+Elena Furtuna Business Strategy 2020 PDF

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Business Strategy 1

BUSINESS STRATEGY Elena Furtuna

DAVID GAME COLLEGE

Business Strategy 2 Business Strategy David Makin and John Wardle developed JD Sports Company in the year 1983. Since its establishment, the company has maintained the top position in being a UK specialist retailer of branded fashions in sports and casual wear (JD Sports Fashion Plc 2020). The company began as a single retail shop in Bury, England, but it has established branches across the entire UK with a total of 56 stores by 1996. JD Sports has gain dominance in the EU, especially in France, Ireland, Germany, Spain, and the Netherlands, followed by Sweden and Denmark. Currently, JD sports is perceived as the most innovative visual retailer of sportswear and having the best and most unique stylish men and women wear. The company established its first branch in Asia, particularly in Malaysia. It also launched its first flagship branch in Pavilion Elite, Kuala Lumpur in November and its third branch in Asia in Sunway Velocity, Cheras. However, the company is expecting business progress and investment opportunities in Asia. Section 1: Macro Environmental Analysis 1. Analyse the strategic positioning of the organisation by assessing their missions statement and long-term goals. The strategic positioning of JD Sports in terms of mission and its long term goals has played a significant role in providing direction about the company’s future. The mission of the company states that “To be UK's best-known sports fashion retailer. To provide customers with a huge range of products, a secure shopping experience, quality and services on huge ranges of men's, women's and kid's trainers and footwear that 80% exclusive to only JD” (JD Sports Fashion Plc 2020). The strategic positioning of the company is well established in the mission statement highlighting the company’s strive to become the leading sports fashion dealer. The mission statement also outlines the company’s prioritization of its customers by giving them a

Business Strategy 3 wide range of clothing, both sports and casual wear. The company also strives to give its customers a safe shopping experience coupled with high-quality services. The mission statement is a strategic guideline that guides in the achievement of the company's purpose. The long term goal of JD Sports is to provide sustainable growth in earnings to facilitate the total earnings to shareholders by use of share price performance and dividends (JD Sports Fashion Plc 2015). The company is set to achieve this in the long run while maintaining its financial ability to invest in business development and hence achieve sustainability of its propositions. The long-term goal is founded on the company's corporate social responsibility to the shareholders. It shows that JD Sports is concerned about the welfare of its shareholders as they play a significant role in the entire performance of the company. The shareholders contribute to the success of the company at different levels of operations. As a business advisor, I have concluded that through its mission and long term statement, JD Sports is strategically positioned to move forward and achieve its organizational purposes. It has well-established foundation for every activity of the business and excellent guidelines for responsible execution of every activity of the business. 2. Critically analyse the current macro environment for JD Sports, and interpret information to produce likely scenarios. The macro-environmental analysis of JD Sports is analyzed using the strategic tool of PESTEL analysis. PESTEL analysis is an abbreviation standing for-Political, Economic, Social, Technological, Environmental, and legal factors that affect business operations of JD Sports Company. Variations in external elements can cause direct effects not just on JD Sports but also affects other players within the retail industry. The macro-environment elements can affect the Porter Five Forces that modifies the business strategy and the competitive environment. The

Business Strategy 4 external factors can also affect individual business' competitive advantage or the entire profit margin in the retail industry (Gupta 2013, pp. 34). PESTEL analysis gives detailed information about business limitations that JD Sports is facing within the existing macro-environment, other factors resulting from competition. For instance, an industry may experience high-profit margins with a powerful growth strategy, but it might be difficult to achieve long term development in terms of a higher level of productivity and general performance if it is operating in a politically unstable environment. Political Factors The prevailing political factors play a crucial role in identifying elements that affect JD Sports’ profitability in the long-run. JD Sports has retail branches in more than ten countries and is therefore exposed to various types of political environment and political framework challenges. JD Sports analyze examples of political elements include the level of corruption, risks of terrorism, legal framework, Bureaucracy, trade regulations, among others. It’s too generic! You should discuss specific political factors affecting JD now and during next 5 years. Economic Factors The external economic factors that affect JD Sports comprise factors such as the rate of savings, the rate of inflation, interest rates, foreign exchange, and the prevailing economic cycle. All these economic elements determine the total demand and investment in a particular country. JD Sports usually utilize a country’s economic elements such as inflation, growth rate, and the market’s economic factors such as the growth rate of the retail market and consumer expenditure to predict the growth of the company and the entire sector. Some of the economic elements that JD Sports considers while carrying out PESTEL analysis include the efficiency of financial

