Strategic Management Report: Business Analysis of JD.com (Coursework)

This report provides a comprehensive strategic management analysis of JD.com, a leading e-commerce and retail company in China. The analysis begins with an introduction to the business environment and its forces, emphasizing their impact on companies. The main body of the report offers an organizational overview of JD.com, detailing its history, products, and services. It then delves into an external analysis using PESTEL and Porter's Five Forces models to assess political, economic, social, technological, environmental, and legal factors, as well as competitive forces. An internal analysis using the VRIO framework evaluates JD.com's resources and capabilities. The report further explores JD.com's competitive strategies, including its approach to market competition. Finally, the report concludes with a summary of key findings and strategic recommendations for JD.com.

STRATEGIC
MANAGEMENT

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
JD.com.........................................................................................................................................3
External analysis of JD.com........................................................................................................4
Internal analysis of JD.com..........................................................................................................7
Competitive strategies..................................................................................................................9
CONCLUSION..............................................................................................................................13
REFERENCES................................................................................................................................1

INTRODUCTION
Business environment and its forces are very important and essential elements for every
company because these forces can severely affect the business activities of the companies and
their current operations. But by proper analysing and studying business environment, companies
can achieve great success. Also, by doing the internal and external analysis by the companies
along with adopting good strategic management policies and models, companies in addition to
prove themselves best among others, can also easily meet the market competition and grab the
future growth opportunities. This project will study about the business environment, its forces,
internal and external analysis of the companies. This project also deals with the concept of
strategic management and its various models including the Bowman's clock and Ansoff matrix,
in the contrast of JD.com which is one of the most famous and well-known retailing company of
China.
MAIN BODY
Organizational overview:
JD.com
It is one of the biggest and famous e-commerce company as well as retail and logistics
industry of china. It provides a variety of products to its customer through its online platform or
through mobile applications. JD.com sells almost every kind of product including clothing, food
products, digital equipments, computers, books, kitchen and home products, groceries and many
more. JD.com was founded in 1988. Liu Qiangdong is the founder as well as current chief
executive officer of JD.com. Headquarter of JD.com is in Beijing, China. The current chief
financial officer of the JD.com is Sandy Xu.
Business environment:
It refers to the environment or surrounding of business in which the company have to do
their operations or activities in order to survive or meet the market competition. It is a very
important element or part of the companies which either helps them to meet or achieve their

objectives or may even harm their working and leads to the non achievement of their goal or
creates troubles for the companies in the way of success. But by doing the proper study or
acquiring knowledge about the business environment, companies can forecast the future or even
grab the future opportunities (Gallego-Posada, and Puerta-Yepes, 2018).
The study of the business environment can be done by studying the internal and external
environment in which a company have to survive. The study of the external environment can be
done by studying its various forces including the political, economic, social, technological,
environmental, and legal forces which are continuously changing and may harm the business
operations. In the same way the internal environment of the company includes its own internal
management, or employees of the company which also have an impact over the company's
operations. However, it would be right to said that both the internal and external environment
affects the companies but the impact of internal environment is competitively low in comparison
of external environment because of the controllability factor which means it is somehow easy to
control the internal environment in comparison of external environment which is uncontrollable.
External analysis of JD.com
The external analysis of the JD.com will includes the analysis of external environment
which have an impact over the JD.com in terms of its decrease in sale or affecting its business
operations. The external environment analysis can be done by two ways which includes the
Pestel analysis and Porter's five force model.
Pestel analysis:
It is one of the important practice which is used to study the external environment and its
elements and their effect over the business of company. As, JD.com is that company which
operates in such a changing environment where the changes occur very frequently in terms of
changing the taste and preferences or needs of the consumers or changes in the technology. In
addition to the above changes the changes in economic, legal or political environment also have
a great effect over it (Çitilci, and Akbalık, 2020). Apart from it, the study is also helpful for the
JD.com because it will help it in formulating the strategic planning or strategies for the future
which again helps the JD.com in the expansion of its business in other areas or countries and
grabbing the future opportunities by avoiding the threats.
Political environment:

