QUESTIONS:
SECTION 1. MISSION, VISION, AND STAKEHOLDERS (20%) [LOs 1-2] Select and answer one of the following questions:
1.1. Write a mission and a vision statement for ASOS Plc. How will these statements support the development of sustainable competitive advantage?
1.2. Identify ASOS Plc key stakeholders and map these stakeholders in terms of the power/interest grid. Critique, with supporting commentary, which of these stakeholders will need to be repositioned over the next 12 months.
SECTION 2. SCENARIOS AND INDUSTRY ANALYSIS (25%) [LOs 2-3] Select and answer one of the following questions:
2.1. Describe and analyse some of the key trends and uncertainties facing the fashion industry over the following 10 years. Build on this analysis to generate two possible scenarios for ASOS Plc, what implications are there for their strategy?
2.2. By employing relevant data from the case, conduct a five forces analysis of the fashion Industry. What do you conclude about that industry’s attractiveness?
SECTION 3. RESOURCES AND CAPABILITIES (25%) [LOs 2-3] Select and answer one of the following questions:
3.1. Evaluate the bases of ASOS Plc strategic capabilities by utilizing the VRIO/VRIN criteria (value, rarity, inimitability, organisation and/or non-substitutability). Which are the key strategic capabilities that provide, or could provide them with a sustainable competitive advantage? Why?
3.2. Evaluate ASOS Plc resources and capabilities by utilizing the value chain framework. How is the company creating value? Discuss how could the company develop and improve further in respect to this?
SECTION 4. BUSINESS AND CORPORATE STRATEGIES (25%) [LOs 1-4]
What suggestions could you make to ASOS Plc Senior Management team to support their position in achieving sustainable competitive advantage in the global fashion competitive environment?
Abstract
This report is based on analysis of ASOS PLC case study. Being a truly global fashion brand, ASOS PLC is looking to gain and sustain a sustainable competitive advantage. The company aims to become a top retailer in the competitive market, and differentiation has become the main priority of the management. Through the strategic analysis tool such as Porter five forces a, several business insights have been derived. Due to the high bargaining power of customers and suppliers, the differentiation process has been initiated. It can also reduce the threat of substitutes. In an intense rivalry, it seems an adequate strategic consideration. The industry is quite attractive due to different substitutes. Thus, some strategic choices are visible for this company to get products in the limelight. Technology revolution and many other competitive factors can lead the company towards success. Based on the TWOS analysis, some strategies are presented. These strategies are the change, multichannel retailing, sustainable supply chain, merger & acquisition, globally competitive environment, and the element of differentiation. Well, the success depends on the implementation plan of the company along with some improvisations in the competitive market.
Introduction
ASOS PLC is a top fashion company, which is in the limelight due to its high-quality fashion products for customers. In the competitive industry, it seems imperative for the management of the company to conduct strategic analysis to derive several business insights and make the best decision. The management intends to gain a sustainable competitive advantage. However, from a future perspective, the management of the company must have to contain some strategic considerations to make a difference in the competitive fashion market. Through pertinent strategic tools, many insights can be derived from the management to existing strengths in the online fashion world.
Section 1
Vision & Mission Statement
Vision
The vision of ASOS PLC is to create the truly global fashion brand to enable growth opportunities for company, employees, and customers,
Mission
The mission of ASOS PLC is to become the number one online fashion business for fashion loving 20-something.
Development of Sustainable Competitive Advantage
Both mission and vision statements can lead towards a sustainable competitive advantage. The company management intends to emerge in the competitive online fashion industry in the United Kingdom. Relative to the vision statement of the company, the management wants to make the global brand. Therefore, In the United Kingdom, the business expansion is the only choice for the company to justify the vision. It can lead towards a sustainable competitive advantage, as it seems tough for the local brand to make heavy investments and expand the business globally. Through global considerations, the company can create the perception to lift the brand image in the fashion industry, and it can also increase the customer assertiveness. For Instance, in 2013, 14.3%, sales of different fashion products were online. Thus, to be part of the online retail community, this company has to make a shift and move towards online fashion retailing. The shift from the Brick & Mortar is a kind of growth opportunity for the business, and if the company depicts the rapid shift, the sustainable competitive advantage can be attained (Wells & Ellsworth, 2016).
