MS60043E: Strategic Management Report on JD Sports PLC Expansion

This report provides a strategic analysis of JD Sports PLC, a UK-based retailer of sportswear and fashion-wear. The report begins with an introduction to strategic management and the company background. It then delves into external environment analysis using PESTLE to identify threats and opportunities, followed by an examination of the competitive landscape using Porter's Five Forces. The internal environment is assessed using VRIO to identify strengths and weaknesses. The report explores strategic recommendations for expansion into the Asian market, incorporating SWOT analysis, and concludes with suggestions for Ansoff's Matrix. The analysis includes detailed examination of political, economic, social, technological, environmental, and legal factors. Additionally, the report addresses the bargaining power of suppliers and buyers, threats of new entrants and substitutes, and rivalry among competitors. The VRIO analysis assesses the value, rarity, imitability, and organization of JD Sports' resources.

Strategic Management

Table of Contents
INTRODUCTION...........................................................................................................................3
1. Identifying threats and opportunities by external environment analysis................................3
2. The Porter five forces that analyse the structure and nature of competition ..........................5
3. VRIO to demonstrate the internal environment for identifying strength and weakness ........7
4. Strategic Recommendations for the Organization..................................................................9
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................13

INTRODUCTION
Strategic management is useful function in every organisation to make sure that they organize, or
monitor their plan in order to achieve its objectives. There are various strategies that the
organization follow in which they assess the current situation, implement strategy accordingly,
and then analyse the effectiveness in the management. JD sports PLC is done its operations in
the sportswear and fashion-wear and established in 1981, founded by the John Wardle and David
Makin. The company is also combining with many famous brands namely Nike, Adidas, and
Puma and also has its own brand name called the Pink soda. In this report, the Pestle analysis is
explain in detail to examine the threats and opportunities of the company and the Porter Five
forces is describe to know about its micro environment. Moreover, the VRIO is evaluate to know
the internal environment along with the Bowman clock or Porter's generic strategies to
understand the competitive strength of the company if they want to expand its business in the
Asian market country like China. In the last, the ways of expansion is examine with the Ansoff's
Matrix and direction with its product or services.
1. Identifying threats and opportunities by external environment analysis
Pestle is vital tool to understand the strength and weaknesses of the company and generally used
in the business for the strategic planning management with the help of various factor. Lets
discuss more and the below paragraph will explain the brief points -
Political - JD sports long term profitability is thoroughly impact by the political factor if they
want to expand its business in the international country. There are various political factor that
effect the company as the JD sports is already operated in the different country and the
increasing tensions in the global market can affect the growth (Dehtiarova., 2018). If they want
to channelise there market in the country China if the political stability is higher and also
provides the friendly environment than the chances of survival is increasing. However, in case of
political disorder, it might demotivate the investors and damage the trust of the stakeholders that
consequently effect the performance of the organisation.
Economic - There are different factors that the need to be address before investing in other
country like the inflation rate, the policies of the bank, economic growth rate and the interest

rates that are applicable (Karyonoand Agustina, 2019). Its vital for the JD sports to understand
the economic factor as they determine the aggregate demand and supply of the product and the
investment in a country. Hence, in China the company should considered the education system,
the present stage of business cycle, unemployment rate, as through this the company will be able
to predict the spending chain of the buyers as a result of this the accurate pricing can be set for
the product easily .
Social - The social norms and values would impact the culture of the organisation. Choosing the
right demographic patterns like the population, the migration patterns of country and the
variables of the social culture would become the essential factor for the JD sports Fashion as they
operate globally. Evaluation of the demographic features of the China beforehand can assist the
JD in selecting the correct market segments for aiming the large growth potential. If company
set foot into the new market with high or low power distance than its must adjust its
management practices accordingly because the increasing inequalities in the many country is
changing the structure of power and become serious issues for the JD sports company.
Technological - JD sports has to assess the technological related factors. The market share is
expanding when the company pay attention on technological innovations or if they enter into the
market when the technology is not reached to the full growth than the chances become high for
long term sustain (Solihat, 2020). Research and development is paramount for the JD sports to
make the investment in order to maximise the profit and re-invest to for future technologies. The
JD sports can analyse the component by understating how the technology would impact the
profitability and help in increasing in long run and their implications on the company's finances.
Environment – As JD is operating in the sports wear so they have look into the matter of the
environment factors. Many countries took the initiative and placing the strict norms to ensure the
effective waste management is being done in every sector of business. Furthermore, accepting
the waste practices units that are located in the urban areas is vital for the JD sports. Business
efficiency can heavily be affected by the weather situation, if the climatic conditions is extreme
than the production department may suffer and compel the JD to make the value chain much
flexible than before.

