Strategic Management Report: JD Sports PLC's China Expansion Strategy

This report provides a comprehensive strategic analysis of JD Sports PLC, focusing on its planned expansion into the Chinese market. It begins with an executive summary outlining the importance of strategic management for competitive advantage. The main body of the report includes an external environmental analysis using the PESTLE framework to identify political, economic, social, technological, legal, and environmental factors impacting JD Sports. A competitive market analysis, utilizing Porter's Five Forces, assesses the bargaining power of customers and suppliers, the threat of new entrants and substitutes, and the level of industry competition. An internal environmental analysis, employing the value chain analysis, examines JD Sports' strengths and weaknesses across primary and secondary activities. The report then identifies potential competitive strategies and strategic directions for the company in China, culminating in conclusions and recommendations for successful market entry and expansion. The report emphasizes the importance of adapting strategies to the unique conditions of the Chinese market, considering factors like customer behavior, government regulations, and technological advancements.

STRATEGIC
MANAGEMENT

Executive Summary
Strategic management helps businesses to access right strategies of business at the right
time. With the support strategic management, any business can achieve an excellent competitive
advantage in market place. This report is all about the management of different business
strategies. Some major business strategies have been included in this report which will give
better outcomes to a business in market place.

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................4
MAIN BODY..................................................................................................................................5
External environmental analysis for identifying opportunities and threats.................................5
Competitive market analysis........................................................................................................7
Internal environmental analysis for identifying strengths and weaknesses.................................8
Identification of competitive strategies.....................................................................................10
Strategic directions....................................................................................................................12
CONCLUSION AND RECOMMENDATIONS..........................................................................13
REFERENCES..............................................................................................................................15

INTRODUCTION
Strategic management is very essential task to an organisation in the market place,
because the task to strategic management plays an excellent role to a business or company all
existing business strategies in a proper channel. In this dynamic and modern world, upper
management within most companies are putting their huge efforts for systematically managing
various strategies in the workplace (Felix, Rauschnabel and Hinsch, 2017). Day to day
competition in the market place also increasing, in which managing own business strategies is
the best solution to a business for effectively gaining huge competition advantage in market
place. Some successful businesses have hired different effective employees as well as marketers
for properly managing own business strategies.
This report discusses the strategic management aspect of JD sports PLC. Basically, JD
sports is a highly reputed retail brand which currently offers fashionable braded casual and
sportswear, headquartered in England, UK. Recently the upper management of this company has
decided to expand its business operations in Asian market place, and in the Asian market,
existing management has chosen China to expand. Basically, business expansion process of this
venture is very effective, and due to this reason JD sports has succeeded in expanding own
business operations in many countries in its just few years of expansion (Paipe and Carvalho,
2019). With the support of business expansion strategy, currently this company serves in
countries, like; Ireland, Netherlands, Spain, France, Germany etc. and next target of country is
China, because this country has one of the growing economies in across the world.
This report includes frameworks and tools, like PESTLE and Porter’s five forces, value
chain analysis, Bowman’s strategy clock etc. Basically, the PESTLE framework has been used to
analysing different macro factors of the busines environment of JD sports, porter’s five forces
has used for analysing key five forces of market place which can affect business in both ways,
positively and negatively. On the other side, value chain analysis framework has been used to
analyse internal environment of business. At the end, some effective recommendations also have
been given to company’s upper management to successfully expand own business operations in
the national boundaries of China. The market development strategy is the main strategy to
company in order to expand its business in new market.

