Strategic Management: Approaches, Models and Tools for ASOS PLC

This report discusses the difference between descriptive and prescriptive schools of thought, classical perspective on strategy, and drivers of internationalisation for ASOS PLC. It also covers the approaches, models and tools of strategic management, including Porter's Generic Strategy and Ansoff's Matrix of Growth, as well as PESTLE and SWOT analysis.

Strategic Management

Table of Contents
Introduction:.....................................................................................................................................1
Main body.......................................................................................................................................1
Difference between Descriptive as well as Prescriptive school of thoughts in association with
strategic management...................................................................................................................1
Approaches to the strategic management:...................................................................................2
Describing key models and tools of strategic management as well as identifying the key
features of classical perspective on strategy................................................................................3
key features of classical perspective:...........................................................................................7
Explaining the drivers of internationalisation along with presenting different options available
to enter into external marketplace................................................................................................7
Conclusion.......................................................................................................................................9
References .....................................................................................................................................10

Introduction:
The term strategic management is defined as the process of making goals and decisions
with the objective of transforming company into more competitive state. The main aim of
strategic management tools is to allow proper deployment of staff as well as right resources in
order to attain long term organisational goals in most effective manner. In addition to this, the
practise of strategic management supports the firm to reduce risks by taking actions as soon as
possible. For this report, ASOS PLC is taken into consideration. The firm is recognised as global
brand for selling fashions and cosmetics products through the online mode. The firm deals in
various items such as womenswear, menswear, footwear and many more. The report will explain
the difference between prescriptive , descriptive and configuration schools of thought in relation
to strategic management. The report will also highlight different approaches to strategy. In
addition to this, the report will also cover key features of classical perspective on strategy along
with the key models of strategic management. Moreover, the report will also evaluate the
PESTLE as well as SWOT model for framing business strategies(Emeagwal and Ogbonmwan,
2018). The report will also analyse the international drivers along with explaining about different
entry options for entering into international market.
Main body
Difference between Descriptive as well as Prescriptive school of thoughts in association with
strategic management
Basis Prescriptive school of thought Descriptive school of thought
Definition This approach lays focus on
planning as well as logical
thought process in order to
develop and properly
implement business strategies
for attaining competitive
position.
Under the descriptive
approach, it focus on the
evaluating the real life
application of strategic
theories so that the firm can
assess about how the strategy
can be put in practise in
solving real life business
problems.
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Strategic decision making In this, the strategic decision
making power is basically
undertaken by top level
managers rather than the lower
level managers(Makadok,
Burton and Barney, 2018).
In this, the decision making
process flows from bottom to
top in which the lower level
managers are also invited to
influence the strategic decision
making process.
Desired outcomes The main objective of
Prescriptive strategic managers
is to formulate a suitable
strategy so that it will lead to
attainment of high
performance.
On the other hand, for
descriptive strategic managers
the high performance and
efficiency matters very much.
The focus is more on building
feasible strategies in order to
survive in real market
conditions.
Process of strategy formulation
vs content
The primary focus of the
organisation that adopts this
style lies in strategy
formulation activity and
process.
On the other side, the
Descriptive manager pays
more attention implementing
strategies rather than putting
attention on decision making
process.
Approaches to the strategic management:
The strategy development process can be classified into deliberate or adaptive approaches
but the desired result which is common among every approaches of strategic development
process is to enhance profit levels(Hitt, Ireland and Hoskisson, 2019). The four approaches
which is taken by ASOS Plc company for making strategy are explained below:
Classical:
The classical approach for formulating strategy is considered as deliberate process in
order to maximise the profit of company. It helps the firm to analyse factors of internal and
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external business environment and directing resources for meeting organisational goals and
objectives.
Evolutionary:
This approach of strategic management process is formulated with a view that firm is
doing operations within economic environment which is highly uncertain to predict. This process
allows the company to effectively respond to the pressures of external environment in order to
maintain survival and profit(Barney and Mackey, 2018).
