Strategic Management and Impact of Internal and External Environment on ASOS Plc

This report critically examines models and tools that ASOS Plc can use for analysing its internal and external environment. It also evaluates the impact of internal and external environmental variations on the strategy of the company. The report includes a review of the strategic plan or business plan of the company. The subject of the report is strategic management and the course code is not mentioned. The college or university is not mentioned.

Individual Report

Contents
Contents...........................................................................................................................................2
INTRODUCTION...........................................................................................................................1
MAIN BODY..................................................................................................................................1
Definition of strategic management.............................................................................................1
Critical assessment of process that is used by company for determining strategy......................1
Critical evaluation of impact of internal addition to external environmental variation on
strategy of business concern........................................................................................................3
Review of strategic plan or business plan of the company..........................................................6
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8
APPENDICES.................................................................................................................................9
Business Plan for ASOS Plc........................................................................................................9

INTRODUCTION
In a company, strategic management focuses on effectively deploying employees, funds and
other resources for goal attainment. It provides direction through designing policies along with
developing plans for achieving business goals and allocation of resources in order to execute the
plans. It outlines actions addition to decision making which permit managers to carry out
practices for reaching at determined heights of success. The purpose of the report is to critically
examine models and tools that company can use for analysing its internal and external
environment. For gaining knowledge about strategic management, ASOS Plc is taken into
consideration. It is online fashion addition to cosmetic retailer which was established in 2000 by
targeting young adults (ASOS Plc, 2022). From the statements presented in website of ASOS
Plc, it is analysed that the company works with mission of becoming number one destination to
shop fashion across the globe. The online store was marketed at 18-24 year-olds wanting to
imitate a celebrity’s style. The firm sold inexpensive replicas of items worn by then-popular “It
girls such as Sienna Miller and Kate Moss. It has multi sided business model, having
interdependent customer segment which are required to operate consumers and fashion
businesses. It offers six primary value propositions that are customisation, brand or status, price,
accessibility, convenience and cost reduction.
The assessment highlights strategic management, process for determining organisational
strategy and impact of environment variations on strategy of company. It also reviews strategic
or business plan of the business.
MAIN BODY
Definition of strategic management
As per Ansoff and Et. Al. (2018), strategic management is described as an ongoing
planning, monitoring, analysing together with assessment of all kinds of necessities that business
concern requires for meeting goals (Ansoff and Et. Al., 2018). It entails evaluation of strategy,
review of internal processes together with external factors, allocation of resources and analysing
competition. In aspect to ASOS Plc, strategic management is significant as it provides protection
from uncertainties, adopting new technologies, fulfilling social responsibilities and beating
competition. Managing strategies allow participation of superiors and subordinates in strategic
discussion that enables in better understanding directions and associated benefits.
1

Critical assessment of process that is used by company for determining strategy
Strategy determination is key undertaking in which an organisation engages in. It is termed
as a process to select most appropriate course of action to realise business goals, mission and
vision (Holloway, 2018). In relevance to ASOS Plc, strategic determination process used by
managers is as assessed:
Determining strategic intent: The strategic determination process starts with stating
aspirational plans, intended directions, overarching purposes, etc. Herein, managers of ASOS Plc
assure consistency in allocation of resources over long term. Moreover, they clearly articulate
challenges of corporate emphasising towards efforts of people in medium term. With this,
management of the establishment build layers of competitive edge painstaking for achieving long
term goals.
Defining mission of company: At this step, managers determine position of enterprise in
respect to mission statement of the firm (Stephens and Martin, 2019). In aspect to ASOS Plc, for
determining strategy, it is essential for managers to determine mission so to set the strategy
accordingly. Mission statement of ASOS Plc is to become number one destination across the
world for fashion-loving 20 somethings. Proper understanding of organisational mission enable
administration and management to analyse which kind of strategy requires to be executed at what
time period.
Assessing business environment: With assessment of business environment, ample
number of factors are determined that are present in environment assisting the venture in proper
execution of strategy. It aids in gathering along with providing information for strategic purpose
and handling dimensions which can effect implementation of strategy. For ASOS Plc, it is
crucial to conduct qualitative addition to quantitative review of current product line of the firm.
For this, managers of the establishment apply framework such as PESTLE Analysis and SWOT
Analysis for determine factors that have possibilities to impact strategic direction internally
along with externally. Moreover, managers also track moves and actions of competitors for
discovering probable opportunities related to threats to supply sources or market.
Establishing quantitative targets: At this step of strategy determination, business concerns
fix quantitative target values towards certain organisational objectives (Ferlie and Parrado,
2018). For ASOS Plc, the idea behind this is to make comparison with long term target audiences
2

