Strategic Management Analysis 1

Strategic Management Analysis

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 Strategic Management Analysis 2

SECTION 1: MISSION and VISION

1.1. Write a mission and a vision statement for ASOS Plc. How will these statements

support the development of sustainable competitive advantage?

ASOS Plc.

ASOS Plc. is an online fashion and beauty company located in British. The store has its

headquarters located in London. ASOS Plc. is well known for retailing womenswear, menswear,

footwear, accessories, jewellery and beauty products. The company has online websites targeting

different markets in different countries like the UK, Australia, USA, France, Germany, Spain,

Russia, Italy and China. The target audience for ASOS is young adults. The firm sells over 850

brands of clothing and accessories within a year. Today, ASOS sales have declined because of

increased competition from online retailers who are offering same products at a cheaper price. As

a result, the company is facing the challenge of reviving its sales back to normal.

Mission

Our mission is to build a family of the worlds best and unique fashion retail brands providing

appealing, cost effective and innovative customer experiences that drive lasting loyalty.

Vision

Our vision is to be universally recognized as the market leader in fashion and beauty brands that

provide growth opportunities for the firm and its employees.

How will these statements support the development of sustainable competitive advantage?
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An organization mission explains the reason for existence by reflecting on the values and

beliefs of the top managers operating the organization. A good mission statement is important

because it inspires employees as well as providing focus and direction. On the other hand, vision

statement provides the picture of the company in future. The importance of vision statement is to

provide inspiration by providing a framework for strategic planning. In the context of ASOS Plc,

the company needs the above stated mission and vision statements in order to improve its

operations by overcoming the recent challenges. ASOS Plc mission and vision statements

support the development of sustainable competitive advantage in several ways.

Sustainable competitive advantage refers to the edge a company holds over competitors.

In order to remain profitable, this edge must be sustained in long run. According to the Porter's

Generic Strategies model, a company has three unique strategies for gaining competitive

advantage. The three available strategies that ASOS Plc can utilize to gain competitive

advantage in the market are cost leadership, differentiation and focus. The set mission and vision

of ASOS Plc clearly supports the development of sustainable competitive advantage in several

ways. The first one is advocating for product differentiation. The mission of ASOS Plc supports

differentiation strategy by encouraging the company to provide the best and unique fashion retail

brands. In order to achieve this, the retail brands should be different from the ones from

competitors. According to Philip Kotler, differentiation occurs through manipulation of product

characteristics like performance, style, design, consistency, durability, reliability, or reparability.

The mission statement of ASOS Plc supports the manipulation of the company products with the

aim of making them unique and best. This is important because it will help the company

overcome competition to become the leader in retailing fashion and beauty brands all over the

world. From the case study, it is clear that ASOS Plc sales have declined because of increased
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competition. In order to withstand this challenge and increase sales, the company should use the

above mission statement and rebrand the products through differentiation. Differentiating the

company products by adding more unique features will provide an edge in the market.

The second way the mission and vision statement of ASOS Plc is supporting

development of sustainable competitive advantage is encouraging innovation. Product

innovation plays a key role in maintaining competitive advantage. The mission of ASOS Plc

requires the company to develop innovative products. Developing innovative products will help

the company sustain competitive advantage by ensuring the products are valuable to consumers.

Innovation will also help ASOS Plc develop products that cannot be easily obtained apart from

the company stores. While putting innovation into consideration, the company should ensure that

the products cannot be easily imitated by competitors in maintain competitive edge. This is

clearly supported in the mission of the company which highlights innovation as one of the pillars

to succeed in building lasting loyalty from customers.

The vision of the company supports development of sustainable competitive advantage

by providing inspiration to the employees. One of the elements in the vision statement of ASOS

Plc is to be universally recognized as the market leader in fashion and beauty brands. This

statement provides inspiration to the organization employees and the management team to work

hard towards the achievement of organizational goals. The vision statement provides motivation

to employees by providing a future target. As a result, employees will work hard to ensure the

company achieves its target in future as the market leader in fashion and beauty brands. The will

ensure sustainable competitive advantage by promoting consistency and creativity among the

employees. In addition, the vision statement clearly motivates employees by providing an

opportunity for them to grow together with the company. From the vision statement, if the
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company is able to sustain competitive advantage and increase profitability employees will get

rewards.

The mission statement also supports sustainable competitive advantage by encouraging

the company to use Porter's Generic Strategy on cost leadership. There is an element in the

mission statement that requires the company to be cost effective. This element requires the

company set prices that are effective. This can be achieved by setting them slightly lower than

competitors in order to ensure sustainable competitive advantage.

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SECTION 2: SCENARIOS AND INDUSTRY ANALYSIS

2.2. By employing relevant data from the case, conduct a five forces analysis of the fashion

Industry. What do you conclude about that industrys attractiveness?

