Analysis of Competencies and Strategies for JD.com

This report analyzes the external and internal competencies of JD.com and suggests new strategies for its development in the competitive business market. It includes PESTEL analysis, Porter's five forces analysis, and an assessment of core competencies. The report recommends implementing a cost leadership strategy to maintain competitiveness. A road map and business canvas model are provided for strategy implementation.

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

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Executive Summary
The analysis of the report is on the external and internal competencies that exist in a market
so that a company like JD.com can expand as well as develop the competencies in a
competitive business market. PESTEL analysis, Porter’s five forces analysis along with the
core competencies of JD.com is undertaken to understand the position it has in the markets of
China. The development of new strategies can assist JD.com in maintaining its competency
in the business. Cost leadership strategy is considered as the new business strategy that can
help assist the development of JD.com. The report provides a road map that depicts specific
requirements for the implementation of the strategies. A business canvas model is also
provided which helps to highlights the key developmental areas of the business.
Recommendations are suggested that contributes for the changes that are required by JD.com
within 6 months.

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Table of Contents
Current strategies assessment.....................................................................................................3
Analysis of PESTEL...............................................................................................................3
Analysis of Porter’s five-forces..............................................................................................5
Analysis of the core competencies.........................................................................................6
New strategies............................................................................................................................8
Recommendation......................................................................................................................11
Reference..................................................................................................................................13

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Current strategies assessment
Analysis of PESTEL
The external and internal capabilities of JD.com can be analysed as the company had
been reasonable in terms of dealing with its external and internal problems in the business
environment. An analysis of the external environment can be in the form of PESTEL, which
provides evidence about the fact that JD.com gain support from the Government. As stated by
Carley and Christie (2017) this can be considered as an advantage from the point of view of
the political forces, as the Government of China does not interfere in the management of the
development and promotion of e-commerce sites in the country. Therefore, in the words of
Sachs (2015) it has been seen that the support of the Chinese Government can provide
freedom in continuing with the formation of business ideas so that it can help in the economic
growth of the country. Hence, China is considered as one of the world’s largest economy in
the world.
Along with this, the economic condition of China is stable and for JD.com, it can help
with the continuation of its innovative practises in the country to ensure the development of
e-commerce so that changes can be made in the living condition of the people. In this regard,
observation of by Assembly (2015) highlights the encouragement provided by the Chinese
Government for the development of its businesses as one of the important reason for the
development of the country after considering its economic scale. However, counter
observation made by Charles Jr, Schmidheiny and Watts (2017) provides threat about
economic loss, which usually is done based on the fluctuating nature of business and the lack
of popularity of e-commerce in the world.

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The analysis of the social factors provides focus on the development related to
changes that takes place in a society. In the words of Bendell (2017), China has proven the
fact that the people in the country are advanced and possessed resonance about providing
support for the business environment to improve. Along with this, the development of the
internet has provided the people of China to increase the rate of using the internet. According
to Welford (2016), in the concerned year, that is 2016, the interest use rate in China has
managed to increase which displays the societal development along with the development in
the e-commerce business undertaken by JD.com with its benefit.
Hence, as stated by Barney (2015) the technological development of China can have a
positive effect on the development of the country and it is for this reason that China is
considered as an updated nation in the world. According to West, Ford and Ibrahim (2015),
internet usage can be considered as the main reason that helps in the development of JD.com
and at the same time ensure that the e-commerce section in the organisation can be developed
as a major functional area at JD.com. Therefore, the development of technology can be
considered as an important factor that can help in the growth and development of the
company in the competitive business market of China.
The analysis of the Chinese legal factors from the case study highlights the fact that
for JD.com to be successful it needs to purchase an express licensing so that development of
the company can take place. Bharadwaj, Fahy and Varadarajan (2015) pointed out the fact
that the legal requirements of JD.com can support the policies of the Government and ensure
that it becomes the key reason for the development of JD.com. The opportunities received
from the legal departments can help to ensure JD manages to compete in the delivery of the
products by using logistics.

