JD Sports Strategy 1

JD SPORTS BUSINESS STRATEGY AND ANALYSIS REPORT

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 JD Sports Strategy 2

JD Sports Business Strategy and Analysis Report

Executive Summary

This report reveals the strategic positioning of JD Sports, its strategic capabilities, its

competitive positioning for the group, and its strategic options. The report shows the current

macro-environmental factors that affect the JD Sports company. The report employed

McKinsey's 7 S framework and TOWS matrix to assess the internal capability and evaluate

the organization's strategic capabilities. Competitive analysis of the organization was done by

the use of Porter's Five forces model. The report draws important recommendations from the

strategies embraced by the firm and the analysis done using various models. The

recommendations are very useful to the organization in helping it realize the vision it has in

the long term.

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Introduction

JD Sports was formed in 1981. John Wardle and David Makin established the

company to operate as a sports fashion retail company. JD Sports operates as a multinational

company (JD Group, 2021). JD Group, as of today, has over 2,600 stores in twenty territories

(JD Group, 2021). JD Group is the leading retailer and distributor of fashion wear and

sportswear. The report will explore the JD Group business strategy and analysis and outline

strategic direction of the company. The business report will also explore the environmental

factors that influence the company’s influence her activities in the United Kingdom market.

The report will employ various strategies to explore the business strategy and other thematic

areas.

Section One: Macro Environmental Analysis

Positioning of The Organization Strategically

The positioning of TD Sports strategically based on her mission and long-term goals

has helped the company significantly in steering the company's success. The company's

strategic positioning is grounded in her mission, which states that the company aspires to be

the best retailer in selling sportswear and fashion wear. They aim to provide their customers

with a wide range of goods, a safe shopping experience, quality and services on huge ranges

of trainers and footwear that is 80% exclusive to only JD" (JD Sports 2021). From the

mission, the company indicates its aim to lead the sportswear and fashionwear market in all

the regions they store and operate in. The company aims at availing a wide range of products

to their customers who are of high quality. JD Sports aspires to offer safe and secure shopping

experiences to their customers in all the places they are having stores and operating in both

abroad and the United Kingdom. JD Sports Fashion Plc aims to attain the dictates of her

mission statement in the long term by expanding her business operations to more territories to
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help stabilize her financial muscle and ensure the organization's sustainability.

Long term goals of JD Sports is anchored in their ultimate objective of delivering long

term sustainable earnings growth to enhance Total Shareholder Returns through share price

performance and dividends, whilst retaining our financial capability to invest in the growth

and the sustainability of our propositions (JD Group, 2021). The company is also committed

towards corporate social responsibility. The company values its employees. The JD Sports

Fashion Plc stakeholders who are investors of JD Sports play a vital role that is fundamental

to the company's growth and success. The shareholders play both indirect and direct roles in

the performance of the company. The stakeholders provide both capital and advice that gets

the company up and running. The organization's performance depends on the strength of its

stakeholders, who make necessary contributions towards the organization's success.

Achievement of the company's goals depends on the mission statement and long-term goals,

which can strategically apply to achieve JD Sports aims and goals. The statements provide a

leeway for all activities the company gets involved in and serves as the basis of providing

guidelines for effective execution of those activities, which are fundamental for the growth

and expansion of the company to other territories.

Analysis of the current macro environment of the organization

The current macro environment that JD Sports operates in is highly impacted by the

current global pandemic, Covid-19 which has negatively affected its operations. The

company faces an uphill task of developing a strategy to respond to the effects brought about

by the pandemic. JD Sports is also operating at a times when the global economy is not

performing as expected. The macro-environment consists of those factors that affect the

organization from the outside or externally. The model advances the use of social,

technological, economic, environmental, political and legal factors in analyzing the

company's macro environment. The factors significantly impact the operations of JD Sports.
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These factors in the macro-environment also affect both the competitive advantage of the

company and its revenue (Gupta, 2013). The elements in the macro environment of JD Sports

impact the company's strategy and interfere with the competitive environment of the

organization.