Business Strategy 5 markets, exchange rates, government intervention, among others. It’s too generic! You should discuss specific economic factors affecting JD now and during next 5 years. Social Factors The culture of the society in which a business is situated also affects its operations. Society’s culture refers to a community’s way of doing things, which affect the operations of the business. Aspects of culture, such as shared values and attitudes of the community, have been applied by JD Sports’ marketers to evaluate the customers’ needs in a particular market. The factors are also crucial in determining how marketers at JD Sports design their marketing content for the retail market consumers. Social factors that JD Sports’ marketers consider include demographic statistics, cultural attitudes, and perceptions, education level, among others. It’s too generic! You should discuss specific social factors affecting JD now and during next 5 years. Technological Factors Technological dynamics associated with various industries also affect business operations in various ways. A business organization should conduct technology of the industry as well as the intensity of technological disruptions in the industry. Slow changes in technology will give the business enough time to adjust. In contrast, speedy changes will give little time for the business to make necessary technological changes (Gutierrez, Boukrami, and Lumsden 2015, pp. 789). JD Sports has conducted a technological analysis based on factors such as the impact of technology on its product, rate of technological diffusion, and the effects of value chain framework on consumer needs. The company has also adopted the latest technology to improve its operations and enhance the customer experience. It’s too generic! You should discuss specific tech factors affecting JD now and during next 5 years. Environmental Factors

Business Strategy 6 Different industries have unique values and environmental conditions, which affect the profitability of individual firms in those industries. Even in a particular country, each region can have unique environmental and liability policies. JD Sports recognizes the significance of protecting the environment for the betterment of future generations. The company is dedicated to conducting its operations while giving due considerations to the environmental effect of its activities through its various environmental strategies. It’s too generic! You should discuss specific environmental factors affecting JD now and during next 5 years. Legal Factors In many countries, the existing legal institutions and procedures are not good enough to aid in the protection of the intellectual property rights of an organization. The JD Sports Company has been able to protect its intellectual property by hiring qualified legal personnel, which has been significant in contributing to the company's competitive advantage. The legal factors that have been considered for the success of JD Sports Company include anti-trust laws, consumer protection rights, discrimination policy, and copyright and employment laws. It’s too generic! You should discuss specific legal factors affecting JD now and during next 5 years. My analysis shows that the company has been able to diversify the systematic hurdles within the political landscape to achieve success in the ever-changing retail industry in different countries of the world. However, my advice is that the company should conduct close evaluation of various elements within a particular environment before investing in that market to help in making informed business decisions. It’s generic! You should identify key factors and suggest likely scenario(s) for future. Section 2: Capability

Business Strategy 7 1. Assess the internal capability of an organisation by using McKinsey’s 7 S framework. The 7-S business model developed by McKinsey is an analytic model, which tries to determine factors that essential for effective strategy implementation. The model is built on the assumption that the seven factors are interconnected and hence must be aligned to improve and maximize organizational performance. The elements of the 7-S model are grouped into two sections. The first group is made of three elements, known as the hard elements, which comprise of strategy, structure, and systems (Ss’) (Shaqrah 2018, pp. 55). Strategy implies the desired actions of the business organizations that aid in responding and adjusting to the competitive factors in the external environment. JD Sports Company applies the multichannel strategy that makes use of digital marketing and channels to gain competitive advantage and increase its market share. The structure reflects how the business is structured in terms of management and reporting procedures. JD Sports is a registered company and major reporting is made to the company's CEO. Systems employed by the company include financial planning and internal audits, performance management, and staffing, as well as the use of modern technology. The other four elements of the McKinsey model are also called the soft Ss- staff, skills, style, and shared values (Singh, 2013, pp. 39). JD Sport has committed staff with the required abilities and experience. The skills of the company are directed towards the satisfaction of customer needs. Additionally, these skills are also employed to control organizational processes and technology. The style employed by JD Sports reflects the culture and values that every organization member needs to uphold. The shared purpose of the company reflects the goal of the business and gives the staff a sense of purpose. My analysis of JD Sports’ internal ability using McKinsey’s 7 S

Business Strategy 8 framework indicates strong internal ability for effective strategy implementation. Too generic, without any evidence. 2. Critically evaluate the strategic capabilities of JD Sports, utilizing a TOWS matrix.

The strengths/ Opportunity (SO) reflect JD Sports’ strengths that can be used to unlock the company’s potential using the above diagram. The company’s strength that is evident in its dominance in the market can be employed as an opportunity to diversify by exploring and entering new markets. The weaknesses/ Opportunity (WO) box implies the use of a company’s weakness as a source of opportunity (Alaaraj and Hassan 2014, pp. 182). JD Sports’ weakness in succeeding beyond its core values often challenges the company to explore other sections of the industry within the existing business culture. The Strengths/ Threats (ST) box implies that the company’s strength cause threats. Incorrect! Strength should compensate Threat. For example, JD Sports’s establishment in many countries across the world exposes it to liability laws within these economies, which sometimes does not support business growth and performance. The weaknesses/Threats (WT) box implies that the existing weaknesses pose a threat to the continuity of the business (Yavuz and Baycan 2013, pp.136). For instance, the

Business Strategy 9 organization structure of JD Sports only works best within the prevailing business system hence limiting efforts for expansion into adjacent markets. As the business advisor, I advise the JD Sports to employ my TOWS analysis to keenly examine the effects external and internal factors to the organization. Here you should suggest specific action(s), directed at developing strategic advantage and growth. A certain misunderstanding of TOWS demonstrated. Please revise! Section 3: Competitive Analysis 1. Apply Porter's Five Forces model and evaluate the competitive positioning for JD Sports. Porter Five Forces is a holistic strategy model that helps in analyzing competition in the industry and the generation of competitive advantage sustainability (Marshall 2013, pp.217). The management of JD Sports Company can employ the Porter Five Forces to establish a strategic position within the retail sector also identify viable opportunities in the entire consumer industry.

