JD Sports: Strategic Management Report for Indian Market Expansion

This report provides a strategic analysis of JD Sports' potential expansion into the Indian market. It begins with an introduction to strategic management and the retail industry, highlighting JD Sports' current global presence. The report then assesses the external macro-environment using a PESTLE analysis, considering political, economic, social, technological, environmental, and legal factors relevant to the Indian market. The external micro-environment is evaluated through Porter's Five Forces, examining the threats of new entrants, substitutes, and the bargaining power of buyers and suppliers, along with competitive rivalry. An internal analysis is conducted using VRIO analysis to assess the company's resources and capabilities. Finally, the report explores competitive strategies using Porter's Generic Strategies and concludes with recommendations for JD Sports' successful entry and growth in the Indian market, emphasizing the opportunities presented by low-cost labor and the need to address economic and competitive challenges.

Strategic Management

executive summary
This report had discussed that JD sports can expand their business in India because they
are successfully doing their business in UK and in India the company can also get low cost
labour which can increase their profits. External and internal analysis is done in this report
through pestle, porters five forces and other models also applied.

Table of Contents
INTRODUCTION...........................................................................................................................5
Assessment of the external macro environment..........................................................................5
Assessment of the external micro environment...........................................................................8
Internal analysis of the organization..........................................................................................11
Identification of competitive strategies......................................................................................12
Recommendations to the company............................................................................................15
CONCLUSION..............................................................................................................................15
REFERENCES................................................................................................................................1

INTRODUCTION
The process of management of the resources of the organization to achieve its objectives
is called strategic management. It involves to analyse competitive environment, making
objectives, recognize the internal organization, evaluate strategy and making sure that
management carry out strategies. It further tells that how strategies are to be developed. Strategic
management is an ongoing process. Retail industry sells goods and products to the customers
through multiple channels so that they can earn profits. JD sports is founded by John Wardle and
David Makin in 1983. It is a leading retailer company of UK in sportswear, casual wear,
fashionable wear etc. Company started with a single small shop and now expanded in complete
UK. They have multiple stores in UK. Company also dominated the market of many countries
like Germany, Spain, France, Denmark etc. This report will discuss models and frameworks of
the company's strategy and how they can take global opportunities to achieve competitive
advantage. Taking India as an Asian country. Further it will assess external macro and micro
environment using PESTLE and Porter's five forces frameworks and internal analysis is also
done by using Jay Barney's VRIO. This study will also evaluate competitive advantage by using
Porter’s Generic Strategies of Competition framework. The challenges which is faced by the
company is the economic and fiscal threats with the consumer expenditure and getting tough
competition from their competitors.
Assessment of the external macro environment.
It includes the external factors on which the company don't have direct control but it functions
got affected through it. It is explained by using PESTLE framework. This model has some
factors which can influence the organization externally and those factors are:

Political factor: political factor can influence the company (HoLEE, 2020). If JD sports
company wishes to enter the Indian market then they have to take permission from the Indian
government. Government of the company changes with the time then if any new government
came in the country then differences in the opinion can be there between new government and
the company. There are other factors also which can influence the company like labour laws
framed by the government, regulation over the pricing strategy and military coup exposure etc.
labour are cheap in India but government follow strict actions to regulate it, they ensure that their
labours are not violated by any of the global or local company. Level of corruption in the country
can also affect the JD sports especially if it is happening in the consumer service sector. Tariffs
and trade regulations is the another problem. In retail sector product labelling and requirements
can be the factors which influence the business functions.
Economic factors: customer demand in any of the country based on various factors which
include interest rates, inflation, level of economy, banking policies etc. economic factors of the
country involve level of education, infrastructure, policies regarding business, unemployment
rate etc (Ethiraj, Gambardella and Helfat, 2016). by evaluating these factors JD sports can decide
that what are the purchasing or buying power of the customer and what prices are to be set and
what type of product should be launched in the Indian market. These factors will help the
company to forecast its growth in the country. Exchange rates are also to be analysed because it
can also affect profit margins of the company. They have to find out that how efficient are the
Illustration 1: Pestle analysis
Source: Scanning the Environment: PESTEL Analysis, 2016