Changes in the policies of the government, political pressure or groups of the country,
restriction in business, corruption all constitute the political environment which have a severe
impact on JD.com. As, JD.com is one of the biggest retailing company of China which has
global presence with good brand name and in order to maintain its business and operating its
activities in different countries political environment and its factor are very important. Since, the
political situation and policies of every country is different with a difference in political parties
or corruption level so, it becomes essential for JD.com to study those factors and act accordingly
in order to minimize its impact (Echchakoui, 2018).
Economic environment:
Stage of economic development of the country, structure of economy, inflation rate,
labour conditions, interest rate are some factors which makes the economic environment of the
country. The study of these elements are also very important for JD.com in terms of its growth or
dealing and carrying out its business activities. While a favourable economic environment can
help the JD.com to grow and expand, on the other hand an adverse economic environment may
even harm its business in drastic way.
Social environment and its impact:
Recent trends, choice, behaviour, attraction, culture, taste, people's spending, are some of
important parts of society and its environment which JD.com have to keep in mind while doing
its business. Studying carefully about the social needs of people, the JD.com can directly hit the
target market and tries to improve its sale proportions (Fosher, 2018). Since it is also one of
those environments, which changes very frequently so it is very important for JD.com to adopt
those changes or market trends and produce those products which not only meet the customers
demand but also improvise their spending towards the company which helps the JD.com to
achieve the success.
Technological factors:
Introduction of new technology, innovation in the existing technology, new marketing
modes, research and development are those elements which constitute technological
environment. The study of technological forces will helps the JD.com not only in meeting the
recent needs but also increases the work efficiency of JD.com. Detailed technological factors
study helps the JD.com in bringing the innovations in its current products and produce more
interesting and attracting products which will finally increase the profit share of JD.com

Environmental forces:
Awareness towards the environment, climatic conditions, laws and regulations regarding
the environment and many more are included under this force. Since, JD.com is a retailing
industry with a wide presence so it has to be very careful about environmental factors because
every country has different laws and rules regarding protecting the environment. Also, now due
to more awareness among the people regarding the use of environmental friendly products the
JD.com should have to be careful that their products will not harm the environment and the
societal norms (Yusop, 2018).
Legal environment:
It includes the study of Laws and legal framework of the country which become an
essential element for companies in their working. JD.com should also have to study about the
legal framework of the country before entering into any new country or launching its product in a
particular country. JD.com have to abide itself under the legal framework of the operating
country otherwise it will have a very serious impact over it.
Porter's five force model:
Since competition is also a very important part of the external environment which could
affect any company including the JD.com so it is very essential to adopt such model by JD.com
which will not only helps in analysing the forces which will have an impact on market in terms
of competition but it also helps the JD.com to meet and fight the prevailing market competition
and proves itself best from others(Ioniţă, 2017).
Threat of new entry:
Due to good access towards distribution channel by new entries will at certain level make
easier for them to enter into the market and create competition for JD.com. As, JD.com is a
retailing and one of the famous company of china so it becomes somewhat difficult for the new
entries to enter into the market which means due to its wide range of different products or strong
financial background or strict government policies regarding dealing, licensing make it
favourable for JD.com and difficult for other new entries to enter into the market.
Bargaining power of suppliers:
Sometime, the suppliers are having the supply of those products which are in demand of
consumer and this will make it difficult for JD.com because of the high bargaining power of

