Business Strategy: ASOS's Macro Environment and Capabilities Report

This report provides a comprehensive analysis of ASOS's business strategy. It begins with an introduction to the company's goals and strategic approach, followed by an examination of the macro environment using stakeholder analysis and PESTLE framework. The report then delves into the internal environment, utilizing SWOT and VRIO analyses to assess the company's strengths, weaknesses, opportunities, and threats, as well as its valuable, rare, imitable, and organized resources. Porter's Five Forces model is applied to evaluate the competitive dynamics within the retail sector. The study also explores the application of various models, theories, and concepts, including Ansoff Matrix, to elaborate on the strategic planning of the company. The report concludes by summarizing the key findings and offering insights into ASOS's strategic positioning and future prospects. The analysis covers political, economic, social, technological, environmental, and legal factors impacting ASOS and its competitive landscape.

Business Strategy

Table of Contents
INTRODUCTION...........................................................................................................................1
1:Analysing the impact and influence of macro environment on the organization using the
frameworks..................................................................................................................................1
2:The impact of the macro environment and its strategic capabilities using VRIO....................3
3:Porter's five forces model for ASOS........................................................................................5
4:Application of modals, theories and concepts that elaborate strategic planning......................6
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................12

INTRODUCTION
Every business have different goals, and they follow different directions to achieve those
goals. These directions make business strategies for the company. In other words it is the
combination of the decisions and performance of the business to accomplish the objectives and
getting the competitive advantages. ASOS is the fashion retailer which is the British based
company, target audience of the company is the young adults as they deal in cosmetics. This
study will discuss the impact which the macro environment have on the organization and on its
strategies, it will be explained using stakeholder analysis and pestle framework. Further it will
analyse the internal environment and capabilities of the company using the appropriate
techniques which include swot and vrio, discussing porter's five forces model to evaluate the
competitive forces of the market sector and also applying ansoff to market strategy. This study
will also discuss the theories and concepts which interpret and design strategic planning of the
company.
1:Analysing the impact and influence of macro environment on the organization using the
frameworks
Macro environment: it is condition which exists as a whole in the economy rather than in a
particular industry and it also influences the performance of the company.
Vision: the mission statement of the ASOS is a document identifying the goals to facilitate its
strategic, managerial and general decision-making.
Mission: the mission of the company is to become the world's number one destination for
fashion loving 20 something.
Objectives:
 To develop the mobile application which give good shopping experience.
 To update the retail system in a more significant manner.
 To continue launch innovate products in the market.
Strategy: strategy is the plan which is made by the company to achieve the short term or long
term goals of the organization, they make strategies according to the situation.
Strategy role in the organization:
Business strategy provides the route to the company, ASOS make sure that the goals of the
company is known by every employee so that they put efforts to accomplish it. Strategy helps in
increasing the organization effectiveness and helpful in operational planning.
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Stakeholder analysis:
It is done to find out that how the stakeholder can influence the business operations and
identifying the success criteria of the stakeholders (Eskerod and Larsen, 2018). Stakeholders are
employees, owners, government, supplier, consumer etc.
Stakeholder analysis matrix:
stakeholder Stakeholder interest Assessment of impact
owner ASOS oner helps in achieving
the target and increasing sales.
Have high impact.
sponsor Providing new markets for the
expansion.
High to medium
Team members Getting skill to develop new
product
Medium to low.
Stakeholder mapping: ASOS do Stakeholder mapping in identifying which stakeholder will
support the change and who will influence the business with the power (Raum, 2018).
Pestle: pestle analysis is the technique which is used in analysing the macro environment of the
company. It has six factors which are:
Political factors: these are the important factors which affect the profitability of the company in
the long run as ASOS is operating its business in many countries so have to face many political
risks. Its business got impacted from Brexit as earlier the company was getting raw material from
EU so now getting raw material from their will be difficult. The company also get affected by the
anti trust laws of the retail sector.
Economic factors: the impact of pandemic has affected adversely the retail sector. As the
company have its presence in many countries so have to go through different exchange rates,
unemployment rate, inflation rates, interest rates etc (Fozer and et.al., 2017). Company also gets
affected from the labour costs and education level of the country. Economic system of the
countries in which ASOS is operating also adversely influence the business if it is not stable.
Inefficient financial market affects the financial needs of the company if the company is not able
to fulfil their financial needs then it will affect the growth.
