Strategic Management Report on JD Sports Plc for Expansion in Cambodia

This report provides a strategic management analysis of JD Sports Plc, a UK-based retailer of sportswear products, for its expansion in Cambodia. The report covers the challenges faced by the company, external and internal environmental analysis, competitive strategies, and strategic directions. The report highlights the opportunities and threats in the macro and micro environment of the company and provides recommendations for future success.

Strategic Management

EXECUTIVE SUMMARY
The report of strategic management is prepared on JD Sports Plc which is retailer of
sportswear products in UK. The company is planning expansion in Cambodia which is an Asian
Market with vast numer of growth opportunities. Key challenges that are faced by the venture are
restricted profits, intense compention from local and international players, etc. Strategic
management aids strategists to develop sense of purpose along with define direction wherein
business must travel and establish realistic goals that line to mission and vision which are charted
for it.
The report highlights details of company, its internal and external environment analysis
and competitive strategies. It also includes recommendations to company for future success.

Contents
EXECUTIVE SUMMARY.............................................................................................................2
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Introduction of company, background and challenges faced.......................................................1
External environmental analysis to identify opportunities as well as threats..............................2
Internal environmental analysis to identify strengths and weaknesses........................................5
Identification of competitive strategies........................................................................................8
Strategic directions.......................................................................................................................9
CONCLUSION AND RECOMMENDATIONS..........................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Strategic management is continuous planning, monitoring, analysis together with assessment
of all kinds of necessities a business concern requires for meeting objectives. It entails
anticipation of changes together with taking benefits of it (Dzwigol, 2020). It is a bundle of acts
and decisions that are undertaken by a manager to enhance organisational performance. To
develop knowledge for strategic management, JD Sports Plc is chosen. It is UK based retailing
corporation specialised in fashionable branded sports in addition to casual wear. The
establishment is facing challenge of unfavourable economic conditions, strong competitive
rivalry and close down stores because of pandemic. The management is planning to expand the
business practices in Cambodia which is an Asian Market with huge growth opportunities.
The strategic management report entails background of company and challenges faced by it.
It further covers external environmental analysis, internal environmental analysis, competitive
strategies and strategic directions.
MAIN BODY
Introduction of company, background and challenges faced
JD Sports Plc was established through John Wardle along with David Makin as a brand
that offer ample number of commodities related to sportswear. It works with objective of
delivering long term sustainable earnings growth for improving returns of total shareholders with
share price performance together with dividends while returning financial potentiality to make
investment in growth of propositions (JD Sports Plc, 2021). It was founded in 1981 at Greater
Manchester, UK as single shop. Further, the ventured opened its physical stores throughout
Europe, New Zealand, Canada, UK, Asia and the United States. Addition to this, it distributes
brands variant of sportswear as well as acquired failing outdoor in addition to sportswear brands.
Restricted growth is one of challenge which JD Sports Plc is facing at presently in retail
industry of UK. The company is making profits and efficiency, but not to the level of its
expectation. At same time, high competition level is also a challenge for the company due to
presence of great retailers offering similar products. In order to combat the challenges, business
managers and leaders of JD Sports Plc have undertaken a decision to expand in Cambodia which
is an Asian Market with vast growth opportunities.