Political factors

The political environment plays a fundamental role in the success of the company.

The political factors that underlie the environment in which the company operates determine

whether the company makes profits or not. They determine and shape the favorable climate in

which the company aspires to work to sustainably put their business in a trajectory position.

The countries in which the company operates are faced with diverse political challenges that

affect efficiency in the company's operations. It is crucial to note that the company has

managed to maneuver different mechanisms to help it to survive under the diverse political

environments in the countries they are operating. The business environment in the various

countries is dynamic. The company makes rational business decisions after a thorough

analysis of the political environments they are operating under. The organization at all times

researches the regulations governing the retail businesses in different countries and decides

on the nature and the extent of bureaucracy that are eminent in acquiring the licenses to carry

out trades in the countries they want to operate. JD Sports carries an extensive analysis of the

legal frameworks and the ease of doing business in different countries.

Economic factors

The economic factors fundamentally affect its operations. The factors in the economic

environment equally affect the profitability of the company in equal measure. The economic

factors are rates of interest, exchange rates, inflation rates, foreign economic policies, and the

ever-changing cycles in different economies. The economic factors impact the demand of the

products of the company and the level of investment in the countries they are operating in and
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in others they want to enter. The company uses the elements that constitute the economic

environment in analyzing the trends in the growth of its markets. Government interventions

in the retail markets coupled with the rates of exchange in the international markets and the

efficiency of markets in the financial sectors are crucial towards the company's success and

strategic expansion. The economic cycles also affect the operations of the company to a

larger extent. During boom periods, the company harvests a lot of money from their

customers because they have enough income to spend on purchasing the products of the

company. When the economic cycles are not stable, for example, during a recession,

customers lack the extra income to allocate in purchasing the companies’ products. The

products of the company are secondary and not basic ones. The consumers consider

satisfying their basic wants before the secondary wants.

The social factors

The environment in which JD Sports Fashion operates affects the efficiency of the

company a great deal. Societal norms are the driving forces in the markets. The countries

whereby the company operates have unique societal norms which significantly impact its

operations. The company values the diverse cultures of people in which it operates. The

company carries extensive research into their customers that conform to their cultural norms

and societal beliefs. It is worth noting that the company has invested massively in its sales

department, which is tasked with evaluating the societal needs visa vi what the products the

company offers. JD Sports team has developed a comprehensive marketing brochure unique

to every society operating in to streamline their products to conform with societal needs and

beliefs.

Technological factors

Technology in the twenty-first century is changing very fast. Technology affects the

operations of organizations entirely. To remain ablest and keep pace with the faster-changing
 JD Sports Strategy 7

technological environment, organizations employ innovative strategies and creativity in their

operations by utilizing the latest technologies in their operations. JD Sports conducts a

thorough analysis of the impact of technology on the products they are offering and the

effects of technology usage on their customers, and how they can control any adverse impact

on their customers. The company has embraced modern technologies in its operations to

improve its efficiency. Technology has revolutionized the way organizations carry out their

operations.

Environmental factors

The environmental policies in which JD Sports operates have unique environmental

regulations in regards to environmental protection. These regulations have an impact on their

revenues. The company has invested in activities that contribute to environmental

conservation in the countries they operate in. they have done this through a corporate social

responsibility framework that guides them in upholding environmental protection programs.

Legal factors

Different countries have unique laws that govern business operations. The company

has employed top minds in the legal profession to help them champion their rights and

interests and protect them against any unfavorable laws in their operating countries. The

company has invested in its legal department to protect the rights of its consumers. The legal

personnel of the company has worked hard in securing the employment laws which

fundamentally affect their employees in different countries.