MAIN BODY
External environmental analysis for identifying opportunities and threats
There is analysis of external environment factors is very important to an organisation in
the terms of dealing with different factors in effective manner. Currently upper management of
JD sports has decided to expand its business operations in the China, in which it is very
important task to the management company to an appropriate model in the terms of analysing
key external factors of China which can affect to company’s business operations in the market
place (Marques and de Carvalho, 2020). According to different business experts, there is
PESTLE analysis is one of the finest and most useful tools to analyse key external factors of a
business, in which this tool has been used below in the context of JD sports and China.
PESTLE analysis
PESTLE is the most appropriate tool that is commonly used by businesses for macro
factors of own business environment (Lee, McGuire and Kim, 2018). Basically, this tool informs
companies about six key external factors of the business environment, in which all six major
external factors of this tool has been mentioned below;
Political factors: Political factors of China will definitely impact to business environment of JD
sports when this business will expand own business operations in this country. For example;
government of each company has imposed custom duty on businesses which belong to other
countries. In this situation, political factors of China will influence to upper management of
existing business to pay higher amount in the custom duty. On the other side, political factors
will impact business for fulfilling the obligation of taxation as well. However, this country has
imposed very higher rate of taxation of MNCs, so this threat to JD sports. On the other side,
company has opportunity to maintain effective relations with local government for running its
business operations smoothly in this country.
Economic factors: Present economic condition of China is not favourable for JD sports, because
due to the corona virus (Covid 19) pandemic, all business system of the country has been badly
affected. This is the main reason that, current economic conditions of country will become threat
to JD sports in its initial stage of this nation (de Moor, Catney and Doherty, 2019). On the other

side, if company follow all guild lines of Covid given by WHO, then it will get opportunity to
properly establish its business in this country in the current time period.
Social factors: Social factors of China will affect business both manners, positively and
negatively. Basically, many of Chinese people not like to buy products and services from
businesses of other countries, because they have purchased most products and services from
those ventures which mainly belongs to China (). The main reason behind this behaviour of
people is grow only own country’s businesses, and the (Speake and et.al., 2016) is perception of
people will become threat to JD Sports. However, many literate people can simply buy products
and services from multinational companies as well, if a multinational company timely fulfils its
obligation of CSR (Corporate Social Responsibility). That’s why upper management have to
follow the concept of CSR to gain opportunity to achieve better outcomes in the Chinese market
place.
Technological factors: China is very advance is the technology, in which these technological
factors of this company will positively affect to the business environment of JD sports (Bilbeisi
and Kesse, 2017). Basically, there are many innovative technological machines and gadgets
simply available in the market place of China, in which upper management of company will have
opportunity to use these gadgets and machines for developing own performance and productivity
in marker place. On the other side, many technologies are very expensive to the business, in
which this factor will become threat to the JD sports.
Legal factors: Legal factors will also affect to company for adhering those all legal and ethical
considerations which has formulated by the local government of China for different businesses
and companies. Many Chinese laws are very complicated to understand and adhere, in which this
threat of legal factors. On the other side, legal and ethical considerations will give opportunity to
JD sports for legally formed in this nation.
Environmental factors: Day to day the precious natural resources are reduces, in which this
environmental factor is threat to company, because it will face lack of raw-material issue in
China due to this reason. On the other side, company has opportunity to increase is brand value
in country by working the welfare of society.

Competitive market analysis
Analysis of competitive market place is also very important task to a busines, in which
the upper management of JD sports also need to conduct the analysis of competitive market,
because this is necessary to ensure there is competition is higher in the selected market place or
not. Currently companies and businesses use different tools and techniques in the terms of
analysing market competition, in which Porter’s five forces tool is one of the major tools in the
term of analysing market competition China.
Porter’s five forces
This is very innovative framework to analyse competition in any market place, and that’s
why many businesses prefer these this tool in their daily business operations. Day to day
competition in each industry is increasing, in which by using this tool, any business can simply
gain better outcomes in marker place (Langer and Mani, 2018). Basically, Porter’s five forces
tool discusses five key forces of market which can affect to a business in both ways, positively
and negatively, in which all five forces has been discussed in below;
Bargaining power of customers (High): Currently braining power of customers is very high in
the Chinese market place, because there are number of businesses is very higher who provides
casual and sportswear. That’s why people or customers has many choices of clothing business.
Bargaining power of suppliers (High): This force is also high in the market place, because there
are many businesses faces the issue relating to shortage of raw-material (Durán-Sánchez and
et.al., 2017). Suppliers are not able to fulfil demands in marker place, because there are
thousands of businesses exists in market place which provide same services and products which
JD sports is planning to provide in China.
Threat of new entrants (Low): This force is something law, because current economic system
of this country has badly affected by corona virus pandemic, in which no local individual can
take risk for starting new sports and clothing wear business in market place.
Competition in industry (High): Currently there is very high competition in the market place of
China. Of course, JD sports plans for offering quality casual and sportswear in China, but there
are already many businesses exists in this country which offers these same products and services.

