Strategic Management Analysis 3000 words
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Anglia Ruskin University BA (Hons) in Business Management/ Marketing
Sample Answer– 01
Strategic Management Analysis
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Strategic Management Analysis
Module Code: MOD001074
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Table of Contents Section 1.......................................................................................................................................... 3
1.2 Key Stakeholder of ASOS Plc. and stakeholder map in terms of power/interest grid ......... 3
Primary stakeholders:.............................................................................................................. 3
Secondary stakeholder: ........................................................................................................... 3
Stakeholder mapping: ............................................................................................................. 3
Power/interest grid of stakeholders:........................................................................................ 4
Importance of managing stakeholders .................................................................................... 5
If stakeholders are not managed ............................................................................................. 6
Section 2.......................................................................................................................................... 7
2.2 Five forces analysis and industry attractiveness ................................................................... 7
Fashion Industry Attractiveness: ............................................................................................. 9
Section 3.......................................................................................................................................... 9
3.1 ASOS’s strategic capabilities by utilising the VRIN/VRIO ............................................... 10
Key strategic capabilities of ASOS that give a sustainable position .................................... 12
Section 4........................................................................................................................................ 15
Suggestions to ASOS’s Senior Management team to support their position in achieving
sustainable competitive advantage ............................................................................................ 15
Strengths: .............................................................................................................................. 15
Weaknesses: .......................................................................................................................... 15
Opportunities: ....................................................................................................................... 15
Threats: ................................................................................................................................. 15
How strategic alternative will support the company to achieve sustainable competitive
advantage .................................................................................................................................. 16
References ..................................................................................................................................... 17
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Section 1
1.2 Key Stakeholder of ASOS Plc. and stakeholder map in terms of power/interest
grid
ASOS Plc. is one of the leading online fashion specialists that have a wide range of operations
within and across the national border of the country. The company is highly successful in the
industry it belongs but it is essential to satisfy the stakeholders too. In order to fulfill the demands
of the stakeholders ASOS needs to understand the range of stakeholders first. That’s why the
significant stakeholders are identified here.
Primary stakeholders:
Primary stakeholders of ASOS are those who directly related to the business activities of the
company. Companies call primary stakeholders as internal stakeholders. Internal stakeholders are
the parties who directly involved in the economic transactions and direct operational activities of
the company. That means the stakes of these parties are directly related with the company and the
effect of any economic event may affect their stakes significantly. The primary or internal
stakeholders of ASOS are shareholders, employees, customer, suppliers and creditors or investors.
These primary stakeholders of ASOS often influence the decision making of the company and help
the company taking the best decision (Appannaiah, Narayana Reddy and Ramanath, 2009).
Secondary stakeholder:
Secondary stakeholders of ASOS are those who indirectly related to the business activities of the
company. Companies call secondary stakeholders as external stakeholders. External stakeholders
are the parties who indirectly involved in the economic transactions and operational activities of
the company. That means the stakes of these parties are not directly related with the company and
the effect of any economic event may affect their stakes insignificantly. The secondary or external
stakeholders of ASOS are mass public, business support groups, communities and media
(Birkinshaw, 2004).
Stakeholder mapping:
According to the nature of business environment almost every party of the economy will be the
stakeholder of ASOS but the company does not need to decisions based on all those parties. Rather
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the company needs to focus the decisions based on the key stakeholders of the company. That’s
why a narrow stakeholder mapping is required where all the significant stakeholders will be
identified and valued (Kotler and Armstrong, 2016). As per the narrow stakeholder mapping the
important stakeholders of ASOS are listed below.
• Shareholders/owners
• Managers
• Employees
• Customer
• Suppliers
• Creditors or investors
• Government
• Mass public
• Business support groups
• Communities
• Media
Power/interest grid of stakeholders:
The important stakeholders of ASOS are identified already but the organisation also needs to do
some further analysis to understand the stakeholders from different point of view. With the help
of power/interest grid ASOS will understand the stakeholders’ interest in the company when they
have power in the company or when they
do not have any power in the company.
