Strategic Management Report: JD Sports' Indonesian Market Expansion

This report provides a comprehensive strategic analysis of JD Sports PLC's potential expansion into the Indonesian market. It begins with an executive summary and table of contents, followed by an introduction to strategic management and its relevance to JD Sports. The report then delves into an external analysis using the PESTLE framework to assess political, economic, social, technological, and legal factors in Indonesia, and Porter's Five Forces to evaluate the competitive landscape. An internal analysis utilizing the VRIO framework assesses JD Sports' resources and capabilities. The report identifies competitive strategies using Bowman's Strategic Clock and concludes with strategic directions and recommendations for successful market entry. The analysis highlights the challenges and opportunities in the Indonesian sportswear market, emphasizing the importance of quality products and adapting to the local context.

Strategic Management

Executive summary:
Strategic management is a concept related to managing the resources of organisation for
the purpose of achieving its objectives and goals. It involves setting of objectives, analysing the
competitive environment, internal factors and further strategy formulation for the purpose of
forming suitable strategies. In present context JD sports can use quality products as a strategy for
the purpose of expanding into new Asian as their target market where Indonesia is select as the
target country.

Table of Contents
Executive summary:.........................................................................................................................2
INTRODUCTION...........................................................................................................................4
External analysis..............................................................................................................................4
Internal analysis...............................................................................................................................7
Identification of competitive strategies............................................................................................8
Strategic directions:.......................................................................................................................11
Recommendations & conclusion...................................................................................................12
CONCLUSION..............................................................................................................................13
REFERENCES .............................................................................................................................14

INTRODUCTION
Strategic management is a process that includes several activities such as planning,
monitoring, analysis & assessment is done to achieve the laid goals & objectives. There are
changes that are taking place in the external environment that have to be assess continuously in
order to achieve strategies required for success of a business (Dzwigol, 2020). Present report is
based on JD sports PLC that is a UK based retail brand dealing in sports & casual wear. The
board of directors of this brand are willing to expand in Asian markets that is country Philippines
for this the report is prepared to suggest the best course of direction that is available for the
organisation to grow across international markets that can assist them in creation of competitive
advantage. Key challenges faced by JD retailers in past include the unfavourable economic
conditions and rising exchange rates that have lead to lower profitability margins. There is
analysis of external & internal environment for the purpose of analysing the available
opportunities in the new target market.
External analysis
PESTLE
Political factors:
The government of Indonesia is through ministry of industry is providing various
incentives to organisations to encourage their restructuring of equipments and machinery
exceeding 20 years of age to improve the competitiveness of the footwear industries and also for
promoting them to make use of modern production methods (Trigeorgis and Reuer, 2017). For
JD sports there is facility to improve the competitiveness of sportswear industry as government is
also providing a support of combine tax facility with additional to other incentives that includes
expediting the licensing process of investment in different industrial zones, slashing of import
fees for different types of capital foods, cutting of interests rate for exporters and introduction of
formula for fixed annual wage.
Economic factors:
The demand for sportswear products in the Indonesian domestic market that was
overlooked by foreign and local sportswear manufactures has strengthen over years. sports that
includes football, basketball, fustal, hiking, running, cycling have been popular. With the
increasing middle class customers in the country sports have become part of Indonesian

