PESTLE and SWOT Analysis of ASOS: Opportunities, Threats, Strengths, and Weaknesses

This report covers internal and external environmental analysis of ASOS with the help PESTLE and SWOT business tools. It also discusses the leadership style that could help ASOS to meet their business objectives and the corporate social responsibilities of the company.

Context of Business

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
PESTLE analysis of ASOS....................................................................................................1
SWOT analysis of ASOS.......................................................................................................3
In what ways PESTEL factors has made an influence on the Opportunities and threats of a
business. How company is using its strengths to negate their weakness and threats ............4
Leadership style that could help ASOS to meet their business objectives.............................7
Corporate Social Responsibilities of ASOS...........................................................................7
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Business environment refers to all the internal and external factors that could influence
functioning of companies. These factors includes customers, social, political, employees,
suppliers, economic changes, etc. which impacts strategies of organisations directly or indirectly.
Leaders also play very important role in company as they provide guidance to their employees to
overcome challenges and achieve goals (Shibia and Barako, 2017). The following report covers
internal and external environmental analysis of ASOS with the help PESTLE and SWOT
business tools. ASOS is a cosmetic and fashion company in UK which was founded in year 2000
in London. The company sells its own products of clothing and accessories in almost 196
countries. In this report the focus is paid on factors that could become threats or opportunities for
company and how its strengths are impacting risks and weaknesses are affecting opportunities in
market. Furthermore, it has also been discussed in this file that what leadership style should be
implemented by the company in order to complete their business objectives. The last section of
this report explains corporate social responsibilities of the company.
MAIN BODY
PESTLE analysis of ASOS
Political factors:
These elements plays important role in finding out political factors that could impact
ASOS profitability in long term. The company deals in various international market and is
bounded to follow rules and regulations implemented by government of those countries (Junior,
Oliveira and Yanaze, 2019). The political factors which could impact the company are political
instability, corruption, bureaucracy, trading regulations and many other factors. In UK the
market of the company was highly impacted by Brexit. The company has faced exceptional
growth as it has experienced Brexit tariff costs of about £15 million along with the trade
deal that was struck. The overall year profit that the organisation expected was almost
around £17 million, up from approximately £135 million that analyst have composed (Asos
faces £15m in Brexit tariff costs following booming sales in pandemic, 2021). The company
also have to make sure that it does follow all the rules of the nations in which it is operating
its business in.
Economic factors:
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These elements explains those factors which impact the financial status of the company.
In case of ASOS, the company face major challenges at times of COVID-19 as during lock-down
its sales increases but firm has to repay furlough cash to government. The online sales rose
almost by 10% to £1bn in year 2020 and due to this factor the firm took decision for returning
cash received by government under furlough scheme (Asos to repay furlough cash as lockdown
sales rise, 2020). The preferences of people has shifted from traditional shopping to online
purchasing during lock-down which pressurised organisation to keep updated its websites.
Social factors:
Social factors refers to cultural beliefs of people which plays important role in
understanding how the selected company should design its products or services. The social
factors that could impact company are demographic changes, power structure in society,
immigration policies and many more factors (Suseno and Pinnington, 2018). Education level in
society also impacts the company as people become aware about quality of jobs and level of
income. People are also becoming conscious about their health and safety as well as prefer
to buy those cosmetic products which are beneficial for their skin. The new trends in the
market also influence the preferences of people. People are becoming more concerned
about their health and skin care which increase a pressure on company to manufacture
those beauty products which could provide healthy skin. People are also getting attracted
towards organic beauty products which makes company to focus on meeting their
demands.
Technological factors:
These factors include utilization of advanced technologies in order to acquire more
customer base. The company should execute technological equipments to attract more buyers
such as it must keep updated its website. The company should post on social media websites in
order to attract young customer base. The company is required to use its social media channel
to promote its services and products so that people could become aware about the firm.
The implementation of digital technologies in the industry enhance the pressure on
company to use it for their marketing promotional activities. The new feature in
application of many cosmetic and fashion companies provide customers an opportunity to
view what cloth or beauty product will be suitable for them. The selected company should
also pay its focus on providing this technological feature to their potential customers.
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Legal factors:
As the company is dealing in various countries it has to follow legal frameworks of those
nations and should carefully evaluate all risks it could face in market. The factors that impact
ASOS are intellectual rights protections, consumer protection laws, securities laws, employment
laws and various laws which the company has to follow otherwise it has to face many legal
consequences (Kuula, Haapasalo and Tolonen, 2018).
