D1 SWOT Analysis
A SWOT analysis is a strategic planning tool used to understand a business's current situation. The process includes identifying internal strengths and weaknesses and external opportunities and threats and analysing the impact of each. This tool can be used to facilitate discussion between managers when making strategic decisions.
Strengths are the characteristics of a business that give it an advantage over competitors. Strengths are internal which means the business has some control of them. For example, high morale amongst staff is a strength due to the impact on productivity. The business has control over this as strategies can be put in place by leadership to improve morale.
Weaknesses are the characteristics of a business that give them a disadvantage compared to competitors. Weaknesses are internal which means that the business has some control over them. For example, low morale amongst staff is a weakness due to its impact on productivity. The business has control over this as strategies can be put in place by leadership to improve morale.
Examples of strengths and weaknesses include;
brand image
staff morale
productivity
efficiency
quality
assets
liabilities.
Opportunities are features of the external environment that the business can exploit for it’s benefit. Opportunities are external so the business has no control of their existence but should respond to. For example, a rise in incomes in the economy is an opportunity as spending may increase. Businesses do not control over incomes rising but can respond with their strategic decisions. A business may exploit this by launching a luxury product range at higher prices.
Threats are features in the external environment that can have a negative impact on the business. Threats are external so the business has no control over their existence but should respond to them. For example, a fall in incomes in the economy is a threat as spending may decrease. Businesses do not control whether incomes fall but should respond to this happening. A business may reduce production to avoid wasting unsold stock or launch an economy version of their products.
Examples of opportunities and threats include;
trends
competitor behavior
education and skills in economy
technological changes
GDP, exchange rates, government regulation and support
press and pressure group interest.
SWOT Analysis for Sports Direct
Sports Direct is a chain of sports stores that operate as part of the Frasers Group. Sports Direct was founded in 1982 by Mike Astley by the opening of a sport and ski store in Maidenhead. There are currently 486 Sports Direct stores in the UK. Sports Direct grew rapidly through takeovers of struggling sports brands such as Dunlop, Slazenger and Karrimor.
This SWOT analysis outlines the current position of Sports Direct in September 2022 in terms of strengths, weaknesses, opportunities and threats.
Strengths
Sports Direct has a wide distribution network. There are currently 486 stores in 386 cities (Scrapehero). This is in addition to an extensive online store. A wide distribution network creates convenience for customers. Saving time and money is a high motivational factor when making a purchase. Creating convenience is likely to lead to higher sales and revenue. In 2021, Sports Direct’s revenue was £3,625.3m (Tighe).
Weaknesses
Sports Direct has been exposed for unfair working practices such as wages below minimum wage and unfair dismissal. This has led to weak customer rankings by stakeholders and customers. In a survey, only 12% of customers stated they would purchase goods from brands with an average or low score (Hobbs). If the reputation damage is not addressed in a way that satisfies stakeholders, customers may switch to rival brands such as JD Sports.
Opportunities
Interest in womens and girls football is rapidly increasing. The UEFA 2022 womens final attracted 17.4m TV viewers, making it the most viewed TV of the year (Sweney). The Football Association is also aiming to have an extra 120,000 women and girls playing football by the end of 2022 (Braidwood). This trend is likely to have a positive impact on sales for sports stores as demand for clothing and equipment targeted at female football fans and players is likely to increase. Sports Direct have launched an ‘Equal Access’ campaign donating footballs to grassroots clubs.
Threats
The consumer price index rose by 8.6% from August 2021 to August 2022 (Gooding). Rising prices increase household spending on essential items and reduce disposable income which could lead to reduced spending on non essential items such as leisurewear. Rising prices also increase business costs. The CEO at Sports Direct has announced that their suppliers are increasing their prices (Simpson). These prices will in turn need to passed onto customer in order for the firm to maintain their profit margins.
Reference List
Braidwood, Ella. ‘Really Heartwarming’: how Euro 2022 started a girls’ football revolution https://www.theguardian.com/football/2022/aug/17/how-euro-2022-started-girls-football-revolution-manchester-united
Frith, Wilf. Sports Direct to Donate Free Footballs for ‘Equal Access’ Campaign. https://shekicks.net/sports-direct-to-donate-free-footballs-for-equal-access-campaign/
Gooding, Philip. Consumer Price Inflation; UK: August 2022. https://www.ons.gov.uk/economy/inflationandpriceindices/bulletins/consumerpriceinflation/august2022
Hobbs, Thomas. Scandal takes its toll on Sports Direct as it suffers ‘weak’ brand reputation https://www.marketingweek.com/sports-direct-has-a-weak-brand-reputation-that-puts-its-sales-at-risk/
Scrapehero. https://www.scrapehero.com/location-reports/Sports%20Direct-UK/
Simpson, Emma. Sports Direct: New Boss Michael Murray Warns of Price Rises. https://www.bbc.com/news/business-61319871
Sweney, Mark. England’s Euros Triumph Draws Record TV Audience of 17m. https://www.theguardian.com/football/2022/aug/01/england-victory-in-womens-euro-2022-final-draws-record-tv-audience-of-17m
Tighe, D. https://www.statista.com/statistics/439648/sports-direct-revenue/