COB S3

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Lahore University of Management Sciences, Lahore *

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Nov 24, 2024

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Introduction The organization selected for this project is “Sports Direct”. Sports Direct is among the best sports retailer of Britain. Sports Direct is European distributor of sportswear, fitness and fashion products from internationally recognized brands i.e. Adidas, Nike, Puma and Under Armor. The company is offering matchless breadth and depth of products with best prices. It has 700 stores operating in UK and in continental Europe among which 427 are under Sports Direct.com Fascia. The Company has a premium lifestyle market targeting UK through 83 stores under Cruise, Flannels, USC and Van-Mildert Fascia. The company’s sports, lifestyle and fashion portfolio is globally recognized. The main operations of company are selling core product to wholesale customers and licensing plans throughout the globe. The company interacts with multi-lingual customers accepting multi-currency using online/ e-commerce platforms 1. Perform a SWOT and PESTEL analysis for chosen business SWOT Analysis Strengths of Sports Direct Sports Direct operates in over 20 countries and has over 765 stores in the UK and abroad. It operates throughout the UK, and in locations in Europe, the U.S. and Asia. Approximately 29,400 people work for the company. Sports Direct has a diversified portfolio of sports, fitness, fashion and lifestyle fascias and brands (Sports Direct International plc, 2021). Sports Direct is a multi-channel retailer. It reaches out to the customers via a steady voice across multiple platforms, including online, mobile, and on the high street. The competitive pricing strategy of Sports Direct has also been very useful to send a consistent message to customers with a view to persuading them to consider it favourably in their purchase decisions. Even when a lot of brands are struggling, Sports Direct is doing relatively well. The Sports Direct group was listed in London Stock Exchange as a public company in 2007. The company has made a number of acquisitions over the years. The acquisitions of USC, Cruise, Van Mildert, Flannels Firetrap, Hot Tuna, Dunlop, Slazenger, Carlton, Karrimor, Lonsdale, Campri, LA Gear, No Fear, Title, Voodoo Dolls, Kangol, Field & Trek, Sport 2000, Bob’s Stores and Eastern Mountain Sports are some of the notable examples in this regard. Weaknesses of Sports Direct Sports Direct has found itself mired in a number of controversies over the years. For instance, it was one of the 260 employers identified by the UK government for failing to pay workers the minimum wage. Sports Direct was found to have failed to pay £167,036.12 to 383 workers (Hodgson, 2017). Likewise, it was labelled as ‘an embarrassment to the UK corporate governance’ after the tumultuous announcement of its annual results in July 2019, including multiple delays and the shock disclosure of a £614 million tax bill (Butler and Kollewe, 2019). Sports Direct has been criticised for its poor working conditions and poor work practices. For instance, the company was accused of worker mistreatment, including staff being penalised for taking a short break to drink water and for taking time off work when ill. Between 1 January 2013 and 19 April 2016, a

total of 110 ambulances or paramedic cars were dispatched to the Sports Direct’s Shirebrook warehouse to treat people with conditions such as convulsions, fitting and strokes, breathing problems, pregnancy difficulties etc. In fact, one woman gave birth in the toilet in the warehouse (Rodionova, 2016). Unsurprisingly, the company was compared to a ‘Victorian workhouse’ by many people. Opportunities for Sports Direct Sports Direct announced in 2017 its plans to expand into the United States with the purchase of the businesses of Bob’s Stores and Eastern Mountain Sports (Megaw, 2017). The deal gave Sports Direct 50 retail stores in the U.S. while costing it $101m. The US market for sports, casual wear and camping equipment is massive; hence a massive opportunity for the company. Likewise, it is heavily focusing on its expansion in the Republic of Ireland, Malaysia, and a number of countries in Europe. Needless to say that Sports Direct has a very good number of stores in the UK. Yet, further growth in the UK is worth exploring. Likewise, expanding into emerging markets and frontier economies can also be very useful for the company. Acquiring brands or joint ventures with companies in those markets should provide Sport Direct with opportunities to reach out to customers across different segments.   Threats to Sports Direct Threat is the last element to address in the SWOT analysis of Sports Direct (Sports Direct SWOT). Sports Direct faces threats from a number of fierce competitors. Foot Locker, Snow & Rock Sports Ltd, ASOS, Big 5 Sporting Goods, Hibbett Sports, Genesco, & Amazon are some of its main competitors in sportswear and footwear. Likewise, some of its main competitors in women’s wear are H&M, ASOS, Amazon, OMG Fashion, Boohoo, and Misguided. Pestle Analysis There are also several other factors in the external environment of TJ Maxx. This PESTEL Analysis explains these factors and how they impact the business of TJ MAXX. Political A political factor that could impact Sports Direct is the trading regulations and tariffs which are related to consumer services. Tariffs give a price advantage to locally-produced goods over similar goods which are imported, and they raise revenues for governments. For example America has imposed tariffs on China meaning goods are more expensive for China to buy from America. Another political factor is the political stability of the country they are operating in and the importance of the retail sector of the country’s economy. For example if Sports Direct operated in Venezuela the goods they would sell will change and fluctuate due to the high inflation which has a high of 110%. Inflation could affect the business financially they will not know how much they will earn and it may be too expensive. Inflation will affect the cost of the goods Sports Direct sell and may lead for the business to be financially unstable and become bankrupt. Economic