for the evaluation of contribution which might be framed through ample number of product
zones as well as operating departments.
Aiming in context with divisional plan: Herein, contributions of each functional units or
departments or category of product within the company is identified by managers. On the basis
of this, strategic planning for individual sub-unit are performed. Within ASOS Plc, the aims for
divisional plan are determined through careful analysis of microeconomic trends.
Performance analysis: It entails discovering as well as analysing gap among planned and
that of desired performance. In case of ASOS Plc, managers are required to perform critical
evaluation of past performance, existing situations and desired future events related to the
company. With the critical performance analysis, superiors identify degree of gaps which persists
among actual reality and long term aspirations of business. Administration team of the company
attempts action for estimation of probable future situations when there are chances of persistence
of existing trends.
Choice of strategy: It is end phase for determining strategy. In relevance to ASOS Plc,
best course of action is chosen after taking into consideration of organisational goals, strengths,
limitations as well as external opportunities (Alstete and Beutell, 2020). Herein, managers of
ASOS Plc are required to ensure that all the phases concerned with strategy determination are
implemented effectively. The management team of the firm ensures that there is clarity among
workforce about policies and responsibilities for successfully executing the strategy addition to
gain competitive edge in marketplace.
As per the above mentioned strategic determination process, it is determined that
managers of ASOS Plc follow all phases of strategy formulation for determining strategy and
executing it at workplace for accomplishing desired success. It provides a roadmap to the
company for maximising its returns on investment. Moreover, it offers clarity on big picture to
superiors for organisational objectives together with ensures that all people are on same page.
Critical evaluation of impact of internal addition to external environmental variation on strategy
of business concern
Internal environment:
All kinds of factors and forces which have more direct influences on day to day practices
of company is termed as internal environment (Sigcha, Morocho and Siguenza-Guzman, 2018).
3

To evaluate impacts of internal environment variations on organisational strategy, strategists of
ASOS Plc apply SWOT Analysis that is as assessed:
SWOT Analysis: It is a strategic framework applied by organisational managers for
determining ample number of internal factors that exists within workplace causing variation on
strategic performance. Within ASOS Plc, application of SWOT Analysis assist in determining
strengths and weaknesses related to enterprise together with opportunities and threats that present
in marketplace. For ASOS Plc, SWOT Analysis is underneath:
Strengths:
 Brand image: ASOS Plc has
developed a good image in market
through focusing on fulfilling corporate
responsibility and letting customers
aware about its functions (ASOS Plc,
2022).
 Supply chain: The company has
adopted unique approach for
understanding addition to strategically
executing operations of supply chain. It
plans continuation in local expansion as
well as makes investment huge in
technology and distribution.
 Influencer marketing initiative: The
firm has brilliant initiative of influencer
marketing through which it curates
irresistible versions of outfit of the day.
Weaknesses:
 Limited investment for improving
customer experience: ASOS Plc is
expanding at rapid scale in variant
geographies, however, it restricts
investment in technologies for
improvisation of experiences of
customers.
 Free shipping strategy: The strategy is
weakness for the firm as it can hit
margins as well as enhance overhead
expenses at the time of return of
products.
 Merchandising: As the company is
online retailer, it does not offer option
of trying on as well as feeling clothing
before buying to customers.
Opportunities:
 Changing trends: Changes in buying
behaviour of consumer addition to
newer trends in fashion industry can
open new markets for ASOS Plc.
 Marketing: With the practice of
Threats:
 Economic factors: For ASOS Plc,
trade war posed threat on activities as
there was hike in product prices.
Moreover, Brexit caused movement of
skilled talents to slow down in United
4