Systematic:
The systematic approach is taken by the company who pays deeper importance to its
local cultural as well as social values. The main purpose of firm is to maintaining sufficient
amount of profits by meeting the cultural and societal needs and requirements.
In context to ASOS Plc, the company uses classical approach of strategic management
process that allows the firm in making suitable strategies based on the results from analysing
forces of external and internal business environment. It helps the organisation in achieving
competitive position in market.
Describing key models and tools of strategic management as well as identifying the key features
of classical perspective on strategy
Porter Generic strategy:
In context to ASOS Plc company, this strategic business model allows the firm to make
classification of company behaviour as well as drivers company behaviour for achieving
competitive growth in market. The following are four elements of porter generic model:
Cost Leadership:
The adoption of cost leadership will help the firm to reduce its cost structure so that the
even the middle class people can afford its product or services(Bel, 2018).The low pricing
strategy can support the organisation in achieving competitive position in market by attracting
large number of customers.
Differentiation leadership:
In this, the firm decides to attain competitive edge by launching differentiated products I
the domestic or in international markets. This can help the firm to take advantage of economies
of scale for improving customer loyalty in effective manner.
Focus strategy
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Cost focus:
The firm by adopting this strategy mainly focus on drawing attention of large number of
customers by making necessary reductions in its cost structure.
Differentiation focus:
The organisation can launch new range of products and services in order to gain a new
market advantage for higher growth. This supports the firm in attaining higher market share.
Recommendation:
In context to ASOS Plc firm, the company should adopt Cost leadership strategy as by
practising this type of strategy it can effectively gain attention of large number of customers. In
addition to this, it will also allow the firm to explore into unexplored markets which can lead into
attaining competitive position in foreign market areas. The firm can implement this strategy by
adopting the low pricing strategy and should focus on practising large scale productions in order
to reduce cost of per unit.(Dyer and et.al., 2021).
Ansoff's matrix of growth:
This type of strategic growth model is the communication tool that supports the
organisation to formulate possible growth strategies in order to gain competitive position in
marketplace. In context to ASOS Plc, this tool helps the firm to choose best possible options so
that growth can be achieved in most effective and efficient manner. The following are the
elements of Ansoff's growth matrix model:
Market Penetration:
This quadrant of market strategy deals with launching existing product ranges within the
existent market place. By adopting this method, the company can increase their current market
by targeting more and more customers within the domestic market. In contrast ,this option does
not seem much promising in enhancing competitive edge as high competition in market can ruin
their strategy(Henry, 2021).
Market Development:
This is the second market growth strategy of the model which lays focus on targeting new
customers present in foreign country by launching existing product ranges. The market
development strategy can allow the company in increase customer share by targeting needs of
new customers. However, this is considered as riskier option as the customers may or may not
provide favourable response to their products.
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Product Development:
The firm which enjoys higher customer base in domestic country can enhance their
market position by launching new products and services in market. This can allow the
organisation in gaining customer loyalty by providing different range of products that can satisfy
their needs and wants. However, if the firm does not enjoy good market reputation in its
domestic market then this strategy may not work effectively(Mehri and Khodadad Hosseini,
2021).
Diversification:
This type of strategy is considered as riskiest option due to presence of uncertainties in
the market. In this, the firm decides to improve competitive position by launching diversified
products in the unexplored marketplace. If the strategy works, it can result in high growth in
terms of profits as well as market share. However, the firm can loose its large sum of capital
resources if the situations of foreign market is not researched properly.
Recommendation:
In context to ASOS Plc company, the firm should adopt strategy of Market Development
as this will allow it to gain new market share where the firm can understand customer demands
and offer its product in the best price ranges. This will support the organisation in achieving
attraction of large number of customers and this will help in attaining competitive position in the
marketplace. The company can effectively implement the market development activities by
adopting different entry modes for entering into foreign market for launching existent products.
