1. Case study-Day 2-Sports direct By T.M.Jayasekera

2. Exercise Read the Sports Direct case study 1.How would you describe Sport Direct’s strategy using Porter’s generic strategies 2.How do they manage to keep prices low and margins high? 3.For future growth – which box on the Ansoff matrix should they focus on? Why?

3. How would you describe Sport Direct’s strategy using Porter’s generic strategies COST LEADERSHIP Sports Direct’s success is all the more remarkable in view of the devastation that has occurred elsewhere in British retailing. Around 14% of retail lots are estimated to be vacant, according to the Local Data Company, a research firm. Yet Sports Direct has thrived, not least by taking the measure of the times with relentless discounting. Signs boasting “mega-deals” hang throughout its shops, which often resemble jumble sales. Lillywhites, a retailer acquired by Sports Direct in 2002, used to be a posh London department store stocked with the finest sporting goods. “Now it is ‘pile it high, sell it cheap’,” sniffs Matthew Hopkinson, an analyst. Another ingredient of Sports Direct’s success is that it makes much of what it sells, under a variety of brands. Like Lillywhites, these tend to be tired but venerable names, such as Lonsdale and Dunlop, which have been revived through clever marketing. This allows Sports Direct to keep prices low but margins high. And unlike JJB Sports, parts of which the company bought after it entered administration in 2012, the chain is generally cannier about negotiating store leases, too. Unprofitable stores are shut down swiftly. The group’s remarkably lean supply chain is another advantage. Rather than use third-party firms, Sports Direct tends to look after most of its logistics itself, says Dave Forsey, the group’s chief executive. This cuts down costs, reducing the number of hands goods pass through. And it helps boost online sales, which are growing.

4. Choose a strategy: Porter’s generic strategies Source: Adapted with the permission of The Free Press, a Division of Simon & Schuster, Inc., from Competitive Advantage: Creating and Sustaining Superior Performance by Michael E. Porter. Copyright © 1985, 1998 by Michael E. Porter. All rights reserved source: Johnson, Whittington and Scholes (2011) Exploring Strategy, 9 th Edition, Pearson Education, Chapter 6

5. How do they manage to keep prices low and margins high? 1.An ingredient of Sports Direct’s success is that it makes much of what it sells, under a variety of brands 2.The group’s r.emarkably lean supply chain.Rather than use third-party firms, Sports Direct tends to look after most of its logistics itself, says Dave Forsey, the group’s chief executive. This cuts down costs, reducing the number of hands goods pass through. And it helps boost online sales, which are growing.

6. Competence Analysis (How we use resources - what the organisation is good at) adapted from Johnson & Scholes, Exploring Corporate Strategy, 2008 Functional capabilitye.g. marketing capability, procurement capability Internal linkages / cross functional capability e.g. good links between sales & procurement; capability in new product development External linkages (the value system) e.g. capability in developing strong supplier or distributor relationships Management capabilitye.g. capability in knowledge management; capability in training and career development Specialised capabilitye.g. miniaturisation, developing thin adhesives (3M Post Its)

7. For future growth – which box on the Ansoff matrix should they focus on? Why? But the firm also seems to be betting on a move away from its cheap and cheerful roots. It is sprucing up its shops, and later this year will be opening a series of concessions in Debenhams, a chain of department stores. The new flagship shop on Oxford Street in London is large and sleek, and sells brogues and more expensive T-shirts alongside tracksuits. This may attract new customers, which would be a better option than just trying to squeeze more cash out of existing ones. But it also brings the company into ever greater competition with big general fashion retailers. Unless it can keep down prices as it moves into this new market, loyal fans such as the Robertsons may become rarer.

8. Choose a Strategy Direction Igor Ansoff Matrix Source: Adapted from H. Ansoff, Corporate Strategy, Penguin, 1988, Chapter 6.