This report discusses the strategic management of JD Sports in India, including external and internal analysis, competitive strategies, and recommendations for expansion.
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Strategic Management
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executive summary This report had discussed that JD sports can expand their business in India because they are successfully doing their business in UK and in India the company can also get low cost labour which can increase their profits. External and internal analysis is done in this report through pestle, porters five forces and other models also applied.
Table of Contents INTRODUCTION...........................................................................................................................5 Assessment of the external macro environment..........................................................................5 Assessment of the external micro environment...........................................................................8 Internal analysis of the organization..........................................................................................11 Identification of competitive strategies......................................................................................12 Recommendations to the company............................................................................................15 CONCLUSION..............................................................................................................................15 REFERENCES................................................................................................................................1
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INTRODUCTION The process of management of the resources of the organization to achieve its objectives iscalledstrategicmanagement.Itinvolvestoanalysecompetitiveenvironment,making objectives,recognizetheinternalorganization,evaluatestrategyandmakingsurethat management carry out strategies. It further tells that how strategies are to be developed. Strategic management is an ongoing process.Retail industry sells goods and products to the customers through multiple channels so that they can earn profits. JD sports is founded by John Wardle and David Makin in 1983. It is a leading retailer company of UK in sportswear, casual wear, fashionable wear etc. Company started with a single small shop and now expanded in complete UK. They have multiple stores in UK. Company also dominated the market of many countries like Germany, Spain, France, Denmark etc.This report will discuss models and frameworks of the company's strategy and how they can take global opportunities to achieve competitive advantage. Taking India as an Asian country. Further it will assess external macro and micro environment using PESTLE and Porter's five forces frameworks and internal analysis is also done by using Jay Barney's VRIO. This study will also evaluate competitive advantage by using Porter’s Generic Strategies of Competition framework.The challenges which is faced by the company is the economic and fiscal threats with the consumer expenditure and getting tough competition from their competitors. Assessment of the external macro environment. It includes the external factors on which the company don't have direct control but it functions got affected through it. It is explained by using PESTLE framework. This model has some factors which can influence the organization externally and those factors are:
Political factor:political factor can influence the company (HoLEE, 2020). If JD sports company wishes to enter the Indian market then they have to take permission from the Indian government. Government of the company changes with the time then if any new government came in the country then differences in the opinion can be there between new government and the company. There are other factors also which can influence the company like labour laws framed by the government, regulation over the pricing strategy and military coup exposure etc. labour are cheap in India but government follow strict actions to regulate it, they ensure that their labours are not violated by any of the global or local company. Level of corruption in the country can also affect theJD sportsespecially if it is happening in the consumer service sector. Tariffs and trade regulations is the another problem. In retail sector product labelling and requirements can be the factors which influence the business functions. Economic factors:customer demand in any of the country based on various factors which include interest rates, inflation, level of economy, banking policies etc. economic factors of the country involve level of education, infrastructure, policies regarding business, unemployment rate etc (Ethiraj, Gambardella and Helfat, 2016). by evaluating these factorsJD sportscan decide that what are the purchasing or buying power of the customer and what prices are to be set and what type of product should be launched in the Indian market. These factors will help the company to forecast its growth in the country. Exchange rates are also to be analysed because it can also affect profit margins of the company. They have to find out that how efficient are the Illustration1: Pestle analysis Source:Scanning the Environment: PESTEL Analysis,2016
financial markets of the country because banks plays a vital role for the company. Their rate of interests, their capacity to give credit can affect the firm (Islam and Mamun, 2017). Social factors:social factors which include sex, gender, education, culture, religion, attitude, health, interest in sports etc. affect the decisions of the company. Through analysing it, companies can understand market conditions, and they will make channels through which they can target right customer for the product. Level of skill of the population influence the company. Hierarchy structure in the society and level of education of the customer and awareness for sports fashion wear and their interest inJD sports fashion industryaffect the decisions in the company. People attitude towards the health, if the people of the country are health conscious and taking interest in sports in balancing their health or want to make career in sports will help the company to get benefit from that and increase their sales and revenue. Sports are also played for leisure it depends on individual to individual that what type of leisure activity they want to take. Technological factors:technological factors should be identified by the company before starting