Legal – JD sports must adhere to law that effect the business activities these are employment
law, discrimination law, employment law, and the health or safety law etc. as because the
different countries have their own law and legal framework (Rizaland Rokhani, 2019.). Hence,
in order to survive in the market the JD sports should need to acknowledge the legal factor of
China as all these examination will help the company to business without any legal hindrance.
To protect the companies patent the intellectual property regulations are outlined and the
inability to protect this right can result in losing the competitive benefits and weakens the JD
sports rank compare to other players.
SWOT analysis of JD sports:
Strength — JD sport have the most genuine suppliers of its finished products thus helps the
company to overcome with any hurdles that occur in supply chain. The company also has very
strong distribution network that it can reach with its potential market.
Weaknesses — JD sports need to develop more of its investment in order to upgrade with the
latest technologies. Company also not highly successful in collaborating with different work
culture.
Opportunities — Government provide new opportunities of green drive for procurement of JD
products by the state or federal government.
Threat — Strengthen the position of the local distribution in the market can bring a major threat
to JD as competition is increasing in the sports industries.
2.The Porter five forces that analyse the structure and nature of competition .
JD sports five forces model is explained in which the understanding of the business planning and
the profitability is influenced.
Threats of new entrants- JD sport will face the new entrants threat if the capital investment is
nearly high and if the company does not focus on their brand than the buyers can easily switch
the product due to poor brand loyalty. JD sports can tackle this situation if they manage the
customer- management connections so that they develop the brand value. The company also plan
to invest in the research and development functions to attract the valuable buyers and also brings
the innovation in the goods and services.

Bargaining power of supplier- The role of supplier is crucial as they can change their prices if
they know that the their dependency is high in the company. The supplier is low in number as
compared to buyers in industries in which JD operates, this factor makes the supplier have less
control over prices and makes the bargaining power a weak drive (Barba-Sanchez, Calderón-
Milánand and AtienzaSahuquillo 2018). Therefore, the company manage this factor by acquiring
the exclusive rights from the suppliers to supply the raw materials and looking for new products
from various raw materials.
Bargaining power of buyer – The customer is essential for the company as they often demand a
lot. If the customer base is smaller and stronger than the chances is increasing for the company
that they have high bargaining power of buyers. The JD sports can solve this by producing the
creative products continuously as the buyers always seek discounts and offer on established
goods and if the company coming up with fresh products every time than they can limit the
bargaining power in the market (Haseeb,and “et.al” 2019) . Furthermore by building a huge base
of customers from different segments than it will not only limit the bargaining power but also
provide the firm to streamline its production and sales management function.
Threats of substitute services or products - There are not huge substitute available in the
market in which JD done its business so the buyers have less options to buy goods and those
industries who are engaging in this business are having very less profit. As a result, there are no
chance for the firms that they earn maximum profit in this sector of business and make the
substitute a weaker force for the JD sports (Koch and Windsperger, 2017). If the company focus
more on the services and the quality of products and set the prices low as compare to the
substitutes than it might be possible that the customers will less likely to switch with the
substitute goods that present in the market. JD sports can focus on the differentiation of the
products and before supplying any goods its essential to do market research to get the better
understanding of the needs or wants of its customers.
Rivalry among existing competitors – If the rivalry in the market is high than it will bring
down the cost of the product and the industries is highly competitive in which JD sports operates.
JD sports can lower this down by maintaining a sustainable differentiation, establishing a scale
so that its can compete well and raising a brand equity. The JD sports can get knowledge about
the demand and supply condition in the industry with the help of market research so that it can
reduce the overproduction.