Threat of substitute product (Low): This force is low, because customers cannot choose any
other product rather than casual and sportswear, and this the main reason that threat of substitute
product is low.
Internal environmental analysis for identifying strengths and weaknesses
Basically, many companies and businesses conduct internal environmental analysis in
own workplace, because when business conducts internal analysis, then it will be able to knows
its strengths and weaknesses (Garcia-Ayllon, 2018). In this situation, upper management of JD
sports also need to conduct the internal environment analysis by using an appropriate model,
like; value chain analysis.
Value chain analysis
Value chain analysis is considered as the tool that enables businesses for gaining huge
competitive advantage in marker place. Model or tool was first introduced by Michael Porter, in
which this model discusses two sets of activities, primary and secondary, in which all activities
of these two sets has been discussed below
Primary activities
Investment team: The JD sports business’ upper management it very active in the context of
investing in appropriate areas. Upper management mostly prefers different analytical data and
information relating to selected marker place to ensure its investment will provide appropriate
outcomes or not.
Operations and leaders: For managing own different operations, the management and leaders of
company uses different approaches of operations management. Basically, operations
management enable to company to reduce cost and improve productivity of daily business
operations. Leaders of company are able to perfectly lead different human resources in market
place.
Marketing and sales: Marketing and sales functional department of company are very active in
daily operations. Basically, the marketing team depends on digital market to boost its sales ration
in market place (Cuervo‐Cazurra, Doz and Gaur, 2020). The sales department also put its huge
efforts to maintaining extra-ordinary levels of sales in market place.

Service: For offering best customer services, the management of company has used customer
relationship management strategy. With support of this strategy, the management can simply
enable to maintaining very effective levels of own customer services.
Secondary activities
Technology: upper management of existing business has always used hi-fi technologies in own
workplace in the terms of improving own business performance as well as productivity. For
example; upper management ordered to marketing team for using digital marketing tools for
promoting own brand the large scale in market place.
Human resources: HR department of company is mainly responsible body in the company who
manages all human resources. Currently this company has an effective workforce, because HR
department time to time provides different training and development sessions to existing
employees for maintaining their performance effectively.
Infrastructure: Currently JD sports has great infrastructure, like; it has a highly advanced and
modern corporate office in Bury, England. On the other side, it has built very modern and
attractive authorised showrooms or store in many countries in all around the world (Valos,
Mavondo and Nyadzayo, 2019). That’s why it has great infrastructure.
On the basis of value chain analysis, there are some major weaknesses and strengths of
JD sports has been discussed below;
Strengths
JD sports is very currently a very highly reputed clothing brand in across the world,
because it always believes in proving quality products and services in marker place. On the other
side, the business expansion strategy of business is also very excellent, in which with the support
of this strategy, the company has succeeded in highly expanding own business operations in just
few years of operations. It has an effective workforce of over 32,125 employees, and these all
employees are day to night putting own huge efforts in terms of achieving final objectives of JD
sports in the market place.
Weaknesses