their operations. It is to be done so that company can understand that how the new technology can be helpful for the company in customer satisfaction and in profit increment and how company finances will be impacted by it (Rastogi and Trivedi, 2016).Jd sportsshould rapidly cope up with the change in technology because slow adaptation can reduce market share. Company should look around their competition and find out that how the use of new technology helping its competitor to increase their profits. With the help of technology company can bring innovation and innovation is very essential nowadays for long term survival. New technology can reduce time and efforts of the company. They should analyse that if the new technology is adapted then how it is helpful for the products. Environmental factors:environmental factors of all the market should consider before entering into that market which include factors like pollution, climate, weather, reduction in wastage etc. through analysing these factors company can make environmental friendly products and spread awareness among the customer about the environment safety and also about their environmental friendly products.Jd sportsshould start campaign in the Indian market about recycling which will attract more customers towards the company and also company will gain government support.Jd sportscan also adopt renewable sources of energy because governments generally support such projects and it can even reduce the costs of the company in the long run. Weather
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conditions of the country may not be suitable for the company sometimes it even affects transport by affecting the delivery of the products in the market. Legal factors:laws are different in every country. Legal factors are to be analysed by the company if they want to survive in the different markets like labour laws, employment laws, copyrights etc. if they analyse at these factors at initial stage only then that will help company to avoid the problems which they can face due to these factors (Zahari and Romli, 2019). Discrimination laws are to be identified because initially government allow foreign company in the country because of the pressure of globalization, but they do not make favourable laws for foreign countries. Government makes such strict laws for outside companies so that they can protect their local company. Proper copyrights and patent laws should be their. If patent laws are not strict then local companies can copy their designs and make product exactly like them. E- commerce sector should be analysed because they are rapidly evolving andJd sportsusing online platforms for doing their businesses along with offline business. This is the new channel through which companies are making profit nowadays. Assessment of the external micro environment. Porters five force model
Threat of newcomer:There is always a huge competition in the retail industry market. As they are a fashionable sports wear retailer they have to face intense threat from the new participants in the market.Jd sportsis determines to penetrate in the Indian commercial market as it has become a hot spot for foreign companies to establish their outlets there as the overall operating capital and the labour cost is low in comparison with other developed countries. That's the reason corporation have to compete with the several new participants struggling to enter acquire their place in the market. They can handle this risk by constantly modifying their customer services and bringing out innovative ideas in their products (Julita and Arianty, 2017). The brand have a huge advantage of economies of scale which new entrants lacks in and they need to work so many years to achieve that. Industry have large amount of financial backup to conduct R&D programme which help them to attain competitive advantage. Threat of substitute:There are so many companies which areproviding fashionable sports apparels and footwear etc. at low prices which will definitely attract customers a they are getting same product may be of low quality but at cheap prices. To prevent thisJd sportsshould established focuses on providing personalised and efficient customer services and after sell Illustration2: Porters 5 forces Source:Porter's Five Forces Analysis. 2016
services to their buyers, to acquire the trust of their consumers and to build a healthy relationship which results in customer loyalty towards the brand. Rivalry among the competitors:There is a extensive rivalry between several sports utility retailers around the globe, asJd sportsis planning to expand their business in India which is an Asian country. Already many multinational brands have established their outlets there and facing a tough competition.JD sportswill penetrate in the Indian market the very first thing they have to face is the war to be on the top from various national and international brands. To manage that organisationshouldusedthebesttechniquepossiblebymaintainingagoodcustomer relationship (Lumbanraja, Dalimunthe and Hasibuan, 2019). They can also minimize it by the advantage they have of manufacturing huge lot of products which they can sell on comparatively low prices in the market. Bargaining power of buyers:People always wanted to but products which are worth their money as they wanted affordable products but of high quality. If a company have small consumer base the bargaining power will be intense. The establishment should focus on locating their outlets and stores at different geographical and remote locations through that it will be helpful for them to acquire large quantity of consumers.Jd sportscan also achieve that by widening their product range as when people get a wide variety of options to choose from in one outlet they will definitely prefer to stick to one enterprise. Their product should also target to every segment of the market from elite class to upper middle and middle class buyers. Bargaining power of suppliers:Suppliers always have a upper hand in this and they have high negotiatingauthorityastheysupplyrawmaterialtoestablishmentandtheyknowthat organisations are dependent on them for their manufacturing and production process. To take advantage of this situation they tend to keep their demands high and sometimes increase their tariffs and charges extra as per their requiremnets.JD industrytackle this situation by diversified their providers they purchase and import material and resources from different distributes and try to experiment with the available raw materials in the production of new products (Omsa, Abdullah and Jamali, 2017).
