Strategic Management for JD Sports PLC in the Philippines Market
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This report discusses the importance of strategic management and decision making for JD Sports PLC's expansion into the Philippines market. It covers external analysis, internal analysis, identification of business strategy, and strategic direction.
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Table of Contents EXECUTIVE SUMMARY.............................................................................................................3 INTRODUCTION...........................................................................................................................4 EXTERNAL ANALYSIS................................................................................................................4 INTERNAL ANALYSIS.................................................................................................................9 IDENTIFICATION OF BUSINESS STRATEGY........................................................................13 STRATEGIC DIRECTION...........................................................................................................14 CONCLUSION AND RECOMMENDATION.............................................................................15 REFERENCES..............................................................................................................................16
EXECUTIVE SUMMARY This report is prepared regarding strategic management and decision making that is helpful for any business organization to accomplish the success in the new market entered. In context of JD Sports PLC, they are planning to expand their business operations in Philippines market and to evaluate the same both internal and external analysis is performed in this report. In order to grab all the relevant opportunities organization must critically evaluate all the internal and external factors and anticipated threats. Moreover, with the help of market segmentation, products can be identified for customer specific targets in efficient manner.
INTRODUCTION Strategicmanagementisthecontinuousprocessofplanningandmanagingthe company’s plans and roadmaps framed to accomplish the desired goals and objectives in smooth manner and to sustain in competitivebusiness environment.This framework is prominent for organization as they are strictly injected in every business function to benefit the business(Wheelen and et. al., 2017). Proper strategic management ensures high power and market dominance for the business organization. This is vital for every organization to accomplish the long-term goals effectively and attain business sustainability. This report is prepared for importance of strategic management process and various concepts and theories related to it with respect to JD Sports PLC, a retail chain of sports and casual wears based out of UK and established in the year 1983 by Wardle and David Makin. At present, due to rise in competition in their sector and industry company is facing downfall in their revenues and profits and had a substantial loss of market share. The factors that gave JD Sports PLC edge over their competitors are high aspect in fashion and quality of their offerings. Due to this, the board of Directors of company had decided to expand their operations in international market i.e. Asian Market of Philippines which is a growing economy. This report is intended to cover various internal and external analyses for the business assisting JD Sports LLC in grabbing most suitable opportunities. MAIN BODY EXTERNAL ANALYSIS External analysis can be defined as process of analysing the external factors i.e. factors that are outside of business organization and their effect and implications on the business. By using the PESTEL framework all the external factors affecting the organization can be identified and their impact can be analysed from both positive and negative effects. With the context of JD Sports PLC, this tool is helpful as they are planning to expand their business operations in Philippines and to make a right decision it is important for them to be aware of all the relevant external factors. Below given is the detailed PESTEL analysis with respect to JD Sports PLC:
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Political factor:Philippines is the country with Presidential system is in place with President being the head of country. They are members of various world organizations like WHO, UN etc.whichprovidesgoodamountofbusinessstabilityhoweverithasdrawnalotof international criticism towards itself for various subjects like Nepotism, Drug Campaigns, Judicial killings etc. JD Sports PLC is planning to expand their operations in Philippines market as there are immense opportunities existing in this segment market and provides a certain sustainability and opportunity to grow as well(Hitt, Ireland and Hoskisson, 2016). Economic factors: Economic factors include various macro and external factors such as exchange rates, business cycle, and economic growth rates. This analysis and consideration is important for a business organization to evaluate impacts of economic measures and aspects within business functions. Philippines is the 38thlargest country in the terms of higher GDP. It is a good destination for investment due to low business set-up cost, strategic location and top- qualityworkforce.ThereishugeincreasenoticedinFDIinPhilippineswhichboosts confidence level of investors. For JD Sports PLC the country is providing huge opportunities in terms of tax incentives, resources and interest rate relaxation. Social factors:These factors contain and are associated with beliefs, culture, demographics and customer preferences. It is vital for any organization to be aware of all the social behaviours of the market in which they are planning to operate their business. They should have relevant understanding of ethical attitude of the citizensas well as their purchasing power and preferences. In the context of Philippines, the country is a developing country therefore they havevastopportunitiesexisting.ThepeopleinPhilippinesaregenerallyfriendlyand hospitable. With respect to JD Sports PLC may face some of the country issues like corruption, poverty, drug abuse etc. and along with that there are some positive things such as friendly environment and vast opportunities to expand their business(Hanson and et. al., 2016). Technological factors:These factors include usage of emerging technologies in the business in order to provide technological advancement to the business. In current time, this is the vital factor as every activity is moving towards automation. In the context of Philippines, country is growing rapidly there has been a massive increase in demand for Tech products and services. The population consists of young people loving technology and advancements. For JD Sports PLC this aspect is important as it will provide them high edge over their competitors in terms of
