Strategic Analysis of JD Sports PLC for Asian Market Expansion

This report provides a strategic analysis of JD Sports PLC, a UK-based sports fashion retailer, focusing on its potential expansion into the Asian market, specifically Indonesia. The report begins with an executive summary and table of contents, followed by an introduction outlining the company's background and objectives. The main body of the report conducts an external environmental analysis using Porter's Five Forces framework and PESTLE analysis to assess the competitive landscape, political, economic, social, technological, legal, and environmental factors influencing the business. An internal analysis is also conducted to evaluate the company's strengths and weaknesses. The report then identifies competitive strategies, incorporating Porter's generic strategies to formulate recommendations for JD Sports PLC to gain a competitive advantage. The report concludes with recommendations for the company to enhance its market position and achieve its strategic objectives in the Indonesian market. The report also covers various aspects such as threat of new entrants, threat of substitute, bargaining power of buyers, bargaining power of suppliers and competitive rivalry. The report also analyzes the political, economic, social, technological, legal, and environmental factors affecting the company.

Strategic Management
Assignment Brief (September
2020 MS60043E)
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Executive Summary
Strategic management is an essential function of management under which effective
strategies are prepared for future growth and success of company. In the current report, ample of
tools are undertaken for external as well as internal analysis of organization that is essential to
prepare effective strategies to strengthen the market position of organization. Here, managers are
required to analyse the competitive environment with appropriate tool such as Porter’s generic
strategies for enlargement current business of entity in an efficient manner.
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Table of Contents
Introduction......................................................................................................................................4
Main body........................................................................................................................................4
External environmental analysis..................................................................................................4
Internal Analysis..........................................................................................................................8
Competitive strategies.................................................................................................................9
Strategic Direction and methods of expansion..........................................................................10
Recommendations......................................................................................................................11
Conclusion.....................................................................................................................................13
REFERENCES..............................................................................................................................14
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Introduction
Strategic management is defined as managing of organization resources in order to attain
objectives within stipulated time period in addition to this it includes setting of objectives,
analysing of competitive environment, formulation and execution of activities and so on it is
important for an organization as it assist in effective planning for the future and also sets a
direction for the company (Ansoff and et. al., 2018). It is analyzed that strategic management
helps leaders and managers of an organization to set a direction for future action that will lead
company towards higher growth and success. For the present report, JD Sports PLC is taken into
consideration. It is a British sports fashion retailer organization based in Bury, Manchester. The
company was founded by John wardle and David Makin in your 1983.The higher authorities of
JD Sports PLC is planning to expand its business activities and operations in Asian country that
is in Indonesia. The main objective of expansion is to gain high market presence and sure in an
effective manner. The current report provides a detailed overview regarding strategies in relation
of internal and external environment of entity. These strategies are prepared by managers and
leaders of entity after analysis of environment in order to ensure future growth and success. The
report will cover internal and external analysis of the respective organization. In addition to this,
identification of competitive strategies will be described by the help of Porter generic strategies.
In the last, some of the strategic recommendations is given in order to strengthen the current
position of the company.
Main body
External environmental analysis
It is important for an organization to conduct an external analysis as it helps in gaining
knowledge about both micro and macro factors that impact on the business performance and
operations (Gallo and Tomčíková, 2019). In addition to this, it also helped company to develop
strategies in order to deal with the threats and make improvements. In order to conduct external
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analysis, the management team of JD Sports PLC adopt pistol analysis an porters five force
framework that is mentioned below:
Porter's five force framework:
It is considered as one of the effective strategic tool which allow an organization to
identify the level of competition prevailing at marketplace. In addition to this it also help in
identifying the opportunities as well as threats associated with the company. It is determined that
with the help of search framework, JD sports PLC to develop strategies which will assist in
proper expansion of its business in other countries. The framework includes five major
competitive forces that is mentioned below in relation to respective company:
Threat of new entrants: It is determined that New entrants in retail brings some
innovation and the new manner of doing things that put pressure on respective organization to
lower down its pricing strategy, providing you value proposition to customers and decline its
cost (HEIDARI and VALIPOUR, 2017). It shows that the threat of new entrance is moderate for
the organization and it is important for higher authorities’ of JD Sports PLC to manage all these
challenges an develop effective barriers in order to protect them from competitive edge.
Moreover this threat can be managed by a company by developing economics of scale so that it
can decline the fixed cost per unit. It can also be tackled by innovating new goods and services
that attract large number of people towards the brand.
Threat of substitute: It is analyse that when a new product as well as service meets a
similar customer requirements in various ways, the company profitability suffers. It is
determined that the threat of substitute is high for the company. It is important for JD Sports PLC
to offer differentiated and unique products in market so that its customers remain with it for
longer time period and did not think to switch do another brand. This threat can also be tackled
by the company by being service oriented instead of product oriented.