An economic factor that could affect Sports Direct is the exchange rates and stability of the country. What might occur is that the projected amount of profit they usually make in the market maybe different to the actual profit they make in a different market. Sports Direct would need to consider the comparative difference between the host country and the current country they operate in. Sports Direct will need to think about the unemployment rate in order to see if they can provide opportunities to help the country which can help alleviate the economy`s instability. Unemployment rate can affect the business because it would mean people in the country do not have the skills and qualities for them to work for Sports Direct which would mean that they would need to relocate some of their current staffs currently working to a new place. Another factor that could impact Sports Direct is if the employment rate is high too many people will be working for one business whereas if they are is a high unemployment rate it would mean they will not be roles filled which will lead for the business failure when trading internationally. Social There are a lot of social factors that could impact Sports Direct for example the demographics and the skill level of the population which could mean they are more young people than older people: they are more people employable for the jobs that Sports Direct offers. The skill level of the older population would mean that Sports Direct will not be able to operate properly because they cannot do the jobs to their best of ability. What could impact Sports Direct is the education level and the education level of standard required in Sports Direct`s industries. When trading internationally you would need to consider this in order to make sure the people working for you are intelligent enough and can do their job accordingly. The beliefs and attitudes of the area (market) that Sports Direct operates in needs to shared and come to an understanding of how they should design the Retail industry to best suit. Technology Sports direct use advanced technology to keep their business operating. Sports Direct maybe impacted by online shopping in order to keep up with their competitors and using this form of technology will help them do their work fast. This will allow the customers to shop online and access the place everywhere 24/7. The advantages of using this feature is that it will be a positive impact which will allow the customers to shop online instead of going to a local shop. Online shopping will help them be more ahead in than their competitors because more customers will be able to buy and they will make huge profits from this. An advantage of having this is that Sports Direct will be operate around the world however everyone cannot access this because the business does not operate in that place which will result in loss of sales and uncertainty of where to export to and how. Legal Sports Direct when they decide to operate another country they will need to follow different laws of the country and failing to follow these laws might lead to countries not accepting deals meaning they will not be able to operate in that country. Sports Direct will need to know the different laws of the countries they operate in so that they can follow it. Laws are different in every country you go to for example in the United States paying tax is high compared to the UK. Sports Direct will need to think before