Porters five forces analysis

The fashion industry has grown to become one of the most competitive retail landscapes

in the 21st century. The industry us characterized by relatively high number of brands that are

similar. The worst scenario is that the market has grown densely populated despite entry of new

brands that are attractive. From the ASOS Plc case study, it is clear that the fashion retail market

is affected by several factors namely the global economy, rise of the digital, technology, and

demand for fast fashion. In this era, power is in the hands of consumers hence retailers like

ASOS Plc are crafting brands that create better consumer experience in order to maintain

competitive advantage. The five main forces influencing the fashion market can be explained

using the Porters five forces. According to Porter an industrys nature and degree of competition

depends on five forces. These forces are threat of new entrants, bargaining power of buyers,

bargaining power of suppliers, threat of substitutes and competition among current rivals.
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Analysis of United Kingdom Fashion Industry using Porters five forces

In 2015, the UK fashion market was one of the most penetrated markets in online retail

environment globally. As the other countries where contemplating in the working of online

fashion stores, UK was building something to attract more customers from different parts of the

world. In 2013, 14.3% of apparel and footwear sales in UK were online. When online retailing

was introduced in UK, some retailers had origin from bricks-and-mortar while other entered the

platform as new retailers. The online fashion market has continued to grow in UK because of

entry of new retailers and customers who are willing to purchase their products online.

Threats of New Entrants (Low)

In almost every industry, there is the threat of new entrants. In Porters five forces the

threat of new entrants usually refers to the possibility of new competitors entering the market to

compete with prevailing competitors in an industry. According to Porter, a profitable industry

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tends to attract more competitors who are determined to gain substantial profits (Walder, 2012,

p.5).

In the fashion industry, the threat of new entrants is mainly a weak force. The fashion

industry is densely populated and new brands need significant level of differentiation in order to

find success. However, brands find their unique ways to grow new brands. According to the

ASOS Plc case study, the fashion industry in UK is very saturated with brands such as NEXT,

Boohoo, Missguided, Net-a-Porter, my-wardrobe and Topshop. As a result, new entrants do not

pose enough threats to the existing companies. In addition, the high cost of establishing an online

fashion store in UK deters new entrants from entering the market. This is a clear indication that

new entrants in the UK fashion market do not have significant power to compete with existing

firms. ASOS Plc does not face the challenge of new entrants but existing competitors who are

becoming stronger daily.

Threat of Substitute Products (High)

Substitutes are products possessing qualities that are highly comparable to the original

products. In most cases, the threat of substitutes mainly originates from inside the industry. With

intense competition, no brand is assured success in maintaining high number of sales. This is

because despite the products being similar consumers can substitute with other products.

The fashion industry in UK has substitutes originating from within the industry. From

the ASOS Plc case study, the threat of substitutes in the UK fashion industry is high. Every

fashion brand in the UK market has numerous competitors and the space continues to decrease.

From the high end up to the low end segment, different fashion brands have populated the UK

fashion landscape. Despite clothes lacking substitutes, customers can substitute the brands with
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other similar brands. For example those who cannot afford luxury fashion brands can substitute

with brands that are available at lower prices. As a result, ASOS Plc faces high threat of

substitutes from brands within the industry since consumers can substitute the company products

with those ones from competitors.

Bargaining Power of Suppliers (High)

In almost every industry, suppliers are considered powerful if their relevant products are

highly differentiated or if the supplier makes it hard for forward integration. In addition, if the

market is dominated by few suppliers then the suppliers are powerful because the switching cost

to another supplier is very high.

From the ASOS Plc case study, suppliers have no significant force in the fashion industry.

Suppliers are powerful when the raw materials supplied are scarce. In the UK fashion industry,

suppliers entail vendors providing raw materials like cotton which act as raw material for

apparels. The market is characterized by few suppliers resulting to high cost of raw materials.

Most suppliers in the UK fashion industry use traditional approaches which increases the cost of

products (Karra, 2008, p.27). The ASOS Plc case study shows that suppliers have high

bargaining power in the UK fashion industry. As a result, ASOS Plc faces the problem of

increased cost of raw materials.

Rivalry among Existing Competitors (High)

The level of competition in an industry is greatly determined by the number of

competitors. The fashion industry is known for its intense rivalry because of many retailers with

similar brands. The availability of brands with similar offering renders the competitive rivalry

intense.
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From the ASOS Plc case study, UK fashion industry is characterized by large number of

big players like ASOS, NEXT, Boohoo, Missguided, Net-a-Porter, my-wardrobe and Topshop.

These companies have formed a formidable brand image with impressive product line targeting

young adults. As a result, the level of competitive rivalry between these firms is high. The

competition between these firms has had great impact in the UK fashion industry. The leaders in

the industry have formulated and differentiated their products to attract customers. From the case

study it is clear that Rivalry among Existing Competitors has played a key role in the down fall

of ASOS Plc. Increased competition in UK has forced ASOS Plc to expand its operations to other

counties like china.

Bargaining Power of Buyers (High)

According to Porter (2008, p. 140-141), the power of a buyer is always high in three

conditions namely if the buyer can purchase large volumes, there are several alternative firms to

purchase from, and if the switch costs are few.

From the ASOS Plc case study, it is clear that UK fashion market is characterized by

large number of competitors. The presence of many competitors offering similar products puts

buyers in the driving seat because they have several brands to select from. Fashion brands are

competing to attract and retain customers hence increase in marketing. Companies have started

to provide discounts and other promotional gifts in order to attract and build customer loyalty. As

a result, consumers in the UK fashion market have high bargaining power.

Industry attractiveness

The UK fashion industry has become one of the most penetrated online retail markets

globally. The industry is growing steadily making it attractive. UK fashion industry can be
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considered attractive based on Porters five forces analysis which shows fashion companies

enjoy low bargaining power of suppliers and low threat for new entrants. However, the threat of

substitutes, bargaining power and competitive rivalry can be detrimental to the companies.