Analysis of External and Internal Competencies of JD.com

This report analyzes the external and internal competencies of JD.com and proposes new strategies for its growth and development. It includes an assessment of current strategies, a road map for implementation, and recommendations for improvement.

Running head: MANAGEMENT
Management
Name of the student
Name of the university
Author’s note

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Table of Contents
1. Executive Summary...............................................................................................................2
2. Current strategies assessment.................................................................................................2
3. New strategies........................................................................................................................6
3.1 Road map..........................................................................................................................7
3.1.1 Vision............................................................................................................................7
3.1.2 Mission..........................................................................................................................8
3.1.3 Objectives......................................................................................................................8
3.1.4 Value creation................................................................................................................8
3.1.5 Target segment..............................................................................................................8
3.1.6 Privacy, ethical and legal issues....................................................................................8
3.1.7 External partners............................................................................................................9
3.1.8 Organisational model.....................................................................................................9
3.1.9 Revenue and cost model................................................................................................9
3.1.10 Strategy alignment.......................................................................................................9
3.1.11 Recommendation.......................................................................................................10
4. Bibliography.........................................................................................................................12

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1. Executive Summary
The report analysis the external and internal competencies of a market and the manner
in which a company like JD.com can continue to expand and develop its competencies in the
market. An analysis of the PESTEL, five forces and the core competencies of the company is
undertaken so that an understanding of the position of the company can be made. The manner
in which development of new strategies can help JD.com is analysed and proposed in the
research. Description of the new strategy that is the cost leadership strategy is provided along
with a road map depicting the specifics required for the changes. At the same time, a business
canvas model is developed that highlights the key areas of the business. Smart
recommendations are provided which highlights the changes required within 6 months.
2. Current strategies assessment
The analysis of the external and internal capabilities of JD.com can be because the
company had been doing reasonable well in its external as well as internal environment. For
example, from the analysis of the PESTEL it can be seen that JD.com from the point of view
of the political forces, the Government of China had supported the development and
promotion of e-commerce sites in the country. Therefore, as stated by Prajogo (2016) it can
be said that the Chinese Government provides excellent support to the people capable of
forming business ideas that can help in the economic growth of the country. It is for this
reason that China is considered as one of the world’s largest economy.
At the same time, it is seen that the economic condition of the country is stable and
thus JD.com can continue to remain innovative in the country and ensure that the
development of e-commerce can help in changing the condition of the people. As observed
by Yeoh and Popovič (2016) it is to be noted that the encouragement from the Government

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and the ability to develop businesses are the main reason for the high development of China
in the economic scale.
In terms of social factors, the focus is on the development of changes within the
society. According to Ifinedo, Pyke and Anwar (2018), in the case of China, it has been seen
that the people are advanced and have a keen sense of providing support to the business
environment that exists. At the same time, it is also seen that the rise of the internet have
made the people of the country to be able to increase the rate of internet usage. Grant (2016)
has also seen it that in 2016, the rate of interest use in China has increased and thus, it shows
the development of the society and the manner in which the e-commerce business of JD.com
can gain benefit.
Therefore, it can be said that the technological development of the country can affect
the development of China as a country and it is for this reason that the country is regarded as
one of the most updated nations. According to Ratten, Ferreira and Fernandes (2017), the use
of internet can be considered as the reason behind the development of JD.com and thus the e-
commerce section in the department can be considered as one of the effective functional area
at the organisation. Hence, it can be said that the development of technology is one of the
most important factors that help in the growth and development of JD.com in the competitive
business market of China.
The assessment of the legal factors in China sheds light on the fact that for the success
of JD.com, express licensing has been a major factor for the success of the company. Ansoff
et al. (2018) pointed out this sheds light to the fact that the support from the legal
departments along with its Government is the key reason for the development of JD.com. The
enhanced opportunities received from each of legal departments ensure that JD manages to
compete in the delivery of markets by using logistics. At the same time, Noe et al. (2017)