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operating in another country and it should evaluate before entering markets as it can lead to theft of the business competitive edge. Environmental Sports Direct will need to consider the environmental impact of their industries whether it causes harm to habitats and wildlife near their industries. They need to make sure that they business is environmentally friendly even when operating in another market. It is important for them to keep in mind the country`s environment and whether or not if this could affect the business. Sports Direct will need to consider the climate and the weather of the place they operate in whether or not if they business will be able to carry out their operations accordingly. The two suitable countries for Sports Direct to operate in is Japan and Turkey. Japan is a developed country whereas Turkey is developing. 1. How the changes in PESTEL factors has influenced the Opportunities and Threats business (150 words) The impact of Brexit has already affected TJ MAXX. Brexit caused prices to increase in 2017, but this did not end up hindering sales. However, the uncertainty of the pound to euro exchange rate could affect TJ MAXX in the long run. Climate change is a major issue that big corporations like TJ MAXX need to evaluate. Their process of improving their sustainable image has begun by selling and using solar panels as well as beginning to eliminate one use plastic products. They are aiming to become a fully circular business by 2030 to eliminate waste and reuse resources. The social cultural trend that could benefit TJ MAXX in the future is the increase in online shopping. TJ MAXX could use this to their advantage to push online sales to increase overall sales. The above analysis shows that instead of some weaknesses, TJ MAXX has enough strength to survive and flourish as a company. Using the strengths of unique designs and diversified products, it can successfully face the threats of the Internet and counterfeit products and use the opportunity of expanding in developing countries to improve its presence as a brand. 2. Compare and contrast the different styles of leadership. Comment if the leadership style is appropriate for the company of your choice (550 words) According to Daniel Goleman there are six styles of leadership 1. Coercive: These leaders show initiative, self-control, and drive to succeed. There is, of course, a time and a place for such leadership: a battlefield is the classic example, but any crisis will

need clear, calm, commanding leadership. This style does not, however, encourage anyone else to take the initiative, and often has a negative effect on how people feel. 2. Pace-Setting: Pace-setting leaders expect excellence and self-direction. The Pace-setter very much leads by example, but this type of leadership only works with a highly-competent and well-motivated team. It can only be sustained for a while without team members flagging. Like the Coercive leader, Pace-setters also show drive to succeed and initiative, but instead of self- control, these are coupled with conscientiousness. 3. Authoritative: Authoritative leaders move people towards a vision. These leaders are visionary and it's the most useful style when a new vision or clear direction is needed, and is most strongly positive. Authoritative leaders are high in self-confidence and empathy, acting as a change catalyst by drawing people into the vision and engaging them with the future. 4. Affiliative: An Affiliative leader values and creates emotional bonds and harmony. Such leaders demonstrate empathy, and strong communication skills, and are very good at building relationships. This style is most useful when a team has been through a difficult experience, and needs to heal rifts, or develop motivation. It is not a very goal-oriented style, so anyone using it will need to make sure others understand that the goal is team harmony, and not specific tasks. 5. Democratic: Democratic leaders build consensus through participation. Such leaders show high levels of collaboration, team leadership and strong communication skills. This style of leadership works well in developing ownership for a project, but it can make for slow progress towards goals, until a certain amount of momentum has built up. Anyone wishing to use this style will need to make sure that senior managers are signed up to the process, and understand that it may take time to develop the consensus. 6. Coaching: Coaching leaders allow people to try different approaches to problem solving and achieving a goal in an open way. The coaching leader shows high levels of empathy, self- awareness and skills in developing others. A coaching style is especially useful when an organisation values long-term staff development. The Democratic Leadership Style is best for TJ Maxx. The Democratic leadership style is part of several other leadership styles frameworks such as the Kurt Lewin Leadership styles which you can find in our leadership styles portal. It is also a style of many names, as I have seen it referred to as participative style, cooperative style, and several other names. Democratic leadership is when an empowered team of TJ Maxx takes full part in the decision-making process. Any team member can bring forward ideas and suggestions, and there is a strive for consensus

