Strategic Management Report: JD Sports' Expansion into Asia

This strategic management report analyzes JD Sports' potential expansion into the Asian market. It examines the macro and micro environments using PESTLE and Porter's Five Forces models, respectively, to understand the opportunities and challenges. The report further assesses JD Sports' internal capabilities using the VRIO model and explores competitive strategies based on Porter's Generic Strategies to achieve customer loyalty and competitive advantage. Strategic directions for growth in the Asian market are discussed, providing a comprehensive overview for informed decision-making. Desklib offers a wealth of similar solved assignments and past papers for students seeking further insights.

STRATEGIC
MANAGMENT

Executive Summary
In this report, JD Sports has been taken which is the established retailer in the fashionable
brands, sports wear and casual wear centred in UK. The company has been established in various
other countries and has planned to expand its brand name in India. In this study, the internal and
external macro environment(Pestle) has been analysed which affects the company's operations.
Micro environment analysis has also been covered by using porter's five forces models. In order
to retain its position and gain competitive advantage over other competitors in the both the
markets, VRIO Model has been covered. Along with it porter's generic model has been covered
in order to gain customer loyalty and gain competitive advantage over others.
Table of Contents

INTRODUCTION...........................................................................................................................4
MAIN BODY...................................................................................................................................4
PESTLE Analysis of JD Sports...................................................................................................5
Porter's Five forces model of JD Sports.......................................................................................7
Internal analysis of JD Sport company by using VRIO model....................................................8
Competitive strategies using Porter's Generic Strategies............................................................9
Strategic directions.....................................................................................................................11
CONCLUSION..............................................................................................................................13
REFERENCES................................................................................................................................1
INTRODUCTION
Business has different goals and to fulfil these goals companies use different methods. In
order to achieve the desired goals, companies use various strategies so that the operation of the
business runs successfully. Business strategies are the collection of all the decisions taken by the

company in order achieve the goals of the firm and to maintain its position in the domestic and
international market(Jones, et.al 2019).Prasetyo, P.E. and Rahman, Y.A. 2018. Effectiveness of
new product development on mat creative industry. KnE Social Sciences, pp.633-653.
Musyoka, R., 2018. Market Analysis, Goals & Marketing Strategies (SEMIs.
Desai, C., 2019. Strategy and strategic management. In Management for Scientists. Emerald
Publishing Limited. It is considered as the backbone of the company which helps to give
direction and any fault can result in the loss to the business. Strategic management refers to the
managing the firm's resources in order to achieve the goals of the firm and it acts as action plan
that ensures that all the targets of the company are met and it also provides overall direction to
the company to resist in the competitive environment(Stocker, and Whalley, 2018). For
understanding the environmental factors and develop strategic plans JD Sports has been taken
which is retailer of branded sports.
The report will cover the external and internal environment factors, competitive strategies
and various methods for the company's expansion using various models and framework in order
to diversify its business and to gain competitive advantage over other competitors.
MAIN BODY
Business Environment refers to the collection all the factors including the internal and external
elements which affects the functioning of the business and can result in the loss to the firm. The
changes in these factors have direct impact on the operations of the business (Ko, et.al, 2018).
These include customers, competitors, demand and supply, regulation by the government,
technology etc. Business environment help the companies' to identify these changes, mange the
resources and improve its planning process for the overall growth of the business and also helps
in expansion of the company (Watson, and Newton, 2018). Like any other industry, retail
industry also faces various changes in its fashion and is known as business trend, the company
has to focus on these changes and plan its strategies according to it. To examine the macro and
micro environment of the JD Sports, PESTLE AND PORTER'S FIVE FORCES MODEL is
applied in order to analyse the forces which has impact on the operations of the company.
JD Sports is UK based retailer company which is a sports brand and deals in the sports and
casual wear and the company has acquired the European markets mainly in Germany, Ireland
etc. The company is planning to expand its business in the India and to achieve its objective to

