Strategic Management Report: JD Sports Expansion into Asia

This report provides a strategic analysis of JD Sports, a major UK retailer, focusing on its expansion into Asian markets. It begins with an executive summary, outlining the company's current position and objectives. The main body of the report examines JD Sports' external environment using PESTLE analysis, considering political, economic, social, technological, legal, and environmental factors. It also analyzes the microenvironment using Porter's Five Forces, assessing competitive rivalry, supplier power, customer power, the threat of new entrants, and the threat of substitutes. The report then explores JD Sports' strategic positioning and recommends strategies for market development and cost leadership to facilitate growth in the Asian market. The analysis includes discussions of strategic management tools such as the Ansoff matrix and Porter's generic strategies, supporting the recommendations with relevant data and insights. The report concludes by summarizing the key findings and recommendations for JD Sports' strategic direction.

Strategic management

EXECUTIVE SUMMARY
Present report is based upon JD Sports which is one of the largest retailers of United
Kingdom and operating business in different countries around the world. Currently the entity is
willing to expand its business in Asian countries for this purpose it is required to analyse internal
and external environment of business. There are various strategic management tools that are
required to be used for this purpose. These are PESTLE, VRIO and Porter’s five force analysis.
In order to determine strategic direction, the entity uses different models such as Ansoff matrix
and Porter’s generic strategies. It has been recommended to the entity that it should use cost
leadership and market development strategies so that it can attain growth in Asian market.

Table of Contents
EXECUTIVE SUMMARY.............................................................................................................2
Table of Contents.............................................................................................................................3
INTRODUCTION...........................................................................................................................1
MAIN BODY..................................................................................................................................1
1. Current strategic positioning of the organisation.....................................................................1
2. Identification of competitive strategies along with strategic recommendations that could be
proposed for the organisation......................................................................................................7
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Strategic management could be defined as the process of monitoring, analysing and
determining organisational performance and managing it in systematic manner. It is very
important for all the businesses to be focused with it as it can help to analyse the strategies that
should be formulated by the entity for betterment of business. If the organisations will not pay
attention towards it then it may affect functionality of operational activities. On the other hand, it
could be described as an ongoing process which is mainly related to the management of business
in strategic manner by keeping detailed information of all the operations (Arunruangsirilert and
Chonglerttham, 2017). Main aim of this assignment is to understand importance of strategic
management for businesses so that effective policies for future could be developed. This report is
based upon JD Sports which was established in 1983 by David Makin and John Wardle. It is
operating business in various countries including Ireland, Spain, Denmark, France etc. Currently
the enterprise is focused with progressive development of business in Asian countries. All the
operations are executed by it in retail industry. This sector of UK is very big and total revenues
that are generated by this industry in 2019 were around 394 billion pounds which was very huge
therefore the industry is very big. For this purpose, it is planning to target more countries by
finding strategic option. This assignment covers various topics such as internal and external
environment analysis of the organisation along with strategic recommendations that could be
proposed for the company.
MAIN BODY
1. Current strategic positioning of the organisation
External environment: It could be defined as the environment that consists different
types of outside factors that are influencing or impacting the business operations. While planning
to determine current position of the organisation it is very important for entities to make sure that
they are analysing the external environment as it will help to accomplish the goals. JD sports is
one of the leading UK specialist retailers of fashionable brands that sales sports and casual wear.
The management teams of the organisation are evaluating micro and macro environment for the
purpose of analysing external environment (Augier and Teece, 2018). The discussion of it is as
follows:
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Macro environment: It could be defined as the condition which is available within the
economy which is focused with analysis of various external factors. As JD Sports is willing to
analyse its current position in the market so it is important for it to determine all the macro
environment factors for this purpose. With the help of PESTLE analysis, it will be easy to
analyse these components. Discussion of all of them is as follows:
PESTLE analysis: It is a strategic management tool which is used by businesses to
analyse impact of all the external factors upon functionality of business. For companies like JD
Sports it is very important to make sure that they are focused with use of it as it can help to
determine current position of business. There are various elements of it which includes political,
economic, social, technological, legal, economic etc. By paying attention towards all of them the
organisation will be able to analyse actual position of it (Berisha Qehaja, Kutllovci and Shiroka
Pula, 2017). Discussion of all the elements of this analysis in context of the company is as
follows:
 Political: There are various aspects that are required to be focused by entities while
analysing implication of this factor. These are policies of government, foreign trade rules,
political stability, trade restrictions, taxation policies etc. For JD sports it is also very
important to be focused with it as it can help to carry out operations with support of
political parties. In order to carry out operations the organisation is following all the
restrictions for trade that are imposed by legal authorities of different countries. In order
to expand the business in Asia it will be also very important for the entity to follow the
rules imposed by political parties. It facilitates the execution of all the operations in
systematic manner.