The mission of the company is to become the top retailer. The management can attain a sustainable competitive advantage by differentiating the business process. The most important thing is to demonstrate the business process, which cannot be imitated by other retailers in the industry. Through increasing apparel revenues, sustaining the brand image and the adaptation of some new fashion trends can help the company gain a sustainable competitive advantage. It is a fact that the company has to maintain its focus on the web and different mobile apps to meet the needs of customers. By utilizing its capabilities and resources, the company can come up with immense diversity in fashion products and enhance the visibility of sales and customer assertiveness. Customer engagement from product development to feedback is a powerful source of sustainable competitive advantage, as it seems rare in the online fashion industry. Different competitors in the United Kingdom such as Amazon (UK) and Mark & Spencer have depicted the shift towards the online platforms. Thus, ASOS PLC is looking to give a tough time to its competitors (Danao, 2017).
Section 2
Five Forces Analysis of the Fashion Industry
· Bargaining Power of Buyers (High)
The bargaining power of customers is high in the fashion industry. The high bargaining power is due to the low switching cost for different customers. As mentioned in the case study, customers of this organization are young people, who are passionate about celebrities. Thus, regarding cost and fashion trends, there are many other brands such as Mark & Spenser, Amazon, and many others, which are targeting customers. Thus, maintaining customer loyalty and satisfaction is a big challenge for this company, which justifies the high bargaining power of customers.
· Bargaining Power of Suppliers (High)
The bargaining power of suppliers is high due to the availability of several fashion brands. The company is focusing on broad sizes of products for customers, and it is using over 500 suppliers for pertinent sourcing. It is necessary for the firm to maintain the supply chain efficiency measures to reduce the cost of the process and reduce the visibility of the supplier’s power. Instead of focusing on concentrated suppliers in the retail industry, it seems good to consider multiple suppliers from different regions to expand the business globally. The company has used local suppliers such as high street suppliers. For Instance, Arcadia group is assigned by the company in the United Kingdom. However, sourcing has been done through local terms and conditions (Fletcher, 2018).
· Threats of Substitutes (High)
In the competitive fashion industry, the threat of substitutes is quite high and visible. For Instance, different online fashion retailers are meeting needs of customers in different ways. The best strategy for the company to eliminate the threat of different substitutes is differentiation. Companies are targeting the same customer demographic along with the low switching costs, and it seems the big thing for the company, as far as the profitability and revenue streams are concerned. Thus, it seems important for the company to reduce the switching cost and increase customer loyalty to the brand despite having the availability of substitutes in the fashion market (Fletcher, 2018).
· Threats of New Entrants (Moderate)
The threat of new entrants is moderate. For Instance, in the United Kingdom fashion market, there is a need for heavy capital to emerging as a prominent retailer. However, due to the technology revolution, the cost of capital is quite low. Companies can initiate through online platforms or mobile apps. On the other hand, to attract customers and position them better in their minds, building brand image and creating core values are two important factors. New entrants can enter along with some key strategic considerations to gain and sustain success and competitive advantage (Fletcher, 2018).
· Competitive Rivalry (High)
Net-a-Porter, my-wardrobe, NotOnTheHighStreet.com, Amazon and Mark & Spencer are some key competitors in the fashion industry of the United Kingdom. The existence of Zara and H&M, which are selling clothes in international markets are given a tough time to the company. The competitive rivalry is quite high as every firm is looking to differentiate its products for customers. Fashion products are quite vulnerable regarding imitation, and some appropriate strategies are to be made to gain the competitive advantage. The competitive rivalry is quite high in the fashion industry (Kulach, 2017).