economy. It has created demand for different sports wear products that has enabled a 9 percent
value growth in 15 percent. The footwear industry is employing nearly 3.5 million of people
across Indonesia that is 15 percent of total workforce of the manufacturing sector. It is providing
a opportunity for JD sports that they can expand their market share in Indonesia (Siegel and
Leih, 2018). The domestic sportswear market of Indonesia will be gaining more importance
because of the middle class customers that s expected to be double to 140 million by the coming
year 2030. the 43 percent of population is below 25 years of age and average age is 28 years that
is offering a growth potential for JD sports.
Social factors: It is the factor that is related to the changing consumer trends. Indonesians are
embracing sports as a lifestyle choices according to observers. The young population that is
median age of 28 years is assisting Indonesia to be a attractive market for sports wear producers.
It is providing a opportunity to rapid expand in these markets.
Technological factors: With the present outbreak of covid virus in different parts of the world
there is more focus of business to expand themselves to e commerce platforms. In JD sports
there has to be laid emphasis both on online and offline channel in order to capture wider share
of market (Schilling and Shankar, 2019). The Indonesian E commerce association has forecasted
that domestic e commerce transactions will triple from 8 billion USD in 2014 to 25 USD in the
year 2016. for JD sport willing to expand in Asian markets the burgeoning e commerce platforms
& specialised sportswear retail outlets is offering a opportunity to reach to the youthful and
targeted audiences so that brand is able to deliver the style and functionality at sane rune period.
Legal factors: There are some of the legal factors that are part of the legal framework in a new
country. JD sports have to consider such factors while they are willing to expand such as there is
complicated licensing procedures. There is need to follow with lot of guidelines that includes
Importer identification number, Special importer identification number etc. all these have to be
obtained through INTRADE system on the website of Indonesia's ministry of traned that is
aimed at streamlining the whole process (Vitolla, Rubino and Garzoni 2017). So it is a factor
that may lead to higher regulations and complexity as a hurdle for JD sports PLC limited.
Five forces framework
Porters five forces analysis is a strategic management tool that is used for making a
detailed analysis of industry and then developing strategies to further implement them in the

course of business. For the purpose of making a detailed analysis of the five major forces there is
need to make detailed evaluation as mentioned below:
Threat of new entrants: New entrants are can lead to innovation as there is development
of new ways of doing things. There can be use of low pricing strategies that can lead to reduction
of cost and new value propositions for their new target market of customers. There is a low threat
of new entrants as JD sports already have established brand image in their existing locations that
is going to assist them in expanding to new markets by reduction of external profits that is lead
towards discouraging of new players.
Bargaining power of suppliers: All organisations in a particular industry are purchasing
raw materials from numerous suppliers. Suppliers are having a dominant position that can
decrease their profit margins (Agwu, 2018). Powerful suppliers are suing customer services
sector as a negotiating power for extracting higher prices from retail organisation. JD sports PLC
is managing the bargaining power of suppliers by diversifying their list of suppliers and getting
exclusive rights from suppliers for supplying their raw materials & researching new products.
Bargaining power of customers: in Indonesia the bargaining power of customers can be
high because of the availability of large number of options that includes Converse, Nike, Adidas
that are dealing in their product across different global markets. For JD sports there is need to
make a detailed evaluation of using differentiation and high quality as two basic strategies to
offer higher perceived value to their target customers in Indonesia which will lead towards
achievement of higher market share & dealing with the high bargaining power of their
customers.
Threat of substitution: When new products and services are able to meet the needs of
customers then it may lead to threat of substitution for brand. For JD sports PLC in order to
expand successfully to Asian markets and manage the threat of substitution there is need to be
more service oriented and understanding the core needs of new market then the scenario that is
already prevailing.
Industrial rivalry: It is the rivalry that is present between the existing competitors in
Indonesia. The overall industrial rivalry will be high for JD sports plc in initial stages because
there is already presence of brands such as Nike, Klein, Hugo boss, Adidas that are dealing in
sports industry and manufacturing of sports products, the noteworthy sportswear industry came
from franc in Indonesia. Decathlon is another giant sporting & retail brand that is having 1000