in decision making. In the end, the democratic leader approves or makes the decision. Democratic leadership is an effective leadership style but can sometimes be too slow when fast decisions are needed by TJ Maxx. It can build sizeable commitment from TJ Maxx employees and bring people together as a team with significant reductions in blame games and politics as a result. The democratic leadership style creates resonance by valuing input from everyone. This degree of participation most often leads to high commitment and engagement within the team. Shared leadership encourages employee engagement and inputs, two things necessary for improving employee morale and performance. Employees are more likely to be happier when they know their opinions matter and more likely to go above and beyond. Leaders are free to consult anyone and everyone. When inputs come from frontline employees, seniors have a better chance of making the correct decisions. This increases the likelihood that democratic leaders can make decisions that benefit as many people as possible. Since employees will work together on a specific task, they will spend a lot of time making a stronger team. They will understand the importance of teamwork and garner trust and admiration with mutual respect. This further implies that democratic leaders are not biased and show no signs of favoritism. Choices are made based on the best results delivered. When there is democratic leadership in place, the entire staff shows active commitment. In addition, these leaders share the progress, vision, mission, and objective of every company member. Hence, every staff member is aware of the company’s vision and progress, and they know where their ideas are shared. 3. Critically comment on their Corporate Social Responsibilities in the processes using evidence from your research Sports Direct has a CSR framework that focuses on five key areas i.e. Health and Safety, People, Environment, Community and Customers. CSR initiatives of Sports Direct monitored using KPIs ensure its performance. However, this report will discuss the CSR trends in sports industry using literature review and evaluate the changes required by the selected organization. The report will offer practical implications and future directions related to sports industry particularly focusing Sports Direct. For Sports Direct sustainability initiatives can be diverse, however, limiting the company’s current objectives to start with a single dimension, sustainability effort recommendation is to partnering with other sports organizing companies and organizations for either launching a self-administered charity program or events to showcase the CSR and sustainability efforts. Therefore, the initiative selection includes collaboration of sports business and CSR objectives as:  Partnering with the Sports event organizations to sell products similar to Adidas (discussed in the examples above)  Organizing a sports based program aimed at funding for sports related and healthy life style adaptation in under-privileged or young people 3.2 Interest in CSR initiatives

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The interest in the CSR initiatives of Sports Direct relies on the development and growth of company in following areas:  The company can achieve profit maximization as the increase in CSR objectives will increase company’s repute attracting more customers, stakeholders and other media attention  This also builds a positive image of company across globe  In future, the CSR initiative may open doors for business and product expansion (Sheth, and Babiak, 2010) 3.3 Benefits of CSR Initiatives The benefits of CSR initiatives for collaborating sports business and CSR objectives are wide ranging. For example, sports have unique features and the business has global impacts. Thus, the advantages can be as following: 1. Sports are a globally renowned business and attract large number of global customers. The company’s objective for participating in sports event or collaborating with sports events for football, cricket and other international events can increase. With the help of athlete (as brand ambassador) of sports directed CSR program, Sports Direct can attain the attention of media and global customers. In return, the company will see a huge increase in sales as a evident profit maximization on basis of CSR 2. Sports are appealing to the young and fitness enthusiastic customers. The partnering of Sports Direct with other sports related events and programs as CSR objective will allow to increase the market base and the company will be successful in communicating its good citizenship, encouraging healthy life style and co-operation skills. 3. Sports initiated CSR objectives are ideal tool for creating a huge business impact. Thus, partnering with sports event organizers can build a strong and long term positive image of Sports Direct fighting against inactivity. 4. With improved social image, the companies also gets the benefits of increased social interaction. Thus, the CSR based Sports Program and objectives of Sports Direct can enhance the participation of company in social events, for social cause and stimulates social cohesion 5. In times of big events, such as FIFA World Cup or Olympics, the company will get the benefit of product selling customized for events, promoting sustainability and environmental awareness. For sports direct, partnering with big event organizers can help clarifying its social responsible behavior in front of existing customers and in emerging markets, whereas provides opportunity to raise awareness. 6. Another CSR benefit is the diversity based promotions. In this area, the company may get an opportunity to identify itself as a social, diversified and understanding towards cultural diversities and social needs of societies. 7. In addition to raising environmental and social awareness, the company may get the gratification benefit, satisfaction and business related fun events promoting responsible behavior and increasing sales.

Conclusion Customer needs are changing frequently based on social and cultural factors. SportsDirect must research on the customer needs and satisfy them to avoid switching. If the product demand is more, the consumer bargaining power will be less, and hence the marketing decisions will not be affected. However, on the other hand, if the product demand is less, consumers will not able to pay a high price and pricing strategy should be changed. Consumer buying behaviour will influence the marketing decisions of the organization. The entry of new products to replace the existing one and the entry of new competitors must also be continuously monitored. These products can influence the marketing decision-making process. Reference

COB S3

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