Section Two: Capability

Assessment of the internal capability of the company using McKinsey’s 7 S framework

The framework gives a clue in the determination of the factors that can be used by the

company in implementing its strategic goals. The framework is grounded on seven

interrelated and intertwined factors; hence, they must be applied together to improve the
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performance in organizations. The framework constitutes of the staff, systems, structure,

style, skills, and shared values. According to Garbrah & Binfor (2013), the model can be used

in improving the performance and organizational arrangement. JD Sports has embraced the

elements of McKinsey's 7 S framework in its internal operations.

Styles and shared values

The company has adopted a digital marketing strategy to help it gain a competitive

advantage over its competitors. The digital marketing strategy has enabled the company to

expand rapidly and gain access to new markets across the regions that it has established

stores. The company's sales team has employed the digital marketing strategy in winning

many customers to buy the company's products. The approach has helped the company to

reach more and more customers as time goes by. The company has also adopted a

multinational strategy to help it boost its sales of the sports wears and fashion wears. The

company threads on unequivocal shared values. They always offer quality products to its

customers (JD Sports, 2021).

Structure

The company is very well structured in terms of its administrative structure. The

company embraces divisional organizational structure. The company’s structure is based on

the products they offer, the markets they serve and the geographical locations of their stores.

JD Sports is headed by the chief executive officer, chairman of the board, and some directors

leading some divisions.

Staff

Apart from the management team, the company has employed quite many employees

heading various functional departments that contribute to the company's running more

coherently. The structured departments in the organizations with clear mandates have played

a key role in enhancing more vital teamwork and collaboration. JD Sports has ensured that all
 JD Sports Strategy 9

the departments are functional and follow a strict chain of command, improving efficiency in

their activities. The good organizational structure displayed by the company has facilitated

the attainment of the mission statement and long-term goals of the organization. The

organization's organizational structure has contributed towards the growth and expansion of

the company to many regions both at home and abroad.

Systems

JD Sports has employed robust and high-tech systems in its processes. It has used

accounting, financial planning and reporting, and internal audit control systems of high

standards. These systems have enhanced the proper usage of resources and accountability of

the employees. JD Sports has committed massive financial help towards the betterment of

these systems, which are fundamental in efficiently running their activities. JD Sports has a

high-quality outsourcing system that has enhanced ordering of raw materials and awarding of

contracts to various business service providers. The company has also employed a robust

customer service system which is crucial in responding to the queries of their customers. JD

Sports has put in place a powerful human resource management system that has enhanced the

management of employees effectively in all their stores in the regions they are operating. The

robust internal procedures of the company have indeed increased its internal capability.

Skills

JD Sports has employed skilled workers in all their departments across the stores

operating both in the United Kingdom and abroad. The skills they look for in employees are

directed towards the satisfaction of their customers at all times. The company employs her

robust human resource management system in outsourcing qualified individuals who have the

expertise and necessary professional experience in all their departments. The company staff is

all motivated, and therefore they discharge their duties with a lot of dedication. The qualified

and skilled team, the company, uses in her operation has enhanced her growth and expansion
 JD Sports Strategy 10

capability. The company enjoys organizational values, which the company's leadership has

developed. All the employees of the organization have embraced these shared values. The

shared values have contributed positively towards the decisions made by the organization,

and they have embraced the ethical component of the organization. JD Sports is a stronger

believer in the formulation of shared values that they adopt in hiring the organization's

employees. The company weighs the skills and experience with priorities and core values

when hiring employees into various positions. JD Sports has created a cohesive and

collaborative team at all levels. The style JD Sports employs in all its undertakings reflects

what other organizations ought to do.

Evaluation of the strategic capabilities of JD Sports using TOWS Matrix

The matrix is a tool used by the organization to generate strategic options to make the

organization much better. TOWS matrix enables an organization to formulate effective

marketing strategies, protect the organization from threats, overcome weaknesses, et cetera.

