JD Sports PLC: Strategic Analysis and Expansion in Asian Market

This report provides a strategic analysis of JD Sports' potential expansion into the Asian market. It examines both internal and external environmental factors using tools such as PESTEL, Porter's Five Forces, SWOT, and VRIO analysis. The report identifies competitive strategies that JD Sports can implement to gain a competitive advantage, discusses strategic directions for growth, and suggests various methods for expanding business operations. Ultimately, the analysis aims to provide actionable recommendations for JD Sports to successfully navigate the complexities of the Asian market and achieve its strategic objectives, ensuring sustainable growth and profitability. The report is available on Desklib, a platform offering study tools and solved assignments for students.

Strategic Management

Executive Summary
The purpose of this report is to determine internal and external factors which could impact
business functions of company. This report also covers nature of competition environment that
exist in the market which could influence position of organisation. Furthermore, this report also
consist of competitive strategies executed by company that would help it in minimizing future
risk. Lastly, methods by which a company could expand its business operations are also being
mentioned in the report.
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Table of Contents
Executive Summary.........................................................................................................................1
INTRODUCTION ..........................................................................................................................3
MAIN BODY...................................................................................................................................3
External environment analysis...............................................................................................3
Internal environment analysis.................................................................................................6
Identification of competitive strategies..................................................................................8
Strategic directions...............................................................................................................10
Methods of expansion...........................................................................................................11
Recommendation...........................................................................................................................12
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13
Books and Journals...............................................................................................................13
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INTRODUCTION
Strategic management is related with the description and identification of the strategies
which can be used by the managers in order to achieve good performance and also to attain
competitive advantage in the market(Ethiraj, Gambardella and Helfat, 2018). The company will
be called as attaining competitive advantage only when the profitability of a company is more
then the other existing companies in the market. Strategic management is defined as the
decisions which has to be taken by the manager which will result in the performance of a
company. But for this it is equally important that the manager is having the right knowledge
about the competitive environment which is existing so that they could be able to make the right
decisions. Strategic management is similar to that of making the planning so that the company is
able to develop the strategies for the unforeseen difficulties. JD Sports fashion plc is a British
sports fashion retail which was founded in the year 1981 and is having its headquarters in Bury,
Great Manchester, England, UK and is now wanting to make the expansion in China. This report
will cover external and internal factors, nature of competition, competitive strategies, strategic
directions and methods of expansion with the recommendations.
MAIN BODY
External environment analysis
PESTEL analysis-
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Illustration 1: PESTEL analysis

 Political factors- From many years JD sports is getting the benefit with the lower tax
payment which has helped them to earn more and increase the level of production and
spending on the products which they are providing(Pasch, 2019). But as it wants to make
the expansion in another country China so their will be regulatory policies which they
will have to follow.
 Economic factors- The JD sports company have been developed in its home country
because of the economic performance in UK. The reason for this is the increase in
globalization and the liberalization of a trade policy. The economy of China will be
different in China and for achieving the success it will be important for them to make the
analysis.
 Social factors- It is important that the country in which JD sports wants to make the
expansion is not having the issue of income inequality because this can be the issue for
conducting the business. The education level is also high in the country where they are
going to make the expansion so this can work the best for JD sports.
 Technological factors- The development of technology in the past few years have been
developed a lot and because of this only the JD sports is also making some of the new
innovation in the ports fashion which can be competed in the market(Mahsud, Imanaka
and Prussia, 2018). In the country like that of China they might have to make the new
development in order to gain the market share.
 Environmental factors- JD sports have become the large business in which it is having
its business in many countries. But with this, they have to adhere to the factors which are
related with the environmental factors like the pollution, causing any harm to the
environment any many other. People are also becoming aware about the environment and
so it becomes very important for the company to work according to it. Legal factors- Every country have different sought of rules and regulations and to make
the survival in that new market it becomes very important to follow such laws. Their are
many laws in which it covers the employment law, labour law and many other.
Porter five forces-
The five forces which will be discussed below will be helpful for the company in making the
evaluation of the intensity of competition which can exist in the market.
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 Threat of new entrants- The threat of new entrants in market of China will always be
their because the products which JD sports provides to its customers can be provided by
any other company also. So the threat will be high in this but with this the investment
which will be made by the companies to open such business will be high.
 Threat of substitutes- When there is a availability of products that are much in similarity
with the company products then the threat of substitution gets increased. For the JD
sports also this issue might be at higher level because of the other companies which exist
in the market of China(Regent and et. al., 2019).
 Bargaining power of suppliers- The bargaining power of suppliers in this will not be as
high because they are higher in number. So the suppliers will not make any showcase of
their power because they are not limited in numbers.
 Bargaining power of buyers- The bargain power of buyers is also high because of the
number of alternatives which is available to them. If JD Sports will not provide the
product according to the needs of consumers then in this case the chances of shifting to
other competitors will increase.
 Industry rivalry- The industry rivalry is higher in this because of the product which they
provide in the market. Their are other companies also which provides the products which
are similar in nature.
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Illustration 2: Porter’s Five Forces Model. 2021.

