Strategic Management Executive Summary

Introduction

Strategic management is the practice of conducting in depth market analysis and develop effective strategic direction for the multinational operations to expand their business creatively and meet the corporate vision of the firm. Through the strategic management report, it is possible to demonstrate the corporate strategies of the company JD Sport as well as conduct internal and external business environmental analysis for understanding the market condition. The company JD Sport is a famous British sport fashion retail company, which aims at entering into international real estate market for gaining high competitive advantage over other competitive firms like Nike, Reebok and Puma. The study also provides a scope to recommend some suitable suggestions through which the company can meet the corporate aim. the market condition is favourable of the brand with political stability, international trade agreement, ethical business practice and technological innovation, where JD Sport has the opportunity to enter into international markets as per the internal analysis, the company is financially stable and successful in develop infrastructure in the workplace, managing inbound and outbound logistics through ERP system and providing innovative service to the end users. As per the analysis, the favourable strategic directions recommended here are product differentiation and cost leadership through which JD Sport can expand their business across the international real estate markets which in turn help positive branding, good corporate image and strengthen their customers base or their quality products and innovative services.

1.0 Introduction

Strategic management is the process of setting appropriate goals, developing procedures and objectives in order to make the business more competitive and profitable. Through developing effective strategies, the multinational corporations try to fulfil own aim by managing human resource, developing organisational infrastructure and ensuring creativity and technical innovation (Tudor, 2018). Through this study, the strategic management of the firm JD Sports PLC will be evaluated through macro and micro business environmental analysis and the evaluating the competitive strategies. The study provides a scope to identify the current challenges faced by the company JD Sports and recommend some suitable strategies through which JD Sports can expand their business and meet their corporate objectives.

1.1 Company and industry background

JD Sports PLC a UK based retailer of fashionable branded sports and casual wear, started as a single shop in Bury, England. It has been established in the year of 1983 and by 1996, it was successful to expand their business and by 2011, there are more than 56 stores with the main market focus on EU countries, primarily in Germany, Spain, Netherlands, France and Ireland as well as Denmark and Sweden. Fast forward to 2016, JD Sports officially launched its first store in Asia, right here in Malaysia and its third store was in Asia in Sunway Velocity, Cheras (JD Sport, 2021a). The company is looking forward to diversify their business into real estate market for gaining better competitive advantage over other competitive brands. The major products of the company are clothing and sportswear accessories. It is successful to generate revenue more than £6,110.8 million in the previous year 2020 (JD Sport, 2021b). Company’s operating income was £516.9 million in the last year and it was successful to handle approximately 34885 employees worldwide to run their operations efficiently. The company is also successful to expand their business across Malaysia, Singapore, South Korea and other Asia pacific regions in order to increase their global presence in the consumer good and real estate market of the world.

1.2 Key challenges faced by JD Sports

The major challenges faced by the organisation JD Sports are such as low profit margin of the brand, lack of international expansion as well as supply chain challenges and poor human resource management. Due to this pandemic era, the company fails to expand their business internationally, with poor supply chain management. There is lock down and social distancing as well as closure of international transaction, for which JD Sports fails supply chain challenges, where it becomes difficult to handle the international suppliers and distributors. Additionally, poor human resource management is another issue, faced by JD Sports, where due to COVID 19, the employees are asked to work remotely and it is difficult for the organisational management team to handle the workers remotely without proper communication and poor partnership working. It also becomes problematic for the firm to manage their sales volume with such low market demand for the sport apparels and clothing, which further deteriorate revenue generation and hamper overall profitability of the firm. Poor market expansion practice and lack of brand creativity further have its negative impacts on customer’s retention. It is important for the brand to expand their business across real estate markets in order to enhance buying and selling activities for their quality products and services (JD Sport, 2021c).

2.0 External analysis

2.1 Macro (PESTEL or STEEPLE)

PESTEL analysis is effective to conduct eternal business environmental analysis, where it stands for political, economic, social, technological, ethical and environmental. It is important to conduct in-depth market research for understanding the external factors that have crucial impacts on the operational activities of the brand. The PESTEL analysis is hereby effective for analysing the external business environment of JD sports.