Bargaining power of buyers: It is stated that buyers are often demanding a lot as they
want to purchase best and quality offerings at a reasonable price. It increased pressure on JD
Sports PLC profitability within the long run (Hofstrand, 2016). The buyers have the option to
shift on another brand as there are lot of companies who offer the same product at marketplace,
Which shows the company has high bargaining power of buyers. In order to deal with this threat,
it is important for company to continuously innovating new product and give discounts as well as
offerings to its customers as it will help in retaining them for longer time period.
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Bargaining power of suppliers: There are lot of suppliers who provide raw materials in
the industry, because of which JD sports PLC have the advantage to decline supplier’s margin
and earn higher profit. It is important for respective organization to maintain good relationship
with its suppliers as it ensure providing of raw materials timely that will lead to implementation
of activities in an effective and proper manner.
Competitive rivalry: There are lot of competitors prevailing at marketplace that decline
the profitability and efficiency level of JD Sports PLC. The company operates in a highly
competitive retail industry that effect negatively on its long-term profitability (Janošková,
Csikósová and Čulková, 2018). It is important for the company to develop a sustainable
differentiation and focus on fulfilling the requirements of its customers. Moreover, the company
can collaborate with its competitors to enhance the market size instead of competing with them
in the small market. It will help in expanding its business at wider level and also assist in gaining
high profitability and market presence in an appropriate manner.
PESTLE analysis:
It is analysed that there are several tools can be used in order to assess the external
environment of an organization that consist several factors which are related to outside
environment and can not be controlled by managers. So, they are required to examine different
elements in order to prepare appropriate strategies to attain predefined organizational goals and
objectives. For this, purpose, several elements of PESTLE analysis are mentioned as under:
Political factors: These are the most crucial factor that comprises several elements such as
political environment of country, government policies, rules mad regulations, grants and more.
Political conditions of different countries are also different from each other thus managers are
required to analyse current political conditions as well as changes in policies that are being
introduced by government (Lawton, 2017). In context of JD sports PLC, it is operating in several
locations such as Germany, Netherland and more. So, it is essential for managers to assess
existing policies of government and prepare their own strategies accordingly in order to operate
business in an effective manner. It will help to ensure long term sustainability and growth of
business. It is monitored that organization is looking forwards to expand business in Indonesia
which maintains better relationships with neighbouring countries so it is easy to execute business
and involve in imports and exports.
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Economical factors: Here, economic conditions of country also put significant impact on
overall business operations. Demand, supply, rate of interest, laws of imports and exports are
some crucial elements of economic factors which need to consider by managers while preparing
effective strategies for future betterment of company. For, JD sports PLC, managers need to
follow different rules of imports and exports of products between different countries. In addition,
Brexit is also an important factor that has been affect sales as well as profit margin of
organization. It has reduced down purchasing power of customers that reduce down demand of
products of company at market place. So, managers of respective entity are required to assess the
economic conditions of countries of Asian market before expanding business that is essential to
prepare appropriate strategies for future uncertainties. It is stated that Indonesia is considered as
16th largest economy across the world and its GDP is nearly $1.02 trillion in 2018. So,
economical conditions are favourable of country for enlargement of business.
PESTLE Analysis, 2020
Social Factors: It is analysed that these factors play an integral role in productivity and
performance of fashion industry. Now, people are highly conscious about fashion and consider
model, celebrities as their role models. They are highly influenced with their fashion sense so it
is really essential for organizations to prepare products as per the requirement of audience. In
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reference of respective company, they undertake proper market research so that they can meet
with the requirements of customers in better manner (Makadok, Burton and Barney, 2018). In
addition, they are also required to make modifications in current product as per the change in
needs, preferences, lifestyle of customers. It helps them to inflate sales and profit margin of
company. In Indonesia, people are more inclined towards western lifestyle and prefer western
food, highly technical products, fashion and more so managers of JD sport need to required
social environment of nation before expanding business.
Technological factors: There are several new as well as advance techniques have been
introduced at market place that helps in growth and success of business. Now, advance and
innovative approaches are used by companies to perform different business functions in an
efficient manner. In context of JD sports PLC, managers use ample of techniques, softwars to
ease out whole working process of company. In addition, they also undertake digital marketing
approaches to promote product and services at wide level. With these approaches, they will be
able to maintain higher market presence of company at international market place. It will help
them in expansion and earn potential profit margin. Here, Indonesia has been adopted some
innovative as well as creative techniques and may become a global leader in the field of
technology in future. So, JD sports is required to adopt new and effective approaches to ensure
long term sustainability in market.
Legal Factors: Under this, several rules, regulations, compliances, legislations are included
that have been formulated by higher authorities in order to operate business successfully. It is
analysed that JD sports PLC is operating at different locations and also planning to expand
business in more countries (Moutinho and Vargas-Sanchez, 2018). So, managers need to stay
aware about policies, trade, import, export and business rules of different countries. In addition,
they need to analyse the legal environemt of regular basis in order to undertake necessary
improvements. It will help to operate business successfully by eliminating legal threats from
business. In Indonesia, there are strict rules and regulations are followed in terms of employment
protection. There are rules in terms of working hours, working conditions which need to follow
by companies to run business in smooth manner.