According to (Weihrich 1982), the matrix is a “tool for analyzing situations." The matrix is

applied in the generation, comparison, and choosing of business strategies. The matrix gives

an organization insight into what best design they can develop to help them achieve their

organizational goals. The use of the TOWS Matrix well illustrates the strategic capabilities of

JD Sports. The following tables show the TOWS Matrix.

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Figure 1 Source: www.marketingteacher.com/tows-analysis/

From the table above, the strengths/opportunities shown in the table represent the

strengths JD Sports have in their possession to put the company on an upward trajectory and

continue exploiting opportunities in the market. JD Sports controls a considerable market

size. JD Sports’ market dominance has enabled the company to explore and venture into

various new markets. The company has adequate opportunities to continue expanding its

operations and opening operational stores all over the world.

Strengths/threats in the table show the possibility of JD Sports using its strengths to

overcome any threats that they may face in the market. JD Sports faces competition from

startups from the operating regions, who try to compete for the market the company controls.

The company uses her solid financial muscles to edge out competitors who try to compete for

their customers. JD Sports is known for selling its products at lower prices while maintaining

its customers' quality standards. The competitors find it very difficult to compete with this

giant company that uses pricing strategy to edge them.

Weaknesses/threats in the table show the company's strategy to eliminate any hazards

in the market. JD Sports uses her weaknesses to ensure that there is no possible threat that
 JD Sports Strategy 12

may affect their operations and the company's profitability. The weaknesses the company

experiences now may cause a threat to its survival for the foreseeable future. The company

has devised mechanisms to reduce any possible flaws in its operations to reduce any threat to

its survival. The company has employed a team of consultants who looks at any weaknesses

in the company and prescribes a possible roadmap towards removing them.

Weaknesses/opportunities in the table indicate the options available to the

organization that the company can use to reduce imperfections to take advantage of the

opportunities that are at the disposal of the company. JD Sports has devised various ways of

mitigating weaknesses and taking advantage of the opportunities that exist in the market.

Section 3: Competitive Analysis & Strategic Options

Competitive analysis

Application of Porter’s model to evaluate the competitive positioning

Porter’s model enables organizations to analyze competition in the market and help

them to come up with sustainable competitive advantage (Marshall 2013, pp.217). Due to

stiff competition in the retail industry, JD Sports can embrace porter's model to position itself

in a way that counters the growing competition in the retail sector. The elements of the model

are the entry of new players, bargaining power of suppliers and buyers, rivalry with

competitors, and the threat of substitution.

Rivalry with competitors

JD Sports faces very stiff competition from quite many organizations offering similar

products in the retail market. Specifically, the biggest competitor or JD Sports is Foot asylum

plc which trade in similar production as that of JD Sports. JD Sports a huge market size in the

retail sector as compared to Foot aslum plc which it finally acquired. Dynamism in the

competitive market demands that the company varies the price of various goods they are

offering. Rational customers are susceptible to the price levels of different items in the
 JD Sports Strategy 13

market. The company is forced to vary the prices of their products to retain their customers

who otherwise may choose the products of the rival competitors whose prices might be lower

than the prices of the products offered by JD Sports.

The threat of new entrants into the retail industry

There are many startups in the retail market today. The entry of these businesses into

the retail market poses a serious threat to the survival of JD Sports. The entry of new

organizations into the retail industry in the same line of sportswear and fashionwear

drastically reduces the market size controlled by JD Sports. Reduction in the company's

market drastically reduces the total sales of the company (Marshall 2013, pp. 221). The

decline in the company's total sales substantially reduces the revenue realized from the

operations of the organization.

Bargaining of suppliers

Suppliers of the raw materials JD Sports used in the production of their products have

eminent bargaining power. Superior skills by the suppliers in negotiating for the price of their

raw materials is a threat to the company's profits. If the suppliers don't have strong bargaining

skills, the company stands to benefit from the extra cost they minimize in their production

process. Conversely, if the suppliers have mighty bargaining power, then the company's

profits reduce drastically as costly raw materials increase the productions costs of the

organization.