Political

Political stability is there mong the international counties, where the local authorities along with the politically powered parties are engaged in the real estate and retail industry to support the multinational operations. The trade unions and internal suppliers are also working collaboratively to manage international trade. After Brexit, the market is hampered with low demand and poor transactions of goods and services (Lee, Kim and Won, 2018). In the recent pandemic situation of COVID 19, the governments of different countries are facing threat in tackling the economic condition and international trade as well as they are concerned in tackling the issue of spreading virus across the communities for which there is politically unstable situation.

Economic

Economic growth with employment rate and high purchasing power parity further influence the companies to expand their business activities. In the recent pandemic era, there is slowdown of the economic growth across the international markets, due to low demand, unemployment and closure of international trade. Over the period of time, the markets are recovering and it is suitable for JD sports to expand their business across the international real estate markets.

Social

Social development is there across the globe with increasing literacy rate and improving the knowledge and skill set of the individuals. The people are trying to be updated with latest news and information on a daily basis where social media is also playing a crucial role to provide all the news around the globe. It further supports the companies to expand their business and target more audiences across the international countries.

Technological

Technical advancement with business creativity and continuous innovation process become the major success factors for the organisations, where the MNCs try to implement latest technology and develop internal infrastructure for running their operations. The company JD sport is also proficient to utilising e-commerce services with GPS and Enterprise Resource Planning system to improve coordination among the employees for running their business innovatively.

Legal

Legal structure is effective to provide in depth information and data about the ways of managing the business activities ethically. The multinational corporations are concerned about international trade agreements and copyright principles so that the intellectual property rights can be ensured long with suitable international trade activities. JD sports is efficient to manage their international trade by following the ethical laws as well as there is employment laws along with whistleblowing policy, anticorruption and bribery policy through which JD sports focus on running their operations legally and create values for all the stakeholders.

Environmental

Environmental protection law is effective for the organisations to develop appropriate strategies to run their operations sustainably, as it provide positive environmental footprint as well as create positive bran image in the market (Chinomona and Maziriri, 2017). The government support towards sustainable solution as well as awareness campaign further influence the organisations like JD sports to adopt new technologies for running their business sustainably. JD sport is a famous organisation and financially stable to focus on exploring sustainable solution and investing in renewable energy resources for supporting the social communities as a whole. The company focuses on increasing the amount of Better Cotton in our private label manufacturing with a target of sourcing 80% of our cotton as “Better Cotton” by 2022 and additionally reusing the materials and utilising renewable resources are effective for the brand JD brand to sustain in the competition.

2.2 Micro environmental analysis

Porter’s five forces framework is effective to conduct micro business environmental analysis. Through identifying the factors under 5 Forces Framework, it would be possible to analyse the competitive strategies of the company JD Sports. The factors are, threats of new entrants, threats of substitute product in the market, competitive rivalry, bargaining power of the suppliers and the bargaining power of the customers.

Threats of new entrants

The threat of new entrants is medium, as the company is a stale firm with strong product range, there is also strong customer’s base of JD Sports, where the customers are loyal to make repetitive purchase decision for the quality products of the company. It is difficult for the new entrants to invest huge capital and gain the markets hare as JD Sports at the new stage. Hence, there is medium threat of the new entrants in the real estate for the companies of providing sport apparels and clothing products.

Threats of substitute product in the market

Threats of substitute product is high as there are other companies with strong market share and high competitive advantage, providing the high quality clothing and accessories as well as sport apparels. There are several brands like Nike, Reebok and Puma who are efficient to provide the best quality products and services worldwide. Hence, JD sports face high threats of substitute products due to availability of the substitute products of the high end brands in the international markets.