Environmental factors:
These factors are related to environment issues which could impact functioning of
company. Government is already pressurising companies to reduce their carbon footprints and
take steps to conserve environment. The selected organisation must implement
environmental standards and regulations at both national and local level. By producing
more organic cosmetic products and manufacturing clothes that are eco-friendly, the
company could pay its contribution in reducing carbon impacts.
SWOT analysis of ASOS
STRENGTHS WEAKNESSES
 ASOS is one of the leading fashion and
cosmetic retailer company in UK as
well as has strong market presence.
 The company connects with its
customers by using various social
media platforms such as Twitter,
Instagram, Facebook, etc.
 It has highly skilled employees and
invest a huge amount of resources in
their training as well as motivate them
to perform their best.
 It has strong distribution network which
helps it in reaching majority potential
market (Braun, Briones and Islas,
2019).
 The company does not have proper and
efficient financial planning. The liquid
asset and present asset ratios advise that
the firm could utilize cash more
effectively.
 There are additional shipping charges
for customers when they shop online as
free shipping cost is very expensive.
 The company is greatly depended on
very few countries for its revenues.
 The organisational structure of
company is not compatible with future
business model which limits its
expansion in product segment.
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OPPORTUNITIES THREATS
 The lower inflation rates could provide
benefit for company as it brings more
stability in market which enables their
customers to have credits at low
interest rates.
 Globalization could help the company
in expanding its business across world.
This will also assist the company in
understanding different demands of
customers.
 New technologies provide an
opportunity to the organisation to
implement innovative marketing and
pricing strategies in market.
 The uncertainties caused due to Brexit
could become a threat for company.
 COVID-19 has changed the shopping
patterns of customers as they now
prefer to buy products from online
sites.
 More advancements in technologies
could become a threat for company as
risk of data leakage or hacking might
increase (Bernardo, Galina, and de
Pádua, 2017).
 The fluctuations in foreign exchange
could also impact functioning of
company in international market.
In what ways PESTEL factors has made an influence on the Opportunities and threats of a
business. How company is using its strengths to negate their weakness and threats
Political factors: Various countries make several strategies and policies in favour of
retail industry which could be utilized by ASOS as an opportunities to explore more in
international market. These favourable;le policies are proved to be the best opportunities for the
selected company and it also has to do its business by following restrictive policies in order to
avoid any legal consequences.
Economic factors: The major risk that the selected organisation could face is inflation
rates which could make difficult for the company to operate its businesses in retail industry. The
company also needs to utilize online trading opportunities for increasing it sales in time of
Coronavirus as people are avoiding physical shopping now a days.
Social factors: These factors are highly influenced by demands of customer which need
to be fulfil in order to remain in market for long time (Lujja and Özata, 2017). The company
should keep changing its designs according to requirements of buyers and must produce items
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that are best for their targeted customers. The company might face risk of coping their products
by other competitors in market which could increase the chance of losing of their potential
customers.
Technological factors: This is the major factor that helped the selected organisation in
overcoming losses at time of COVID-19 as its sales increases at that time. But these factors
might become threat for the company as private data of company or customer might get leaked
or hacked by hackers which could harm the image of company.
Environmental factors: These factors are related to environment that could help the
company in enhancing its position in market by implementing strategies related to reducing
carbon footprints (Andreini and Bettinelli, 2017) .
Legal factors: These factors are related to all the rules and regulations executed by
countries in which selected organisation is running its business which could become opportunity
for the company if it follows them properly.
INTERNAL FACTORS
EXTERNAL
FACTORS
STRENGTHS (S) WEAKNESSES (W)
OPPORTUNITIES
(O)
SO: The strength of
ASOS is that it has a
strong market presence
in UK which makes an
opportunity for them
to maintain their
position stable for long
time. It has also
appoint highly skilled
employees within
organisation which
makes it beneficial for
them to produce
quality products for its
customers. These
WO: The company do
not have proper
financial planning
which the organisation
could convert it into
their strengths by
recruiting those
employees who have
large experience in
managing financial
situations properly.
The company's
international presence
is limited which it
could enhance by
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strengths of ASOS
help the company in
expending its
businesses on big level
(Jaja, Gabriel and
Wobodo, 2019).
expanding its business
in global market and
enhance its customer
base.
THREATS (T) TS: The company is
highly active on social
media platforms and
only focus on online
trading which could
become threat for it as
its traditional market
presence might
become low. The more
online presence could
expose company to
threats of hacking or
leaking of its data or
customer's personal
details.