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At the same time, Nurmi and Niemelä (2018) is of the opinion that JD.com need to
maintain the environmental sustainability, since it is considered as an important success
factor for business. Therefore, from the case study along with the environmental
sustainability of the company, it can be said that JD.com can support the low cost in logistics
and supply chain. Hence, a succinct overview of JD.com can be identified since JD.com can
witness tremendous growth in the market that is required for the mitigation of the treat in the
business.
Analysis of Porter’s five-forces
The analysis of Porter’s five-forces show that the impact that the external factors like
the bargaining power of the customers, the threat of substitutes and the competitive rivalry
have on JD.com is high. In the words of Pan, Chen and Zhan (2018), the justification from
the case study can be made based on the evidence, which indicates that in the modern world,
companies indulge in online marketing as part of a strategic approach to gain more support
from the customers. Schuetz and Schrefl (2017) are of the opinion the high treat is mainly
because of the fact that the customers posses a tendency to lose loyalty over other companies
in a manner that defines the ease of things.
The case study also provides evidence about the threat received from the substitutes.
This is because a link can be established based on the bargaining power possessed by the
customers. Moutinho and Phillips (2018) stated that the services provided by the companies
provide evidence about the existing rivalry between the rival companies of JD.com. It is seen
that JD.com is not the only e-commerce business in the Chinese market that provides for the
development of the Chinese economy. In the words of Grünig and Kühn (2015), a change in
loyalty of the customers helps in the development of rivalries and thus creates opportunities
for improvement.

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The intensity between the competitive rivals in the market is high mainly because of
the presence of major competitors. This also accounts for the threat received from the
competitors being high. Anton (2015) is of the opinion that the biggest competition is
received from Alibaba due to the international popularity it possess and the strategies applied
by the company for inspiring the growth of various opportunities in business. Hence, it can be
said that in order to develop its competencies in the market JD.com need to raise the level of
its e-commerce facility in the business. Along with this, it needs to ensure that updated
technologies are available in the competitive market.
The analysis high competitors have also opened up an analysis of the low competitors
in the market. It can be seen that the bargaining power of the suppliers along with the threat
of new entrants are considered as low in the Chinese markets addressed by JD.com. In the
words of Alava and Mu (2018), the company provides opportunities to every customer to
purchase different brands of the other companies in the market that sell similar products.
These strategies are usually not adopted by companies. The fact that JD.com supplies the
products directly to the customers makes the company independent from any form of reliance
on the suppliers.
Hence, based on this a succinct overview of JD.com can be provided which ensures
that the suppliers are not limited or exclusive from developing the products which are sold.
As observed by Carraher (2018) the threat of new entrants can be considered as low because
of the delivery standards that exist in the industry are high. The case study also provides
evidence about the fact that JD.com had managed to introduce a new cross border in the
world. Therefore, it can be said that JD.com can continue with the analysis of its external
factors by considering the externalities that are required to be maintained.

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Analysis of the core competencies
The analysis of the core competencies highlights the internal strengths that JD.com
possesses and the strategies by which the company can develop its internal strength in the
business. As seen from the case study one of the core competencies that exist in the
operations of JD.com consist of a fast delivery of products. In the words of Jarzabkowski and
Kaplan (2015), the customers hold no grudge against JD.com when it comes to the responses
of getting the products or services in a timely manner. This fact also highlights the level of
improvement undergone by JD.com to improve the customer experience better than that of its
competitors. Therefore, it can be said that JD.com need to continue in improving its market
position and it needs to ensure that development of the company is aimed in the manner in
which products are delivered to the customers.
At the same time, another important competency identified from the case study
analysis consists of the fact that JD.com is a huge investor in the supply chain management.
In the words of Holloway (2017), a high investment in the supply chain management assists
JD.com with opportunities to be competitive against its rivals. Therefore, it can be said that
the supply chain management process can be considered as a way that can help to mitigate
any threat that arises from the existing competitors along with the possibility of restricting
new entrants in the market. Hence, it can be said that for its development JD.com, can make
investment in the supply chain so that mitigation of any form of threats that made from the
suppliers can be made.
At the same time, another major core competency of JD.com consists of its use of
diversification strategy that includes the collaboration between the financial and logistical
services. From the analysis of the case study, it can be seen that for JD.com to make
improvements in its business competencies, the company need to maintain the diversity, as its
competitors are more than capable of meeting the additional needs of the customers by extra