The management of this business have to develop its skills of problem-solving and
conflict management, because existing management is not able handle different problems of the
business environment. For example; currently all businesses face many challenges and problems
due to corona virus pandemic, but many of clothing businesses, like; Marks and Spencer and
Zara have perfectly handled this situation, and gaining appropriate situation in this condition as
well. But JD sports is not gaining proper revenue in this time period due to having lack of
conflict management and problem-solving skills or competences.
Identification of competitive strategies
Bowmans strategic clock
Bowmans clock is a comprehensive tool to understand options for positioning products
and services inside a market on the basis of price and the value that is perceived for it. There are
eight positions on this clock which highlight a different strategy which can be used successfully
in the market place or industry.
1. Low price and low added value: In this position of the clock, the only competitive
method is to keep the prices of the products and services low (Johnson, 2017, p. 193).. In
this strategy the total value and cost of all the products that are offered by the businesses
are extremely low. Apart from this, the products that are sold are not at all differentiated
or offer any extra value.
2. Low price: The organisations that adopt this strategy tend to manufacture or produced
huge quantities of goods in addition to. the products that they offer is highly valued in the
target market. This is a highly competitive segment in the markets as many rival fights to
keep their prices low and gain high market share (Whittington and Cailluet, 2008). JD
sports plc has to aim for high quantity of production if it adopts this strategy or the
company can end up with low sales.
3. Hybrid: This position is placed at a merge of low prices and differentiation and it ensures
that price is competitive along with promotion of value-added aspects that JD sports plc
can adopt in china (Johnson, Scholes and Whittington, 2009).
4. Differentiation: This strategy can help JD sports plc to focus upon differentiating the
products from the competitors of china operating multinational and locally. The strategy
comprises of a broad spectrum to full product diversity by selling off unique features in
the core product (Echchakoui, 2018).

5. Focussed differentiation: This strategy is about provision of highly valued products sold
at high prices. If JD sports plc successfully employs this strategy, it can help the company
in getting high profits, although it could be really difficult to maintain (Johnson, 2017, p.
193).
Figure 1: Bowmans strategy Clock
Source: Lucidity, 2020
6. Risky high margins: Before deploying any strategy while expanding across china, JD
sports plc should completely evaluate the risks that come with it. The primary thrust of
this strategy is going in with a high point of price that may nor even have any perceived
value. It can be often observed that people tend to buy a certain product due to some
emotions attached with it, rather than a cheaper alternative (Johnson and et.al., 2017).

7. Monopoly pricing: In markets that operate under monopoly, a single company, entity or
organisations has the power over the products being sold and also fix prices according to
their choice. JD sports plc does not operate in a monopolistic market, although it has to
keep evaluating external factors (Echchakoui, 2018).
8. Loss of market share: This position is perceived as the worst one to be in a market and it
definitely indicates that the company has been declining in t existing industry (Johnson,
2017, p. 193). In this stage, the company can be either faced with the choice of market
development, moving to newer markets or coerced upon getting the price and market to
for appropriately.
Strategic directions
Proper strategic direction is very important to a business current highly competitive
market place. Basically, when upper management of a business properly direct its different
strategies, then it will be able to gain very appropriate outcomes from own different strategies
(Cho, Bae and Kim, 2019). Currently strategies are everything to a business or company in the
market place, in which those businesses always gain higher profit margins in comparison to
others which has excellent business strategies. The concept of strategic direction is very essential
to JD sports right now, because it has planned to expand own business operations in the new
market place, named; China. There are Ansoff matrix’s strategies of business expansion has been
discussed below in the terms of proper strategic direction within JD sports.
Ansoff Matrix
Ansoff matrix is one of the most useful tools to different ventures in this modern world,
because this tool informs upper management of various ventures about four major and
productive business strategies. All four strategies of Ansoff matrix has been discussed below,
and there are upper management at JD sports have to adopt these strategies for successfully
expanding in China.
Market penetration: This is the first strategy under the Ansoff grid or matrix, in which when
upper management of this business will adopt this market penetration strategy, then it can simply
increase its levels of sales by offering existing products and services in the present selected
market place (Bonidia and et.al., 2018).