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Social factors: social factors which include the culture of the society impact the environment of
the company. The attitude and behaviour of the society plays important role by ASOS that how
they will understand their market and how they will design the marketing strategy for the retail
industry customers. Education level, skills and demographics of the population affects the
revenue of the company as every region have different purchasing power of the customers.
Increasing online shopping is the advantage for the company for increasing the sales as they do
business online as well and there is boom in online which will definitely give kick to the
company in terms of profits.
Technological factors: it means that the technology innovations which can influence the
business operations. Nowadays companies are using digital platforms for marketing and selling
products so ASOS should also focus more on online business, they can design their website in
such a manner that it attract their target audience and selling online also saves many expenses of
the company like rental expense etc. for achieving the competitive advantage company should do
technology analysis and adopt advanced technology in their business.
Environmental factors: environmental factors are those factors which include weather, climate,
temperature etc. as ASOS is in fashion industry which changes very fast so company should
analyse market trends so that they can get the competitive advantage (Perera, 2017). Company
also recycle the waste and use less plastic so that it will be helpful in protecting the environment.
ASOS has also given training to their employees regarding waste management which is helpful
in reducing the wastage. Now the companies are going towards renewable energy for healthy
environment.
Legal factors: when ASOS enter in new country they should evaluate the market and their legal
framework before entering. As it is the retail industry so have to take care of all laws which
include discrimination laws, data protection laws, employment law, health and safety law, e-
commerce law, consumer protection etc. like data protection is very confidential thing so ASOS
is not allowed to share the data of the employees with anyone without the permission of the
employee and if company does that then it is punishable by the government.
2:The impact of the macro environment and its strategic capabilities using VRIO.
SWOT analysis at ASOS is help in understanding of its strength, weaknesses, opportunities and
threats. In below paragraph the following points are explained in details:
Strength
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ASOS is UK based where its sell more than 800 brands all over the world. The company also
has its own range of clothing and accessories that help them to grow internationally. ASOS is
now become the UK's biggest fashion beauty retailer that also consists it sales online. The
company now engage in the various countries and spread its operation in more than 200
countries.
Weaknesses
There are few weaknesses that ASOS are facing like its almost 30% purchases through online
is retuned to the them and that results in additionally shipping charges that cause them a huge
loss (Murcia, 2020). ASOS provides its purchases with free shipping, however that cost huge
amount of money of around 100 million pounds annually to the company.
Opportunities
ASOS has lot of opportunities near future as most of the consumers are willing to spend more
on innovative products. Additionally, globalisation is also increasing the reach of the retailers
around the world and help them to grow their businesses.
Threats
There are uncertainty in economy times that may cause a threat to ASOS. There are huge
amount of retailers that mark the presence both physically or digital and may form as strong
brand recognition as compare to ASOS. As because they can attract customers through their
online platforms.
VRIO Analysis:
VRIO helps ASOS to analysis its internal resources and find out whether they provides the
competitive advantages the company or not.
Valuable
This factor at ASOS shows that the employees are the valuable resources for firm. A
significant amount of highly trained employees can help the company to increase its productivity
(Aziriand and Ismaili, 2020). Another valuable resources for the firm is providing the highly
differentiated local foods products. This factor makes the perceived value of customers high and
provide value more that its competition by its buyers.
Rare
As per the VRIO analysis, distribution networks of ASOS is consider as rare resources. The
reason is because the competitors posses a huge amount of investment and has to come up with
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the strong network of distribution than that of ASOS and these factors are only acquire by very
few firms. Another rare resources of ASOS is its financial resources because having a strong
financial resources is own by very few firm.
Imitable
According to this factor, the patent of ASOS is not easy for any firm to imitate. The reason
behind this is that its not allowed by law to imitate the patent of similar goods and also developed
the similar products and than acquiring the patent is become costly affair for any firm. Moreover,
local food goods are become less costly as carries out by VRIO. As these resources can easily
possessed by its competitors if hey are investing amount in research and development.
Organisation
The patent of ASOS a per the VRIO method, are not well organised because these are not fully
utilised by the organisation. If ASOS will try to sell its patented goods before their expiration
than its unused competitive can be alter into sustainable competitive advantage. However, its
distribution networks are well organised according to the VRIO (Rua, França, and Ortiz, 2018).
ASOS make sure that its goods are available on all its outlets with the help of network and it will
be able to reach out its customers.
3:Porter's five forces model for ASOS
Porters five forces help the company to analysis the competition and assist ASOS plc to
develop strategy to survive in the market .