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Internal analysis of the organization Internal analysis evaluate organization's internal environment and access resources, competitive advantage and competencies. It identifies weakness and strength of organization. This is done by using Jay Barney's VRIO analysis. There are four dimensions of this framework which are: Valuable:It is valuable for the company to expand in Indian market because Indian market will give many opportunities to the company to grow and increase the revenue.JD sportsis already a trusted company in UK so, company know and rather they have strategies to build customer value (Darling and et.al., 2019). Company will attract customer of the Indian market from its pricing strategy. They believe that if any company want to beat its competition then they should make their prices lower as compare to them. So,JDalso follows the same but without compromising on the quality. Research and development team of the company is also very efficient they observe change in market trend and make such new products which satisfy the demand of the customer. Innovation is the key to their success, they believe that considering customer preference is the priority before launching any product in the market. Rare:company also covers rare dimensions because they want to expand in India and Indian market do not have many sports brand and specific having less global sports brand in the market. This will give competitive advantage to theJd sports. This can even give rise to competitive parity if few companies got converted into many companies, and they also use similar way to carry out their business (Durand, Grant and Madsen, 2017). Those companies can even do the implementation of the same strategies and create cut-throat competition. IfJd sportslooses valuable resources this can hurt the company because they are very important for the market and Illustration3: VRIO analysis Source:VRIO Analysis,2020
consumers. Rarity is also very important because if competition have the exact resources, then they will not get competitive advantage in those resources. In this case different company should use same resources in different manner so to achieve the competitive advantage. Costly to imitate:if any resource is costly then the organization which don't have these resources for them it becomes costly to imitate or substitute at the reasonable price. Imitation can be done in two ways go for direct imitation of the resource or provide product/services that are comparable.JD sportscompany can face the threat of direct imitation because in India cheap labour are easily available and local company can hire those labours and do imitation of their products and will sell them in the market at low price (Ariyani and Daryanto, 2018). This will attract many customers and can reduce the market share of the company. Local company will identify that JD sports clothing are easily capturing the Indian market, so they find out that there is demand for that, so they motivate to imitate. Company's resources are expensive, but local company can compromise of the quality to beat the price. Organization:only the resource itself cannot give any advantage to the company if they are not organized then value cannot be taken from them.JD sportsshould organize its processes, functions, policies, management systems, culture, organizational structure etc. so to realize the potential of valuable, rare and imitate resources and their capabilities. Company should also follow formal reporting system. Manager's of the firm should take such decisions which help to achieve organization goal. Timely incentives and bonus should be given to the employees so that they get motivated which increase their productivity. By doing that only, company can sustain in the market and can achieve the competitive advantage. Company should take the advantage from its resources. So all the system of the organization should be organized in a proper way (Trigeorgis and Reuer, 2017). Identification of competitive strategies To attain competitive advantage in the market is must because many retailers have entered the market and catering innovative and stylish products, some companies have price advantage as they are providing services at affordable pricing some have quality and other have design related advantage. So to secure there place in the Indian market organisation should keep in mind and consider all the factors which their rivals are using and build their services and
product range strong enough to help them sustain in the market. To identify these strategies Porters generic analysis is applied which is discussed below. Porters generic model Cost leadership:The main motive of practising this strategy is to achieve leadership in the market with efficient value business management. This particular tactic enables the company to target the middle class segment of the market as this segment covers the largest percentage of the overall population (Islami, Mustafa and Latkovikj, 2020). The consumers belongs to this class give more emphasis to the pricing of the product. They tend to purchase things which are affordable and pocket friendly and also value for their money and cost leadership is the best pricing plan of action to be taken by the company.JD sportstargets on providing easy access to variety of commodities at inexpensive costing to people which results in increased sales growth and brand promotion and awareness. They not only have low pricing strategy but they also avail discount and shopping coupons to their consumers at various occasions to achieve high position and stability in the market and increase consumption of their products. Differentiation:Thesportsfashioncompanyusesacombinationofcostefficiencyand differentiation tactics to gain advantage in the market. This will facilitate the company to acquire the consumer base in India and other operating countries by emphasising over the innovative features of their utilities. Organisation apply this plan of action after identifying the customer preferences as they are more concern about their health conditions (Julita Julita, 2019). Industry Illustration4: Porters generic model Source:GENERIC STRATEGIES MICHAEL PORTER. 2019