financial markets of the country because banks plays a vital role for the company. Their rate of
interests, their capacity to give credit can affect the firm (Islam and Mamun, 2017).
Social factors: social factors which include sex, gender, education, culture, religion, attitude,
health, interest in sports etc. affect the decisions of the company. Through analysing it,
companies can understand market conditions, and they will make channels through which they
can target right customer for the product. Level of skill of the population influence the company.
Hierarchy structure in the society and level of education of the customer and awareness for
sports fashion wear and their interest in JD sports fashion industry affect the decisions in the
company. People attitude towards the health, if the people of the country are health conscious
and taking interest in sports in balancing their health or want to make career in sports will help
the company to get benefit from that and increase their sales and revenue. Sports are also played
for leisure it depends on individual to individual that what type of leisure activity they want to
take.
Technological factors: technological factors should be identified by the company before starting
their operations. It is to be done so that company can understand that how the new technology
can be helpful for the company in customer satisfaction and in profit increment and how
company finances will be impacted by it (Rastogi and Trivedi, 2016). Jd sports should rapidly
cope up with the change in technology because slow adaptation can reduce market share.
Company should look around their competition and find out that how the use of new technology
helping its competitor to increase their profits. With the help of technology company can bring
innovation and innovation is very essential nowadays for long term survival. New technology
can reduce time and efforts of the company. They should analyse that if the new technology is
adapted then how it is helpful for the products.
Environmental factors: environmental factors of all the market should consider before entering
into that market which include factors like pollution, climate, weather, reduction in wastage etc.
through analysing these factors company can make environmental friendly products and spread
awareness among the customer about the environment safety and also about their environmental
friendly products. Jd sports should start campaign in the Indian market about recycling which
will attract more customers towards the company and also company will gain government
support. Jd sports can also adopt renewable sources of energy because governments generally
support such projects and it can even reduce the costs of the company in the long run. Weather

conditions of the country may not be suitable for the company sometimes it even affects
transport by affecting the delivery of the products in the market.
Legal factors: laws are different in every country. Legal factors are to be analysed by the
company if they want to survive in the different markets like labour laws, employment laws,
copyrights etc. if they analyse at these factors at initial stage only then that will help company to
avoid the problems which they can face due to these factors (Zahari and Romli, 2019).
Discrimination laws are to be identified because initially government allow foreign company in
the country because of the pressure of globalization, but they do not make favourable laws for
foreign countries. Government makes such strict laws for outside companies so that they can
protect their local company. Proper copyrights and patent laws should be their. If patent laws are
not strict then local companies can copy their designs and make product exactly like them. E-
commerce sector should be analysed because they are rapidly evolving and Jd sports using
online platforms for doing their businesses along with offline business. This is the new channel
through which companies are making profit nowadays.
Assessment of the external micro environment.
Porters five force model

Threat of newcomer: There is always a huge competition in the retail industry market. As they
are a fashionable sports wear retailer they have to face intense threat from the new participants in
the market. Jd sports is determines to penetrate in the Indian commercial market as it has become
a hot spot for foreign companies to establish their outlets there as the overall operating capital
and the labour cost is low in comparison with other developed countries. That's the reason
corporation have to compete with the several new participants struggling to enter acquire their
place in the market. They can handle this risk by constantly modifying their customer services
and bringing out innovative ideas in their products (Julita and Arianty, 2017). The brand have a
huge advantage of economies of scale which new entrants lacks in and they need to work so
many years to achieve that. Industry have large amount of financial backup to conduct R&D
programme which help them to attain competitive advantage.
Threat of substitute: There are so many companies which are providing fashionable sports
apparels and footwear etc. at low prices which will definitely attract customers a they are getting
same product may be of low quality but at cheap prices. To prevent this Jd sports should
established focuses on providing personalised and efficient customer services and after sell
Illustration 2: Porters 5 forces
Source: Porter's Five Forces Analysis. 2016

