Using a SWOT Analysis, the Consultant examined Sports Direct business to identify all potential threats and underlying weaknesses as well as present an overview of its existing or anticipated opportunities and strength. The results, as represented in a visual presentation below, aim at aiding the Board of Directors in achieving competitive advantage by maximizing opportunities and strengths while eliminating or reducing impacts from its weaknesses and potential threats.
Figure 1: SWOT Analysis of Sports Direct
Source: The Author (2018)
Results of the SWOT Analysis show that Sports Direct has great visibility across Europe and the UK. The company’s team of quality staff totalling about 270,000 plus over 730 retail outlets highlight a strong revenue base which it requires for expansion and corporate responsibility engagements. Its recently completed Shirebrook campus site on a 700,000 sq. ft. land provides enough space for additional office buildings and warehouse. The company in 2016 acquired 50% stake in Hearthrone Irish Business to improved existing growth opportunities in Ireland. In addition, increased investment in R&D significantly raised earnings by 2% whereas an updated website boosted online sales thus granting the company an edge against competitors since 2016.
As shown in the presentation above, Sports Direct also has some weaknesses which hamper productivity and sustainability. Reduction in profit after tax and earnings per share for the fiscal year 2016 are evidence that a change of business strategy is important. This corrective step should hinge on restructuring the existing management-staff relationship, improving working conditions and adopting transparent procedures in scheduling tasks. In addition, lack of investments in staff training was responsible for the 22 percent-decrease in staff turnover recorded in 2016. These setbacks call for urgent attention to provide Sports Direct with competitive advantage.
Some of the opportunities identified by the Consultant are: a growing demand for Sports Direct products; an increased interest in sportswear around the globe; the availability of wide-ranged products in one-stop shops, and the existence of attractive markets for investors. The company also has a chance to maximize current technological developments for increased marketing and sales. These areas can be exploited to achieve sustainable growth against competitors. However, a list of threats was also identified alongside the opportunities. Sports Direct is facing pressure from contenders in the market to restructure its pricing strategy which, in turn, results to decreased profit margins. Payment of high taxes to governmental/market regulators within and outside the UK also hampers growth. Also, the company runs a risk of defaults from customers who purchase goods on credits. The volume of sales and profit margin largely depends on a fluctuating exchange rate, and this can either benefit the company or threaten its visibility on the global stage. Above all, Sports Direct functions under agreement with big brands like Adidas and Nike, among others, therefore in an event of bankruptcy, the company could face unfavourable decisions from its suppliers.