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focuses on building a modified product which compliment to their raising concern by production of food wears with memory foam. By using the tool of distinction they can easily outrun other rivalcompaniesasJDsportshavehugefinancialfundtospendontheirresearchand development, advertising and promotional activities. This will help the enterprise to reach maximumcustomersandpromotetheirinnovativeproductwhichothercompaniesare inadequate in. Not only the commodities but the company image and history also help them to stand out from other establishments as they have a strong base and background. They are one of the oldest and well established brand having their stores in almost every country in the world. which help them to acquire customers trust more effectively. The best thing about them is although they went under various modification and adapted wide range of strategies and plans but their core remains the same and they never compromised with their quality this distinguish them from others. Differentiation Focus strategy:Establishment generally adapt this focus strategy to cater to niche marketing and deliver to a specific segment of the market. They have develop different planning for the different segment for the middle class consumers they have planned to focus on the costing by keeping it minimal and cater good quality products, which fulfil and satisfy the needs of the buyers in terms of pricing and attribute as well. For targetting the upper middle class and premium consumersJd sportshave focused on providing superior quality which have put emphasis on their designing , pattern and taste which achieve fulfil the requirement of those costumers for whom designing , colour and presentation are also equally important along with the quality as price is not much of a constraint for them (Lotayif, 2016).Jd sportsalso give importance to the unique packaging as this is also and beneficial factor which attracts people and they cant resist from making a purchase. Cost focus:Retailers have targetted the pricing to get the advantage as a large percentage of the population belongs to the price sensitive group. They have low spending power and they tend to invest their hard earned money on the utilities on the priority basis, starting from fulfilling the basic necessities first then they move forward to purchasing products which helps them to uplift their status and living standard. Fashion retailing industries are well aware about that mindset of their audience, so they prepare their business planning and strategies in accordance with that.JD groupconducted research in Indian market and being a developing country the purchasing power of the buyers is increasing rapidly but there is a huge population in India which belongs to
middle segment. They focuses on keeping their cost low and affordable to reach out to maximum number of audience as they are at their introductory phase in India. This will help them to penetrate in the market and attain high popularity and sales growth. For the metro cities and states they have applied premium costing as people there have high living standard and spending power is high so they introduce their premium quality products with latest designs and features in their outlets which targets the upper middle class and elite class of customer base (Min, Liangwen and Yue, 2018). Strategies direction: JD sports will go into product differentiation because the company is having skilled workforce and the capacity to launch the products in the market which can help them to increase the sales and eventually revenue as the innovative products can help in the growth of the company. Recommendations to the company Jd sports can put more focus on their online sales because they are earning good with their stores so, they can focus online also because now market trend is shifting from offline to online now people want to do shopping online because of lack of time, traffic they face etc. are somefactorstheyavoidwindowshopping(Fozerandet.al.,2017).Peoplecaneasily differentiate and compare one product with the other product in online shopping. For that they have to hire such people who can manage these online platform and also can manage company's website. CONCLUSION Through this report it can be concluded that JD sports company get many positive reasons to start their business in India. This company is already doing good business in UK and have strategies and skilled workforce through which different market can be captured. Indian markets are suitable for them and can help them to increase the revenue. All the factors of the country are analysed thoroughly and suggestions are given. This is find out by analysing external and internal environment of the organization using pestle, porter's five forces model and Jay Barney's VRIO model. Porter's generic strategies are also applied to evaluate organization
competitive strategies and to achieve the competitive advantage. The Best alternatives are evaluated and recommendation are given to the company.