stores across world. All this scenario will lead to higher industrial or competitive rivalry for JD
sports.
Internal analysis
VRIO ANALYSIS OF JD SPORTS IN INDONESIA
This is the framework which is used to get the sustainable competitive advantages which
are there can help brand to get the scenario of competition which could be faced by them. This
framework comprises of four components which are value, rare, inimitable and organised.
Value- This is one which tells about the value which is offering to customer by JD
Sports. Here, JD sports is offering the better quality of products along with faithful suppliers and
with having the higher bread value than other which builds trust within customers (Irawanto,
2017). In Indonesia there is huge customer who are there interested in sports wear and thus
company JD sports is having market research along with having their store in different countries
this makes them able to handle market and demand with proper standard procedures. JD sports is
having the ability to sell their product at reasonable price which gives the value to their customer
and creates high satisfaction to their customer.
Rare- They are having strong supply chain management which creates higher value to
the distribution of their products in different geographical region in given time with better effect.
Ability and knowledge about having strong chain management JD sports is able to make such
suppliers in Indonesia with less effort to get high competitive advantages. They are having
faithful suppliers which make the brand better in dealing with client to sense of proper
availability of products which is one of the best way to retain customer by providing regularly
the product in continue manner to deal with better supply.
Inimitable- This is the one which is having the ability to have some quality in company
where rivals or competitors are not able to copy or steel their resources and when they try, this
may high cost in this procedure (Gondek, Boessenkool and Star, 2018). Having faithful suppliers
and strong supply chain using with having knowledge about the market creates a inimitable
element which can be costly along with long time taking to inimitable this. JD sports should take
advantage of this and should better use this while opening store in Indonesia. This can helps in
lead to get the high level customer satisfaction.
Organised- this refers to the ability to manage the resources and different management
system in systemic way which can help in to get the better management in running the business.

To get the sustainable competitive advantage there is need to use the management in such a way
to hire better employee who can be able to get the work done in effective manner. JD is also
having good HR staff which are there can help in organising such management in effective
manner in Indonesia to cover the high market share in that country. This creates high level of
customer satisfaction (Vlados and Chatzinikolaou, 2019).
Resources or
capabilities
Value Rare Inimitable Organised Result
Product
quality
YES NO NO YES Low
competitive
advantage
Faithful
suppliers
YES YES YES YES Strong
competitive
advantage.
Strong supply
chain
management
YES YES NO YES Moderate
competitive
advantage
Customer
satisfaction
YES YES YES NO Moderate
competitive
advantages
Identification of competitive strategies
Bowman's clock
It is a model that is exploring the options that are available for strategic position and the
products have to be position according to the competitive position of the target market, the main
purpose of Bowman's strategic clock is to illustrate the way business can make assessment of
variety of options so that they are able to position their products based on two dimensions that is
perceived values and prices (Bowman's Strategic Clock (Strategic Positioning), 2018). There are

10 major stages that are part of Bowman's clock and have to be assess in order to select the most
suitable & available options for the purpose of market expansion to a complete new market
segment. In present scenario there will be market expansion of JD sports as the brand is willing
to expand in the target market that is Indonesia for this different associated elements of JD sports
will be evaluated in order to select the best possible action:
(Source: Bowman's Strategic Clock (Strategic Positioning), 2018 )
Position 1: Low price and low value added: in this the product is not differentiated and the
customer is perceiving low value despite of the low prices. In this the way to remain competitive
for JD sports will to use undercutting of prices but this strategy is not suitable in context of
market expansion strategy in new markets of Indonesia.
Low position (Position 2): In this business have to position themselves as low cost leaders. The
strategy is to cost minimisation can be focussed to be successful. In this profit margins of
product are low but the volume of output is high.
Position 3: Hybrid: It is a position that involves some elements of low prices but there is also
presence of product differentiation. The main aim here is to persuade customers by using a
combination of reasonable prices and product differentiation. In JD sports this strategy can be
used if the added value is offered consistently.

