Porter 5 Forces FTSE 250 Assignment
Porter’s 5 Forces in relation to JD Sports
Bargaining power of suppliers
The products offered by JD Sports range from a number of different established brands that give JD Sports a strong relationship with suppliers in terms of bargaining power. This is represented by the fact that JD stores supply a wide range of competitively priced sports and leisure clothing, footwear and accessories under a mix of brands (JD Annual Report and Accounts, 2014) Therefore using a wide range of suppliers makes it easy for JD to choose between the prices and products offered, making the bargaining power of suppliers low and the bargaining power of JD Sports much higher. This is also reflected by the fact that JD Sports also state they acquire brands and retailers in which JD themselves can further develop and therefore exploit in order to ensure that their overall product offers remain uniquely appealing to the customer but also to JD Sports (JD Annual Report and Accounts, 2014).
Bargaining power of customers/buyers
Bargaining power of customers is gradually becoming lower as JD states that more and more people are now coming in for their products, they have got more exclusives and differentiation and also less competition (Butler, 2014). However when it comes to some of the products brands sold by JD Sports, the bargaining power of customers could still be high because these products are homogeneous and also sold in the respective brand outlets both in stores or online i.e. Adidas or Nike for example.
Threat of entry of new competitors
Although JD Sports enjoys economies of scale (Butler, 2014), still there is space for new competition as the set up cost doesn’t involve specialised technology or large infrastructure and distribution channels are easily accessible all of which means low costs of entry into the market and subsequently a moderate threat of new entrants.
Threat of substitute products
Threat of substitute products is low in terms of sports equipment because although
Bargaining power of suppliers
The products offered by JD Sports range from a number of different established brands that give JD Sports a strong relationship with suppliers in terms of bargaining power. This is represented by the fact that JD stores supply a wide range of competitively priced sports and leisure clothing, footwear and accessories under a mix of brands (JD Annual Report and Accounts, 2014) Therefore using a wide range of suppliers makes it easy for JD to choose between the prices and products offered, making the bargaining power of suppliers low and the bargaining power of JD Sports much higher. This is also reflected by the fact that JD Sports also state they acquire brands and retailers in which JD themselves can further develop and therefore exploit in order to ensure that their overall product offers remain uniquely appealing to the customer but also to JD Sports (JD Annual Report and Accounts, 2014).
Bargaining power of customers/buyers
Bargaining power of customers is gradually becoming lower as JD states that more and more people are now coming in for their products, they have got more exclusives and differentiation and also less competition (Butler, 2014). However when it comes to some of the products brands sold by JD Sports, the bargaining power of customers could still be high because these products are homogeneous and also sold in the respective brand outlets both in stores or online i.e. Adidas or Nike for example.
Threat of entry of new competitors
Although JD Sports enjoys economies of scale (Butler, 2014), still there is space for new competition as the set up cost doesn’t involve specialised technology or large infrastructure and distribution channels are easily accessible all of which means low costs of entry into the market and subsequently a moderate threat of new entrants.
Threat of substitute products
Threat of substitute products is low in terms of sports equipment because although
References: Butler. S. (2014) JD Sports plans overseas expansion after doubling profits for second year. The Guardian, 17 September, 18. JD Sports Fashion Plc (2014). Annual Report and Accounts. JD Sports Fashion Plc, Bury. Rothaermel, F.T. (2013) Strategic Management: concepts and cases. McGraw-Hill, New York. Ryan. J (2012). There is more to success than just getting bigger: JD Sports shows what is possible. Available at: http://www.retail-week.com/stores/comment-jd-sports-marathon-runner/5042006.article Accessed 29/11/2014 - 12.00.