Industry’s Attractiveness
In 2013, ASOS Company reached 5 million customers, and it was due to the industry attractiveness. Customers can reach high quality and differentiated cloths or apparel in no time. Things are easy to navigate on mobile phones and the web. It is a fact that the fashion industry contains attractiveness due to technology compatibility. Companies in this industry can depict more attractive options to customers. For enhancing the visibility of the industry attractiveness, the company has invested heavily in the mobile phone technology and apps. For Instance, daily edit option enhances the customized shopping, and it is an important element regarding the attractiveness. Free deliveries and returns are several options which have been used by companies in a competitive business environment. The online fashion industry needs effective and attractive marketing process by companies to increase overall attractiveness. Companies in the United Kingdom did the same, and it worked (Vandevelde, 2018)
Structural Determinants of Industry Attractiveness
Furthermore, the structural dimensions regarding industry attractiveness are in the limelight. For Instance, in this industry, buyers are price sensitive, and to maintain the attractiveness, apparels are to be sold at low prices. From the perspective of new entrants, normally, the company finds the best distributors or suppliers in this region. However, product differentiation is a big difference. Availability of substitutes in the fashion industry is not a big issue for this company. The biggest thing to worry about is the workability of all those substitutes, which have been developed by competitors. Resources and capabilities to imitate products enhance the attraction for both customers and new entrants. Overall, the industry attractiveness is increasing, and accordingly, companies are making some key strategies to make the difference (Wilkinson & Kannan, 2013).
ASOS Company received some profit warnings in 2014, as stock priced was dropped 39%. To get rid of this problem, the company applied zonal pricing technology. It depicts the flexibility in the fashion retail industry, which helps to restore or regain business sustainability and profit margins. 10% fall in profit was disturbing. However, the industry attractiveness suppressed this issue. It seems a glimpse of how industry attractiveness creates an impact on business operations. It depends on the management of how it makes and executes strategies in the competitive business environment (Wilkinson & Kannan, 2013).
Section 3
Strategic Capabilities by Utilizing the VRIO
| Resource/Capabilities | Valuable | Rare | Inimitable | Organized to Exploit | Impact on the Competitive advantage |
| Differentiation | Yes | Yes | Yes | Yes | Sustainable |
| Business Expansion | Yes | No | No | Yes | Sustainable |
| Integrating trends and styles | Yes | No | Yes | Yes | Temporary |
| Brand Image | Yes | Yes | Yes | Yes | Sustainable |
| Customer Perception | Yes | Yes | No | Yes | Temporary |
There are several capabilities that this company has carried with the passage of time. Even in complex business situations, these capabilities lifted the company in an effective and lucrative manner. Firm’s capabilities, which have been streamlined by the company management, are differentiation, business expansion, integrating with styles and trends, brand image and customer perception. However, some capabilities such as differentiation, brand image, and business expansion have led towards a sustainable competitive advantage. The elaboration of the sustainable competitive advantage through these capabilities is as under (Wells & Ellsworth, 2016).
Strategic Capabilities for Sustainable Competitive Advantage
The streamlined capability of this company is differentiation. The differentiation process is not triggered by only product quality and design, as it is integrated with many other factors. For instance, ASOS Company has offered free order and delivery over £20 to 180. It depicts the uniqueness of the firm’s operations to facilitate customers in the presence of many other competitors. It is valuable and rare in the industry, which leads towards a sustainable competitive advantage. Of course, to maintain the differentiation process, the company has kept profit margins low as compared to other companies. Through this differentiation strategy, the sales process has been increased comparatively, and it enables the sustainable competitive advantage for the long run. Moreover, business expansion is also a powerful capability, as the company can reach those areas which are undone by the competitors. Operations in United Kingdom, France, Germany, Spain, Italy, Denmark, Sweden, the Netherlands, Belgium, and Ireland have justified the business expansion. The recent decision to expand United States warehouses can also contribute to the sustainable competitive advantage. This company streamlines the brand image through celebrity endorsement and better depiction. Thus, it seems rare and valuable in the fashion industry, which leads towards a sustainable competitive advantage. The most important thing for this company is to gain something which is not attained by competitors. It leads towards the unique brand image, which cannot be imitated (Vandevelde, 2018).