That means the variations of the interest
of stakeholders with the changes in
power within the company (Greenley,
2009). The overall power/interest grid is
classified into four major parts those will
be covered below.
High power with low interest: The
stakeholder who has high power in the
Government Managers
Shareholders
Communities
Public
Supplier
Media
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company but have low interest should be kept in the loop and their satisfaction is really very
important because they have power and they can use their power in a wrong way that may be
harmful for the company. That’s why company always needs to make them satisfied for not
allowing any interruptions in the operations. Government of the country is a perfect example for
this grid.
High power with high interest: The stakeholders who have high power and interest in the
company should be managed closely. These are the stakeholders who take the different important
decisions for the company. All these decisions are directly linked with the achievement of the goals
of the company. That’s why management of the expectations of the peoples of this group is highly
prioritised and significantly managed by the company. According to the business model of ASOS
the managers, shareholders, investors and executive employees is the stakeholder who needs to be
managed closely for the betterment of the company.
Low power with low interest: The stakeholders who have low power and low interest in the
company should be monitored only but there is no need to prioritize the monitoring must. These
peoples are not interested in the decisions or operations of the company but the company needs to
gather information about them so that they do not take any decision harmful to the company.
According to the business model of ASOS the public, communities and business support group is
the stakeholder who needs to be just monitored by the company for the betterment of the company.
Low power with high interest: The stakeholders who have low power but high interest in the
operations of the company should be well informed by the company about different matter.
Although these peoples are not so important but in some case they can provide solutions of big
problems and they can be very effective friend for the company. That’s why ASOS needs to keep
media and suppliers informed about different decision making and operational activities that are
relevant.
Importance of managing stakeholders
Stakeholders are integral and important part of the overall business model of ASOS that’s why
management of the stakeholders should be highly prioritised by the company. In order to achieve
the desired success of the company it is very important that the stakeholders of the company are
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satisfied with the decisions of the company. In order to do so the stakeholders should be managed
properly.
A well management of the stakeholders can enhance the resources of the company because proper
management creates a positive image of the company in the eye of the investors and more investors
will be interested in the company that eventually increases the resources of the company. Due to a
proper and efficient stakeholder management the stakeholders are satisfied and a positive brand
image will be created. This brand image will lead the company towards the desired success in full
swing because the positive image motivates the stakeholders to provide even better support to the
company for attaining the desired goals of the company (Hitt, Ireland and Hoskisson, 2017). With
a proper management plan the stakeholders of the company can be turned into valuable assets for
the company because these stakeholders will influence other publics to involve in the operations
of the company.
If stakeholders are not managed
The present business world is highly competitive for every business organisation. That’s why a
little misbehavior in the market can highly affect the market share of the company. If ASOS fails
to manage the stakeholders of the company properly a wrong image will be created because the
market will realise that the company does not care of the stakeholders and peoples will not be
interested in the transactions with ASOS anymore.
Due to mismanagement of stakeholders the loyal customers may move to competitors because they
want to build up a relationship with a company that cares and thinks for the betterment of them
(Lynch, 2015). That’s means a company with the mismanagement of stakeholders ends up with
losing customers too. The most important issue is the regulations of the country as well as business
may be changed in the next 12 months because of high inters of the government in the business
activities of ASOS. In that case the company needs to reposition the regulator or government in
the power/interest grid/ interest grid will be like as follow.
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Section 2
2.2 Five forces analysis and industry attractiveness
The five forces analysis model is highly effective for analysing the overall industry. The model is
defined from five dimensions and those will be covered here for better understanding about the
market of ASOS.
Threat of new entry:
The fashion industry is highly developing industry throughout the whole world and a lot of new
companies are entering in this industry although there are some prominent brands that are doing
business for a long time. The entry barriers are not so strong for the fashion industry that’s why
the threat of entry for ASOS is high here (Appannaiah, Narayana Reddy and Ramanath, 2009).
