Strategic Management Analysis: JD Sports PLC's China Expansion Plan

This report provides a strategic management analysis of JD Sports PLC's planned expansion into the Chinese market. It begins with an executive summary and introduction, followed by an in-depth external analysis using the PESTLE framework and Porter's Five Forces to assess the political, economic, social, technological, legal, and environmental factors, as well as the competitive landscape in China's retail industry. An internal analysis, employing value chain analysis, examines JD Sports PLC's capabilities and competencies. The report identifies a suitable business strategy, outlines strategic directions, and concludes with recommendations for successful market entry. The document aims to help the company navigate the complexities of the Chinese market and achieve its growth objectives. The analysis covers market segmentation, and product targeting.

Strategic management

EXECUTIVE SUMMARY
This report is associated with strategic management that is helpful for the business in
order to attain prominence while entering into new market size. In the background of JD Sports
PLC the company is trying to expand in Chinese market and for this purpose external and
internal analysis is performed through this report. In order to attain prominent opportunities this
is imperative for the organisation that they analyse external and internal market conditions and
minimise possibilities of threat. Along with this by taking assistance of market segmentation,
product can easily be targetted to customer in most effective manner.

Table of Contents
EXECUTIVE SUMMARY ............................................................................................................2
INTRODUCTION .........................................................................................................................4
MAIN BODY...................................................................................................................................4
EXTERNAL ANALYSIS ...............................................................................................................4
INTERNAL ANALYSIS ................................................................................................................9
IDENTIFICATION OF BUSINESS STRATEGY .......................................................................12
STRATEGIC DIRECTION ..........................................................................................................13
CONCLUSION AND RECOMMENDATION ............................................................................14
REFERENCES .............................................................................................................................15

INTRODUCTION
Strategic management is defined as the concept in which organisation plans their policies
in order to attain their goals and objectives in easy manner in order to sustain within competitive
business environment. Strategic management is helpful in order to impose prominent policies
within business functions so that to provide benefits to the business. With the help of strategic
management high power can be gained by business and by this organisation can dominate the
market in appropriate manner. Besides this strategic management plays a significant role in
meeting long term insights of the business through which sustainability can be attained as well
(Ansoff and et. al., 2018). This report is prepared in order to understand various concepts
associated with strategic management in the background of JD Sports PLC which is a UK based
retailer of sports and casual wear which was founded in the year of 1983 by Wardle and David
Makin. In current time the company is facing major challenges of downfall in their profit and
obtained with higher competitiveness within marketplace due to which company is losing their
identity from market. The major quality existed within clothing range of JD Sports PLC is that
they are high in fashion aspect and quality aspects. The BOD of JD Sports PLC in UK has
decided to expand their business in Chinese Asian Market in order to grow within international
markets. This report is covering internal and external analysis for the business by which new
opportunities can be attained by JD Sports PLC.
MAIN BODY
EXTERNAL ANALYSIS
External analysis is defined as examining extrinsic factors which are existed outside the
business and those are having high edge implication on business functions. With the application
of PESTLE framework external factors can be identified as along with examining their positive
and negative impact over the business. In the context of JD Sports PLC as the company is
planing to expand their business in Chinese market so this is significant that they analyse market
situation along with various factors so that to maintain strategic position within marketplace. For
JD Sports PLC PESTLE analysis of China is elaborated as under:
Political factor: China is the largest populated country in the world and 3rd largest country
by land area (Taródy, 2016). China is having strong political system due to which the country is
associated with boosted economy. Besides this the government of China has prominent

commitments in order to flourish enhanced production fro varied businesses in easy manner.
Industries are getting higher support from government in order to succeed and grow in Chinese
market. JD Sports PLC is planning to expand their business in Chinese market as this segment of
market is providing immense opportunities for the companies to grow and attain sustainability as
well.
Economic factors: Economic factors are associated with exchange rates, business cycle,
and economic growth rates. This is significant for a business to examine impacts of economic
prosperity within business functions. China is the second largest country in the terms of higher
GDP which proves that country is having sound economic position. Besides this cheap labour is
the most favourable aspect for the country to provide high competitive advantage for the
businesses surviving in China. For JD Sports PLC the country is providing immense
opportunities in terms of tax rebates and interest rate relaxation.
Social factors: Social factors are associated with culture, demographics and preferences
of customers. In this factor the major challenge is culture of the nation as this includes ethical
attitude of citizens and their purchasing power as well. In the context of China, the country is
over developed so they are the pioneer for any technology. In this regard JD Sports PLC may
face problem to set their business over there as the China already have established business in the
same industry. Besides this spending capacity of people over China is high this is a positive sight
for JD Sports PLC in order to expand their business in Chinese market (Garzella and aele
Fiorentino, 2017).
Technological factors: These factors are as associated with using emerging technology
in the business in order to provide technological advancement to the business. This is the most
vital factor as in current time demand of technology is higher. In current time nano technology
and internet technology has integrated with retail sector in order to provide opportunities to the
business and to capture higher market size as well. In the context of China, the country is
technological advanced which innovations are inhaled by the country in prominent manner. For
JD Sports PLC this aspect is providing high edge opportunities as the company is using
advanced technology in their business functions which is aligned wit customer needs of China.
Legal factors: These factors are related with legislative and regulatory aspect of the
country (Kalaman, Okulicz-Kozaryn and Purtskhvanidze, 2019). For instance restriction imposed
on merger and acquisition or liberal FDI policies. In the context of China there are numerous