 Economic: Different elements of this factor that are required to be focused by the
businesses includes exchange rate, disposal income, inflation or deflation rates etc.
Fluctuation in these factors result in changes in purchasing power of the customers. JD
Sports is also focused with all the economic factors as it is paying attention towards
changes in all the rates. It is facilitating it to ignore the possibility of reduced sales
because it formulates the policies and pricing strategies according to the exchange,
inflation and deflation rates. While planning to expand business in Asian countries the
entity will be required to be focused with these factors (Bryce, 2017).
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 Social: Aspects such as lifestyle attitude, income level, demographics, culture etc. are
considered as the part of it. It is very important for all the entities like JD Sports to make
sure that they are focused with all of the as it can help to meet expectations of clients.
The organisation is formulating these strategies by paying attention towards them which
is helping it to sustain in the market. All the items that are sold by the organisation in the
market are offered on the basis of expectations of clients the help it to retain them for
long run in future.
 Technological: There are various aspects of this factor that includes advancement in
technology, innovation etc. In order to be the first choice of all the customers it is very
important for the entities to make sure that they are using latest technologies and focused
with technological factors. JD Sports is also using latest technology for marketing related
activities which is facilitating it to reach maximum number of clients. With the help of it,
the enterprise is attracting large number of customers and it is resulting in increased
number of clients for business (David and David, 2016).
 Legal: All the rules, regulations, policies and legislation that are imposed by government
are known as legal factors and for all the businesses it is very important to carry put
operations accordingly. JD Sports is one of the largest retailers in UK which is operating
its business in different countries. As it is planning to expand business in Asian market so
it is very important for it to make sure that all the policies of the countries are followed
by it. For example, as the governmental policies changes with time therefore for a
business entity it is very difficult to modify its policies frequently. If the changes will not
be made then it may result in legal actions against the company.
 Environmental: Different types of factors such as environmental protection act,
corporate social responsibility etc. are the key elements of this component of PESTLE
analysis. It is very important for companies like JD Sports to make sure that all the acts
related to environment protection are focused by it in the Asian countries where it will be
expanding its business in future. It will be beneficial for the enterprise to attain its
objective of capturing larger market share.
Micro environment: It could be defined as the combination of factors that are required to
be focused by the businesses for the purpose of analysing competitive advantage within the
market. All the factors that are influencing performance of the company are considered as the
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part of it. In order to analyse the micro environment porter’s five force analysis is used in JD
Sports. The application of the model is as follows:
Porter’s five force analysis: This model was developed by Michael Porter for the
purpose of facilitating the business entities to determine the attractiveness of the industry. With
the help of all the forces of it companies will be able to analyse that they can sustain in the
market by attaining competitive advantage or not. It is also used in JD Sports by the managers to
analyse the micro environment (Dmitrieva, Ilinova and Kraslawski, 2017). Discussion of all the
key elements of this model in context of the organisation are discussed below:
 Competitive rivalry within the industry: This factor facilitates the businesses to
analyse the level of competition within the industry. There are various competitors of JD
Sports within the industry. Some of them are Foot Locker, Zumiez, Cole Haan, Under
Armour etc. It shows that the level of competition within the industry is very high and it
may result in issues for the organisation in future because it may lose its market share
because of it.
 Bargaining power of suppliers: All the outsider parties of the organisation that are
supplying raw material to manufacture the goods so that operational activities could be
carried out in systematic manner. The retail industry is very large and the number of
suppliers for the entities like JD Sports is very high therefore the bargaining power of
suppliers is very low. If one of the suppliers will be selling goods on higher price then the
entity can contact to another external party to supply raw material.