3.VRIO to demonstrate the internal environment for identifying strength and weakness
The VRIO is tool to identify the competitive advantage that they provide to the company . The
JD sports can conduct this function to know the connections between the internal or external
activities so that they enjoy the competitive advantages.
Value
The JD sports VRIO factor shows that the financial resource are extremely valuable sources for
the company as these are providing assistance in making the investment into external
opportunities that may appear in the future (Ariyani,and Daryanto, 2018). Hence, the value factor
show that the domestic food sector of the JD sports is valuable resources for the company as
those goods are hugely differentiated and these are also provide more value for the buyers.
Moreover, the employees is also consider a valuable source for the JD sports as there well
trained staff will bring the more productive output and that too with efficiency. As the retention
level among the company is increasing it will make the employees loyal.
Rare
According to the VRIO, its financial resources of the JD sports which is rare because having the
strong financial resources are only acquire by the strong or large companies. The patents of the
JD sports are found to be rare according to the VRIO analysis as these are not conveniently
available in the market and not to be hold by any competitors. Finally, the distribution network is
meant to be rare resource because it will require a huge amount of investment and time to step up
in the market along with the good network of distribution as compared to JD sports and these are
also owned by very few industry sector.
Imitable
It shows how easy to copy organization's product, assets, and resources. Mostly the resources of
JD sports plc are highly expensive to get duplicate or copied. As it is one of the oldest brand
therefore it becomes easy for JD sports to purchase such luxuries resources but it is very difficult
to copy or purchase such resources for the newly formed companies even the employees of JD
sports are also rare and experienced for that JD sports offers them a handsome salary package
which is difficult for the new entrants to give such high salary and packages so the employees of
JD sports are not easy to imitate (Tomy, and Pardede,2017) . With the help of VRIO analysis,
company gets to know about its valuable delivery network which is very difficult to copy for

competitors. To copy such huge delivery network competitors need to invest huge capital and
efforts top acquire a good distribution network.
Organisation
It refers a well-organized management, procedure, and culture of the company. With the help of
efficient management any organization know about its valuable, costly and rare resources. In JD
resources the management is very effective to use its resources to meet the opportunities. Due to
effective management the company is able to fight against the threat and weaknesses. The
delivery and distribution channel of JD sports is also well-organized and it is efficient to get
reached at its targeted customer.
4. Strategic Recommendations for the Organization
JD Sports PLC is famous brand in UK. It is leading in fashion merchant. The JD Sports PLC is
acknowledged for its duty and quality. Micro and Macro environment may impact on the
specific part. Therefore, Porter's generic strategies and Ansoff Matrix is used before expanding
the business in China. Porter's Generic Strategies, Bowman's Clock Strategy and Ansoff Matrix
is help company in expansion of the business.
Porter's Generic Strategies
This strategy is introduced by Michael Porter in 1980. It explains how organization desire to use
competitive advantage across its new market. This model describes how the firm can act on
competitive benefits. This strategy includes cost leadership, differentiation and focus. The
company should take a clear selection between differentiation and cost leadership strategy. JD
Sports PLC can use this strategy to expand its business in China. The company can adopt the
combination of cost leadership, focus and differentiation (Hitt, and Duane Ireland, 2017). The
development scheme adopted by JD Sports PLC to achieve growth targets such as product
development, market development etc.
Cost Leadership Strategy:
This strategy is about decreasing the cost to the company of delivering product and services. In
this company try to increase profit rate by minimizing the costs. Company also increase market
share by charging low prices. JD Sports PLC uses cost leadership strategies in different markets.
It involves profit of competitive advantage by reducing the cost. Objective of using this strategy
is to fix the market leadership place through value chain management. It allows JD Sports PLC