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stated that the company maintains the environmental sustainability, as in the modern world it
is considered as an important success factor, also. From the case study and the analysis of the
environmental prowess of the company, it is seen that JD.com supports the low cost in
logistics and supply chain. Thus, a succinct overview of the company can be stated as JD.com
can witness exceptional growth in the market is required for the mitigating the treat in the
business.
From the analysis of the five-forces, it can be seen that the impact of the external
factors such as that of the bargaining power of the customers, the threat of substitutes and the
competitive rivalry are usually high. According to David and David (2016), this can be
justified from the case study by the fact that in the modern world, most companies are willing
to undertake online marketing as a part of the strategic approach so that more customer
support can be gained. As observed by Wheelen et al. (2017) this provides a high treat mainly
because the customers have a tendency to switch to other companies in an easy manner.
The intensity of the competitive rivalry is high due to the existence of major
competitors. It is for this reason that the threat received from the competitors is high. Beck et
al. (2017) is of the opinion that Competitor Company such as Alibaba is considered as one of
the most threatening companies in the market mainly because of the international popularity
it has and the manner in which it can inspire the growth of opportunities in business.
From the high competitors, analysis can be made about the low competitors in the
market. It has been seen that the bargaining power of suppliers as well as the threat of new
entrants are low among the markets of JD.com. As observed by Tapscott and Tapscott (2016)
this is mainly because the company offers opportunities to the customers to purchase
different brands of the companies that can also sell the similar products.

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Therefore, as a succinct overview it can be said that for JD.com to ensure that
suppliers are not limited or exclusive for the development of the products that are sold. As
observed by Nowiński and Kozma (2017) the threat of new entrants is considered as low
mainly because the delivery standards in the industry are high. Along with this, from the case
study it has been seen that JD.com had introduced a new cross border across the world.
Hence, it can be said that for JD.com to continue with the analysis of the external factors,
considerations about these externalities need to be maintained.
The analysis of the core competencies point to the internal strengths that JD.com
possess and the manner in which it can be used to develop its internal strength in the
business. One of the core competencies that have been seen from JD.com is the fact that the
company is a fast product delivery entity. Barr (2016) is of the opinion that customers does
not have any such grudge against JD.com in terms of the delivery of service receives. In fact,
as observed by Harper, Harper and Snowden (2017) the company is considered is said to
improve the level of customer experience than its competitors. Hence, it can be said that for
JD.com to improve its position in the market, it needs to ensure that development of the
company takes place in terms of its product delivery system.
Along with this, another important competency that is identified from the analysis is
the fact that JD.com is a huge investor in its supply chain management. Baland, Bardhan and
Bowles (2018) observed that the high investment in the supply chain management provides
the company with opportunities to gain advantage over the competitors. In this regard, it can
be said that such a process can be considered as a way to mitigate the threat from the existing
competitors along with the possible new entrants in the market. Therefore, it can be said that
for the development of the company, the investment in the supply chain can mitigate any
form of threats that are received from the suppliers.

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3. New strategies
In order to ensure that new strategies are formed, it is necessary that JD.com
undertake an analysis of its competencies and use it to identify the elements that can help in
the development of its business. However, Noe et al. (2017) the application of e-business
strategies needs to be undertaken so that the application of the new strategies can be formed
and implemented at the organisation. To do so, it is necessary that the company formulate a
road map so that specific elements can be pointed out to apply the strategies. Barr (2016) is of
the opinion that the new strategy that can be adopted by the company includes developing a
cost leadership strategy that can help in its growth in the business.
The cost leadership strategy helps in establishing competitive advantage by lowering
the cost of operation in industry. According to Beck et al. (2017), the importance of cost
leadership is that a company can improve its efficiency and the cumulative experience. As
stated by David and David (2016) the aim of the cost leadership strategy is to exploit the
scale of production so that a well-defined economic strategy can be maintained with the use
of advanced technology in the market. Hence, it can be said that the application of cost
leadership can help JD.com to continue its operations in the business.
It can also be said that JD.com can develop a business model canvas that can help the
company to identify and link different elements of the business block. As stated by Nguyen,
Newby and Macaulay (2015) the building blocks of the business model canvas can help
JD.com to identify specific areas in which the company can improve upon its competency
and ensure that it can assist the customers in remaining satisfied with the services provided
by the company.