In order to analyse the internal and external business environment, the PESTLE and
SWOT analysis tool is taken into consideration:
SWOT business tool:
This strategic framework helps the company to gain insight about its internal
environment factors(Barney, 2020). In context to ASOS Plc firm, this model can assist the firm
in preparing its market strategy by focusing on internal environment. The following elements of
SWOT model is explained below:
Strengths
 The ASOS Plc company enjoys a good
brand image by focusing on meeting
customers through providing quality
Weaknesses
 The firm does not pay much focus on
adopting newer technologies for
improving customer experience.
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products. The firm adopts marketing process
through social media influencers which
helps in achieving high growth.
 The free shipping strategy can
negatively hit its margins at the time of
product return.
Opportunities
 The newer trends in fashion industry is
the major change which the firm can
take advantage by adopting it(Barbosa,
Castañeda-Ayarza and Ferreira, 2020). The company can run its marketing
campaign by adopting new
technologies like Artificial Intelligence.
Threats
 The cut throat competition in the beauty
and fashion industry can damage firm
potential to gain higher profits.
 The increase in cases of cyber attack is
also the major threat for company.
PESTLE framework:
This business tool helps the firm to consider external market forces at the time of
constructing marketing strategies. In context to ASOS Plc firm, this can support the company in
gaining insight about external market factors in most effective manner. The following are the
elements of PESTLE framework which is given below:
Political force:
The political factors such as corruption, Legislation laws and many more can largely
influence the growth strategy of the organisation. In context to ASOS Plc firm, the positive and
stable political climate can provide various opportunities for attaining growth. But the Brexit
decision can reduce its sales and revenues.
Economical force:
The economical factor involves elements such as inflation rate, interest rate and many
more. In relation to ASOS Plc company, the company can take advantage of high GDP as well
as high economic power of UK by providing quality products at the best prices(Carayannis,
2018).
Social force:
This factor covers demographics, customer need and demands , societal values and many
more. In relation to ASOS Plc firm, the change in the trends among people of UK towards
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adopting online platforms for purchasing products can become favourable for firm as it operates
through its official website.
Technological force:
This factor covers presence of innovative technologies within the market. In context to
ASOS Plc firm, the availability of innovative technologies such as AI in UK market can allow
the company to exploit it in order to gain competitive advantage by gaining information about
consumer experiences (Ansoff and et.al., 2018).
Legal force:
This covers elements such as laws and regulation regarding employee and traders and
many more. In context to ASOS Plc firm, the flexible legal structure can help the company to
remove tiresome documentation process in proper manner.
Environmental force:
These type of factors involve elements like weather conditions, pollution level and other
climatic conditions. In relation to ASOS Plc company, the firm adopts sustainable practises such
as usage of solar panels that allows the company to impose less harm on the natural environment.
key features of classical perspective:
 The main aim of classical perspective is to give proper attention in enhancing
productivity levels.
 This kind of concept gives preference for deploying formal organisational structure by
giving proper guidance about who will report to whom.
 In this, the workers are encouraged to work in best manner by giving them monetary
incentives.
 This strategic concept says that workers need to fitted to the right structure just like cogs
needs to be fitted in machine(Kryscynski, Coff and Campbell, 2021).
Explaining the drivers of internationalisation along with presenting different options available to
enter into external marketplace
The globalisation process involves many factors which decides whether the firm will gain
profits after launching its product in international markets or will fail to do so. In context to
ASOS Plc firm, the company must properly study the below mentioned drivers of globalisation
in order to gain insight about necessary forces of external market. These are:
Technological drivers:
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The technologies are the foundations stone for setting up the path of modern
globalisation. The higher usage of social media platforms along with establishment of Artificial
Intelligence can provide essential help to ASOS Plc firm in using these technologies for gaining
higher customer base.
Political driers:
The political factors also plays a key role when the company is deciding for entering into
international markets. The ASOS Plc can choose international markets where there is following
of liberalised trading rules and also the markets are not regulated tightly. It can help the firm to
remove uncertainties regarding failure of project(Indonesia, 2018).
Market drivers:
The market drivers can also impact the decision making of ASOS Plc company in order
to explore into unexplored market. In order to successfully tap into international markets, the
company should study customer needs as well as global marketing channels in the most effective
manner.