opportunities and innovations by using advanced technology in their business functions which is aligned with young customer generation’s needs of Philippines. However, there is an argument by many experts to invest further by government in technology advancement. Environmentalfactors:Theseaspectsareassociatedwithusingsustainableand environmentallyfriendlypracticesinthebusinesstominimizenegativeimpacttothe environment due to any business activity and to grab opportunities for business expansion by enhancing goodwill. Philippines is surrounded by over 7640 Islands, beaches, water parks etc. which makes it a country full of nature however it also faces various environmental challenges such as Earthquake, Volcano, typhoons etc. With context of JD Sports PLC they are required to use environmentally friendly business procedure such as recycling of resources and using paper saving practices in their business. This could enhance their survival opportunities and goodwill in Philippines(David and David, 2016). Legal factors:The last factor part of this analysis is Legal factors which are related with legislative and regulatory aspect of the country. For example, imposing of restrictions on various policies related to merger and acquisition or liberalized FDI policies. In the context of Philippines too there are several laws and regulations published by government that are mandatorily required to be followed by every company carrying on any business activity over there in a smooth manner. This policies are on various subjects such as Employment laws, company laws etc. The country is providing various incentives for FDI Investments. This FDI friendly policies and environment is providing immense opportunities to JD Sports PLC to invest and expand in Philippines. Porter's five forces Porter’s model is helpful for any business to identify and evaluate attractiveness of the relevant industry by analysing these five forces. These are frames to define industry’s structure and the structure of competitive rivalry existed within industry. With this model’s assistance profit potential of the industry can be identified which could lead in attaining edge over the competitors for the organization. With context of JD Sports PLC as the company is planning to expand their business in Philippines market they are required to carry on this analysis
effectively so that the most appropriate decision can be made for their future actions(Leskaj, 2017). Competitive rivalry Competitive rivalry force covers analysis of existence of number of competitions existed in the markets that are selling homogenous products. When the competitors existing in the market are equally sized this may lead competitor dominance market. In the context of retail clothing industry associated with JD Sports PLC, high competition exists as there are large number of companies which are manufacturing high range of clothing products and accessories. In context of JD Sports PLC as the company is planning to expand their business in Philippines market so this threat is higher as there is existing high competition in this industry. Threat of new entry This threat is associated with measurement of ease of business carrying within industry in order to influence overall market environment. This is one of the important aspects to sustain within a market and this consists of various barriers such as governmental intervention, scale and expected retaliation. With respect to Philippines market as it is encouraging FDI companies can initiate their activities in smooth manner. For JD Sports PLC as the company is planning to expand their business in Philippines market so this threat can have high impact over business and should be taken into proper consideration due to highly liberal policies. Threat of substitute This threat includes threat for a business organization of its product being replaced by a substitute product which is like the product offered by them and is having edge in terms of innovation and benefits(Fitri and et. al., 2019). With the increasing competition and technology advancement this threat is increased as every organization wants to get edge over their competitors by offering innovative substitutes. In this context JD Sports PLC this challenge is faced majorly as they are planning to invest in Philippines which is giving encouragement to FDI investment therefore a lot of innovative businesses in the same industry might come up with a better substitute. The power of buyer
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This threat is associated with Purchasing power of the consumers of the market. The greater the power or dominance held by consumers the riskier it will get for companies as they might have to offer their products to the dominant consumers at lower cost which may bring down their profit ratio. Besides this if buyer's dominance is low this may lead to marketplace which prices are driven by companies. In the context of Philippines market customer are having moderateoptionstobuyfromthereforthepowerdistributionalsoismoderateamong consumers and companies. With regards to JD Sports PLC, the company may or may not face threat of high buying power therefore, it must be ready to mitigate the same with their varied clothing range highly differential and laced with high quality(Peppard and Ward, 2016). The power of suppliers Suppliers or Vendors are parties or persons supplying various services and raw materials required to the business organization. Retail industry have their own set of different suppliers through which they are taking varied raw material and services for processing their business activities(Vetrov, Vandina and Galustov, 2017). Philippines is having controlled labour cost due to which every company is maintaining large portfolio of suppliers and this is the reason that business functions are rarely impacted due to dominance of suppliers. In the context of JD Sports PLC, the company has to face low dominance of suppliers as they have large portfolio of suppliers for various resources and services in their business.