to expand their business in China by targeting middle class customers. Middle class consumers
are play important role in this strategy. JD Sports focusing on supply and easy availability of its
products and services across the world.
Differentiation Strategy:
This strategy involve uniqueness in product or service. Differentiation is most common strategy
used by organization to build market base and to attract customers. In this strategy company
provide different and attractive product or services from which new consumers attract. Some
companies use this strategy with cost leadership strategy to achieve growth objectives. Adoption
of this strategy by JD sports allows to spread their business and attract consumers by providing
unique product features. JD sports objective to use differentiator strategy is to differentiate the
products by consumer needs or interest and innovation. JD sports extended their product
consumption according to consumer interest to differentiate itself from industry. This strategy
helped JD Sports to busied strong and loyal customer base. Through, this strategy company can
stand out and be different in market. For differentiation JD Sport invest high amount in
marketing and for advertisement pay heavy amount to celebrity to just create differentiation from
other brands.
Focus Strategy:
It is 3rd generic strategy that motivate companies to concentrate on their target and goals.
Company use this strategy by understanding the impulsive market and customer needs for
unique products (Dvorský, 2020). In this strategy company focus on particular market or goals.
Company concentrate on particular market segment or customers. In this strategy JD Sports
focus in both terms low cost and offer best value. In low cost service company try to focus on
particular market and provide services in low prices and in best value company provide the best
product according to customers need and expectations such as design of the product, size, Price
etc.
It recommends that to JD Sports PLC expand their business in Asian country it can use cost
leadership strategy and differentiation strategy. It provides befits to JD Sports PLC such as quick
brand recognition, attracts new customers, etc. JD Sports also use these strategies to set the base
for competitive market and to attract new consumers. Combination of these strategies help
company to make more profit and achieve its objectives and goals.

Bowman's Clock Strategy
This model is used to show strategic positions of different operation in business. It helps JD
sports company to make sense of competition and competitors positions. Bowman's Clock
Strategy divided into eight different parts such as:
Low price low added value: This strategy usually used by JD sports to differentiate the value of
the product. In this company used cost effective selling volume.
Low Price: In this part JD sport can set low price to attract new buyers. It set low profit margins
and high market shares.
Hybrid: This method help JD sports to provide high product value compare to other competitors
at low price. Hybrid strategy help JD sports to create loyal customer base. For example JD sports
discount stores.
Differentiation: In this JD sports can build a unique selling point for its product and make
difference from other competitors. By doing this company can fulfil its competitive advantage.
Focused Differentiations: By using this method JD sports can increase their product value.
Focused differentiation help JD sports to attract more new customers.
Increased Price and Standard Product: This method can decrease market image of JD sports. I
this method company charge high for normal product in comparison to other competitors.
High Price Low Value: In this part company set high price for low value product. This method
usually used in monopolies because they don't have any competition.
Low Value Standard Price: If company use this strategy then they will definitely lose their
market because in this strategy company set high price for low product.
Ansoff Matrix
JD Sports is UK based company. To expand their business in Asian countries such as China they
need to first studying the market for development or implement the essential changes for
betterment or growth of the company. Ansoff matrix is used in research for market. Ansoff
matrix has four sub-parts such as market penetration, market development, product development,
and diversification.

Market Penetration Strategy:
The aim of this strategy is to sell existing product in existing market. In this strategy customer
focus on existing customers and increasing market share for existing products. It is primary
strategy for growth in existing market. In this strategy JD Sports trying to develop or update their
current products and sell it to existing customers for growth in shares. Organization offers
various discount offers, coupons and advertisement to growth in market. It used different generic
strategies in market penetration to achieve market goals and objectives (Zainal-Abidin and
Mohd-Roslin., 2020).
Product Development Strategy:
In this strategy company try to introduce new product in existing market. This strategy was
successfully used if company have strong and loyal; customers who trust companies product and
try new products as well. This strategy involves new product development and update or modify
existing products. JD Sports have sub brands like Black Leisure, Chau Sports and few others
because product development play important role in JD Sports. Product development methods
help JD Sports to give strong competition to competitive companies and market.
Market Development Strategy:
It is supporting strategy. In this strategy company try to expand their business in new market or
new customers. Company try to sell their products in new customers or new geographical area.
JD sports extend their business by entering in new market or industries. By this they have
significant growth in market because this organization acquired all sports, blacks and Scots. JD
Sports also operate at internation level so it has foreign brands like a sprinter in Spain, Chau
sport from France. Similarly if JD Sports want to expand their business in Asian country like
China, this is most helpful strategy for company.
Diversification Strategy:
This strategy involves new market with new products. In this strategy company expand their
business in new market with new products. The Best time to execute this strategy when market
saturated. JD Sports used this strategy when it introduced its skull candy product and focused on