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The vision of JD.com
is to become a
trustworthy company
The objective of JD.com
is to become a cost
leader by ensuring price
management
The value offered
includes development of
a commercial service
that can assist customers
24x7
The target customers
are people of all
income scale. Value
proposition is in terms
of providing proper
service
Issues related to cyber
threats need to be a
cause of concern
Partners like Tencent
and alliance with
Walmart need to be
maintained
The e-strategy helps in
complementing the
physical strategy by
linking with the
organisational
objectives
The mission of JD.com
is to become number
one
Revenue is generated
from services
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3.1 Road map
An analysis of the road map of JD.com is provided that helps in identifying the
specific and key areas of the business.
Figure: Road map
(Source: Created by author)
3.1.1 Vision
Vision is to become a trustworthy company. It can help JD.com to develop its
competency in the market by ensuring that every customer in the market trusts the products
and services of the company. It can help the company to identify the manner in which
customer satisfaction can be gained so that development of the company can take place in the
Chinese market.

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3.1.2 Mission
Mission is to ensure that it becomes the number one company in the country. This can
help it to keep out any type of competition and ensure that JD.com remains as the best
company in the Chinese market. Developing the mission can help in the development of the
objectives as well as the vision of the company. Thus, the mission can be considered as
important for the development of JD.com
3.1.3 Objectives
The objective is to become a cost leader by ensuring that the price management takes
place in a proper manner. This can help in the implementation of the new plans and strategies
so that JD.com can ensure that the Chinese market can understand the effectiveness of the
services provided. The objectives are aligned with the mission and vision of the company.
3.1.4 Value creation
The value is created by developing commercial service that can provide customers
with 24x7 delivery system. This can guarantee the company for gaining success and ensure
that JD.com manage to stay in connection with the customers at a regular interval. The
manner in which this can be done is based on the revenue generated by the company.
3.1.5 Target segment
People of all income level are targeted. Value is provided in terms of proper services.
The reason for targeting every customer is that JD.com can ensure that the probability of
success increases. The Chinese people can understand the requirements of every people and
provide them the services that are necessary so that success rate of the company can improve.
3.1.6 Privacy, ethical and legal issues
Privacy and ethical issues can be related with the cyber crimes that are developed in
the modern world. The cyber crimes related to the company can affect its services and

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processes. Ethical issues such as racism or disability of the people need to be kept away from
the organisation, so that success can be maintained. Legal practises in terms of maintaining
trade can help in maintaining proper services in the industry.
3.1.7 External partners
In order to survive in the competitive market, JD.com needs to be involved with other
organisations. Tencent and Walmart are the key partners of the company. It can help in the
development of the company and ensure that JD.com becomes the leading service provider in
the country by maintaining proper partnership between the reputed organisations in the
world.
3.1.8 Organisational model
The organisational model is a flat structure wherein line managers are the supervisors.
In JD.com, it is the responsibility of the employees to continue with the domination in the
market by taking responsibility related to its manufacturing and services. Line managers
merely help in addressing the orders but the employees take the ultimate decision of going
with the flow of the orders.
3.1.9 Revenue and cost model
The revenue and cost model is developed from the services that are provided and the
rivalry among the competing markets. Revenue is collected from the profit earned and is used
for the development of the organisation. Cost model such as price bundling is sometimes
provided that can help in improving the reputation of JD.com to the Chinese customers.
3.1.10 Strategy alignment
It helps in complementing the physical strategy with the objectives of the
organisation. Alignment is made between the organisational objectives and the strategies so