Threat of new entrants
In the retail industry threat of new entrants is high, and the new companies will get
innovation and new products and pressurized the ASOS plc to reduce prices and cost. To reduce
the threat of new entrants ASOS plc can launch new products to the market, so that it will bring
new potential customers for the company and existing customer will also get a reason to buy
from ASOS plc only. Company can also put more emphasis on the marketing so that it can get
strong brand image in the market (Martin, 2019).
Bargaining power of buyers
Buyers want quality products at cheap prices, if the customer base is powerful of ASOS
plc then the bargaining power of buyers will be higher and they want more discounts and offers
from the company (Omsa, 2017). The only way to avoid such situation, company can bring
innovative product in the market and sell them on higher prices. Besides this, company can
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introduce new product range at affordable prices for the middle class people to increase its
customer base.
Bargaining power of suppliers
Retail industry is depended on suppliers for the raw material, so the suppliers are in the
dominating position and can use their negotiating power to sell the raw material at higher prices
to ASOS plc. Thus, the bargaining power of suppliers are high, to reduce this ASOS plc can
build a good supply chain along with multiple suppliers.
Threat of substitute products
ASOS plc is the oldest company so it has already won the hearts of customers, so the
threat of substitute products are low(Kawira, 2017). But ASOS don't want to let go its potential
customer for that it needs to focus on providing more services rather than being product oriented.
ASOS plc should understand the needs of the customer instead of knowing what the customers
are buying.
Rivalry among the existing competitors
The industry in which ASOS is operating, the rivalry among competitors is very high.
Due to intense competition, it will decrease the profit of the company. To reduce the rivalry
ASOS plc can tie-up with the competitors so that ASOS can increase its market share in place of
competing for tiny markets (Varelas, 2017).
4:Application of modals, theories and concepts that elaborate strategic planning.
Bowman's Strategy clock is a type of modal that helps an organisation to explores the various
positions of strategic that positioned the products in that way that give it as most competitive
position.
Low value added and Low price
For ASOS, its not very competitive position for its business. ASOS is not selling its product that
cheaper online, but its provides as range of prices that focus on customer habits. However goods
are not differentiated and it might be possible that customer receives little value.
Low Price
Low prices are only set up by the ASOS if they are producing the products in bulk quantity. But
if ASOS is applying this strategy than it might be possible that they face huge competition.
Hybrid
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ASOS are providing huge amount stock of core apparels such as flats, converses and standard
coloured jeans at lower prices as all of these items can be combined with other trendier pieces
and create more diverse looks (Wolf and Floyd, 2017).
Differentiation
ASOS can use this strategy by making its business more sustainable and should be able
provide the products that have top quality. By this method they can strong its brand value.
Focused differentiation
ASOS is able to use this strategy in order to target to position its products at utmost price
levels, where consumers buy products because of its perceived value for example, it branded
apparels like jeans, tops etc.
Risky High Margins
With this strategy, ASOS may sets high prices and engage in providing perceived value of
the product without providing anything extra. If buyers continue to acquire those products than
the return will be higher.
Monopoly Pricing
When monopoly is applied than there is only one business that take place in the market that
is offering services or products. The buyers have very limited options in this strategy. As per the
present scenario its not possible to apply this strategy (Bryson, and et.al, 2018).
Loss of Market share
By applying this strategy, it might be possible that it create disaster in the market. In which
the company is charging high amount of prices with its law perceived value products. Blackberry
phones is as great example of this strategy.
Ansoff Matrix for ASOS plc
Ansoff matrix is a strategic tool which guides the company in making plans and policies
and in the growth of the company (Hanlon, 2020). ASOS plc is successful in its business and
operations, but growth of the business depends on the various region, location and choices of
customers. With the help of Ansoff, this company can make plans to reduce the impact of
internal and external factors.
Market penetration
It is a strategy through which ASOS plc look for the growth of existing products in the
existing market. To increase the market penetration, ASOS plc can increase the marketing and
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advertisement activities, it will make the company to reach at the untouched customers in the
same market. By making higher investment in marketing of the products, ASOS can increase the
market penetration for the existing products in the existing market. Apart from this ASOS plc can
use new supply chain and new channels for the distribution of their products.
Market development
Strategy of market development will lead the company to magnify the growth of business
by launching existing products in the new market (Loredana, 2017). With the help of research
and development, ASOS plc can identify new customers and market for its products. R&D
department of ASOS plc will recognise the buying behaviour of customer, market culture and
trend. ASOS plc can expand locally and globally as well, while expanding internationally it will
bring new potential customers to the company and will increase the brand in different countries.