diversify its business it is important for the company to examine the market situation of Indian
market, demands of the people, trends which are prevailing in the present market and then plan
its strategies by considering all the basic elements which is required to consider in order to
expand.
PESTLE Analysis of JD Sports
The Pestle analysis is a management tool that can be used by the JD Sports in order to
predict the changes and make better decisions which can benefit the company. It consists of
political, economic, social, technological, legal and environmental factors that impact the macro
environment of the company and can directly impact the business and cannot be avoided. The
company operates in the dynamic environment where multiple factors influence the working of
the business.
Political factors: Political factors refers to the interference of the local government regulation
over the business and economic environment. Different countries have different regulations and
policies which are mandatory to follow by the companies operating in Asian countries. In order
to develop its market in India, JD Sports need to know the nature and roles of the policies of that
country in order to expand its business.
JD Sports has benefited from the low taxation policies of various countries which has resulted
into high profits and most of the cost is utilized in the process of research and development of the
company. Various changes in the policies in UK can impact the company (Upadhyayula, et.al,
2018.). The company has to manage to make modifications in the regulations of the different
markets and various changes in the regulations made by the economies relating to the provisions
of entry of any Company and also in retail sector. The company has to focus on the changes on
the policies of the government.
Economic factor: Economic factors involve exchange and interest rate, economic position of the
country, inflation rate, taxation rate and market conditions etc. Relief in the restrictions of trade
policy will enable the company to invest and expand its business in other countries. Over the
years, UK government has made huge investment in the development of infrastructural facilities
in order to improve the business environment of the country (Hamilton, 2019). JD Sport in order
to improve its business operations can utilize present infrastructure for the growth and
development of the service sector in the country. The interference of the government in the
service sector can impact the company.

Social factor: Each country follows different cultures in operating their business. These factors
will help the company to understand the customers behaviour and their preferences and also give
ways for further functioning of the business. These social factors include the various cultures,
gender roles, health and safety knowledge, traditions and the area of interest people posses.
Shared beliefs and knowledge will help the company to know more about their customers in
order to plan its marketing strategies and fulfil the requirements of the customers (Silinevicha,
and Kalinina, 2017). The gender roles are evolving in the country so the company can use
various different concepts to support the gender roles in the society.
Technological factors: Technological factors impacts the functioning of the company and
includes innovation in customers services, access to the information and disturbance because of
the change in the technology. Updations and changes in the technology have enabled the
companies to provide products in the market at very short period and innovation of new
products. This has put immense pressure on the company to retain their suppliers and provide
products in the market. JD Sports have to adopt the changing technology and provide the quality
products in the market and stay ahead of their competitors in the market. The scope of
technology is not advanced in the retail sector; efforts should be made in order to fulfil the
market requirements in order to gain advantage over other competitors.
Legal factors:Legal factors plays an important role before expanding its operation in the Asian
market as all the countries have different laws and provisions which is binding on all the
companies operating in the that market. Laws such as Discrimination law, Intellectual Property
Rights, Data Protection law etc. JD Sports have to follow all the provisions relating to
Employment law and cannot violate any law and the company in order to expand its operation in
the India has to follow the provisions mentioned under the act prevailing in that country. It is
important to follow the laws of their own country and also the laws of the countries where they
want to expand its business.
Environmental factors: It is important for every company to understand the changes in the
environment as these changes will impact the functioning of the company and can create
problems for the company for its survival. Governments are making efforts so that companies
can adapt to these changes quickly and plan its strategies accordingly. Some environmental
factors are: taking steps to regulate pollution, climatic change, sustainable development, safe
waste disposal etc. Every market has different standard and environmental laws which can