attempting marketing efforts for the
purpose of leveraging traffic from sites
which rival uses, the company can
convert undecided shoppers prior other
brand does which can result in
enhancing traffic and expanding
customer base.
 Expansion: Managers of ASOS Plc can
build its stock through adding wider
range of commodities and expand new
categories as customers’ like variants. It
can opt try before buying along with
same day delivery in new market for
brand expansion.
Kingdom that restricted its success
(ASOS Plc, 2022).
 Competition: In the market, there are
giant players, such as Boohoo Group,
The Hut Group, Matches Fashion,
Farfetch and hence forth having huge
market share of online retail that poses
threat for ASOS Plc.
 Cyber threat and data security:
While performing online business
practices, ASOS Plc faces cyber threat
and data security issues that affect its
bottom line and consumer trust.
External environment:
It refers to group of conditions, elements or factors which exist outside the company and
affects the business to various extent. For evaluating impacts of external environmental
variations on strategy of company, strategists of ASOS Plc make use of PESTLE Analysis that is
as assessed below:
PESTLE Analysis: It is a framework which helps to study changes in fashion trends and
preferences of customers due to the external environment of a country. ASOS Plc managers
undertakes pestle analysis to examine consequences of macro elements of market. The analysis
provides comprehensive understanding about challenges ASOS Plc may face in future. Study of
all elements of PESTEL in context to ASOS Plc are explained below:
Political- Factors associated with the political landscape of a country can largely impact
functioning of an organisation (Schilling and Shankar, 2019). The political environment of UK is
generally favourable and stable which provides various opportunities to companies for successful
functioning. But the Brexit decision greatly impact business of ASOS Plc as the company had to
shut its stores which further affects its sales and revenues.
5

Economical- These consists of factors like inflation rate, interest rate, income level of
people, etc. which determines overall economic environment of a nation. UK is a developed
nation where income level and spending power of people is high which provides various
opportunities of market growth to businesses. ASOS Plc takes this opportunity by providing
quality products and great services to its customers. However, at time of COVID-19, the
company suffered heavy losses due to low spending rate and rise in unemployment rate in UK
(Asos Sees Sales Growth Slow on Covid-19 Uncertainty, 2022).
Social- Culture, preferences, way of living, demographics, etc. are various factors which
significantly impacts operations of companies. In UK, people are moving towards online
shopping and various social media sites as well as greatly influenced by celebrities and
influencers style. ASOS Plc benefits from this factor by selling their products through various e-
commerce sites and by increasing popularity of its stores via digital marketing.
Technological- In recent times, technology is advancing at a great pace which puts great
emphasis on operations as well as production of organisations (Ivanov, 2018). As a developed
nation, UK always strives to adopt new and advance technologies to save both time and efforts
of companies. ASOS Plc regularly invests in their R&D department and adopts innovative
marketing techniques which aids the company to improve their relationship with customers.
Modern day technologies have resulted in enhance channels of distribution and also gives rise to
digital media marketing of products that have helped ASOS Plc to increase profitability and
improve efficiency of operations.
Environmental- Elements which an organisation needs to look after while operating their
business are environment factors (Remmer and Gilbert, 2019). It includes factors like weather
conditions, pollution level, climate change effects, etc. which have the power to change the
functioning of firms. Climate change has greatly impacted the temperature of UK and the nation
is also suffering from air pollution. ASOS Plc managers strives to utilize resources as efficiently
as possible to not put extra burden on environment. Company follows efficient waste
management exercises in production activities which helps in enhancing brand image as eco-
friendly firm.
Legal- Detailed knowledge of laws, regulations and policies of a country a business
operate its functions in, is essential for successful conduct of company's operations. Legal
structure of UK is flexible which provides several relaxations and opportunities to businesses to
6

operate their business activities without any problems. ASOS Plc managers’ files tax regularly
and follows fair trade practises to avoid any penalties from national authorities.
Review of strategic plan or business plan of the company
Strategic plan or business plan is organisational document which elaborates the ways a
company defines its goal and how it is to perform for attaining goals. From the changes in
external environment, for example, technical factor, the company needs to adopt advanced
technologies for smooth functioning in dynamic business environment. To carryout working with
changing technological environment, it is reviewed that ASOS Plc is required to adopt new
technologies that will give the company competitive advantage. With this, ASOS Plc can offer
what no one else in the industry is offering and boost revenue streams while providing valuable
experiences to target audiences. It also presents them as innovators and risk-takers in front of
their customers and investors, opening new doors to a wider market and more investment.
Moreover, changes in economic environment also impacts organisations to make changes in
existing strategy. In case of ASOS Plc, functioning and efficiency of the company is impacted
adversely because of COVID-19 pandemic. ASOS Plc has traded through multiple coronavirus
lockdowns while store-based rivals have had to close shops (Asos Sees Sales Growth Slow on
Covid-19 Uncertainty, 2022). Gross margin fell 150 basis points reflecting unfavourable foreign
exchange movements, higher freight costs due to global supply chain disruption and a category
product mix still weighted to lockdown leisurewear. From the business plan of the company, it
has been analysed that that effective growth strategy for ASOS Plc to combat with threats of
COVID-19 is market development strategy as with this, managers can identify along with
develop new opportunities in order to sell offerings in unexplored market. A market development
strategy supports businesses in a growing period to recognize and enhance new sales
opportunities for the current range of products in the otherwise untapped markets.
CONCLUSION
Within a company, strategic management enhances operational efficiency through guiding
management discussions and making of decisions to determine resources along with requirement
of budget in achieving set objectives. With strategic management, organisations are able to take
objective view of practices performed by it as well as conduct cost benefit analysis to analyse
profitability. PESTLE Analysis along with SWOT Analysis are some framework used for
7

assessing impacts of external and internal business environment variation on business strategy.
Regularly along with rigorous evolving strategy determination process keeps track of
competition for business concern and prevent complacency within employees.
8

