JD.com: Leveraging the Edge of E-Business - Strategic Analysis

This report provides a strategic analysis of JD.com, focusing on the case study 'JD.com: Leveraging the Edge of E-Business'. It includes PESTLE analysis, Porter's five forces analysis, core competencies, and strategy recommendations.

Management
4/6/2019

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Contents
Introduction......................................................................................................................................2
Pestle analysis..................................................................................................................................3
Political factors............................................................................................................................3
Economic factors.........................................................................................................................3
Social factors...............................................................................................................................4
Technological factors...................................................................................................................4
Legal factors................................................................................................................................4
Environmental factors..................................................................................................................4
Porter’s five forces...........................................................................................................................5
Core Competencies..........................................................................................................................6
Strategy recommendation................................................................................................................6
Conclusion.......................................................................................................................................8
References........................................................................................................................................9

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Introduction
The aim of the report is to present the supplied case study by making the use of the three
analytical approaches that include PESTLE, Porter’s five forces, and Core Competencies. The
case study that is considered while preparing the report is “JD.com: leveraging the edge of e-
business”. The report include the strategic analysis of the organisation with the motive to identify
the changes related to strategic that remain effective as well as beneficial for the company.
Further, in addition to this, the strategies are proposed for establishing a strong position in the
near future.

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Pestle analysis
PESTLE analysis is a framework or tool that is majorly used with the motive to analyse or
monitor the factors that can affect the working of the company in the market (Baker, 2014). The
company JD.com make use of this tool and the analysis of it has been given below -
Political factors
The political factors include change in rules and regulations of the government that affects the
business. In the present years, the Chinese government has brought the promoting as well as the
encouraging factors that bring the development as well as improvement in e-commerce. These
supporting policies include Administrative measure of online trading, Notices majorly on the tax
policies for cross-border retail export in the segment of e-commerce, different provision on the
procedures for the formulating transaction rules of third-party online retail platforms and many
others. These policies will support the business of e-commerce and bring the new opportunities
as well as threat in the form of expansion and competitors respectively in the market.
Economic factors
The economic factors include the impact of macro and microelements on JD in the Chinese
market. In the case study, this is clear that retailers and consumers are engaging in online trading.
In 2014, the country was largest market in B2C and C2C with the sales of US $458bn that
effectively contributed approx. 19.4% of GDP growth and 33.5% of total growth in terms of
retail (Chan, Huanyong Chen and Zhao, 2018). This shows that the company has an opportunity,
as not only it contributes in GDP but also enhance development in country.

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Social factors
Social factors focus on changes in preferences and choices of customers present in market. In the
case study, this has been found that there are major changes in the people’s purchasing habit with
the rise in use of internet. In June 2016, the people-using internet in China touches 710 million
that is 51.7 per cent of the country’s population (Chan, Huanyong Chen and Zhao, 2018). This
number will increase which shows the opportunities for company in China market. The company
is grabbing opportunity as it provides delivery in 3 hours after online purchase.
Technological factors
The rise in use of updated technology is affecting the company in China market. JD is forming a
reliable as well as scalable platform with the motive to offer the value-added technology services
to customers. This improved the customer account in 2011 that is clear as the number had
reached to 227million in 2016 and with this company is able to achieve an effective position in
entire market (Chan, Huanyong Chen and Zhao, 2018).
Legal factors
The legal rules and regulation are followed by JD which has been found in case study, that JD
has obtained an express license to offer similar sort of services from diverse companies. This
enhances opportunity for JD, as they are able to compete in delivery market with logistics
services.
Environmental factors
It is the obligation of company to maintain the sustainable environment obligations. In 2017, JD
is considered as new subsidiary business group, which was formed to support the lower costs in

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logistics and supply chain. This effectively contributes in improving the efficiency and customer
experience.
Porter’s five forces
Porter’s five forces is majorly a tool that contributes in analysing the completion present in the
market (Chernev, 2018). The analysis of competition faced by JD.com is analysed below -
Factors Description
Bargaining power of
customers - High
The bargaining of the customers is high because the emergence of
online business has brought many players in the market due to
which the customers can easily switch to the other company (JD,
2019).
Bargaining power of
Suppliers - Low
The bargaining power of the suppliers is generally low in the
market. JD is open for the different brands, franchises, retailers,
traders as well as the other companies who can offer the products.
These are considered as the direct suppliers from where the
customers can directly order and get the product.
Threat of Substitute –
High
JD found high threat of substitute in the market because different
services are provided by various companies in the market that
affect the operations of company.
Threat of New entrants-
Less
In the case study, this has been said that JD has less threat of new
entrants. The raising of the delivery standards in the industry of e-
commerce is one of major reason. In the month of April 2015, JD
introduced platform of new cross border across the world (Chan,

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Huanyong Chen and Zhao, 2018).
Competitive Rivalry –
High
The competitive rivalry is intense in the market due to which the
major competitors of the company include Tencent, Baidu and
Alibaba and many others (Chan, Huanyong Chen and Zhao, 2018).
The rise in the e-commerce market has improved the availability
of companies.
Core Competencies
The core competencies that are maintained by the company in the market include -
 JD was able to offer the products to customers in faster and effective manner that
improve the customer experience than the competitors.
 JD has invested the millions in supply chain that offer them an advantage towards their
competitors (JD, 2019).
 The company major core competency is that it makes use of diversification strategy by
offering finance and logistics services.
 JD has brought the night delivery service, which give opportunity to customer buy
product before 3 p.m. and get the same in next 4 hours.
Strategy recommendation
 JD need strong partnership for its business operations

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 It is recommended to the company to implement the cost leadership strategy that will
help them to offer the products at low cost in the market and to take the advantage of
increasing the business opportunities (Grant, 2016).
 It is recommended to company to expand the product line in different areas of the world.

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Conclusion
In the end, this can be concluded that the JD has vast opportunity, threat, and risk in the market
where they are performing their business operations. The analysis of the same has been done
with the use of effective marketing concepts.

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References
Baker, M. J. (2014) Marketing strategy and management. London: Palgrave Macmillan.
Chan, A.K., Huanyong Chen, C. and Zhao, L. (2018) JD. com: leveraging the edge of e-
business. Emerald Emerging Markets Case Studies, 8(3), pp.1-30.
Chernev, A. (2018) Strategic marketing management. Chicago:Cerebellum Press.
Grant, R.M. (2016) Contemporary strategy analysis: Text and cases edition. New Jersey: John
Wiley & Sons.
JD (2019) How To Partner With JD.com [Online]. Available from:
https://corporate.jd.com/forPartners [Accessed on 6th April 2019]
JD (2019) Sustainability [Online]. Available from: https://corporate.jd.com/sustainability
[Accessed on 6th April 2019]