impact the profits of the company. Before entering and starting new business in any country, IT
is mandatory for the company to carefully examine the environmental laws which are operated in
that market.
Porter's Five forces model of JD Sports
Micro Environment is the environment which is directly connected with the goals of the
company and affects the daily activities of the company. Micro factors affect the strategy, plans
and plans of the business. Various examples of micro are customers, suppliers, employees,
competitors etc. Porter's five forces model is used to analyse the competitive forces which affects
the profitability of the JD Sports company and through examining these forces will help the
company to develop its strategy and gain competitive advantage over the other competitors in the
market.
Porters Five Forces Analysis is a strategic management tool that examines the company and
helps the JD Sports company to analyse the various competitive forces existing in the domestic
as well as international market. The management of the company can apply this model in their
business and examine the factors which is affecting the profitability of the business and helps the
managers to frame its strategies after considering these elements. The Porters Five Forces are:
Threats of new entry: Since the company deals in retail industry, the company faces the threats
of new competitors in the market. The threats to the company are managed by regularly
analysing and improving their services and by introducing new products into the market. The
company also provided their products and services at low cost as compared to the other company
in order to retain its old customers. The company has also managed all the challenges related to
the market changes and build safeguards to compete with their competitors.
Bargaining power of the suppliers: All the companies in the retail industry purchase raw
materials from the multiple suppliers and if the suppliers come to know that the company is
dependent only on one supplier, the supplier take can advantage of their position and can change
the prices of the raw materials. By diversifying the number of suppliers, the company manages
the bargaining power of their suppliers and getting exclusive rights by negotiating with the
suppliers for raw materials and innovating new products.
Power of buyers: Buyers demands for the product are more than they are paying and want to
buy the best quality products at minimum price. In order to avoid such situation, JD Sports can
managed the situation by acquiring the customers from different geographical areas and by

increasing the product variations in order to provide better and multiple options at minimum
cost. This results in increase in customer base and offering multiple varieties of products in the
market.
Substitute of goods and services: Customers buys those goods which can be substituted by the
similar goods and also fulfils the requirement of the customers. JD Sport can minimizes the risk
by being service oriented rather than product oriented and by understanding the requirements of
the customers rather than focusing on what they are buying.
Competitors in the market: Intense competition in the market will result in decrease in the
price of goods and revenue to the company. JD Sports can reduce by increasing the quality of
products and focus on product differentiation, understand the customers’ needs by
communicating and by collaborating with other competitors and increase the market size.
Analysing these forces, JD Sports can frame its plans and strategies to gain competitive
advantage and also identify the changing trends in order to respond to those changes and exploit
the opportunity in the market.
Internal analysis of JD Sport company by using VRIO model
The VRIO framework is a strategic tool which is based on providing protecting the
resources of and capabilities in order to give long term competitive advantage over the other

competitors in the market. It examines the internal management of the company and its
performance(Machado, et.al, 2017.). The company should focus on both internal and external
environment in order to improve its performance in the company and also in the domestic market
and overseas market.
 Valuable: Resources are valuable for the company because they enable the company to
implement its strategies and act accordingly in order to increase that efficiency of the
firm by exploiting the opportunities and reducing the threats to the company (Baia,
Ferreira, and Rodrigues, 2020). In order to measure that the resources is valuable or not
by analysing the Net Present Value that means the cost which is invested in the business
should be lower than the future cash flow.
 Rare: Resources which are present in every organization are common and those which
are not available everywhere are rare. Common resources are not the root for competitive
advantage but the rare resources are competitive advantage and are the sources of
strength of the company (Vargas-Hernández, 2021). JD Sport can use the resources
which are available with few companies; these resources are the strength of the company
and are the source of competitive advantage over other companies.
 Inimitable: If the resources are easily available, then an organization can only achieve
the competitive parity only when the resources of the company are rare but the company
cannot gain long term competitive advantage through this (Barbosa, et.al, 2020.).
According to the Research Based View, the resources can be substantially costly is
obtained by the aggregation of specific historical conditions, casual ambiguity and
cultural complexities. The choices made by the firm in the past have impact on the
present and future decisions of the company and the organizations which has its facilities
located outside the estimated location have costly resources.
 Organized: The resources do not create any advantage for the company, for this the firm
should have the ability to put together these resources and extract product out of these.
For proper use of resources, organization should involve planning, strategies and
effective management systems (Armitage, 2019). With the correct organizational
structure and proper planned strategies, these valuable and rare resources cannot help the
company to sustain in the market.