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External environmental analysis to identify opportunities as well as threats
Business conduct external environmental analysis for assessing changes undertaken in
broader world that can impact or affect existing operations (Rabetino, Kohtamäki and Federico,
2021). In JD Sports Plc, managers conduct external environmental analysis to ensure that
pertaining changes in wider world are adapted and continue working for succeeding in the
industry. Mentioined below are external environmental analysis of JD Sports Plc:
Macro environment analysis
Macro environmental analysis enables management of corporation to analyse along with
determine potential hazards and opportunities having high probability to impact business and its
strategies (Timeea-Alexandra and Doina, 2018). In JD Sports Plc, purpose of macro
environmental analysis is to prepare personnel in advance with essential information which helps
in making rational operational decisions. To conduct macro environmental analysis, strategic
consultant uses mentioned theories:
PESTLE ANALYSIS: The theory that aids in environment scanning elements for gaining
broader image of an environment that is uncontrollable by organisation. For expansion in
Cambodia, strategic consultant of JD Sports Plc uses PESTLE Analysis to examine ample
number of factors that can affect market environment for the venture. The framework encourages
development of strategic together with external thinking and enables in anticipating of upcoming
organisational threats together with take actions for minimising impacts. Explaination of all
factors of PESTLE Analysis for JD Sports Plc are below:
Political factors: It exerts strong influence on long term profitability along with
sustainability of a firm. Political stability, governance system, trade restrictions, intellectual
property protection and changing policies are categories of political factors posing threats or
opportunities for company in a country. For instance, political environment of Cambodia is
unpredictable in nature that can put threats on JD Sports Plc to conduct business in the nation.
High political interference can create political risk for the venture that can make the market less
friendly for the company. Operations as well as regular practices could be directly impacted due
to uncertain political stability that has high chances to create difficulties for the retail to expand
and run in the country.
Economic factors: It undertakes elements including labor market conditions, foreign
exchange rate, workforce skill level, discretionary income, infrastructure quality and financial
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markets effectiveness (Amason and Ward, 2020). At present, economy of Cambodia follows
open market economic system which enhances efficiency of ventures to do practices without
common barriers of market. It can bring huge opportunities for JD Sports Plc to carry out
activities in the country. The company has opportunity to come with new ideas as per needs of
market of the country and make decisions rationally about allocation of production factors or
resources available in the economy.
Social factors: It builds understanding of entity about demographic trends, consumer’s
shared beliefs, spending power and demographic trends that aid establishment to design effective
campaigns and meet objectives (Timeea-Alexandra and Doina, 2018). In Cambodia, population
practices interdependence and fairness activities. At same time, people are preferring sports
based footwear, accessories and sportswear that can be an opportunity for JD Sports Ltd to
improve customer base and profitability with expansion in the country.
Technological factors: Rapid technological advancement addition to technological
diffusion are kinds of the factor. In Cambodia, digital transformation in form of capturing along
with maximising advantages in information and communication technology addition to digital
technology are adopted by ventures. With usage of different technologies, for example, SD
WAN Network is an opportunity to expand in Cambodia with everything undercontrol from
central. Also, operating with customer feedback technology at physical stores in the new country
will allow shoppers to rate experiences at checkouts.
Legal factors: It comprises all the laws and regulations that are imposed or passed by
political leaders in a country. In Cambodia, it is mandatory for all ventures to function as per
laws of areas wherein they wish for operation. By carrying out business practices as per laws
such as Cambodian Labour Law 1997, Data Protection Act 2021, Occupational Safety and
Health Act of 1970, etc which will open opportunities for the retailer to perfrom ethically in new
nation and build sustainablity in shorter time duration.
Environmental factors: It is composition of ecological regulations, standards and
changing climatic conditions in a country (Duhaime, Hitt and Lyles, 2021). To deal with
increasing carbon emision, government of Combodia has undertaken initiatives, such as
undertaking reforestation, promoting use of cleaner fuels, making strides on long road to low
carbon, etc. With expansion in Cambodia, JD Sports Plc can contribute in initiative of
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government through fulfilling corporate social responsibility that is an opportunity to build
strong brand awareness in the new country.