REFERENCES
Books and Journals:
Alstete, J. W. and Beutell, N. J., 2020. Delivery mode and strategic management simulation
outcomes: On-ground versus distance learning. Journal of International Education in
Business.
Ansoff, H. I. and Et. Al., 2018. Implanting strategic management. Springer.
Ferlie, E. and Parrado, S., 2018. Strategic management in public services organizations:
developing a European perspective. In The Palgrave handbook of public administration
and management in Europe (pp. 101-119). Palgrave Macmillan, London.
Holloway, S., 2018. Changing planes: A strategic management perspective on an industry in
transition. Routledge.
Ivanov, D., 2018. New drivers for supply chain structural dynamics and resilience:
Sustainability, industry 4.0, self-adaptation. In Structural Dynamics and Resilience in
Supply Chain Risk Management (pp. 293-313). Springer, Cham.
Remmer, S. and Gilbert, D. U., 2019. Applying materiality assessment in strategic management:
The implicit coating of the materiality lens. In Rethinking Strategic Management (pp.
267-291). Springer, Cham.
Schilling, M. A. and Shankar, R., 2019. Strategic management of technological innovation.
McGraw-Hill Education.
Sigcha, E., Morocho, V. and Siguenza-Guzman, L., 2018, August. Towards the implementation
of a software platform based on BPMN and TDABC for strategic management.
In International Conference on Technology Trends (pp. 259-273). Springer, Cham.
Stephens, E. and Martin, B., 2019. Business policy and strategic management. Scientific e-
Resources.
Online:
ASOS Plc. 2022. [Online]. Available through: < http://www.asos.com/>
Asos Sees Sales Growth Slow on Covid-19 Uncertainty. 2022. [Online]. Available through:
<businessoffashion.com/news/retail/asos-sees-sales-growth-slow-on-covid-19-
uncertainty/>
9

APPENDICES
Business Plan for ASOS Plc
Particulars Description
Executive summary ASOS Plc is an online retailer that offers fashion and cosmetics to
wider people at global level. With outbreak of COVID-19 pandemic,
organisational profitability has been impacted adversely. For
continuing business practices, the company uses warehouse
technology in order to differentiate the brand.
Organisational
description
ASOS Plc sells more than 850 brands and diverse range of its
clothing addition to accessories to around 196 nations from fulfilment
centres in Europe, UK and USA. It was set in 2000 at London, UK
through targeting young adults. The company faced huge losses due
to changes in economic environment, that is Covid-19 pandemic. It
noted that product mix and higher returns rates, had started to reflect
a shift back into occasion wear in recent weeks as Covid restrictions
eased.
Products or services Clothes, shoes, beauty and accessories are products offered by ASOS
Plc.
Market analysis It refers to quantitative along with qualitative assessment of market.
In ASOS Plc, undertaking market analysis reflects determination of
some factors which exist in market resulting in impact business
profitability and productivity. To analysis market, strategists of
ASOS Plc uses Ansoff Matrix to analyse external market and plan
growth strategies. All the four strategies of Ansoff Matrix are as
follows:
 Market penetration: With this strategy, managers of ASOS
Plc can emphasis to enhance sales of offerings to current
market.
 Product development: Through using the strategy, managers
of ASOS Plc can put focus on launching new offerings to
10

current marketplace.
 Market development: With this strategy of market growth,
managers of ASOS Plc can put consideration on entering to a
new market with current offerings.
 Diversification: If managers of ASOS Plc can use the
strategy, they can enter in new market with launch of new
offerings.
In order to combat threats of Covid-19, market development is
effective for ASOS Pls. With this, the business has chances to acquire
new customers, support long term growth, improve product quality,
upsell existing customers and build organisational resilience.
Monitoring and
controlling
For monitoring and controlling, managers of ASOS Plc can consider
SAFe Model which involves workflow patterns to execute agile
practices at organisational scale.
11