INTERNAL ANALYSIS Internal analysis is a tool which can be used within business in order to analyse internal capacities that can be used by the business for attaining business objectives in sufficient way. For JD Sports PLC as the company is planning to expand their business in the markets of Filipine so this is requisite for them that they analyse internal capabilities so that to acquire need of modifications. JD Sports PLC is taking assistance of value chain analysis in order to analyse their internal capabilities which is elaborated as under: Value chain analysis The value chain is defined as the bifurcation of various activities which are executed within an organisation and with the help of these activities product and services can be delivered to customer in better way. Successful business organisation tries to keep high value
within their organisation in order to manage prominent relationship with produced products or rendered services(Abosede, Obasan and Alese, 2016). There are various activities which are existed within an organisation and some of them are keeping high value for the organisation. These essential activities are required to be differentiated in such a way that organisational objectives can be aligned with these activities in direct manner(Witek-Crabb, 2016). Value chain relates with examining those aspects for the businessthrough which marketopportunitiesare easier to find out and ways to attain sustainability can be adopted. For JD Sports PLC the company is planning to expand their business in Filipine, so with the help of internal capabilities the can receive appropriate competitive edge in the overall market and retain in the market for longer time duration. Various dimension of this model are elaborated as under: Primary activities Inbound logistic These activities are associated with storing, handling material stock and transportation related with the same party. These functions are holding high degree of priority as they are directly linked with desired output by the organisation. For JD Sports PLC, with the view to expand business in Filipine the company is preparing strategic plans so that to attain efficacy. The company is trying to manage their stock within this aspect as they are a retail chain in
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which by effectively managing these activities stock out conditions can be avoided(Cescon, Costantini and Grassetti, 2019). Operations These are defined as the aspects under which raw material gets converted into finished goods. These are associated with packaging, testing and manufacturing process. For JD Sports PLC as the company is managing retail stores so this dimension is keeping higher value for them in order to get market prominence. JD Sports PLC is emphasised over enhancing their operational efficiency so that to induce efficiency within business operations. Besides this testing of final products are another aspect which is used by JD Sports PLC in order to manage quality within their business. Outbound logistics These are defined as the method under which products and services are being distributed to end consumer by using channels of distribution. For JD Sports PLC the company is having prominent online presence due to which they undertake internet as mediator in order to deliver products to their customers. Besides this the company is associated with dealing in retail stores so by adopting prominent channels for distribution JD Sports PLC can attain market success in the markets of Filipine. With the help of appropriate distribution channels JD Sports PLC can deal with market competition faced by them in Filipine(Ethiraj, Gambardella and Helfat, 2018). Marketing and sales Marketing and sales are two different aspects which are assisting the business to sum up more value to business operations in such a way that business objectives can be aligned as well. Marketing is a concept which involves various activities that are used by the business in order to spread awareness regarding products and services offered. For JD Sports PLC as they are planning to expand their business in the markets of Filipine so in order to attain prominence this is imperative that they use prominent methods of marketing. These activities can help the company in order to add more value and to minimise arising challenges in Filipine market. Service
These are related with maintenance of product and services in which higher value can be given to customers. In the context of JD Sports PLC the company is managing retail stores in which the major focus of the company is required to focus on providing customer satisfaction and adopting such ways by which after sale services can be enhanced and customers can be retained as well. In current time the company is planning to enter into markets of Filipine so in order to attract more customers the company is focusing over after sales services in order to retain their customers. Support activities Procurement This is regarded as the process in which resources are acquired in such a manner that business efficacy can be intensified(Garzella and aele Fiorentino, 2017). For JD Sports PLC the company is emphasised over procuring resources in such a manner that they can attain success within markets of Filipine. This activity is helpful in order to provide higher value to organisational functions of the business and align their business objectives as well. Technology development This is defined as the technical knowhow which is used in the business in order to attain high prominence. Under this aspect, JD Sports PLC is required to use ample amount of emerging technology by which they can add on value to their organisation and enhance market survival as well. Besides this demand of technology is higher in the market of Filipine due to which JD Sports PLC can have higher options for attaining market success and sustainability as well(Bagheri, 2016). Human resource management This is defined as the aspect under which overall human capital can be managed. For JD Sports PLC the company is managing their human capital in effective way so that to align aims and objectives in equitable manner along with providing value to their customers as well.JD Sports PLC is executing their functions in sufficient manner within retail industry and under this human capital is the major asset that is held by them. Human capital is helpful for the company to manage their business operations in optimal manner.