Competitive rivalry

JD Sports's top competitors include Foot Locker, Zumiez, Academy Sports + Outdoors and Skechers. The competitive rivalry among the brands is high, and the JD sports face intense competition in running their business in the sport apparel and clothing retail industry. It is important for the firm to adopt new strategic planning for expanding their business to gain high competitive advantage in such intensely competitive market (Calder, 2020).

Bargaining power of the suppliers

The bargaining power of the suppliers is low, as the company JD sports has strong supply chain and distribution network across the globe the company is successful to expand their business across different international countries including UK, America and Asia Pacific region for gaining high market share by running their business successfully (Warren and Gibson, 2017). In this regard, strong supply chain is effective for the company, where JD sports is able to provide high return on the investment, good remunerations and compensations as well as managing the suppliers by engaging them with the business activities, which satisfy the suppliers to work or the company and contribute efficiently.

Bargaining power of the customers

The bargaining power of the customers is medium, due to existing other competitive brands and high quality products availability in the market. The switching cost of the customers towards other brands is low for which the customers has medium power to bargain for the products and services provided by JD Sports.

3.0 Internal Analysis

Internal business environmental analysis is important to understand the internal process of the organisation to provide the best quality products and services to the ultimate customers. The Value Chain Analysis is hereby effective to connect internal analysis which includes the primary activities and the support activities. For the support activities, it is important to identify the firm’s infrastructure human resource management, technical development and procurement. JD Sport is efficient to develop internal infrastructure, so that the employees can utilise the attest technology and internal structure for performing better. Human resource management at JD sports is effective where the firm is able to manage more than 34,885 employees worldwide. The values of the employees are improved through providing monetary and non-monetary incentives to the staff members, managing good corporate governance with fairness and harmony at the workplace. The technical innovation with ICT, GPS and ERP software system is also beneficial for the company to manage the overall operational process. The primary activities are such as inbound and outbound logistics, operations, marketing and sales as well as services. JD sports try to manage inbound and outbound logistics and improve internal corporation by operating through the ERP system and online database management system (JD Sport, 2021c). The marketing and sales department is efficient to manage the customers and provide the best quality products with proper packaging to the customers within effective time. the service innovation further enhances brands capabilities to target more customers and satisfy them in long run. the organisational official website as well as e-commerce services are effective to provide 24*7 support to the customers. The customer’s queries are handled as soon as possible with good communication and collaboration with the clients to help them for choosing the best clothing and sport apparel products as per their personal choice and budget (JD Sport, 2021c).

4.1 Porter’s Generic Strategies

Competitive strategic planning is important for the MNCs in order to expand the business worldwide and target the customers for gaining high competitive advantage. the organisations try to adopt different brand expansion strategies in order to increase brand visibility and secure future sustainable development, as per the Porter’s generic strategy, the strategies are cost leadership, differentiation, cost focus and differentiation focus. The company adopts cost leadership strategy in order to minimise cot of the product and maximise the profit margin to ensure financial stability of the firm. It is beneficial for the organisations to manage the cost structure and improve the economies of scale by producing at a large volume so that it can increase sales volume and maximise profitability on a specific economic year. On the other hand, the product differentiation strategy is important for brand expansion with creativity and technical innovation (JD Sport, 2021d). The entrepreneurs of the company focus on entering unique products and increase variety of product portfolio so that the customers can choose their product as per their personal choice and budget (Iglesias et al., 2020). It is important for the organisation JD sports to focus on product differentiation strategy for managing good product portfolio, with the availability of diverse products. There are different clothing and sport apparel product in the company which attract the customers in long run. the variety of sport apparels and accessories are designed to target the customers and also the availability of designer clothing for all the individuals of different age group and gender further increase product portfolio. it would be beneficial for the company JD sports to expand their business by adopting major two strategic planning, cost leadership and product differentiation so that the company would be able to run their operation profitably as well as target diverse customers across the international marketplace with different taste and preferences ((JD Sport, 2021e).