Position 4: Differentiation: The aim of this strategy is to offer high value to customers so that
they are able to perceive high added value. Branding is playing a key role in this strategy as the
organisation is willing to use their brand name as a strategy for creation of strong brand
awareness & loyalty. This strategy can be used by JD sports as they are having a influential
brand image in their existing markets.
Position 5:Focussed differentiation: In this the major aim of the strategy is position the product
at high price levels where customers are willing to purchase the products because of high
perceived values,. In this the strategy used by luxury brand by focussing on targeted
segmentation, promotion and distribution strategies (Išoraitė, 2018). For JD sports this strategy
will lead to achievement of high profitability margins and this strategy can be used for sustaining
in long run.
Position 6: Risky high margins: It is a risky position for the brand as the business is setting high
process but there is no extra offering in terms of perceived values. If customers are willing to
purchase the products at high prices in such cases only the profitability will be high. Ion JD
sports this strategy is not suitable as for new markets if there will be use of price skimming as a
strategy to enter the market then there will be no shifting of customers with their existing brands
if they are already purchasing products of low prices.
Position 7: Monopoly pricing: In case of monopoly pricing there is generally only one brand in
the market that is offering a particular type of product. This is not a possible position for JD
sports in the present scenario of market where they are willing to expand themselves to a new
market that is Indonesian market because their already exist some of the sports brands.
Position 8: Loss of market share: In this position there can be situation of disaster for a
competitive market. There is need to set middle range or standard prices for products with low
perceived values. In case of JD sports this strategy will entail higher value to be perceived by
their target segment of customers in the Asian markets that is in country Indonesian. But it I snot
much suitable because there has to be offering of higher value for the same prices from other
competitors (Sánchez, 2017).
From the above made analysis it can be said that there have been major three positions
for the business according to the Bowman strategic clock. In this the position 6, 7 and 8 are not
that competitive. It can be used only at time when prices are higher than the perceived values. If
the market is operating at a competitive position then there will be always be presence of pother

competitor who are off erring higher perceived value for same prices or the value will be same
but prices can be low.
In context of JD sports, there is high demand for sportswear product in the Indonesian
domestic market that has been overlooked by foreign and local sportswear manufactures. The
low price products are dominating the markets of Indonesia. Hence, there is need to lay emphasis
on sportswear products that can lead to strategic market expansion for JD sports. So the
appropriate strategy according to the changing situation of sports industry in Indonesia is
focussed differentiation, where the brand have to successfully differentiate their products by
providing high quality products to their customers so that they can switch easily with high
quality products that will be offered by JD sports.
Strategic directions:
It refers to various plans and policies set up by management of the business firm to make
effective progress towards business goals and objectives. Strategic directions of JD sports are as
follows:
Ansoff Matrix
This matrix which was given by H. Ansoff in year 1957, which was also published in
Harvard Business Review. It provides various strategies to the management of a business firm
that helps in getting a clear image of companies product or service launched by the company in a
market. It includes four strategies likely, Market Penetration, Product Development, Market
Development and Diversification.
 Market Penetration: This strategy helps a businesses firm to boost up sales of their
existing product or services in an present marketplace. It provides various promotional
ways and also conducts timely market researches to adopt trending techniques and to
analyse customers current demand in marketplace. It enhances customer loyalty towards
companies brand by introducing various offers and discounts on products.
 Product Development: This strategy helps a business organisation to introduce it's
product or service in an existing market along with their competitors. It provides
number of ways in which a business can make it's brand image in existing market such
as selling products at comparatively lower prices for temporary time period to attract
market customers. This strategy provides various promotional techniques to promote
respective companies product to increase market presence of the company.

 Market Development: This strategy helps a business firm to enter new market with it's
existing product or service. Exploring different marketplace involves dealing with new
customer segments, geographical regions etc. It helps the firm to analyse customer
demands and needs in given marketplace and contributes in boosting up of sales of an
organisation.
 Diversification: This strategy helps an enterprises to capture new market full of
demanding customers with new products or services. It provides greatest opportunities
to a business firm to increase their annual revenue and enables a firm to become a
market dominator in the marketplace.
In relation to JD sports, from the above mentioned strategies management of business
firm will be adopting product development strategy. It will help the workforce in carrying it's
operational activities in an efficient manner.
Expansion methods
In respect to a operations, capital, product and services a business enterprise have the nature of
expansion. Business expansion refers to expansion of companies operations or changes in it's
policies and direct it's control towards any particular location. Various types of expansion
methods are been followed by a business firm with context to JD sports, Licensing is been
followed up by companies management.
Licensing: It is a common expansion method used by every business firm. It refers to
official proof that a business firm undertakes in order to provide them satisfaction of working in
various business activities. JD sports have attained various licences with regards to it's product
distribution in a market which provides freedom to a firm to explore different segments of
business environment. License acts like a valid proof for conduction various business activities
and helps in maintaining transparency in working of business firm helps in building customer
trust towards the brand of company.