Cost drivers:
The cost of raw materials and cost of machinery is also the major factor which the
company involves when entering into new market conditions. Hence, the ASOS Plc firm should
do proper study in order to know the cost structure in foreign markets.
Entry options for entering into international market:
There are different entry options available to the ASOS Plc organisation through which it
can enter into international market. This includes:
Export:
By adopting this process, the firm can effectively start their operations in international
market by exporting products directly to foreign markets. This can allow the company to gain
economies of scale by expanding production capacity. In relation to this, the firm can also take
the advantage of internet platforms in boosting export marketing opportunities. However, the
firm can become exposed to trade barriers as well as the process of exporting can also be
sometimes more tedious.
Licensing and Franchising:
Through this option, the firm can make entry into international markets by adopting
licensing or franchising options. In this, the firm can give permission to other business entities to
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sell their products in exchange of fixed amount of profit share. This helps the company in
ensuring steady flow of income and limited financial exposure. However, it may result into loss
of competitive advantage due to leakage of confidential business practises.
Joint ventures:
In the other option, the firm can enter into foreign market by joining hands with other
business enterprises. This can benefits the firm to lower investment risks by sharing the financial
risk in proper manner. The company can also adopt technological resources of another
organisation in order to improve efficiency. However, the difference in strategic opinions
between parties can damage the relationship which can dissolve this agreement. In addition to
this, the company can also face issue in finding right partners as accompanying with wrong
partners can possess financial loss to the firm(Rua, França and Ortiz, 2018).
Recommendation:
In context to ASOS Plc firm, the company should adopt Exporting process in order to
effectively enter into international markets. This can become good option of company as it can
protect the confidential information and practises of it. This will benefit the organisation to
maintain its competitive position in market in most appropriate manner. Moreover, the firm can
also take advantage of economies of scale through which they can lower the prices of their
products in order to gain larger attraction form customers present in international market. The
organisation can implement this strategy by taking permission from government authorities and
take the license of export by signing certain relevant documents. After completing the legal
process, it can perform the exporting of goods in the international market.
Conclusion
From the above report, it was analysed that strategic management helps the business in
providing right directions for formulating plans and policies in order to realise the mission of
company. The strategic management process also assist the organisation to allocate its resources
in the right job so that plans can be implemented in effective manner. It was concluded that the
firm can achieve competitive position in market by supplying quality products with less price
structure. The report has covered the different between Prescriptive as well as Descriptive school
of thoughts in relation to strategic management. In addition to this, the report has also included
the different approaches to the strategic management. Moreover, it was recommended that the
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company should adopt market development as well as cost leadership strategy in order to achieve
competitive position in most effective manner. Furthermore,the report has also included the
international drivers as well as also analysed that exporting is the best option for entering into
foreign marketplace.
References
Books and Journal
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Competitiveness and globalization. Cengage Learning.
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management. Academy of Management Learning & Education, 17(3), pp.359-373.
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Dyer and et.al., 2021. Strategic management. John Wiley & Sons.
Henry, A., 2021. Understanding strategic management. Oxford University Press.
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Barney, J.B., 2020. Measuring firm performance in a way that is consistent with strategic
management theory. Academy of Management Discoveries, 6(1), pp.5-7.
Barbosa, M., Castañeda-Ayarza, J.A. and Ferreira, D.H.L., 2020. Sustainable strategic
management (GES): Sustainability in small business. Journal of Cleaner
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Carayannis, E., 2018. Strategic management of technological learning. CRC Press.
Ansoff and et.al., 2018. Implanting strategic management. Springer.
Kryscynski, D., Coff, R. and Campbell, B., 2021. Charting a path between firm‐specific
incentives and human capital‐based competitive advantage. Strategic Management
Journal, 42(2), pp.386-412.
Indonesia, M.P.I., 2018. Competitive advantage and product innovation: Key success of Batik
SMEs marketing performance in Indonesia. Academy of Strategic Management
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Rua, O., França, A. and Ortiz, R.F., 2018. Key drivers of SMEs export performance: the
mediating effect of competitive advantage. Journal of Knowledge Management.
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