An analysis of the organisation’s external environment includes the
various factors that affect the organisation’s structure and operational
processes. In e-commerce, there is intense competition and continuous growth in
the past and high growth in the future which makes this sector very attractive
for all kinds of businesses irrespective of its size and nature of operations.
In this section, this report uses red and blue ocean strategies to analyse the external environment for ASOS within e-commerce sector. Research indicates that ASOS Company’s strategies are based on the red and blue ocean strategies. Where red ocean strategy refers to the companies where they strive for survival and the competition is tough and the chances for the growth are very low because everyone is at the parity level On the other hand, the blue ocean strategy refers to the companies which are doing great because there is not so much competition in the industry due to which they have a high chance of growth and profitability.
The ASOS claims that it is one of the companies that have found the blue
ocean by setting a great position in the e-commerce industry that allows
customers to buy clothes and other accessories directly through the website.
Further said by the ASOS that the blue ocean strategy has allowed it to grow
rapidly and generate huge profits. Hence it has become the leading fashion
retail company. The major challenge faced by ASOS and retailers is the exploitation of workers . ASOS was
also criticized for the poor performance of the workers in response to its
workers saying that they are exploited by the company. Hence now ASOS have been
working on training the worker and improving their wages and other working
conditions. below are given the red and blue ocean strategies used by ASOS.
Porter’s five forces model is used to
analyze the overall industry. Managers can use it to analyze the profitability
and develop the strategy for gaining a competitive advantage in the long term.
Porter’s five forces model is used to analyze
the overall industry. Managers can use it to analyze the profitability and
develop the strategy for gaining a competitive advantage in the long term.
The threat of new entrants: The threat of the new entry in the e-Commerce retail is a threat such as ASOS which ASOS can reduce the prices further. There is also the risk of an increase in the price of raw materials cost by suppliers. But because of the sustainability and good positioning of the ASOS, there would not be that much effect on ASOS.
Bargaining power of suppliers: The bargaining of the supplier is high in the e-commerce retail industry because there is a huge number of the companies but ASOS can reduce the threat of the supplier by making partnerships with the suppliers and building its own supplies warehouses.
The bargaining power of the customers can influence the ASOS by forcing them to decrease the prices but power is low in the case of ASOS because it already has a huge number of customers and also because it is providing quality and innovative products.
The threat of substitute products: The threat of the substitute can be high when the other products can similarly satisfy the needs of the customers. To reduce the threat, ASOS should be service-oriented rather than only product, understanding the customer need is important further, can also increase switching cost to reduce the threat.
Rivalry among existing competitors: Rivalry among the existing competitors will lower the prices of the goods and decrease the profitability of the companies hence creating differentiation and collaborating with the competitors can reduce the threat. The major competitors of the ASOS are Alibaba, Hut Group, AllSaints, New Look, House of Fraser, Pretty Little Thing, Bestseller, and Matches Fashion.
Industry report about COVID-19
During the period of the COVID-19, all the companies were affected and there was a shift in all types of market forces. Hence the impact was on all of the companies except a few of them. Their performance decreased, market share decreased, many companies cut off their employees and even many of them went broke.
An internal environment competence
analysis
Figure 2: The internal environment factors
Resources: ASOS resources like technology and online platforms are all reasons for the ASOS’s success other than these its financial and material resources like technology, human resources, branding information, and cultural resources all play a great role in making and delivering great value to customers.
Management values: All of the employees are equally treated. ASOS believes in performance-based rewards. Furthermore, it does not compromise in terms of ethical standards and the set values of the organization hence everyone has to comply with them and if violated intentionally there are severe punishments for that.
Stakeholder goals: Stakeholders are the core for the success of the organization most importantly investors and the employees and customers because they contribute a major share to the profitability of the organization. And least of them are the government because it restricts the policies and trading of the company in the country and sometimes outside the country in the tariffs and quotes form.
Strategy success: As mentioned above they use the blue
ocean strategy which is there is not any kind of tough completion and their
market share, growth and profitability are high because of the low completion
in the e-commerce and maybe because it has got the competitive advantage.
Furthermore, their
corporate culture of employees, mixing capabilities, and all of the other
internal environment-related factors are one of the success factors for ASOS.