laws and regulations which are required to be followed by business in order to operate in smooth
manner. Besides this the country is encouraging FDI due to which opportunities are provided to
foreign companies in order to operate their business in China. This factor is providing immense
opportunities to JD Sports PLC to invest and expand in China as the country is associated with
liberal policies of FDI which could be helpful for the company in initiating their business
functions in China (Kalıpçı and Yay, 2018).
Environmental factors: These factors are associated with using sustainable practices in
the business so that to minimise negative impact to the environment and to attain opportunities
for business enhancement by intensifying goodwill. China is one of the most rapid growing
nation due to which negative impact is seen over environment due to high industrial wastages
which is impacting biodiversity and environment of the nation in adverse manner. In this respect
JD Sports PLC is required to use sustainable business procedure such as recycling of material
and using paper friendly practices in their business. This could lead the business to enhance their
survival probabilities in China.
Porter's five forces
This model is helpful in order to identify attractiveness of the industry by analysing five
forces. These forces are associated in order to frame industry's structure and competitive rivalry
existed within industry. With the help of this model profit potential of the industry can be
determined which could lead in attaining benefits from rivals. In the context of JD Sports PLC as
the company is planning to expand their business in Chinese market so this is required that they
analyse industry rivalry so that to take out decision in appropriate manner (Acar and Özşahin,
2018).

Competitive rivalry
Competitive rivalry is defined as existence of number of competitive existed within the
same industry selling homogeneous products. When competitors of the business are equally
sized then this may lead the competitor to dominate market. In the context of clothing industry
high competition is existed as there are so many companies which are manufacturing clothing
range of varied aspects. For JD Sports PLC as the company is planning to expand their business
in Chinese market so this threat is higher for them as market of China is already laced with huge
product portfolio and customisation as well (Höglund, Holmgren Caicedo and Mårtensson,
2018).
Threat of new entry
This threat is associated with degree of ease pertained within industry in order to
influence overall market competition. This is the very crucial dimension in order to survive
within an industry and under this factor various barriers are existed such as governmental

intervention, scale and expected retaliation. In this respect markets of China are liberal in which
companies can initiate their business in easy manner. For JD Sports PLC as the company is
expanding their business in Chinese market so this threat is having high impact over business of
the company as due to liberal policies high entries are exhibited by the nation which creates
competition for JD Sports PLC.
Threat of substitute
This force is defined as number of similar products existed in the market which may
displace attractiveness and cost of other company. In this aspect businesses are facing problems
in sustaining and dealing with their competitors. In this way China is the most emerging country
in the world due to which buyers are having various options of purchasing. In this context JD
Sports PLC is facing high edge problem as China is already an established country due to which
they are going to face problem in placing their product. In order to minimise this threat JD Sports
PLC is requisite to inhale product differentiation so as to sustain in Chinese market (Drumaux,
2018).
The power of buyer
This threat is denoted as power held by buyer in order to access market, in the presence
of high power of buyer this may lead the business to offer their service or product in lower
prices which may minimise the profit. Besides this when buyer's power is low this may lead in
controlling prices by the company. In the context of Chinese market as customer are having
varied options to buy from so buying power of customer are high. In this regard JD Sports PLC,
the company is facing threat of high buying power and for which they are required to maximise
efforts put in order to make their clothing range highly differential and laced with high quality.
The power of suppliers
Suppliers are defined as the person and parties those are providing raw material to the
organisation. For retail industry they have different suppliers through which they are taking
varied raw material and processing their business operations (Vetrov, Vandina and Galustov,
2017). China is having less in labour cost due to which every company is keeping huge portfolio
of suppliers and this is the reason that power of suppliers are rarely impacting business functions.
In the context of JD Sports PLC the company is facing low power of suppliers as they have
number of suppliers in their business.

INTERNAL ANALYSIS
Internal analysis is defined as the tool by which internal capabilities of the business can
be examined in such a way that objectives of the business can be aligned with organisational
capabilities. In the context of JD Sports PLC the company is planning to expand their business in
markets of China so this is the major task for them that they analyse their internal competencies
in such a way that they can modify business processes whenever needed (Putz, 2019). For JD
Sports PLC internal analysis is taking place with the help of value chain analysis and the same
are elaborated as under:
Value chain analysis
The value chain is described as differentiation of activities existed within an organisation
with the help of those product and services are created and delivered in prominent manner. All
the successful business organisation they keep high value system in their organisation in which
appropriate relationship is created with product or services.
When an organisation is trying to attain competitive advantage then it is required that
they understand important activities of their business so that to align those activities within
business objectives. The concept of value chain is related with recognising those frameworks
which are essential for the business in dealing with complexities and grabbing high end market
opportunities to sustain (Desislava, 2017). In this regard JD Sports PLC is planning to expand
their business in Chinese market so for this it is required that they analyse their internal
competencies and capabilities so that to acquire market competitive edge. This model is having
various dimensions which are elaborated as under:

Primary activities
Inbound logistic
These activities are related with storing, distributing, handling, stock of material and
transporting the same to associated party. These functions are primal for the business and
required to be enhanced in order to get desired output. In the context of JD Sports PLC as the
company is making strategic plans to expand their business in Chinese market so this is
imperative for them that they understand the way in which they can manage their stock as the
they are running retail business. For retail business this is necessary that they manage their stock
in such a way that stock out position can be avoided (Levinthal, 2018).
Operations
These are the operations which are used in order to convert raw material into finished
goods. This includes machining, packaging, testing and any manufacturing related activities. In
the context of JD Sports PLC the company is managing retail stores so this aspect holds higher
value to them. The company is emphasised on enhancing overall value so in order to boost
operational efficacy this is needed that they introduce prominence in their business operations.
On the other hand testing of final product is the another aspect for JD Sports PLC as the
company is known for their quality so this feature is adding value to overall business.
Outbound logistics
This is defined as the manner in which product and services are distributed to ultimate
customer such as by using distribution channels, warehousing etc. In the context of JD Sports
PLC the company is having online presence as well so they use internet as mediator in order to
distribute products to their customers. On the other hand the company is having prominent
existence over various retail stores which enhances their possibility of attaining market success.
JD Sports PLC is planning to expand their business in China so in order to get business success
in flourished market the company can enhance their distribution channel so that to deal with
market competition (Durmanov and et. al., 2019).
Marketing and sales
Marketing and sales are the other aspect which could be helpful for a business to add
value within business operation. Marketing is defined as the activity which is associated with
spreading awareness and sales activities includes administration of sales. In this context as JD
Sports PLC is willing to expand their business in Chinese market so they are required to use

appropriate channels to market their products. This could add high value in their business so that
they can deal with market challenges of China.
Service
This is associated with enhancement and maintaining value of product and services by
providing after sale services in optimal manner. JD Sports PLC is a retail organisation in which
the company is required to provide effective after sale services so that to obtain high customer
satisfaction and enhanced market image. In this regard JD Sports PLC is planning to expand their
business in Chinese market so this is required for them that they attract their customer by
introducing prominent after sale services so that to retain them as well (Bryson, 2016).
Support activities
Procurement
This is the process under which various resources are being acquired by an organisation
in order to run their business with higher efficacy. In the context of JD Sports PLC the company
is trying to procure resources in appropriate manner so that to attain succession over markets of
China. This could enhance overall value of the organisation in which they are able to attain goals
and objectives in easy manner.
Technology development
This is defined as usage of prominent technical know how in order to run the business
with high level of prominence. This way JD Sports PLC by using appropriate technology in their
business they can add value to overall business due to which JD Sports PLC can sustain in the
market for longer time. On the other hand demand of Chinese market is associated with usage of
high tech functions within business so by adopting emerging technology the company can
acquire success and sustainability.
Human resource management
This is defined as the dimension in which human capital within business is being
managed. In such way JD Sports PLC is required to manage their human capital in such a way
that this may lead in value enhancement to the business by which goals of the business can be
attained in optimal manner. JD Sports PLC is performing prominent functions in retail sector so
this is the responsibility of their management that they manage their human capital in prominent
manner.
Infrastructure

These are defined as support system for the organisation and this allows the business to
perform their routine functions in appropriate manner. This activity is associated with planning,
accounting, finance and quality management systems within JD Sports PLC.
IDENTIFICATION OF BUSINESS STRATEGY
JD Sports PLC is planning to launch their business in China so for this the company is
required to recognise the most prominent business strategy so that they can enhance their
survival probabilities and earn market success in short period of time. In order to analyse
business strategy Porter's generic model is used which is elaborated as under:
Cost leadership
Under this strategy businesses are concerned to lower their cost and capture higher
market size as well. This strategy is helpful for attaining economies to scale and to make more
profits. In this strategy input cost are playing major role, so in order to attain prominent
competitive edge businesses are required to control their cost. In the context of JD Sports PLC
the company is trying to maximise their output so that to control their cost (Soltani and et. al.,
2019).
Differentiation strategies
Under these strategies some uniqueness within product or services are introduced in order
to capture higher market and customer as well. This strategy is helpful in attaining prominent
identity within marketplace that would help the business to grow and sustain as well. In the
context of JD Sports PLC as the company is operating their business in retail chain so this is
imperative that they introduce differentiation in size and place of their retail outlet in order to
bifurcate them from others. In order to deal with market competitors in China JD Sports PLC is
requisite to differentiate their products and services so that they can maintain unique identity
within marketplace and attain specific edge in competitive market.
Focus strategies
This strategy is divided into two variants such as cost and differentiation. In cost focus
prices of homogeneous products are lowered so that to attract high ranged customer and meeting
sales target. In the context of JD Sports PLC as the company is dealing in retail chain so they are
having portfolio of homogeneous products, so in order to get success in Chinese market the
company can focus on decreasing prices of those segment which are homogeneous and customer
are pertained with verity of choices to buy from.