Rationale & Critical Success Factor
Critically, the company has focused on profitability and multiple revenue streams to gain the competitive advantage, which created the complex business situation. However, making the good brand image is a good approach by the company to create the best impact on future growth. Ultimately, differentiation, business expansion, and band image create the impact both, profitability and sustainability advantage, and it seems the pertinent rationale for the company. With the passage of time, it is necessary for the company to integrate with new retail fashion trends to develop several capabilities. The most important thing is to perfectly utilize all capabilities to create the space for the new capabilities. This prospect of the business is in the limelight, and the company has to reconsider some initiatives to ensure the future regarding resources and capabilities (Kulach, 2017).
Section 4
TWOS Analysis
| Strengths
Diverse Brand Array Product category segments Innovative Franchise Free Shipping Brand Image Strong Financial Condition Business Expansion |
Weakness
Lacking Physical Appearance Lacking Advertisements Web Shutdown and losses
|
|
| Opportunities
Development of unique products Changing Consumer Trends Global Expansion Enhancing Diversity
|
(S-O) Strengths-Opportunities
The diverse brand array can be depicted and sold well through bring innovation and uniqueness Customers usually want free delivery services m, and the free shipping service from the company is a good approach Global expansion needs a brand image, and it can be increased through sustained strategies. Business expansion can be done effectively through bringing diversity in products and operations within the fashion industry
|
(W-O) Weakness- Opportunities
Lacking physical appearance can be tackled by maintaining a few retail outlets in different regions. Consumer trends can be integrated through integrating some key media channels, as it seems good to streamline new products as well. Global expansion and diversity can be enhanced through modern and sustainable technology. The most important thing is to make global expansion and diversity successful through consistency and availability of products through modern technology. |
| Threats
Sluggish economic conditions The emergence of E-Commerce for new arrivals Product imitation
|
(S-T) Strengths-Threats
The diverse brand array can be successful through a low pricing strategy, as income level is to be targeted by the company. New arrivals are emerging in the market, and brand image, merchandise innovation, and financial condition of the company can be sustained through differentiation process. When expanding the business in different regions, the company can develop several product elements, which cannot be imitated.
|
(W-T) Weakness- Threats
Social media integration is the best strategy for the company, especially in sluggish economic conditions to ensure the low cost of the marketing process. Developments of multiple apps for multiple product lines can help the company get an edge over competitors and new arrivals |
Suggestions to ASOS PLC.’s Senior Management Team
The Change
The first suggestion for the management team is to enhance the change practices with the passage of time. As elaborated, trends in the fashion industry are changing, and accordingly, the form management has to make changes to integrate with some new trends. For Instance, the change can be initiated regarding new product developments and business expansion. Internally, the firm can develop new technology and design patterns to come up with something unique and innovative. In the presence of the competitors, the change process can help the company to make outputs inimitable. Pertinent change may prevent imitation, and in the result, the sustainable competitive advantage can be gained (Kulach, 2017).
Multi-Channel Retailing
The management of the company must have to initiate multi-channel retailing in different regions. It is necessary to continue the Brick & Mortar model to enable the physical appearance. Interestingly, when developing new products and expanding the business, the firm can navigate different options. Customers can generally accept multi-Channel retailing. Along with younger customers, the company can target senior citizens as well. Multi-Channel retailing can also help the company to play with the psyche of customers, as some customers look to visit fashion retail outlets instead of going online. Thus, sales, revenues, profitability, and customer assertiveness can be increased through this consideration (Hendriksz, 2017).