The threat of New Entrants Businesses that are venturing into the retail industry pose a threat to the company by reducing the market share and hence the total sales (Marshall 2013, pp.221). It also put pressure on companies like JD Sports to lower the price of its product. The result is that it reduces the company's profit margin. So????

Suppliers Bargaining Power Most companies in the retail sector acquire their raw materials from several suppliers (Marshall 2013, pp.222). JD Sports works dominant suppliers in the consumer service industry

Business Strategy 10 employ its negotiating power to achieve lower prices for the required raw materials. Lower prices of raw materials boost the firms' profitability level. Buyer’s Bargaining Power Buyers of consumer products are demanding as they require quality products with as little costs as possible (Marshall 2013, pp.222). Therefore, this determines JD Sports long term profitability. The company has been able to lower the price of its products and the use of offers and discounts to achieve a large customer base. The final results are that it increases the number of the company's sales and profit level. What about power? Rivalry with the prevailing competitors JD Sports Company faces stiff competition that characterizes the retail industry. Competition forces a firm to lower prices to attract consumers into buying its products (Marshall 2013, pp.224). JD Sports Company applies competitive prices to its products that help in maintaining its market share and increasing its profits in the long-term. What about power? The above analysis of JD Sports using the porter’s Five Forces framework provides indepth understanding of the concept of competition within JD Sports’ industry of operation. I advise the company to apply this analysis to identify the competitive position of the company. It is also essential for the company to look for more strategies that can help in gaining more competitiveness in the industry. No specific advice. What they should focus on? 2. Critically analyse the current and potential strategic positioning for JD Sports by using Ansoff's matrix and, either Porter generic strategies or Bowman's strategic clock. Ansoff’s matrix is a depiction of intensive growth strategies aimed at market expansion that can be achieved through four main dimensions- market penetration on product development, market development, and diversification (Hussain et al. 2013, pp. 200). Market penetration

Business Strategy 11 entails the facilitation of sales increase inside the existing market and focusing on the prevailing product. JD Sports use product development as a secondary strategy, which entails modifying the existing product or developing new brands within the existing market. In the past few years, JD Sports was forced by stiff competition to introduce a new line of products targeting different market segments. Market development is used as a supporting strategy for market penetration and product development. I believe the company has extensively employed this strategy and that is why it has established several branches within competitor countries. In terms of diversification, cost leadership results in cost minimization and the established infrastructure has allowed the company to identify and introduce new products in new markets. I perceive that this strategy has also enabled JD Sports to extend its business portfolio through the use of efficient acquisition strategies. In light of Porter’s generic strategies, JD Sports Company introduced a mixture of cost leadership, differentiation, and focus strategies. Cost leadership is the primary strategy applied by JD Sports in different consumer markets to sustain a leadership position in the industry by the use of effective value chain management. JD Sports applies the strategy to enlarge its market share by targeting the middle class, which consists of the highest percentage of the total consumer market mix in most countries of its operation (Tanwar 2013, pp.12). Affordability is an essential factor among middle-class consumers, which implies increased sales to achieve a competitive advantage. Differentiation is a secondary strategy applied by JD Sports alongside cost leadership. The company has been able to sustain its market share through the company's emphasis on unique brand characteristics. Differentiation entails the use of innovative skills in production that makes JD Sports’ products to stand-out form those of the competitors (Caruthers 2019, pp. 9). JD Sports employ the focus strategy both in offering products with the best value

Business Strategy 12 and low cost. A low-cost focus strategy is used by satisfying the needs of a small market section at the lowest possible price. The best value focus strategy is employed by emphasizing the aspect of taste, design, and quantity of the product that best suits the needs of the customers. Through my analysis of Anoff’s matrix and Porter’s generic strategies, the company is strategically positioned increase its market share and gain dominance in the market. Elena, confusion! Should be revised and re-written! Section 4: Strategic Plan 1. Produce a strategic management plan, based on the above analysis that produces a valid strategic direction, objectives and tactical actions for the next 5 years of the organisation. Priority sector

Objective To achieve product

Tactical Action Enhancing innovativeness in

Internal Efficiency

differentiation to expand the

the production of the

External Environment

market share To establish more branches

products. Pursuing market

by exploring and venturing

development

into new markets Simplistic! It’s not a strategic Plan. Conclusions JD Sports is a popular international company operating in the retail industry. A critical examination of the company using different models of analysis shows the realization of success in various aspects. The company is putting more effort into working on its mission statement so it can finally achieve its long term goals. The establishment of the company's branches across different parts of the global market is an indication of its ability to ...