Infrastructure These are the support system for the business which allows the business to execute various regular functions in optimal manner. Under these activities planning, accounting and quality management system of JD Sports PLC are included. IDENTIFICATION OF BUSINESS STRATEGY JD Sports PLC is planning to initiate their business operations in Philippines and to accomplish this it is necessary for them to come out with a relevant business strategy so that they can improvise their survival possibilities and earn stable market reputation in short period of time. In order to analyse business strategyPorter's generic modelis used which is elaborated as under: Cost leadership As per this strategy, companies are focused on reducing and lowering their cost which would ultimately result into high profits for company. In this strategy, business is reducing their costs to get the cost control edge over their competitors. With context of JD Sports PLC, they are focused on increasing their output so that the overall per unit cost can be reduced. Differentiation strategies This strategy is associated with directing the company towards innovative and creative products that can capture the large market due to their uniqueness and differentiation. This is helpful for business in establishing a unique and stable identity for the organization in the new market of business. In the context of JD Sports PLC as the company is engaged in retail chain so this is imperative that they have come up with differentiation in size and design to get edge over their competitors. In order to overcome with market competitors in Philippines JD Sports PLC is required to differentiate their products and services so that they can maintain unique identitywithinmarketplaceandattainspecificedgeincompetitivemarket(Stamevska, Dimitrieska and Stankovska, 2019). Focus strategies
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This strategy is segregated into two variants such as cost and differentiation. Cost variant focuses on lower prices of their homogeneous products offered so that large number of consumers can be attracted, and large sale target can be met, whereas differentiation focuses on unique specification in their products. In the context of JD Sports PLC the company is dealing in retail chain so they deal in variety of homogeneous products, so in order to get success in Philippines market it is pre-requisite for company to have both this aspects covered as per this strategy in order to succeed. For JD Sports PLC the most appropriate strategy is differentiation focus as the Philippines market has high competition with large market existing in this industry therefore, to overcome all their competitors it is necessary for JD Sports PLC to have some uniqueness in products offered by them in Philippines market in order to succeed and sustain and to align their path of goal attainment. STRATEGIC DIRECTION JD Sports PLC is making plans to expand their business in Filipine and for this market development strategy is opted by the company in prominent manner. JD Sports PLC has already examined business environment within Filipine and in this manner strategic plans are prepared by them. Besides this higher profits can be earned by JD Sports PLC by properly making strategies to deal with rivals. In order to succeed in the market is the primal aspect which is required to be analysed by the company so that to attain customer attention in prominent manner. In this context JD Sports PLC is facing issue within earning revenues so they have initiated market development strategy within Filipine so that to deal with their issues. By undertaking Ansoff growth matrix JD Sports PLC can recognise their strategic direction: Market penetration This is the strategy which is focused over enhancing sales within existing market and products as well. In the context of JD Sports PLC they can obtain higher profits within existing market just by minimising prices of their products. Product development
This is the strategy which can be utilised by businesses by introducing new products in existing market in order to attract more customers towards business offerings(Venkateswaran, and Ojha, 2017). Market development This strategy is emphasised over tapping into new business market so that to share product portfolio in another market as well. Diversification This strategy can be used by businesses when they are willing to enter into new market along with a new products segment. In this regard, JD Sports PLC can expand their business by introducing a new product line. As per the business expansion plan of JD Sports PLC market development is the most profitable strategy that can be adopted by them to deal with their business objectives in effective manner. CONCLUSION AND RECOMMENDATION From the above report this can be concluded that strategic management is one of the significant aspects of the business which is playing crucial role in overall development of the business. This is leading the business to receive higher gains due to which issues within businesscan be faced in effectivemanner. Withthe help of internalanalysisintrinsic capabilities of the business can be analysed and aligned with business objectives as well. On the other hand with the help of external analysis, organisational working can be made adhered to external market needs in which prominent image can be attained. In order to opt for market development strategy JD Sports PLC is requisite to select appropriate market in order to unleash the same. In this manner the company is selecting Filipine market in order to initiate their market development and to sustain in the market as well.
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