WT: The present
organisational
structure is not
according to present
times which could
become threat for
company as it will not
be able to cope up with
market changes
quickly. The limited
global presence could
also become threat for
the company as its
customer base would
become very less.
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Leadership style that could help ASOS to meet their business objectives
Leadership is a capability of a person to influence, guide and motivate people around
them to achieve their desired targets (Choi, 2018). The company could implement following
leadership style that will it in accomplishing its business objectives:
Democratic Leadership style
This leadership style is also known as shared leadership in which leaders or managers
motivate their employees to participate more in decision making process. This leadership style
should be executed by ASOS in order to increase productivity of employees (Lee and Ding,
2020). This leadership provides an opportunity for employees to exchange their ideas and
opinions freely within organisation. This will provide a positive workplace environment to
employees and they will feel more engaged in company.
By implementing this leadership style in company leaders encourage more creativity and
innovation as various workers will bring several new ideas that could help the firm in enhancing
its growth. In times of crisis the chances of getting more potential solutions increases as several
minds are working on same issue. This leadership style also increases team relationship within
company as employees work together on same projects or issues which provide them great
opportunity to know each other better.
As employees feel valued at workplace they will be satisfied with job roles and their
morale is more likely to get high. This leadership style also boost up the morale of workers and
they become more dedicated towards their commitments for company. As all employees have
clear roles and responsibilities which provides strong vision for company that could help it in
building sustainable future (Ahmad, Mohamed and Abdul Manaf, 2017).
Corporate Social Responsibilities of ASOS
The corporate social responsibilities of the selected organisation is explained through
their 'Fashion With Integrity' programme which means that the company manages all aspects
transparently so that their buyers could enjoy fashion shopping. The company also knows its
responsibility towards animals and environment as it works actively to minimize their impact on
these factors. This strategy of company is designed in such a way that it also supports its basic
business schemes and focuses on four factors that are Products, Customers, Business and
community (Candi, Melia and Colurcio, 2019). The company manufacture its products that are
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environment friendly and that could be trusted by its customers. The focus on accomplishing
growth in such a way that it could add social value and can reduce its environmental impacts.
The main aim of the company is to become a global retailer by 2030 in a responsible
and sustainable way. A decade ago, the organisation introduced its fashion integrity and
since then it has tried to become a responsible firm that provides advantages to its
customers and also reduce its impact on planet. The next mission of the company is to work
towards becoming more sustainable and will perform under two pillars that are People and
Planet. The organisation is transforming itself into a overall zero emission company that
implements circular system to organise resource and waste. The firm wants to accomplish
net zero across its overall value chain by the year 2030. It will also become carbon neutral
by the 2025 in its direct operations such as deliveries, offices, returns and fulfilment
centres. The company will also ensure that it would become more sustainable by shifting
towards circular system through making its packaging more environmental friendly. The
firm will pack its products in recycled materials, provide service that offers product
recovery programmes and would also prioritise circular designs (IS ASOS ETHICAL AND
SUSTAINABLE? A COMPLETE REVIEW OF ASOS, 2020).
The selected company will also expand its human right and transparency process
for its supply chain and would execute new equity, diversity as well as inclusion aims for its
business. The organisation would improve its supply chain policies by the year 2030 by
introducing more rights and transparency within the company. The firm will also focus on
enhancing diversity in the company by making sure that every employee present their
opinions freely. The organisation will drive equity and inclusion which means that it will
focus on providing equality to workers of the firm and would ensure that leaders will
execute right leadership style (IS ASOS ETHICAL AND SUSTAINABLE? A COMPLETE
REVIEW OF ASOS, 2020).
In the year 2017, the selected organisation promised and pledged to minimize its
impacts on environment and assist in transforming fashion to more sustainable future. In
UK the company has managed to reduce its influence across its distribution network and
facilities. The brand also gave commitment to people to minimize its greenhouse gas
emission by utilising renewable resources at its several sites. In present time the company
offers sustainable garment for women and men. The accomplishment of the company in the
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year 2020 are very impressive as in order to understand its impact on environment, it has
mapped out its carbon footprints. It has found during this evaluation that around 91% of
emission are manufactured due to deliveries and transport activities. In order to reduce
this impact the company plans to establish more efficient methods of transportation and
has created new local fulfilment centres to minimize distance of delivery and had launched
electronic vehicles in low-emission zone of London. To make its operations more
sustainable in the country its sites in UK utilize around 25% renewable energy and
approximately 10,000 energy efficient LED lights. After evaluating the negative impact of
plastics, company has decreased the thickness of its mailing bags which helps firm in saving
around 583 tonnes of plastics every year. The firm also recycle mailing bags which its
customer return by making new bags with them through using around 10% of used mail
bags. The company is able to minimize virgin plastic utilisation by around 160 tonnes every
year (IS ASOS ETHICAL AND SUSTAINABLE? A COMPLETE REVIEW OF ASOS,
2020).