services to their buyers, to acquire the trust of their consumers and to build a healthy relationship
which results in customer loyalty towards the brand.
Rivalry among the competitors: There is a extensive rivalry between several sports utility
retailers around the globe, as Jd sports is planning to expand their business in India which is an
Asian country. Already many multinational brands have established their outlets there and facing
a tough competition. JD sports will penetrate in the Indian market the very first thing they have
to face is the war to be on the top from various national and international brands. To manage that
organisation should used the best technique possible by maintaining a good customer
relationship (Lumbanraja, Dalimunthe and Hasibuan, 2019). They can also minimize it by the
advantage they have of manufacturing huge lot of products which they can sell on comparatively
low prices in the market.
Bargaining power of buyers: People always wanted to but products which are worth their
money as they wanted affordable products but of high quality. If a company have small
consumer base the bargaining power will be intense. The establishment should focus on locating
their outlets and stores at different geographical and remote locations through that it will be
helpful for them to acquire large quantity of consumers. Jd sports can also achieve that by
widening their product range as when people get a wide variety of options to choose from in one
outlet they will definitely prefer to stick to one enterprise. Their product should also target to
every segment of the market from elite class to upper middle and middle class buyers.
Bargaining power of suppliers: Suppliers always have a upper hand in this and they have high
negotiating authority as they supply raw material to establishment and they know that
organisations are dependent on them for their manufacturing and production process. To take
advantage of this situation they tend to keep their demands high and sometimes increase their
tariffs and charges extra as per their requiremnets. JD industry tackle this situation by diversified
their providers they purchase and import material and resources from different distributes and try
to experiment with the available raw materials in the production of new products (Omsa,
Abdullah and Jamali, 2017).

Internal analysis of the organization
Internal analysis evaluate organization's internal environment and access resources, competitive
advantage and competencies. It identifies weakness and strength of organization. This is done by
using Jay Barney's VRIO analysis. There are four dimensions of this framework which are:
Valuable: It is valuable for the company to expand in Indian market because Indian market will
give many opportunities to the company to grow and increase the revenue. JD sports is already a
trusted company in UK so, company know and rather they have strategies to build customer
value (Darling and et.al., 2019). Company will attract customer of the Indian market from its
pricing strategy. They believe that if any company want to beat its competition then they should
make their prices lower as compare to them. So, JD also follows the same but without
compromising on the quality. Research and development team of the company is also very
efficient they observe change in market trend and make such new products which satisfy the
demand of the customer. Innovation is the key to their success, they believe that considering
customer preference is the priority before launching any product in the market.
Rare: company also covers rare dimensions because they want to expand in India and Indian
market do not have many sports brand and specific having less global sports brand in the market.
This will give competitive advantage to the Jd sports. This can even give rise to competitive
parity if few companies got converted into many companies, and they also use similar way to
carry out their business (Durand, Grant and Madsen, 2017). Those companies can even do the
implementation of the same strategies and create cut-throat competition. If Jd sports looses
valuable resources this can hurt the company because they are very important for the market and
Illustration 3: VRIO analysis
Source: VRIO Analysis, 2020

consumers. Rarity is also very important because if competition have the exact resources, then
they will not get competitive advantage in those resources. In this case different company should
use same resources in different manner so to achieve the competitive advantage.
Costly to imitate: if any resource is costly then the organization which don't have these
resources for them it becomes costly to imitate or substitute at the reasonable price. Imitation can
be done in two ways go for direct imitation of the resource or provide product/services that are
comparable. JD sports company can face the threat of direct imitation because in India cheap
labour are easily available and local company can hire those labours and do imitation of their
products and will sell them in the market at low price (Ariyani and Daryanto, 2018). This will
attract many customers and can reduce the market share of the company. Local company will
identify that JD sports clothing are easily capturing the Indian market, so they find out that there
is demand for that, so they motivate to imitate. Company's resources are expensive, but local
company can compromise of the quality to beat the price.
Organization: only the resource itself cannot give any advantage to the company if they are not
organized then value cannot be taken from them. JD sports should organize its processes,
functions, policies, management systems, culture, organizational structure etc. so to realize the
potential of valuable, rare and imitate resources and their capabilities. Company should also
follow formal reporting system. Manager's of the firm should take such decisions which help to
achieve organization goal. Timely incentives and bonus should be given to the employees so that
they get motivated which increase their productivity. By doing that only, company can sustain in
the market and can achieve the competitive advantage. Company should take the advantage from
its resources. So all the system of the organization should be organized in a proper way
(Trigeorgis and Reuer, 2017).
Identification of competitive strategies
To attain competitive advantage in the market is must because many retailers have
entered the market and catering innovative and stylish products, some companies have price
advantage as they are providing services at affordable pricing some have quality and other have
design related advantage. So to secure there place in the Indian market organisation should keep
in mind and consider all the factors which their rivals are using and build their services and