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that JD.com can complement develop into an effective organisation in the Chinese market as
well as in the world.
3.1.11 Recommendation
Based on the analysis of the position of the company and the analysis of the new
strategy, recommendations can be provided that can help JD.com to continue with the
business process that can help in the development of the company in China. At the same time,
these recommendations can help JD.com to mitigate the threats it possess in the business. The
recommendations are provided in a specific manner.
Specific Develop strong partnership
Measurable Can be measured in terms of growth attained in the business
Achievable Can be achieved with the help of the core competencies in business
Realistic Is realistic since partnership usually helps companies to improve its business
process
Timeline Within the next 2 months
Table 1: Recommendation #1
(Source: Created by author)
Specific Maintain cost leadership strategy
Measurable Can be measured based on the growth of the business and the prices
Achievable Achievable since it helps in managing the cost of the products before its
delivery
Realistic Can be realistic since cost leadership is considered as an important strategic
management of a company
Timeline Within the next 2 months
Table 2: Recommendation #2

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(Source: Created by author)
Specific Expansion of the product line
Measurable Measurable in terms of amount of success in terms of selling the products
Achievable Achievable as it provides assistance to expand the market
Realistic Realistic since an expansion of product line can help in reaching out to various
customers
Timeline Within the next 2 months
Table 3: Recommendation #3
(Source: Created by author)
Octobe
r
Septembe
r
Augus
t
JulyJuneMayActivities
Develop strong
partnership
Maintain cost
leadership strategy
Expansion of the
product line
Table 4: Time line
(Source: Created by author)

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4. Bibliography
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strategic management. Springer.
Baland, J.M., Bardhan, P. and Bowles, S. eds., 2018. Inequality, cooperation, and
environmental sustainability. Princeton University Press.
Barr, S., 2016. Environment and society: Sustainability, policy and the citizen. Routledge.
Beck, R., Avital, M., Rossi, M. and Thatcher, J.B., 2017. Blockchain technology in business
and information systems research.
Bocken, N.M., de Pauw, I., Bakker, C. and van der Grinten, B., 2016. Product design and
business model strategies for a circular economy. Journal of Industrial and Production
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David, F.R. and David, F.R., 2016. Strategic management: A competitive advantage
approach, concepts and cases. Pearson.
Gilpin, R., 2016. The political economy of international relations. Princeton University Press.
Grant, R.M., 2016. Contemporary strategy analysis: Text and cases edition. John Wiley &
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Harper, C., Harper, C.L. and Snowden, M., 2017. Environment and society: Human
perspectives on environmental issues. Routledge.
Hull, G., 2017. A treatise on political economy. Routledge.

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Ifinedo, P., Pyke, J. and Anwar, A., 2018. Business undergraduates’ perceived use outcomes
of Moodle in a blended learning environment: The roles of usability factors and external
support. Telematics and Informatics, 35(1), pp.93-102.
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Nguyen, T.H., Newby, M. and Macaulay, M.J., 2015. Information technology adoption in
small business: Confirmation of a proposed framework. Journal of Small Business
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Noe, R.A., Hollenbeck, J.R., Gerhart, B. and Wright, P.M., 2017. Human resource
management: Gaining a competitive advantage. New York, NY: McGraw-Hill Education.
Nowiński, W. and Kozma, M., 2017. How can blockchain technology disrupt the existing
business models?. Entrepreneurial Business and Economics Review, 5(3), pp.173-188.
Prajogo, D.I., 2016. The strategic fit between innovation strategies and business environment
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Tapscott, D. and Tapscott, A., 2016. Blockchain revolution: how the technology behind
bitcoin is changing money, business, and the world. Penguin.

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Wheelen, T.L., Hunger, J.D., Hoffman, A.N. and Bamford, C.E., 2017. Strategic
management and business policy (p. 55). Boston: pearson.
Yeoh, W. and Popovič, A., 2016. Extending the understanding of critical success factors for
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