new customers who like to listen musing while playing. It expands its sales and growth in market
using Diversification strategy. It promotes its new product in social media and magazines.
CONCLUSION
This report present the valuation of current performance of JD Sports Company. This report
concludes the JD Sports PLC current position and what strategics recommended for company.
This report show company's current strategy using models and framework such as PESTLE
analysis, Porter's 5 forces framework and it also shows internal analysis using Jay Barney's
VRIO analysis. It also presented opportunities and threats in internal and external environments.
This report help JD Sports PLC in analysis of competitive strategies and also show the best
alternative recommendation to expand their business in Asian country. For strategic
recommendation it used Porter's Generic Strategies and different strategic methods in different
directions such as market, products, services etc. This reports also showed the expansion
methods such as Ansoff Matrix. Ansoff's Matrix and Porter's generic growth strategies are
discussed the environment of the market where JD Sports PLC invest. This report analysed the
JD sports position in market and using generic and external growth factors to expand their
market size.
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.
Barba-Sanchez, V., Calderón-Milán, M.J. and Atienza-Sahuquillo, C., 2018. A study of the value
of ICT in improving corporate performance: a corporate competitiveness
view. Technological and Economic Development of Economy. 24(4). pp.1388-1407.
Dehtiarova, I.B.. 2018. Strategy of Enterprise.
Dvorský, J., and ET.AL., 2020. Selected aspects of strategic management in the service sector.
Journal of Tourism and Services, 11(20), pp.109-123.
Haseeb, M.,and “et.al” 2019. Role of social and technological challenges in achieving a
sustainable competitive advantage and sustainable business
performance. Sustainability. 11(14). p.3811.
Hernández, J.G.V. and Garcia, F.C., 2018. The link between a firm s internal characteristics and
performance: GPTW & VRIO dimension analysis. Revista de Administração
IMED.8(2). pp.222-235.
Hitt, M. and Duane Ireland, R., 2017. The intersection of entrepreneurship and strategic
management research. The Blackwell handbook of entrepreneurship, pp.45-63.
Karyono, O. and Agustina, K., 2019. Determining the Priority Strategy in the Implementation of
E-Government Through Swot Analysis Model. Budapest International Research and
Critics Institute (BIRCI-Journal). 2(2). pp.66-74.
Koch, T. and Windsperger, J., 2017. Seeing through the network: Competitive advantage in the
digital economy. Journal of Organization Design. 6(1). p.6.
Rizal, S. and Rokhani, H., 2019. ANALYSIS OF PERTAMINA RETAIL E-COMMERCE
BUSINESS DEVELOPMENT STRATEGIES WITH A CANVAS MODEL
BUSINESS APPROACH. Russian Journal of Agricultural and Socio-Economic
Sciences. 95(11).
Solihat, A., 2020. Strategy Analysis of SME's Printing Service in Garut. Management and
Entrepreneurship Research Review. 1(2). pp.79-88.
Tomy, S. and Pardede, E., 2017. Opportunity evaluation using uncertainties in software
entrepreneurship. Entrepreneurship Research Journal. 7(3).
Zainal-Abidin, H.A. and Mohd-Roslin, R., 2020. An Internal Marketing-based View of Porter’s
Model of Competitive Advantage: The Conceptual Framework. International Journal of
Business and Technology Management. 2(3).pp.58-67.