supplier. While, JD.com is that industry where the customer power is more important for growth
in comparison of suppliers and with high customer power of JD.com the supplier power is
weakened down. Also, sometimes JD.com operates in such market where large number of
supplier are present make the bargaining power of supplier weaker because of wider choice for
JD.com and also the products offered by suppliers are standard and not differentiated which
makes easy for the JD.com to change its supplier and reduces the supplier power.
Bargaining power of buyers:
The bargaining power of the customers are usually low in concept of JD.com because of
the less availability of firms in the market offering products, or due to the differentiated and
quality products of JD.com and because of this the consumers are ready to buy the products by
paying high amount of money also which make the bargaining power of the consumer weaker.
Substitute products:
Due to the presence of less substitute products in comparison of the products offered by
JD.com reduces this threat for JD.com. Also, in case if some substitute product is present but
available at high prices again create favourable condition for JD.com and reduces the threat
(Lewis, 2017).
Competition:
It lays both favourable and adverse impact over JD.com which means due to the variety
of products and good image of JD.com make it difficult for the competitors to compete with
JD.com while in some case if the market share of competitors is big then it will have a negative
impact over JD.com.
Internal analysis of JD.com
The internal analysis helps the JD.com to self analyse itself and knowing its own capabilities or
strength and helps it to face the future threats and convert into opportunities so that it can expand
and grow more (Hamilton, and Webster, 2018). The internal analysis can be done by VRIO
analysis.
VRIO analysis of JD.com:
VRIO is an analytical tool used by JD.com in order to have an efficient utilization of internal
resources and helps it to protect itself from competition and provides a long term benefit to it.

This also helps the JD.com in differentiating the resources which either could prove beneficial
for it during competition and which are not.
Valuable:
There are many valuable resources JD.com have which includes its local product which
are of different types, its efficient staff, its financial resources, its patent rights over the products
are some of its valuable resources which JD.com have and which helps it to face the competition
and helps it to grab the future opportunities (Kozubikova, 2019). On the other hand the cost
structure of the JD.com is not its valuable resource because sometimes the cost of production and
cost on research and development is competitively high in comparison of its benefits.
Rare:
The local products of JD.com is not rare because anyone by using the similar resources
can produce the products as JD.com sales and become its competitor. While, good financial base,
highly trained staff, its patent rights, its distribution system are some rare resources which only
JD.com have in comparison of its competitors because it is very difficult for its competitors to
acquire these rare resources and this helps the JD.com in getting success and bit its competitors.
Imitable:
Trained staff, food products are some of those resources which are imitable by the
competitor of JD.com because any competitor by using various good technique can train their
own staff or by hard work can also imitate the food products as produced by JD.com but on the
other hand the distribution system, the patent rights, or the financial base as JD.com have can't be
imitated by its competitors which proves to be its strength and helps it in its business or meeting
competition.
Organization:
The financial structure or distribution system of JD.com are said to be organized and
helps the JD.com in meeting market competition. As, the distribution system of JD.com is that
much organize which helps the JD.com to deliver its products at every part of world and the
organized financial system of JD.com also help it to invest the right amount of money at right
point which gives maximum benefit to JD.com. On the other hand, the patent right are not said to
be fully organized by JD.com because it is usually seen that it is not selling its product under its
patent right but it is more selling the general or differentiated products which are not properly
organize.

From the above internal and external analysis it would be right to said that, trained staff,
financial system, distribution system, variety with consumer devoted products, cost structure,
legal framework, technological advancement, consideration towards the business environmental
changes are some strengths of JD.com which it can use to grab the future options and
opportunities for growth and more expansion in its business while less investment in research
and development, high employee turnover ratio, cash flow issues or less diversified employees
are considered as some of its weakness which it has to overcome to avoid or reduce the impact of
threats like the uncertainty in business environment, competition, changing environmental effects
and many more.
Competitive strategies
Strategic management: It means management of resources of the organization in such a manner
that efficient and best utilization of the available resources can take place and which helps the
company in the achievement of goal. It involves setting up of objectives, study of the business
environment, study of the company's internal management, formulating or putting it into action
or controlling the strategies and see that all the activities are directed toward the goal
achievement (Stamevska, Dimitrieska, and Stankovska, 2019).
Strategic analysis of JD.com:
As in today's times JD.com is very famous and big brand of China but this is only possible
because of the good strategic management and the using of adequate strategies which JD.com
adopted as per the requirement. As earlier JD.com operates its business through offline modes
which means by stores but with the changing environment and growing needs, the JD.com has
adopted many strategies to move as per needs or changes. And in order to meet the growing
requirement for digitalization, the JD.com develops or started the online stores where it started
selling its products through online modes. Initially it suffers some loss also but by following the
best strategies and patience for best results, it cover up those losses and convert it into profits.
Again with the growing need JD.com develops such automated warehouse where meeting the
growing requirement of products can be very easy with very less workforce (Tukdeo, 2016).
Also, with the growing needs the JD.com has developed such distribution system by using the
latest mode of technology in terms of drones or auto driving transportation vehicles which is now