Internal environment analysis
Internal environment is related with the internal atmosphere of the company which exist
in the company structure. It is important for the company to make the analysis of internal
structure of a business because with that only they would be able to design the strategies of a
company.
SWOT analysis-
 Strengths- The strength of JD sports is that they have the strong supplier base which
provides them the raw material helping them to keep the inventory updated. As the
company is making the expansion in China so the issue which is mainly because of the
supplier then for this they are having the strong geographical connections with the
suppliers(Angiola, Bianchi and Damato, 2019). Also the brand value which JD sports
have made till now is good and because of this they will be able to gain good market
share.
 Weakness- As the company is now wanting to make the expansion in China then for this
they have to make the development in technology. The technology advancement of JD
sports is not that good and because of this other companies make the development in their
products. The work culture of the company is not updated according to the modern work
culture which might create this thing in a problematic way.
 Opportunities- The best opportunity for the JD sports will to make and develop some
idea by which they can make the reduction in the prices of transportation (Lin and et. al.,
2021). It is because with this they would be in a position to reduce their overall cost of
the products. The youth in present time is working according to the fitness and health
elements and which is why the company can take the help of such factors and can
capitalize this factor. Threats- The main threat for JD sports is that the business is not for the whole year but is
just only for the seasonal purposes. Other then this, the competition which is their in the
market and will also be in the new market where they are going to make the expansion
can be the biggest threat for them.
VRIO analysis-
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VRIO analysis is useful for making the evaluation of resources which the company is going to
use for attaining the competitive advantage.
 Valuable- For JD sports their main valuable thing is their finances with which they can
make any of the investment which they think will be best for them. If they will be having
the finances then in this condition they would be able to make investment and they will
also be safe from any of the external threat(Arun and Ozmutlu, 2021). The other
resources which is the most valuable one for the JD sports is their employees who are the
main assets for the company and without them they would not be in a position to make
the achievement in the company objectives. The next is the supplier of JD sports which
can be made available to them in any of the geographical area and as they are making the
expansion in China so with this thing will make them the most valuable one.
 Rare- The financial resources of company are rare because there is always the fluctuation
in the availability of finances of a company. This is the reason because of which JD
sports is unable to make the investment in any of the project. The employees of the JD
sports are also rare because the training and hard work which has been done on the
employees cannot be undertaken by any of the company(Yan, Hong and Warren, 2021).
The work environment which might not be modern in the sense but with this the
employees of the company do not want to leave the firm. The distribution network of a
company is also rare in the sense because this is not made available to any of the other
company.
 Imitable- The finances of JD sports cannot be imitated because this has been acquired by
the company on the basis of earning the profits and the success which they have made till
now. The employees also cannot be made imitated because of the training which they
have provided to each and every employee who are working for the company. According
to the company when the employees will be trained enough then it would become
difficult for the other companies to make the imitation. The other factor is distribution
network of the company which is their suppliers. This is costly for the companies to make
the imitation of the suppliers or the distribution process which they are having is highly
costly which will make it difficult for the other business to imitate. Organisation- The financial resources of JD sports is being organised in a very
sophisticated manner and they have identified that they can use it strategically to make
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the investment in the right things. The distribution network of company is also organised
in a sense that this has helped the company in accomplishment of company
objectives(Mongkol, 2021). It is considered to be the main strength of JD sports because
of which they can make the strategy of starting the business in the new markets which
covers the China. Also, the employees in the company are organised and they conduct all
their work according to the planned strategies which the management of a company have
made.
Identification of competitive strategies
Competitive strategy is the long term plan which is made by the management of a
company in order to gain the competitive advantage in the market. The strategy is made by the
business because to earn the average position and on the other side generate a good return on
investment. To achieve success in the competitive environment it is very important that the
company makes the analysis of all the factors in order to achieve the objectives. This can be
explained with the help of Bowman strategy clock-
 Low price and low added value- In this strategy the business uses the low pricing so
that consumers can make the purchases but with this the quality of products will also be
low(Bayiley and Hailegiyorgis Behaylu, 2020). This strategy will not work to be the best
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Illustration 3: Bowman’s Strategy Clock . 2021.