By getting new customers, company can increase the profitability as well and can get the name
and fame outside the national boundaries and territories.
Product development
As the name suggest, in product development, ASOS plc can enhance its business in
existing market by introducing new products. For the sake of product development ASOS plc can
modify and improvised its existing products apart from this, company can bring new product in
the market as per the needs and demands of the customer (Kalogiannidis, 2020). New launch of
the product will rise the reach and breadth of the company and it will get ASOS plc to penetrate
in the new market segment. ASOS plc can make investment in the R&D department who will
conduct research about the market trend so the company can remain competitive. To develop
new products, company can go for partnerships and it will save the extra cost. Except this, by
improving the quality of existing products ASOS plc can target new intended audience.
Diversification
It shows the growth and development of the new product in the new market, which brings
ASOS plc to stay competitive and innovative in the market (Dawes, 2018). ASOS plc can go for
vertical diversification, in which company seek for the growth by launching new products under
the current product line. Besides this, ASOS plc can hit horizontal diversification through which
ASOS plc will introduce new product in the market. Apart from this company can do merger and
acquisition, which will bring the new customers to ASOS plc without investing more money in
research and development.
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Porter's Generic Strategy
In this modal, companies can find out how they can pursue the competitive advantage with
the help of right strategies.
Cost and leadership Strategy
The main objective of this strategy is to conserve the leadership position with the use of
efficient value chain management. This strategy can help the ASOS to increase its market share
by targetting the middle class, which makes biggest proportion of consumer market mix in many
counties (Desai,2019). As middle class buyers generally place pricing factor in its supreme factor
so cost leadership is the best strategy to apply as they help to cater the requirements of this
segments of consumer.
Differentiation Strategy
ASOS can use this strategy in connection with cost leadership so that it able to achieve its
overall growth. This strategy allows ASOS to focus more over the innovative product features in
order to expand its market. By applying this strategy, ASOS place its product offerings in such a
way that stand out in market and that it differentiates from other alternatives. There are major
differentiation factors like the oldest brand, numerable experience and having the strong image
all over the world that are being spotlighted the marketing and communication strategy of
company.
Focus strategy
This is third strategy that encourages all the companies to focus on the resources on
expanding the carefully targeted segments. If ASOS is focuses on its products attributes,
examine its brand strategy and bring regular changes in the product designing and packaging
than it will satisfy the needs of customers, their psychological expectations that automatically
maximizes the value for money (Chatzoglou,, and et.al2018).
Diversification Strategy
This is intensive growth strategy of Ansoff Matrix and involves in entering the new market
with new products. This strategy's main objective is to expand the portfolio with the help of
effective acquisition strategies and its linked with diversification intensive growth strategy. If
ASOS is try to strategically application of this strategy than it help in enhances the sustainability
of business. Helps ASOS to achieve its long term objectives of growth despite high turbulence
in market.
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Vertical and horizontal integration
It is done when the business is growing by acquiring a similar company in their industries and
that operates before or after them in supply chain.
Strategic Management Plan
Strategies
ANSOS will now more concentrate on sustainability business, providing smart discount on
black Fridays and focus more on its representation (Trigeorgis,and Reuer, 2017). Youngsters
will always value and focus more on progressive brands so its vital for retailers to able to focus
more future resistance strategies.
Objectives:
To increase the sales by 20%.
To expand growth at consumer base.
To increase the market share globally.
As per the above objective, ANSOS is already upgrading its sales value in the international
market and try to cut down the competitive force in the market.
Tactics
Advertising in magazines is the best tactics that ANSOS can use. Magazine can help to strong
its brand and draw s strong impressions on audience on larger scale.
Use of Newsletters in order to announce its sales and offers. ANSOS is very strategic in order
to make the announcements of discounts. ANSOS announce large scale of sales on its website,
but also uses their newsletters as a prime platform for discounts information (Papke-Shields
and Boyer-Wright, 2017.
Mass appeal is also another tactics that is used by ANSOS. They first collect the data of
consumers ad then the relevant ads in order to attract more audiences as its marketing
department now understand that mass marketing has its own place and bring great benefits.
CONCLUSION
After analysing the entire report, it can be concluded that, this report shows the impact of
macro environment and how the company can avoid the losses by implementing pestle and with
the help of stakeholder analysis. Besides this, importance of internal environment for the
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