Company Strategic Analysis – ASOS
Assessor: Kevin Hefferman
2. Online Fashion Retail Macro Analysis
3. Competitive Strategy of ASOS
4. ASOS Resources and Capabilities
5. Strategic Options
5.1 Strategy Evaluation
7. Appendix 1 - ASOS Ethical Code of Conduct
8. Appendix 2 – Profitability Ratios
ASOS is an international fashion retailer, which offers an extensive line of products, varying from high street to luxury items.
Success and rapid growth of the company was achieved trough a well- planned corporate strategy, using their resources and capabilities in a way that would profit the company. “Strategic planning is the process by which the firm organizes its resources and actions in relation to an external environment in order to achieve its goals and objectives” (McGee, Thomas & Wilson, 2005, p.9). The report will explore current and future trends in the online fashion industry and analyze where ASOS is at the moment in terms of a market place and what strategy do they need to pursue, in order to achieve more financial stability and profitability in the future.
2. Online Fashion Retail Macro Analysis
Online fashion retailing is a rapidly growing and expanding market. “Retailing in the UK is expected to increase by a constant value CAGR of 2% over the forecast period, as Internet retailing will continue to experience strong growth and outperform store-based channels” (Euromonitor International GMID, 2011). But despite the stability of the market, macro environmental factors still can affect it:
* Globalization of markets
* Reduction of disposable income
* Seasonality of sales
* Raw material costs
“Macroenvironmental changes are the broad outside forces affecting all markets. These include the major economic, demographic, political, technological and cultural developments taking place today” (Doyle, 2008, p.4). The factor which will have the most negative effect on the industry, is cost of raw materials, especially cotton. Cotton is the most common material for high street clothes. “The price of cotton jumped 13 per cent to $1.65 (£1.03) a pound in New York trading last week, largely driven by fears over a disastrous recent harvest in the southern states of the US” (Thompson, 2011). With this trend it can be foreseen that cotton will become a luxury material eventually and high street brands will need to find alternatives, which can be costly.
Another major factors, which can affect the market, are recession and reduction of disposable income. But for high street this can bring positive outcome. Current research shows that at the moment it is the “lowest annual decline since June 2011. This left the average UK family with £147 of weekly disposable income – 5.5% down from the same time last year” (27 February 2012). Recent recession influenced people to cut down on their spending’s, therefore driving loyal customers of luxury brands to consider changing to high street brands.
The environmental issues are affecting people’s awareness in sustainable products and its manufacturing processes. As a cause of global warming, changes in weather occur as well, which causes implications in predicting buyer behavior, therefore predicting sales.
However, “the pace of change in many macroenvironment situations is increasing and becoming more turbulent and unpredictable” (Evans, Campbell & Stonehouse, 2003, p.157). In order to overcome negative effects of economical and political factors fashion retailers will have to maintain and continue to deliver value to their customers. This can be achieved through...
Bibliography: Annual report, 2011. Asos plc. [online] Available at: <http://asos.annualreport2009.com/> [Accessed 2 March 2012]
Annual report, 2011
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Euromonitor International GMID (2011) Retailing in the United Kingdom (online)
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