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REFERENCES Books and journals Ariyani, W. and Daryanto, A., 2018. Operationalization of Internal Analysis Using the VRIO Framework: Development of Scale for Resource and Capabilities Organization (Case Study: XYZ Company Animal Feed Business Unit).Asian Business Research Journal.3. pp.9-14. Darling, E.S. and et.al., 2019. Social–environmental drivers inform strategic management of coral reefs in the Anthropocene.Nature ecology & evolution.3(9). pp.1341-1350. Durand,R.,Grant,R.M.andMadsen,T.L.,2017.Theexpandingdomainofstrategic management research and the quest for integration.Strategic Management Journal.38(1). pp.4-16. Ethiraj, S.K., Gambardella, A. and Helfat, C.E., 2016. Replication in strategic management. Strategic Management Journal.37(11).pp.2191-2192. Fozer, D. and et.al., 2017. Life cycle, PESTLE and multi-criteria decision analysis of CCS process alternatives.Journal of cleaner production.147.pp.75-85. HoLEE, J., 2020. Smart Study’s Strategy in the Kids Content Industry: VRIO Framework. Journal of Economics, Marketing and Management.8.pp.1-8. Islam, F.R. and Mamun, K.A., 2017. Possibilities and challenges of implementing renewable energy in the light of PESTLE & SWOT analyses for island countries. InSmart Energy Grid Design for Island Countries(pp. 1-19). Springer, Cham. Islami, X., Mustafa, N. and Latkovikj, M.T., 2020. Linking Porter’s generic strategies to firm performance.Future Business Journal. 6(1), p.3. Julita and Arianty, N., 2017. Porter’s Five Force Model For Superiority Of Micro Small And MediumEnterprises(Sme’s)InFaceTheAseanEconomicCommuniy (Mea).KUMPULANJURNALDOSENUNIVERSITASMUHAMMADIYAH SUMATERA UTARA. 4(2). Julita Julita, S.E., 2019. DEVELOPMENT OF PORTER GENERIC STRATEGY MODEL FOR SMALL AND MEDIUM ENTERPRISES (SME’s) IN DEALING WITH ASEAN ECONOMICSCOMMUNITY(AEC).KUMPULANJURNALDOSEN UNIVERSITAS MUHAMMADIYAH SUMATERA UTARA. 8(9). Lotayif, M.S., 2016. Selection factors of market segments and porter's generic marketing strategies: Evidence from an emerging GCC market.International Journal of Business and Management. 11(1). p.199. Lumbanraja, P., Dalimunthe, R.F. and Hasibuan, B.K., 2019. Application of Porter’s Five Forces to Improve Competitiveness: Case of Featured SMEs in Medan. Min, C., Liangwen, L. and Yue, X.G., 2018. New Thoughts on Porter's. IETI Transactions on Social Sciences and Humanities.1. pp.105-113. Omsa,S., Abdullah,I.H. and Jamali,H., 2017. Five competitiveforcesmodeland the implementation of Porter’s generic strategies to gain firm performances. Rastogi, N.I.T.A.N.K. and Trivedi, M.K., 2016. PESTLE technique–a tool to identify external risksinconstructionprojects.InternationalResearchJournalofEngineeringand Technology (IRJET).3(1).pp.384-388. 1
Trigeorgis, L. and Reuer, J.J., 2017. Real options theory in strategic management.Strategic Management Journal.38(1). pp.42-63. Zahari, A.R. and Romli, F.I., 2019. Analysis of suborbital flight operation using PESTLE.Journal of Atmospheric and Solar-Terrestrial Physics.192.p.104901. Online GENERICSTRATEGIESMICHAELPORTER,2019[Online].Availablethrough: <https://www.calltheone.com/en/consultants/generic-strategies-michael-porter> Porter'sFiveForcesAnalysis,2016[Online].Availablethrough:<https://www.visual- paradigm.com/tutorials/five-forces-analysis-tutorial/> ScanningtheEnvironment:PESTELAnalysis,2016[Online].Availablethrough: <https://www.business-to-you.com/scanning-the-environment-pestel-analysis/> VRIOAnalysis,2020[Online].Availablethrough: <http://www.free-management-ebooks.com/news/vrio-analysis/> 2