Environmental Factors: Now, it is crucial for each and every organization to follow
necessary measures in order to protect environment from business activities. In addition, they
also give significant contribution in overall development and well being of society. For
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respective company, they adopt appropriate techniques to control waste as well as emission for
environmental protection. It helps to maintain positive image of organization at market place. It
is monitored that Indonesia is suffering with some great environmental issues such as earthquake
and more. So, it is vital for managers to consider environmental protection while preparing
strategies for business growth.
With above discussion, it can be said that external environment is made with plenty of
macro as well as micro environmental factors. These factors are crucial to analyse on regular
basis in order to minimize the adverse impact over business and prepare appropriate strategies
for future growth and expansion.
Internal Analysis
Here, internal analysis help to know the strengths, weakness, resources as well as
capabilities of an organization that differ it from other competitors (Naipinit, Sakolnakorn and
Kroeksakul, 2016). There are several tools are used to undertake effective internal analysis of an
organization. For this purpose, VRIO analysis is given as under:
VRIO analysis
This framework is designed to assess the competitive position of an organization at
market place with the help of some predefined factors such as valuable, rarity, inimitability and
organized. This tool is essential to assess competitive strength of company in terms of internal
resources, capabilities and more. In addition, it also helps to prepare appropriate strategies that
are crucial to strengthen the market position of company. Different elements of respective model
are given as under:
Valuable: It refers to provide such kind of products and services that provides value to customer
so that they stay with company for longer run. Here, managers are required to assess available
resources and used it to get competitive edge. It is monitored that the JD sports PLC has strong
global presence that provides higher advantage to company (Novikova, 2018). It has presence on
UK, US and also in Asia that make organization enable to meet with the requirements of
domestic as well as international audience in significant manner. In addition, products of entity
are perceived as premium products that also add value in its existing brand value. Quality of
product also provides better experience to customers.
Rarity: As per this factor products of company should rare which can not be copied by
other competitors. It is essential to get competitive parity at market place as being valuable is not
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enough at current market place. Here, global presence of company is not rare as there are several
other organization who are also operating at global level. In addition, category of products is
rare. Further, quality of products entity is also rare that will help it to get higher competitive
advantage at market place that is essential for future growth and success.
VRIO Model, (2020
Inimitability: Here, products need to be unique so rivalries are not able to copy it easily.
With this, company can get sustainable competitive advantage that is vital to sustain at market
place for longer run (Okumus and et. al., 2019). Global presence of JD sports PLC can be easily
copies by others. Further, competitors can also list their product in premium category. But
quality is something which is unique to organization thus can not be imitate by competitors. It
will help in growth and success of company by increasing in current revenue as well as profit
margin.
Organized: It is the last and most crucial factor of VRIO framework as per which
resources of organization need to organize effectively so predefined objective can be achieved in
stipulated period of time. In case of JD sports PLC, it is analysed that all resources of
organization are organized in an efficient manner that will further provide higher competitive
advantage to entity.
Resources Valuable Rare Inimitability Organized
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Employees YES YES NO YES
Global Presence YES NO NO YES
Premium
category
YES YES NO YES
Quality YES YES YES YES
As per above analysis it can be said that quality of products of JD sports PLC is its core
competency that provided higher competitive edge to company. With this, they are able to create
value among customers and it can not be imitate by rivalries. This will provide sustainable
competitive advantage to company that is essential for future growth and success.
Competitive strategies
There are extensive competition is prevailing at market place so it is essential for
managers to adopt effective strategies that will help to face competition in better manner. It is
really crucial for a company to sustain at market place for longer run (Smit and Trigeorgis,
2017). In addition, it also helps to make proper use of available resources that is crucial for
betterment of company. For this purpose, porter’s generic strategy is mentioned as under:
Cost strategy: Under this, main emphasis is over cost and profit. It is analysed that
customers get easily attracted towards lower cost products and it also helps an organization to
acquire higher market share. In addition, they can be market leader by increasing customer base
that will further increase in sales and profit margin. In context of JD sports PLC, they can get
higher competitive by reduce down the price of their products at market place. It will help them
to expand market by targeting middle as well as lower income group of people that make a
significant part of overall customer segments. With this, they can provide products to customers
in affordable price range that is essential to retain buyers with organization for longer duration.
In addition, lowering down price will help to maximize production which will reduce overall
cost and allow managers to earn potential profit for future betterment of company. In addition, it
will also help to improve the efficiency of overall supply chain management system which make
them enable to meet with demands of customers in an efficient manner.
Differentiation strategy: As per this strategy, it is crucial to differentiate products and
services with competitors so that customers get attracted towards products. It is really essential to
make strong presence at market place and ensure long term sustainability (Strydom, 2016). Here,
managers are required to undertaker detailed market analysis and make necessary improvements
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