Bargaining power of customers

Buyers of the various products of JD Sports always bargain when they are buying

their products. The selling prices of products depend on the strength of sellers in multiple

stores and the ability of the customers to negotiate for a price reduction. An efficient sales

force helps the company fetch higher prices for their products hence more revenue. If the

sales are not strong in resisting the influential customers who know how to bargain, then the
 JD Sports Strategy 14

firm will make meager profits.

Strategic positioning

Strategic positioning of the company using Ansoff’s matrix and Bowman’s strategic clock

Ansoff’s matrix

Ansoff's matrix gives strategic choices the organizations choose. JD Sports are

increasing production of sport wears and fashion wears that they plan to sell globally through

their stores in different locations. The company has adopted a market penetration strategy to

enable it enter new markets across all countries. The company has also embraced

diversification strategy. The strategy has enabled them to produce unique brands that fit the

demands of their customers and also to compete favorably ion the retail market. The two

strategies have enabled JD Sports managers to strategically plan and develop strategies that

can enable them realize their plans. is used in strategic planning by managers in

organizations to develop strategies to develop its growth.

The JD Sports Fashion Plc has been so successful while discharging its operations

based on strategic growth decisions. According to JD Sports annual report for the year 2021,

the company has opened over 2600 stores in many countries where they have businesses (JD

Sports, 2021). The decisions have been unique in all the regions and markets they enter to

start and run their stores. They make growth decisions based on the factors in the

organization. JD Sports has used Ansoff's matrix to grow and expand into various territories.

The company has favorable opportunities of diversifying their operations and penetrating and

entering different markets. However, the company is faced with challenges caused by the

global pandemic Covid-19 which has drastically reduced their efforts of expansion.
 JD Sports Strategy 15

Figure 2 Source: Ansoff Matrix (Daft 2016)

Market penetration

JD Sports has employed varied marketing strategies to penetrate the new markers. The

company has a competitive pricing strategy to help attract customers to buy its products. The

company has increased its production capacity of their products to reach more customers in

all the areas they are operating in. the increased production of their products has reduced its

overhead cost significantly. JD Sports has invested heavily in the marketing of its products.

More customers have been reached through its elaborate digital marketing strategy. JD Sports

has enhanced the distribution of its products in all places they are operating in, thereby

increasing the accessibility of their products by customers.

Market development

With the strategies in market development, JD Sports can facilitate its growth by

introducing the existing products into different markets. Investment in research will improve

the quality of its products to satisfy its customers. They can use market research to help them

come up with strategies to make entries into new markets. Research and development enable
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the organization to the diversification of the products they are offering. The organization can

expand into the regional market that exists out of the United Kingdom. The organization can

enter the international markets and start a business in different countries all over the world.

Product development

JD Sports can create modifications in the existing products in the market to create

demand for the products. The company can launch new products in the market that can make

customers' curiosity hence increase their sales. The organization should use research and

development to identify the customers' needs in terms of the products they desire to use in

their daily lives. The company should increase the quality of its products to increase the

demand for the products in the market.

Diversification

JD Sports should engage in developing new products that they can bring to the market more

often. The company ought to diversify into the production of a unique product that meets the

demand of its customers. As Ansoff (1957, pp. 114) puts it, "diversification is the final

option." Diversification enables the company to remain relevant in the market and continue to

control huge markets. JD Sports can partner with other businesses to handle a large market

and be the market leader.

Bowman’s strategic clock is used in conjunction with the Ansoff’s matrix. It is an alternative

of the Porters’ generic strategies. This model provides options organizations can use in

determining their positioning in the market-based price and any values that are perceived.
 JD Sports Strategy 17

Figure 3 Source: https://getlucidity.com/

The model shows how the company can strategically position a product to give it a

competitive edge in the market. With Ansoff's matrix, Bowman's strategy clock helps

organizations strategically price their products appropriately to command more sales in the

market. The organizations fix the prices of their products in eight different positions and

compare how the customers react to their prices. The price strategy development out the

testing of all the positions in the model is suitable for customers and can increase their

demand for the product. JD Sports should use these two models to help them price the

products they offer to their customers.