 Bargaining power of customers: The stakeholders who buy products and services from
the companies are known as customers. It is very important for all the businesses to make
sure that clients are satisfied with the services or the quality of products that are sold to
them as it can help to retain them for long run and reduce the bargaining power of them.
As the number of competitors for JD Sports is very high therefore the bargaining power
of customers for the entity is high. If the clients will not be satisfied with the products of
the organisation the it will result in increased bargaining power of them as the
alternatives for them will be very high (Doyle and Brady, 2018).
 Threat of new entrant: The biggest threat for a well-established business is a new
competitor because if a new business will be introduced in the industry then it may result
in reduced market share. JD Sports is operating its operations under retail industry and
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for a business which is willing to introduce itself within the industry there are various
types of barriers. The businesses will need huge funding to be a part of this sector. It
shows that threat of new entrant for JD Sports is low because if a new business will be
introduced in the sector then it will require huge funding.
 Threat of substitute: All the items that are providing same benefits to the users are
considered as substitutes for each other. In other words, if a product could be replaced by
same kind of item then it will be treated as substitute for the same. As JD Sports is
operating business under retail industry and there are various types of substitutes for the
business because the items that are sold by it could be purchased from different stores. It
shows that threat of substitute for the entity is high because the items that are sold by it
could be replaced by local products.
Internal environment: It could be defined as the combination of internal factors that are
affecting the business environment in positive as well as negative manner. It is very important
for all the entities to make sure that they are able to analyse the internal environment so that all
the strengths of the organisation could be analysed. While planning to determine it the businesses
can use VRIO model. It helps to determine the level of competitive advantage of the organisation
(Engert, Rauter and Baumgartner, 2016). In JD Sports the managers are using this strategic
management tool to analyse the internal environment. Discussion of all the elements of it is as
follows:
VRIO analysis: It is a tool which is used by businesses for the purpose of making sure
that they are able to compete with the major players of the industry. With the help of it, the
entities determine their strengths. By using it JD Sports will also be able to analyse the internal
factors that are facilitating it to be at the position of market leader. The analysis of it in context of
the enterprise is as follows:
Resources Valuable Rare Inimitable Organised
Use with latest
technology
Yes No No No
Effective
marketing
Yes Yes No No
Skilled
workforce
Yes Yes Yes No
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Good market
image
Yes Yes Yes Yes
Valuable: All the elements that are able to provide value to the organisation are
considered as valuable factors for the organisation. There are various resources that are resulting
in value to the organisation. These are use of technology, marketing, human resource and good
market image. All of them are valuable for JD Sports because with the help of them the entity is
carrying out its operational activities in systematic manner.
Rare: All the key resources that could not be acquired by all the businesses are known as
rare elements for business. Use of latest technology is not the rare resource for JD Sports because
there are various other competitors who are using it for carrying out operational activities in
systematic manner. Effective marketing, skilled employees and good market image are some of
the key factors that are rare for the organisation because all of them are not easy to acquire for
businesses (Johnsen, 2019).
Inimitable: Those resources which could not be copied by other businesses are know as
inimitable elements. Effective marketing is not inimitable for JD Sports because the market
techniques which are used by it could be copied by other businesses within the industry. Skilled
workforce and good market image are two factors which could not be copied by other
competitors within the industry therefore these are inimitable for JD Sports.
Organised: The key elements or capabilities that are organised by the companies in
systematic manner are treated as the part of this elements of VRIO analysis. Skilled workforce is
not an organised resource for JD Sports because it is very difficult to fulfil all the demands of
employees and keep them engaged within the business. On the other hand, market image is
organised by the organisation in systematic manner which is facilitating it to carry out all the
operational activities properly (Michael, Storey and Thomas, 2017).
On the basis of above discussion, it has been analysed that there are various elements that
are resulting in strengths for JD Sports and it is very important for the organisation to keep them
aligned with business operations. With the help of it, the entity will be able to meet all its long as
well as short term goals successfully.
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2. Identification of competitive strategies along with strategic recommendations that could be
proposed for the organisation
Porter’s Generic strategies: These were introduced by Michael Porter so that businesses
can determine competitive strategies to attain competitiveness within the industry. There are four
different alternatives of this model which could be focused by businesses to attain competitive
advantage. As the main goal of JD Sports to expand business in Asian countries so this model
could be used for the same purpose as it will facilitate the best option to develop the business.