Competitive strategies using Porter's Generic Strategies
Competitive strategies are the long term action plan of the company which is made in
order to gain competitive advantage over the other competitors in the domestic and international
markets after evaluating the strength, weaknesses, opportunities and threats prevailing in the
industry and compare it with the respective company. Porter's Generic model are the various
types of the competitive strategies which can be implemented by the JD Sports in order to
understand the important principles in order to make the business decisions and gain competitive
advantage over the rivalry firms in the market(Buckley, 2018). This strategy focuses on the
generating return on investment from the market. This strategy is applied where the number of
competitors is more and produces similar types of products in the marketplace.
Michael Porter divided the competitive strategies into three categories:

Cost leadership strategy: To utilize the Cost leadership strategy in the small business is
difficult as these strategies involves long term loyalty of offering products and services in the
market and for this the small business companies have to produce the products at low cost in
order to yield profit from the market (Weng, 2020). JD Sports can gain competitive advantage
by lowering their cost of products in the market. The main aim of using the cost leadership
strategy is to reserve the market leadership position and this strategy will allow the JD Sports to
enlarge the market share by giving importance middle class segment which constitutes the
largest proportion in the marketing mix in most of the countries. The company should focus on
the principle of affordability and easy access which will lead to high brand awareness, sales
growth and strong competitive advantage (Chelanga, et.al, 2017). The main benefits of adopting
the cost leadership strategies is that it helps to gain quick brand recognition and achieving sales
target by focusing on the product accessibility and affordability of the customer in both the
markets.
Differentiation: Another most commonly used generic strategy to increase the competitive
advantage and the company should use the combination of both cost leadership and
differentiation to achieve the growth of the company, and helps to expand the customer base by
focusing the producing unique customer feature in the market. The uniqueness in the product by
the company will allow the firm to charge higher prices for it. By offering higher prices, the
company can incur extra cost which is used in the production of these products. The firm which
adopts the differentiation strategy possess following strength such as access to the best scientific
research, skilled and creative team base and goodwill in the market for innovation and providing
diverse variety of products. In order to adopt the strategy, JD Sports should analyse the changing
trends and customer's preferences and taste (Li, 2018.). Furthermore, the company should focus
on achieving the greater differentiation in all the market segments.
Focus strategy: The focus strategies concentrates on the narrow portion of the market and within
that portion focuses on achieving the cost advantage and differentiation. JD Sports Company by
using these strategies can achieve high level of customer loyalty (Iyer, et.al, 2019). These
strategies deal in the narrow market segments thus have low bargaining power with the suppliers.
The focus strategies have variance: differentiation focus and cost focus which is different from
the cost leadership and differentiation strategies.

JD Sports in order to archive competitive advantage over other competitors should use the above
strategies to cover the important segments of the market.
Strategic directions
The strategic direction refers to the plans of action which the organization implements for the
entering in the new marketplace and growth of the business. It gives assistance in expansion as
well as in accomplishment of goals of the enterprises (Prasetyo, and Rahman, 2018). There are
the various tools for the expansion of the business like Ansoff Matrix.
Ansoff matrix is the strategical tool used for growth of the business. It gives assistance in
planning, marketing and process. The organization analysis is planning is to enter into Asian
market which is India. These plans of action deliver framework of four chambers which are as
follows:
Market penetration: in these plans of action the organization aim to launch the same existing
product into same market segment with the aim of increasing the market share of the
organization. JD Sport can decrease the price of the commodity in order to satisfy the customer
or develop new customers. For the expansion company increase the scale of promotion and
expend then network among the supplier, buyers, wholesale and retailers. In this action Plan
Company face tough competition in the marketplace. For the promotion of the business the
organization can used social media and online platforms. The organization increases the brand
value and loyalty in the exit market. The company spread the brand awareness among the
peoples who are already targeted by the firm to deliver the product sand services. It is the riskiest
strategy for entering intro new market and generate profit.
Product development: it is consisted of strategy tool in which the organization deliver
modified or the new product into the market in order to acquire the goal of firm. It is slightly
risky then other plans of action because the targeted customer are not aware of the commodity
offered by the organization (Musyoka, 2018). It involves the variety of the product which amend
the consumer services along with the quality. It gives assistance in extending the business
enterprise in the same repeated marketplace.
Market development: in this form of plan the business entity delivered existing commodity in
completely new marketplace. The organization target new customers into different market
segment with old product produced by the company. For delivering the product the organization
can use various sales channels such as online or direct sales. The organization spread the network