Micro environmental analysis
It refers to review of internal business climate that covers all aspects which are under
operational control of a venture. For micro-environmental analysis, strategic consultant of JD
Sports Plc has opted Porter’s Five Force Analysis so to analyse industrial structure together with
the nature of competition. Description of Porter’s Five Force Analysis for JD Sports Plc is
below:
Porter’s Five Force Analysis: Michael E. Porter founded Porter’s Five Force Model for
identification and analysis of five competitive elements which shapes each sector or industry and
determine its attractiveness. In JD Sports Plc, purpose of strategic consultant to use the model is
to identify the structure of industry for devising decision making to attain growth. The forces of
Porter’s Five Force Analysis in association to JD Sports Plc are as explained:
Threat of new entrant: Power of a company are affected by threat of new entrants into a
market. In retail industry, strong barriers and high investment requirement creates low entrant
threat to existing ventures. However, a new entrant with unique innovation can create high threat
of new entrant for an existing business. For JD Sports Plc, retail industry has strong entry
barriers, but, the time and money which costs to new ventures to enter and build brand image
significantly creates the high threat of new entrants. It can be a threat for JD Sports as the
established brand have to put more focus on new entrant, despite of carrying out practices.
Competitive rivalry: It states that larger number of competitors and equivalent
commodities or services that they offer results in lesser power of an establishment (Desai, 2019).
In retail industry, major players that have maximum market share are Foot Locker, Skechers,
Zumiez, Elite Fitness, Academy Sports + Outdoors, etc which creates high competitive rivalry
for JD Sports Plc. Conversely, if there is low competitive rivalry, it is opportunity for the
company to operate with greater power to charge higher prices as well as set terms of deals to
make greater sales volume and profits.
Bargaining power of suppliers: A force which addresses the ways it is easy for suppliers
to drive cost of inputs is bargaining power of suppliers (Putz, 2019). Within retail industry, fewer
suppliers cause higher dependency of company on a supplier. However, JD Sports Plc is large
corporation that maintains relationship with high number of suppliers, if one makes changes in
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prices and quality of required material or production factor, the establishment switches to another
one that gives less bargaining power to suppliers. It is an opportunity for the retailer as it can
manager bargaining powers of suppliers through making diversification in supplier list, gain
exclusive rights from suppliers for material delivery and research about new commodities from
variant raw materials.
Threat of substitutes: Substitute services or items that can be used in place of
organisational offerings poses threats. In retail industry, customers find substitute products that
have high competence to meet the requirements of customers in a similar manner. JD Sports Plc
has potential to minimise substitute threat through making its services more significant than
similar products through positioning in the way wherein target audiences are required to make
more payment, if opt for substitutes.
Bargaining power of buyers: Customers or buyers need worth of products more than what
they are paying (Stamevski, Stamevska and Stankovska, 2018). In retail industry, buyers possess
ability to drive prices lower. For JD Sports Plc, higher bargaining power shows an independent
customers have abilities to negotiate for lower prices in addition to better deals. The company
tackles the issue through acquiring larger segment of customers and enhancing product portfolio
to provide more options for purchase. With this, the retailer improves its customer base of
variant range as well as multiple offerings of sportswear to buyers.
Internal environmental analysis to identify strengths and weaknesses
For internal environmental analysis, strategic management consultant of JD Sports Plc
uses VRIO Analysis which is defiuned below:
VRIO Analysis
VRIO analysis is an analytical method that help companies to evaluate their resources
and competitive advantages in effective manner (Todorov and Akbar, 2018). It describes that the
company who knows their resources can proper understand their weaknesses and competitive
advantages in effective manner. The resources are should be tangible or intangible which
includes material, human resources, financial, patents, cost advantages, machinery, people skills,
etc. The intangible resources are the most effective source for the company sustainable
competitive advantages. It helps companies to allocate their resources better and set the course
for future plans in effective manner. In context with JD Sports Plc, VRIO framework is used to
analyse their resources and its competitive advantage in order to improve their resources for
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gaining competitive advantage in effective manner. Evaluation of factors of VRIO analysis for
JD Sports Plc are described below:
Resources and
capabilities
Valuable Rare Imitable Organised Competitive
implication
Relationship with
suppliers
Yes Yes Yes Yes Sustainable
competitive
advantage
Service quality Yes Yes Yes No Sustainable
competitive
advantage
Human resources Yes Yes No No Competitive
advantage
Product design Yes No No No Partly
competitive
advantage
Market strategy Yes Yes Yes No Competitive
advantage
Valuable- It refers to those things which makes companies more strong in order to
exploit more opportunities as well as neutralised their threats in effective manner through their
highly valuable resources and threats (Bogdan and Lungescu, 2018). In respect of JD Sports Plc,
its valuable resources and capabilities are relationship with suppliers, service quality, human
resources, product design and market strategy.