Econ5.1 Markets, Products, Services omic

for strategy directions, the company JD sports must focus on products and services provided by the brand to all the customer worldwide product portfolio management with diverse product ranges is the major strategic directions for the company to target diverse customers and provide diverse products and services to the customers that meet the clients personal needs and preferences. the firm must focus on expand their business in Asia Pacific region like Malaysia, Singapore and India, where there is strong customer base due to high population and good demand for the clothing and accessories (Rahman, Rodríguez-Serrano and Lambkin, 2019). It would be the best strategic planning for the brand JD sports to enter into international markets and run their business operations successfully. The product availability must be maintained efficiently, so that the customers can review their products and choose the best clothing and sporty apparel as per their personal choice and budget. Along with this, the company must focus on product differentiation strategy, to improve product portfolio and make availability of all the products of different customers group. The company focus on paper packaging system for maintaining sustainability as well as Zero Discharge of Hazardous Chemicals by improving textile quality and the green supply chain management. Hence, the sustainable solutions of the firm as well as product differentiation strategy further improve branding and attract more audiences around the globe (Beig and Khan, 2018). For service innovation, the firm must focus on online services and e-commerce activities to connect with the customers and provide them continuous support. The service innovation will be helpful to strengthen their customer’s base and retain more old and new customers in long run. In the recent era of globalisation, the company JD sport must focus on organic clothing and organic farming facilities in order to secure future sustainable development. The organic clothing would be the great strategy for JD Sport to diversify their products and launch new designed clothing and port apparel to attract the sport overs, diverse customers and athletes.

5.2 Expansion strategies

The major expansion strategy for JD sport would be entering into international market with the cost leadership strategy. strengthening the supply chain and distribution network is important to enter into new market and export the products successfully to meet the market demand, additionally it would be necessary to provide efficient services through online delivery system as well as develop their corporate website effectively so that the customers can find their products and communicate with the organisational representative to make effective purchase decision (Liu et al., 2018). Hence, strong e-commerce service along with good supply chain network is the best tactics for JD sport to enter into new international markets and strengthen their position in the real state. the firm aims at gaining high market share in real estate and in this regard huge volume of production with product differentiation strategy would be effective strategic directions in near future. this strategy further provides a scope to the organisation to meet the aim of expanding their business in real estate market and securing future sustainable development.

Econo6.0 Conclusion and Recommendationsmic

It can be concluded that, JD Sport is a famous organisation focusing on providing the best quality clothing and sport apparel to the diverse customers across the globe. The company aims at entering into international markets through gaining strong position in real estate industry. JD Sport is efficient to generate revenue and stabilise their financial position as well as per the internal analysis, there is strong employee base and technical infrastructure where the employees are working proficiently and contribute in organisational success. In order to enter into international real estate market, the firm must diversify their product range in order to maintain good product portfolio as well as attract more customers by enhancing communication and connecting with them. The organisation also needs to focus on cost leadership strategy by producing the product at a huge volume and technical innovation so that the overall cost of the product can be minimised and the firm can maintain the profit margin. Hence, the product differentiation and cost leadership strategy would be the best strategic direction for JD Sport to enter into international real estate market and gain high competitive advantages.

Reference List

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JD Sport, 2021a. Our history. [online] Available at: https://www.jdplc.com/our-history [Accessed on 24 December 2021].

JD Sport, 2021b. Key facts. [online] Available at: https://www.jdplc.com/key-facts [Accessed on 24 December 2021].

JD Sport, 2021c. Our strategy. [online] Available at: https://www.jdplc.com/our-strategy [Accessed on 24 December 2021].

JD Sport, 2021d. Sustainability. [online] Available at: https://www.jdplc.com/environment/sustainability [Accessed on 24 December 2021].

JD Sport, 2021e. Our policies. [online] Available at: https://www.jdplc.com/corporate-governance/our-policies [Accessed on 24 December 2021].

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Rahman, M., Rodríguez-Serrano, M.Á. and Lambkin, M., 2019. Brand equity and firm performance: the complementary role of corporate social responsibility. Journal of Brand Management, 26(6), pp.691-704.

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