Threat of substitute products:
In case of evaluating the fashion industry of the UK and the whole world there a numerous fashion
brands. Most importantly the products of these brands are almost similar in quality and utility.
That’s why the customers have a high opportunity of using substitute products. That means ASOS
Government Government
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is facing a high threat of substitute products and in fashion this trend may be carried forward for
some years more (Birkinshaw, 2004).
Industry rivalry:
In the fashion industry of UK and world numerous brands are available and all of them have some
loyal customers and some of the brands are well known and popular for their quality products. As
customers do not think much in case of buying fashion products the competition in the industry is
high. Companies are always focused in increasing their market share so the industry rivalry in
fashion industry is high for ASOS (Kotler and Armstrong, 2016).
Bargaining power of supplier:
The number of companies in the fashion industry is abundant that’s why the number of suppliers
is also abundant. At the same time the cost structure of the companies are similar and the raw
materials are collected with a standardised price from the suppliers. As the pricing standard is
followed by the suppliers, companies have very few scope of bargaining with the suppliers. In fact
the abundance of suppliers also demotivates the suppliers bargaining power. That’s why the
bargaining power of supplier is low (Greenley, 2009).
Bargaining power of buyers:
Due to high number of competitors in the market the pricing is also very competitive because
customers will not buy in premium price when the supply is excessive in the market. As the
company takes pricing decisions after analysing a lot of information it takes the best decision.
That’s why there is no scope for the customers to bargain the prices of the products in fashion
industry. That’s means the buyers power of bargaining in case of the products of ASOS is low
(Lynch, 2015).
Porter’s Five Forces for ASOS
Intensity Reason
Threat of new entry High Low entry barriers
Threat of substitute products High A lot of competitors available
Industry rivalry High Market is highly competitive
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Bargaining power of supplier Low Follows standardized pricing
Bargaining power of buyers Low Products are priced in lowest possible price
Fashion Industry Attractiveness:
According to the trends and growth rate of fashion industry from a global perspective it is highly
attractive industry now. In the past time peoples were not interested in spending much money of
the fashion products. But with the passage of time peoples are becoming very much conscious
about their fashion products and because of that more and more companies are entering into the
industry with advanced and quality products. According to world economy the most attractive two
industries are food and fashion (McGee, 2014). The new competitors will find it easy to enter into
the fashion industry but it will be really hard to sustain in the industry due to high industry rivalry.
That means the attractiveness of fashion industry is very high.
Industry
Attractiveness
Very High
Entry in the
Market
Very High
Sustain in the
Market
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Section 3
3.1 ASOS’s strategic capabilities by utilising the VRIN/VRIO
Resources and capabilities both are valuable assets for ASOS Plc. But there is a big difference
between resources and capabilities. Resources are generally indicates physical assets whereas
capabilities indicates generating value for the company using the physical resources efficiently.
For instance, the well decorated outlets of ASOS are the resources of the company but using those
outlets attracting, convincing customers and increasing sales consistently is the capabilities of the
salespersons of ASOS.
According the past information provided in the case ASOS is an organisation that is accelerating
its revenue consistently. That’s why using the VRIN/VRIO model the strategic capabilities of
ASOS is evaluated here in the following paragraphs (Sadler, 2004).
Value: ASOS in continuously developing its business strategies and due to that successful effort
the company’s revenue is increasing consistently. At the same time the company is exporting its
products in many countries of the world. So AOS is continuously adding value to the company
past value that gives a better sustainability.
Rarity: As an industry fashion is so vulnerable and the products of all the companies in the
industry are almost same. But all the companies have some of their signature product and
differences in these products are also low. That means the products or services of ASOS are not
something rare in the economy but the company needs to develop new products that will create a
strong position in the market.