one of the famous and strong distribution system of JD.com in China that no one can beet it.
Thus, it would be right to say that by using the strong strategic management system and adopted
strategies for meeting the future requirements, JD.com would be able to meet the requirement of
time and proves itself best among the other competitors.
Bowman' clock strategy:
(Source: Bhasin, 2019)
Bowman's clock is one of the famous strategic tool used by the companies to meet the existing
competition of market and helps in analysing the own competitive positioning among the
competitive positioning of other companies or competitors.
From the above diagram it is very clear that stage 6,7, and 8 are such stage which has of no use
or has no fills which means in these stages the prices of the goods are very high in comparison of
the value which the products offered, and no company wants to continue in such stages because
consumers can easily shift themselves to other companies offering similar product with same
value but at low prices (Velikorossov, 2020).
While, apart from the last three stages the remaining stages can be adopted by JD.com as a
strategic management tool but from the remaining stages also, only the stage 3,4, and 5 is
suitable stages which JD.com can adopt because by using theses stages the sale and business of
the JD.com can be easily developed because as per theses stages the price and the value are
Illustration 1: Bowman's clock strategy

simultaneously running same which means the price charged by the company is almost equal to
the value which the product offered, and it is very common that every customer wants to buy
such kinds of products only who have value but at reasonable price. While stage 1 and 2 are such
stages which is not suitable for JD.com because no customer wants to buy such product which
has no value in spite of its low prices.
Thus, it should be right to said that Bowman's clock is one of the most useful strategy which
JD.com can use in its existing product line to more improvise its sales and profits and meet its
competitors and proves itself best among others.
Ansoff matrix:
For making strategies regarding future expansion of the business or launching of new
products Ansoff matrix is one of the major strategic tool which JD.com can use or apply. The
companies including JD.com can either choose one of the strategy of this model or can either
apply all the strategies of this model collectively for grabbing future opportunities and
expanding its business operations (Hanlon,2020).
(Source: The Ansoff Matrix – deciding your growth strategy.2020)
Illustration 2: Ansoff matrix

From the above diagram it is very clear that this model consists of four main strategies which
JD.com can use for achieving its future objective. The description of all the four strategies are as
under:
Market penetration:
It is that strategy which JD.com can use for launching or dealing of its existing product in
the existing market in something new form so that it can grab the consumers of the competitive
companies also, and this not only helps the JD,com to bit its competitors but it can also increase
its customer share which further leads to an increase in its profit ans sales.
Market development:
This strategy helps the JD.com to sell the existing products in the new market which will
helps it to development which means JD.com can expand its business by capturing the
completely new markets and selling its existing products in it which will leads to the expansion
of the business of JD.com globally (Loredana, 2017).
Product development:
Under this strategy by doing market research or understanding the needs of customer
JD.com can make and introduce the new products in its existing market which will not only
satisfy the consumer's need but also helps the JD.com in grabbing new customers and an increase
in its existing sales.
Diversification:
This strategy is something risky because this strategy can either made a very good brand
image of the company or it can either badly affects or destroys the existing brand image of the
company in the market. Because under this strategy, company have to launch a completely new
product in the completely new market which involves a high degree of risk. Thus, by adopting
this strategy JD.com can either rule the entire market by becoming the biggest competitor for the
other companies or it can either make JD.com as one of the weakest company in the market
because of the bad brand image (Tsatsoula, 2018).