JD Sports is expanding into new markets across all the regions. The company has

embraced the dictates of the Ansoff matrix and Bowman’s Strategy clock in the setting of

prices for their products which are favorable to their customers and help to increase the

demand for their products. The company is exploring new markets through the diversification

of the products while improving their quality. The company is embracing product
 JD Sports Strategy 18

development and market development, intending to control larger markets.

Strategic management plan

JD Sports has a long term of increasing its revenues. It has a mission of providing

quality products to her customers. It has a mission of diversifying their products with the aim

of meeting the ever-changing demand by their customers necessitates changers in their

preferences. Based on these three aspects the strategic plan of the company for the next five

years their strategic management plan will be as follows.

Sector of priority Objective Tactical Action

Efficiency in internal To increase market share Employing creativity and

operations through product innovation in the production

diversification process
Macro-environment To venture into new markets Enhancing market

development

Conclusion

The company is recognized in the retail industry all over the world. The company has

succeeded in very many areas in the retail market. Analysis of the company by using various

tools reveals that the company has a competitive advantage in the market. The company has

made unequivocal efforts towards the realization of its mission statement and long-term goal

statement. The company has grown in the past thirty years by establishing very many stores

around the globe. The company controls a big market in the retail industry, and this has been

enhanced by the quality of products they offer and the kind of human resources they have in

their processes and functions. The company has enhanced modern technology more

especially in digital marketing strategies, which has impacted the company positively by

increasing its sales volume.

Recommendations
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Due to stiff competition, the company is facing. It is likely to face in the future; this

report recommends the company employ product diversification and differentiation strategy

for their products to remain relevant in the market. Product differentiation and diversification

help the company retain its customers in the market regardless of competition from other

rival companies. Secondly, the report recommends the company take advantage of their

competition to open more branches globally where local laws are favorable for them to

operate. Expanding to different territories will increase the profits they earn as a company and

help spread risks. The report also recommends the company increase the adoption of

technology in their production process. The report recommends that the company invest

massively in its internal audit operations so as to enhance accountability among the

accounting staff who handle the finances of the company. The finance department is the

backbone section in the survival of the company. Unaccountable personnel in the accounting

department will siphon the company and cause its exit from the market.

References
 JD Sports Strategy 20

Ansoff, H., (1957) ‘Strategies for diversification’ Harvard business review, 35(5), pp. 113-

124.

Daft, R.L. and Marcic, D., (2016) ‘Understanding management’ Cengage Learning.

Gupta, A., (2013) ‘Environment & PESTEL analysis: an approach to the external business

Environment’ International Journal of Modern Social Sciences, 2(1), pp.34-43.

Gyepi-Garbrah, T.F., and Binfor, F., (2013) ‘An analysis of the internal environment of a

commercial-oriented research organization: Using McKinsey 7S framework in a

Ghanaian context’ International Journal of Academic Research in Business and

Social Sciences, 3(9), p.87.

JD Sports Fashion Plc (2021) ‘Annual Report and Accounts’ JD Sports Fashion Plc, Bury.

https://files.jdplc.com/pdf/reports/annual-report-2021.pdf

Marshall, S.J., (2013) ‘Evaluating MOOCs' strategic and leadership challenges’ MERLOT

Journal of online learning and teaching, 9(2), pp.216-227.

Shaqrah, A.A., (2018) ‘Analyzing business intelligence systems based on 7S model of

McKinsey’ International Journal of Business Intelligence Research (IJBIR), 9(1),

pp.53-63.

Weihrich, H., (1982) ‘The TOWS matrix—A tool for situational analysis’ Long-range

planning, 15(2), pp.54-66.

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