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effort required for development. In the words of Sachs (2015), the collaboration between the
financial and logistical services can help in the development of JD.com and ensure that an
advantage that is obtained by the company is mainly due to the support that is provided by
the employees to maintain and enhance its competency in the business.
Another core competency of JD.com is the fact that the company had managed to
introduce night delivery services. Carley and Christie (2017) are of the opinion that the
customers can be delivered with the purchased order at any time within 7 pm and the
company can ensure that effective customer service and experience is maintained. The aim of
JD.com is to deliver proper services to the customers and hence, it can be said that the
development of the core competencies in the market helps the company to gain a succinct
advantage by making improvement in the position of the market. As observed by West, Ford
and Ibrahim (2015) such advantages can provide JD.com with an opportunity to mitigate any
threats that are received from its major competitors like Alibaba.
New strategies
In order to make sure that effective new strategies are formed, it is necessary for
JD.com to undertake an analysis of its competencies and apply it to identify elements that can
assist in the development of its business opportunities. However, Bharadwaj, Fahy and
Varadarajan (2015) is of the opinion that the application of cost leadership strategy need to be
undertaken so that JD.com can apply new strategies for developing the competencies of the
organisation.
The assistance provided by the cost leadership strategy is in the establishment of a
competitive advantage by ensuring a low cost of operation in industry. The importance of the
cost leadership to a company is that it can help in the improvement of its efficiency along

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The vision: JD.com
wants to become a
trustworthy company
The objective: To
become a cost leader by
ensuring proper price of
products
Value offered: It
includes the
development of
commercial service for
assisting customers
Target customers: People of
different income scale. Value
proposition is in terms of providing
proper service
Issues: Cyber threats
need to be a cause of
concern
Partners: Coordinates
with Tencent and has
alliance with Walmart
Strategy: The cost
leadership can help to
link the organisational
objectives with that of
the objectives required
for survival in the
market
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with the cumulative experience (Welford 2016). Thus, it can be said that the implementation
of cost leadership can help JD.com to make progress of its operations in the business.
For undertaking such steps, it is necessary that JD.com formulate a road map so
highlight the specific elements required for the application of the strategies.
Figure 1: Road map
(Source: Created by author)
From the analysis, it can be said that JD.com need to develop a business model canvas
that can assist the company in identifying any link between different elements of the business
block. In the words of Burns and Dewhurst (2016), the building blocks associated with the
business model canvas can assist JD.com to identify any specific area by which the company
can make improvement based on the competency it possess and ensures that assistance can be
provided to the customers for being satisfied with the services provided by the company. An

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analysis of the business canvas model is made to highlight the key and important areas
related to the business.
Key Partners
Partnership
with Tencent
and Walmart
Key Activities
Deliver using
proper logistics
Invest in supply
chain
Night time
delivery until 7
pm
Value
Proposition
Become the
most
trustworthy
company by the
sale of valuable
and rare
products
Customer
Relationships
Customer
relationship is
enhanced by the
introduction of
night time
delivery along
with an
improvement of
the financial
and logistic
system
Customer
Segments
Every customer
in the society
Customers
willing to stay
at home
Rural customers
Key Resources
Mobile services
Financial
capability
Employees
Channels
Personal service
delivery system
Less
dependence of
suppliers

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Cost Structure
Lower cost of supply chain
High market share
Revenue Streams
Service revenue
Figure 2: Business model canvas
(Source: Created by author)
Recommendation
After conducting an analysis of the position of JD.com in the Chinese market and
completing the analysis of the effectiveness of the new strategy, certain recommendations can
be provided which can help JD.com to continue with its business process so that it can help in
the development of the company in China and in the world. Additionally, the
recommendations provided can help JD.com to mitigate any possible threats that exists in
business market. The recommendations are provided in using SMART framework.
Specific Expand the product line
Measurable It can measured by analysing the success based on the selling the products
Achievable It is achievable since it helps to provide assistance for market expansion
Realistic It is realistic as the expansion of product line can lead to the reaching out of
various customers
Timeline Within the next 3 months
Table 1: Recommendation #1
(Source: Created by author)

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Specific Implement the cost leadership strategy
Measurable It can be measured based on the growth of the business along with the prices
Achievable It is achievable as it assists in the management of the product cost before its
delivery
Realistic It can be realistic as the cost leadership is considered to be an important
strategic management of a company
Timeline Within the next 3 months
Table 2: Recommendation #2
(Source: Created by author)
Decembe
r
Novemb
er
Octobe
r
Septemb
er
Augus
t
Jul
y
Activities
Expand the product line
Implement the cost
leadership strategy
Table 3: Time line
(Source: Created by author)

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