ASOS also possess various sustainable brands that trades on its platform, vintage
clothing and champion reused on its marketplace as well as the company has also launched
its own 'Eco Edit' collection. It has been observed that the products of Eco Edit are
manufactured from around 50% sustainable fibres except for recycled cotton where a
minimal of 20% is needed. The company also ensures that its suppliers must also give
validations to make sure that the products have been manufactured while concerning their
responsible edit criteria (IS ASOS ETHICAL AND SUSTAINABLE? A COMPLETE
REVIEW OF ASOS, 2020).
CONCLUSION
Form the above analysis it could be said that company should evaluate its external and
internal environmental factors in order to operate its business effectively in market. Companies
should plan their strategies according to market demands and must analyse its strengths that it
could utilize to create opportunities. It has also been observed from the above report that right
leadership style is very important for company to execute as it helps in motivating, guiding and
increasing productivity of employees. A good leader always boost morale of their workers and
encourage them to put forward their persuasions about decisions of company. It has also been
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evaluated form the above analyses, that it is very important for companies to understand their
social responsibilities towards society and environment.
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REFERENCES
Books and Journals
Ahmad, R., Mohamed, A. M. and Abdul Manaf, H., 2017. The relationship between
transformational leadership characteristic and succession planning program in the
Malaysian public sector. International Journal of Asian Social Science, 7(1), pp.19-30.
Andreini, D. and Bettinelli, C., 2017. Business model innovation. Springer International
Publishing AG.
Bernardo, R., Galina, S. V. R. and de Pádua, S. I. D., 2017. The BPM lifecycle: How to
incorporate a view external to the organization through dynamic capability. Business
Process Management Journal.
Braun, M., Briones, I. and Islas, G., 2019. Interlocking directorates, access to credit, and
business performance in Chile during early industrialization. Journal of Business
research, 105, pp.381-388.
Candi, M., Melia, M. and Colurcio, M., 2019. Two birds with one stone: the quest for addressing
both business goals and social needs with innovation. Journal of Business
Ethics, 160(4), pp.1019-1033.
Choi, D. H., 2018. A Study on the Effect of the Servant Leadership Style of Hotel Managers on
Employees' Trust. Indian Journal of Public Health Research & Development, 9(8).
Jaja, S. A., Gabriel, J. M. O. and Wobodo, C. C., 2019. Organizational isomorphism: The quest
for survival. Noble International Journal of Business and Management Research, 3(5),
pp.86-94.
Junior, C. H., Oliveira, T. and Yanaze, M., 2019. The adoption stages (Evaluation, Adoption, and
Routinisation) of ERP systems with business analytics functionality in the context of
farms. Computers and electronics in agriculture, 156, pp.334-348.
Kuula, S., Haapasalo, H. and Tolonen, A., 2018. Cost-efficient co-creation of knowledge
intensive business services. Service Business, 12(4), pp.779-808.
Lee, M. C. and Ding, A. Y., 2020. Comparing empowering, transformational, and transactional
leadership on supervisory coaching and job performance: A multilevel
perspective. PsyCh journal, 9(5), pp.668-681.
Lujja, A. and Özata, F. Z., 2017. The Consequences of Consumer Engagement in Social
Networking Sites 1. Business and Economics Research Journal, 8(2), p.275.
Shibia, A. G. and Barako, D. G., 2017. Determinants of micro and small enterprises growth in
Kenya. Journal of Small Business and Enterprise Development.
Suseno, Y. and Pinnington, A. H., 2018. The significance of human capital and social capital:
professional–client relationships in the Asia Pacific. Asia Pacific Business
Review, 24(1), pp.72-89.
[Online]
Asos to repay furlough cash as lockdown sales rise. 2020. Online Available Through:
<https://www.bbc.com/news/business-53414678>./
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Asos faces £15m in Brexit tariff costs following booming sales in pandemic. 2021.Online
Available Through: <https://www.standard.co.uk/business/leisure-retail/asos-brexit-
tariff-b868773.html>./
IS ASOS ETHICAL AND SUSTAINABLE? A COMPLETE REVIEW OF ASOS. 2020. Online
Available Through: <https://cariki.co.uk/blogs/the-green-road/is-asos-ethical-and-
sustainable>./
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