Discussion of all the elements of it in context of the organisation is as follows:
 Cost leadership: Under this option the businesses can reduce their costs for the purpose
of increasing profits because when the entity will sale the items at lower prices then it
will result in higher profits and market share. In order to develop business in Asian
countries JD Sports can pay attention towards this strategy in which it can reduce prices
of its products and capture large market share (Peppard and Ward, 2016).
 Cost focus: According to this strategy, the entities can reduce the process for a niche
market so that the responses of the clients could be determined and best suitable
strategies for future could be formulated. JD Sports can select this option to expand its
business in Asian countries. It can help it to introduce its low-cost products in a small
market segment of a new market so that the responses of clients could be determined and
future decisions could be formulated.
 Differentiation: This strategy guides business to launch something new and unique in
the market so that large number of customers could be attracted. It could be focused by
JD Sports to expand business in Asian countries. It will be beneficial for capturing large
market share with a unique product.
 Differentiation focus: By paying attention towards this option businesses can launch a
unique product in a niche market so that it could be determined that the customers will be
satisfied with that item or not. JD Sports can also use it to expand business in Asian
countries because it will facilitate the organisation to determine that its new product will
be accepted by the targeted audiences or not (Tonelli and Cristoni, 2018).
On the basis of above discussion, it has been recommended to JD Sports that it should
use cost leadership strategy because by using it the entity will be able to become the market
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leader. Apart from this, this strategy will also benefit it to attract large number of customers from
the targeted market which is the Asian countries.
Ansoff matrix: This model was developed by Ansoff for making sure that businesses get
aware of all the strategic directions which could be focused by them to expand the business.
There are four different types of strategies of it and the entities that are willing to attain growth
can use any one of them. As JD Sports is willing to expand business in Asian countries so there
are various alternatives for it for the same purpose. By paying attention towards all of them the
management of the entity will be able to choose the best alternative which should be selected for
expansion purpose. The discussion of all of them in context of JD Sports is as follows:
 Market penetration: Under this type of strategy the businesses try to attract more
customers from the existing market by offering existing products. When tis option is
selected then the entities try to formulate effective strategies for marketing so that
prospect customers from existing market could be attracted. In order to expand business,
in Asian countries this strategy could be used by JD Sports as it can strengthen its
existing marketing strategies in the Asian markets where it has established its business. It
will help it to attract more and more customers (Umam and Sommanawat, 2019).
 Market development: When businesses select this strategy then they can offer their
existing products in a new market so that the market share could be increased. With the
help of it, number of customers from a different location could be enhanced. As JD sports
is willing to expand business in Asian countries so this option can be selected by the
organisation. With the help of it, all the existing products could be launched by the entity
in a new Asian country which will provide growth to it.
 Product development: This strategy facilitates the businesses to offer a new product to
the existing customers in the market so that the clients could be retained and new
customers from the market could be attracted. For the plan of business expansion in
Asian countries, JD Sports can choose this strategy. With the help of it, the enterprise will
be able to increase its sales in the existing market so that growth could be increased.
 Diversification: When a business introduces a new product in a new market then it is
known as diversification. The risk associated with it is very high and the funding for the
same is very high. It could also be used by JD Sports to expand business in Asian
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countries where it can launch a new product in a new nation. With the help of it, a new
market could be captured by the organisation (Voinea and Van Kranenburg, 2017).
Recommendation and justification: On the basis of above strategies it has been
recommended to JD Sports that market development strategy should be used by it in which it
should introduce its products in new Asian countries where it has not yet operated. With the
help of this option the organisation will be able to capture larger market share and develop
business.
CONCLUSION
From the above project report it has been concluded that strategic management is the
process of managing all the operational activities in strategic manner. If the managers will not be
able to pay attention towards it then it may leave negative impact upon execution of all the
business activities. While planning to expand business in different locations it is very important
for all the entities to conduct the market analysis. For this purpose, internal and external market
is required to be analysed. There are various models which could be used for the same purpose.
These are PESTLE, Porter’s five force and VRIO analysis. While looking for a strategic
direction, Porter’s generic and Ansoff matrix could be used.
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REFERENCES
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Tonelli, M. and Cristoni, N., 2018. Strategic management and the circular economy. Routledge.
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