 JD Sports Plc has a effective and strong relationship with its suppliers and it is most
valuable to them in order to maintain competitive position in the market.
 Service quality of JD Sports Plc is valuable because it is different from its competitors
and make values through its potential customer in effective manner which is its key
strength.
 Human resources are also valuable because they are highly skilled and trained in order to
make company competitive in the market.
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 Product design of the company is valuable that helps companies to attract its customer in
effective manner.
 Market strategy of JD Sports Plc is valuable which helps company to promote their goods
effectively and make strong position in the market that is organisational key strength.
Rare- It describes those resources and capabilities of the company whose controlling
power are in few hands and that are not copied by other in any manner (Todorov and Akbar,
2018). In aspect with JD Sports Plc, its rare resources and capabilities are Relationship with
suppliers, Service quality, Human resources and Market strategy that helps them to achieve
competitive advantage in effective manner.
 Relationships with its suppliers are rare and they does not supply their competitors
products.
 Service quality of JD Sports Plc is rare because its competitors can not provide effective
service like them.
 Its human resources are rare because they are highly skilled and motivated which not
possible in the case of its competitors.
 Market strategy of the company is rare because its competitors cannot provide goods in
low cost and higher quality in effective manner.
Imitable- It describes those resources of the company which provides cost disadvantages
in order to acquire or improve them in effective manner. In regards of JD Sports Plc, its imitable
resources are Relationship with suppliers, Service quality and Market strategy which contain
high cost in order to acquire or improve in effective manner.
 Its strong relationships with its suppliers are imitable which makes its competitors to pay
high cost in order to maintain it.
 Service quality of JD Sports Plc is imitable which contain huge cost in order to manage it
by its competitors.
 Market strategy uses by JD Sports Plc is also imitable and make cost disadvantages for its
competitors.
Organised- It describes those resources of the business which is well organised and
ready in order to exploit or create value for the company (Drobyazko and Et. Al., 2019). In case
of JD Sports Plc, its relationship with its suppliers is well organised that helps them to make
competitive advantage in effective manner.
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 Its strong relationship with its suppliers is well organised that helps them to make strong
position in the market as well as earn maximum profit in effective manner. It also makes
them different from its competitors in effective manner.
Identification of competitive strategies
Porters generic competitive strategy is a structure that helps companies to plan a strategic
direction that helps to gain competitive advantage in effective manner (Quarm and Busharads,
2020). Companies relative positions in the industry describes profitability in industry average.
There are two types of competitive advantage of form exist that are low cost and differentiation.
If these competitive advantages are applied in either narrow or broad scope, the results come in
cost leadership, differentiation and focus. In context of JD Sports Plc, different types of
competitive generic strategy that described its competitive position in the market are mentioned
below:
Cost Leadership strategy- It describes those companies who are low cost producer in
the industry in order to provide level of quality (Olshanskiy and Et. Al., 2019). In respect of JD
Sports Plc, if its management uses this competitive strategy they have to sale their products in
low cost in order to earn higher profit. It also helps them to make efficient distribution channels
and develop skills in designing their products for efficient manufacturing.
Differentiation Strategy- It helps companies for the development of their product and
service in order to provide unique attributes that are valuable for competition that makes
customers perceived better and different products from their customer. In regards of JD Sports
Plc, if its management uses this strategy they have to make their products unique and better by
adding values in order to earn higher profit and market share in effective manner. It helps them
to increase their reputation for innovation and quality.
Focus Strategy- It describes narrow segment of the competitive advantages that makes
companies to achieve either a differentiation and cost advantage. Companies also have less
bargaining power with their suppliers due to lower level of volumes. In case of JD Sports Plc, if
its management uses this competitive strategy, they are able to pass higher costs on their
customers because close substitutes of their products are not exist in the market.