for JD sports as they are making expansion in new market and if they will use this
strategy then it would be difficult for the company to gain market share.
 Low price- This strategy is on the basis of offering the products to consumers at a low
price as compared to the other existing competitors in the market. The products are often
sold at low prices but with this it provides the company low margins. This strategy can be
good for JD sports in the beginning of their business expansion.
 Hybrid- This strategy means that the company is focusing on making the product
differentiated from the other brands and with this are offering the products at lower value.
This strategy will help the consumer to become satisfied as they are getting the product
which they want and that too in less prices.
 Differentiation- The differentiation will mean that the products are offered to consumers
in a very differentiated manner(Mariina and Tjahjadi, 2020). JD sports can also make the
use of this strategy in order to bring most customer base.
 Focused differentiation- This strategy is applicable to the luxury brands which provides
the products in a very costly and also in a high quality manner to the consumers. This
strategy will not work out the best for JD sports and the company which provides the
high end products makes the use of promoting and segmentation strategies.
 Risky high margins- This is a very risky strategy in which the company charges higher
prices from the consumers. This strategy can work out to be the best only for those
companies who are confident enough that the customer will make the payment for it.
 Monopoly pricing- Those companies use this strategy who have already created their
own monopoly in the market in which they know that by charging even higher prices
people are going to make the purchases. It is because the consumers are only left with the
choice of either making the purchase or not to purchase. Loss of market share- This is not a desirable strategy which can be used by the
companies because with it the company is not able to make the offering of the products
which is in accordance with the consumers (Hodgkinson and Healey, 2018). It is because
either the prices are high or the company is not providing the product with quality.
Recommendations- For achieving the success in the new market JD sports can make the use of
hybrid strategy where they can provide the products in a differentiated manner. Also, the prices
at which it will be offered must be reasonable so that any group of consumer can purchase it.
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Strategic directions
Strategic directions means the plans which has to be implemented within the organisation
so that they can make the progress towards their vision which they have developed. The
strategic directions will mean that the owners and management of a company will develop the
communication to the employees about the motive of achieving the goals and objectives.
 Market- To enter in the market of China it will be very important for JD sports to
develop a strategic direction because of which they have make the decision to enter in the
new market. For the JD sports to make the entry in a new market will not be a easy task
because of the other competitors who are already existing in the market. So for achieving
the success it is very important that they are making new innovation and differentiation in
the products so that they can start getting success and good amount of profits. But for
this, they have to conduct the proper research in which the information regarding needs
and wants of consumers must be mentioned (Abd, Abbas and Khudair, 2019). This will
help the company to make the entry in the market confidentally without any loss.
 Products- In terms of products, company can bring the new range of products which will
be helpful in satisfying the needs of consumers. For the development of a product it is
also useful to develop a strategic direction for the company in order to achieve success in
this factor also. The development of product requires a high level plan which will be
helpful in defining the product goals and in what way it will help in achieving the
objectives of a company. When the strategic direction is made for the development of a
product then it helps in providing the clarity to the company that in which segment the
company will be going and specially when JD sports is going to make the entry in anew
market.
 Services- In terms of services, JD sports is providing some new offering to the customers
in the market of China so that people can like the new fashion sports apparels which is
new and unique for them(Emeagwali and Aljuhamni eds., 2019). The market of China is
already having many competitors which at times becomes very difficult to compete in the
market. JD sports can provide the best offering to the people in the way of achieving the
objectives of a company.
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Methods of expansion
There are different methods which can be used by businesses in order to make the expansion of
their business and those methods have been discussed below-
 Licensing and franchising- Licensing will mean the facility of taking the permission
from another company to make the use of their intellectual property but with the issue of
a license. In the franchise business also the business who will be using the trademarks or
any of the intellectual property will be providing the payment in the form of a royalty.
This method is considered to be the low entry method in which the cost which is made
invested in the business is not as high.
 Joint ventures- The joint venture is considered to be the best option for making the entry
in another market because it just makes the investment to another company and can make
the use of assets(Adizov, 2020). Any company who wants to make the expansion in
another country can make the expansion with the help of this method in which it can
include making expansion with the local business which the JD sports can also do so that
it becomes easier for the business to learn what the market actually requires. In this both
the companies which have decided to come together can in which they can leverage the
growth and can make the expansion by working together.
 Exporting- In the exporting method company can make the delivery of products and
services to the another country but this will not involve their physical presence in the
country in which they are going to make the expansion. This is the way by which
company can give its products in the new market and with this it would be helpful to
them in identifying that if they will be able to make the expansion in the new market or
not (Chumburidze and et. al., 2019).
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