Sustainable Supply Chain
The sustainable supply chain process is a good suggestion for top management. For Instance, when expanding in different regions, the firm has to maintain the efficiency of the whole supply chain process to keep the cost low. The most important thing is to reach customers to meet their needs. The supplier’s sustainability depends on the relationship. Of course, the intention should be towards sustainable relations with both local and international suppliers to maintain an effective flow. It can also reduce the bargaining power of suppliers (Hendriksz, 2017).
Merger & Acquisition
For enhancing the visibility of global expansion, product development, integration of consumer and fashion market trends, the form must have to acquire some local giants. Financially, this company is quite able to acquire local fashion retailers. Interestingly, it can cause a rapid shift in market share, profitability, and the firm’s reputation.
Global Competitive Environment
In the global competitive environment, the firm can implement these suggestions or strategies to gain a sustainable competitive advantage. The business of this company can benefit internally and externally. In the presence of global fashion firms, some improvisations are needed to streamline initiative and ensure the advantage over them.
Element of Differentiation
The product quality is the best way to differentiate in the competitive market. However, there are some other elements which can be carried by the company to justify the differentiation and gain the advantage. For Instance, the management intends to enhance the product-based differentiation along with several elements such as manufacturing, design, product features, and performance. Starting with the manufacturing process, the firm can adopt modern technology to make differentiated apparel. Furthermore, creativity and innovation in the company can help to come up with some unique and inexperienced design of clothes. The differentiation is a source of attraction, and the company must be up to it. Regarding performance, the company can develop several product attributes for customer demographic. It is a good approach in the fashion industry, which makes the attraction visible. Another element of the differentiation strategy is pricing. To depict the low cost of fashion products, the firm may maintain the penetration pricing strategy. Sustainable competitive advantage can be attained over some luxury brands, which have been emerged in the competitive market. Thus, these are some different elements, which are to be kept in mind when differentiating the products (Wells & Ellsworth, 2016).
Conclusion
In the end, it is to conclude that ASOS Company has different resources and capabilities to gain a sustainable competitive advantage. The most important thing is to align all strategies and initiatives with the vision and mission statement of the company. In this contemporary business, the fashion industry is based on fashion trends. The combination of short and long strategies can assist the company to enhance growth and expansion. Through different strategic analysis tools, several insights have helped to derive several business insights and suggest to the company some key strategies. Effective execution can lead towards the sustainable competitive advantage.
References
Danao, M., 2017. How ASOS Built A Popular Brand Through These Brilliant Marketing Strategies. [Online] Available at: https://www.referralcandy.com/blog/asos-marketing-strategy/ [Accessed 20 June 2018].
Fletcher, N., 2018. Fashion forward – Asos has ambitions for big expansion. [Online] Available at: https://www.theguardian.com/business/2018/apr/08/asos-fashion-forward-ambitions-expansion [Accessed 20 June 2018].
Hendriksz, V., 2017. 5 reasons why Asos continues to be successful. [Online] Available at: https://fashionunited.uk/news/business/5-reasons-why-asos-continues-to-be-successful/2017081825534 [Accessed 20 June 2018].
Kulach, K., 2017. Here’s what made ASOS online store into a global ecommerce giant. [Online] Available at: https://www.webinterpret.com/uk/blog/asos-online-store-global-ecommerce-success/ [Accessed 20 June 2018].
Vandevelde, M., 2018. Asos thrives by striking a pose on social media. [Online] Available at: https://www.ft.com/content/5600396e-0db5-11e8-8eb7-42f857ea9f09 [Accessed 20 June 2018].
Wells, J.R. & Ellsworth, G., 2016. ASOS PLC. Harvard Business Review, pp.1-26.
Wilkinson, T.J. & Kannan, V.R., 2013. Strategic Management in the 21st Century. ABC-CLIO.
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