From the mentioned competitive strategies, differentiation strategy is effective for JD
Sports Plc to expand in new market that is Cambodia. With differentiation strategy, strategic
consultant of the company makes decisions for providing something unique, distinct addition to
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different to target audience from product offered by rivals. With this, managers create brand
loyalty among prospective customers and gain market share with perceived quality.
Differentiation strategy builds unique features in an offering and meet diverse needs of buyers to
help the venture in achieving competitive advantage.
Strategic directions
It is the plan which requires to be executed for a company to progress for its vision together
with fulfilling its goals (Yoder, 2019). In JD Sports Plc, strategic directions ensure owners in
addition to management to communicate significant of working of personnel and contribute in
achieving objectives of firm. The concept is meant for sustaining the competitive benefit of a
venture. It assists in uniting strategies of enterprise together with provides aspects for greater
stability into future. With strategic direction, strategic consultant determines required resources
to operate in new market of Cambodia for finding success. Key strategic directions for JD Sports
Plc to expand in Cambodia are as mentioned:
Product and Services: It defines what a company wants to achieve as well as how it plan
to reach there. In JD Sports Plc, product and service helps in understanding context of market
wherein it operates in along with guide large themes of work which assist in accomplishing
goals. Products through which JD Sports Plc is planning to expand in Cambodia includes
apparels, recreational, footwear and accessories. At same time, services used for expansion are
finnacial services, customer query management and full services.
Markets: Group of potential customers which business managers identify for selling
offerings are markets or target market. In Cambodia, target markets of JD Sports Plc are people
under 25s, despite the fact that its fashion based sportswear offer will attract broader
demographics. Moreover, the company will offer through Footpatrol fascia that will allow it to
tap growing streetwear fashion trend famous among under 30s.
Expansion method: An attempt of a firm for growing in size of business with aim to
enhance scale of operations and generate more money (Dzwigol and Et. Al., 2019). Some of
expansion methods that can be opted by JD Sports Plc for expanding into Cambodia aare as
follows:
 Mergers: It is described to combination of two or more independent corporations into
individual enterprise. By using the expansion method, JD Sports Plc can have greater
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economic power that can lead to higher market share, reduced competitive threat and
more influences over customers.
 Joint venture: It refers to combination of certain parties or companies which seek
development of single establishment for profit making and sharing risks that are
concerned with development (Quarm and Busharads, 2020). In aspect to JD Sports Plc,
use of joint venture for expansion in Cambodia can help in accessing distribution
networks, sharing risks, accessing greater resources and increasing capacity.
From the above mentioned expansion methods, joint venture is opted by strategic
consultant of JD Sports Plc for expanding in Cambodia. With this method, the company achieves
success as it shares expenses, penetrate in new market easily, elevate financial burden placed on
firm, brings expertise along with knowledge, access to capital for growth and gain intellectual
property rights to operate in Cambodia.
CONCLUSION AND RECOMMENDATIONS
From the information presented in the report, it is concluded that leadership,
environmental analysis, uncertainity management, planning and maintaining organisational
cohesion are major strategic management functions of company. To analyse external
environment of coompany, PESTLE Analysis and Porter’s Five Force Analysis are applied to
determine opportunities and threats of business. VRIO Analysis is used for internal
environmental analysis to identify weaknesses and strengths of venture. Expansion methods
helps a firm to amortise costs, attract new customers in new market, enhance market influence
and develop economies of scale.
It is recommended to strategic consultant of JD Sports Plc to opt cost leadership strategy
as it enhances focus of venture to enhance efficiency of operational processes to lower costs of
production, withstand price wars and enjoy enhanced market share. At same time, company is
recommended to opt franchising as expansion method as it results in lower failure rate, receive
business assistance, brand recognition, sheer size of network and see higher profits in new
market that is Cambodia.
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Online:
JD Sports Plc. 2021. [Online]. Available through: <https://www.jdplc.com/>
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