Imitability: In the fashion industry the problems of imitability is very high because much scope
is not available to differentiate products in this industry. But in case of some special product or
innovation of the company ASOS should take protective measures that will hinder the imitability
of competitors. Due to those protective measures competitors will not be able to copy the products
of ASOS and the company will achieve higher competitive advantage.
Non-substitutability: The industry ASOS belong to is the fashion industry. In the fashion industry
the products are quite standardised that’s why the companies have very few opportunities to
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differentiate the products. But a higher differentiation can be done using the quality of the products.
But in case of substitutability the industry is so vulnerable. ASOS has a fantastic policy of ensuring
the quality of the products.
Organisation: Organisation mainly refers to the collection of resources for the production purpose
and the value chain of the company. The value chain ASOS is quite strong and the collection
process of raw materials for production is also strong. As the company does not agree to
compromise with the quality of the products, organisation should be strong and ASOS follows this
strictly.
V
Valuable
R
Rare
I
Imitable
O
Organization
Criteria
fulfillment
Yes No Yes Yes
Achievements Competitive
Parity
Unused
Competitive
Advantage
Sustainable
Competitive
Advantage
The overall discussion describes the overall managerial and strategically capabilities of ASOS.
Although the company belongs to an industry that is highly vulnerable the company is very
successful with its strategies. At the same time the strategies of the company suits the business
model properly that is the ultimate strength of the company.
According to case of ASOS and the VRIO analysis the most significant strategic capabilities of
ASOS are given below with a table describing how they can provide sustainable advantage to the
company.
Strategic capabilities Description of achieving sustainable competitive advantage
Global presence
The company has a lot of international outlets where it sales its
quality products. As the company can cover bigger market its
competitive advantage is high.
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Product line
development
ASOS has a big product line of 80,000 products that provides better
offerings to the customers. As the product line is big it can fulfill
more customers’ requirements.
International revenue
Around 50% of the total revenue of ASOS is generated from
international market that is a big competitive advantage for the
company as it does not need to be dependent on the national
market.
Key strategic capabilities of ASOS that give a sustainable position
According to the information of ASOS the company is highly successful due to the strategic ability
of the company. Actually three basic achievement leads the company to a position that is almost
unbeatable by the competitors. The first one is the globalization of the brand across the world. The
company is operation its operation in 240 countries of the world that creates a unbeatable big
market for the company. The second achievement of the strategic ability of the company is the
product line of the company. ASOS is offering 80,000 products in its websites that provides the
customers choose their desired products and also provides lots of options in case of buying. Finally
the sales revenue of the company, which is the biggest achievement of the strategic abilities of
ASOS. Almost 50% of the revenues for the company are generated from international sales. That
means the company is not dependent on native sales revenue. All these achievements of the
company that leads to a sustainable position indicate that the company is successful for the
strategic capabilities (White, 2004).
Strategic Capabilities VRIO/VRIN Impact
Valuable: With big
international market size,
sales and market share
increased.
Rare: The company is widely
popular and acceptable
although numerous brands are
available.
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Globalization Inimitable & Non-
substitutable: The products
are not inimitable but
competitors cannot replace it
in short term by entering
international market.
Achieved superior
sustainable competitive
advantage
Organized: ASOS has 80,000
products and outlets in 240
countries.
Strong product line
Valuable: 80,000 products
can fulfill higher customer
demands.
Achieved superior
sustainable competitive
advantage
Rare: It will be tough for the
competitors to develop a big
product line within a short
time.
Inimitability & non-
substitutable: Competitors
cannot directly copy the
product line.
Organized: Offering 80,000
products in 240 markets.
International Revenue
Valuable: Around 50% of
total revenue earned from
international market.
Rare: Very few competitors
will be able to generate
international revenue like
ASOS.
Inimitability & non-
substitutable: It will be tough
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to generate that much revenue
from international market and
lowering dependency on
native market.
Achieved superior
sustainable competitive
advantage
Organized: The overall
activities and selling process
is well organized that assist
increasing revenue.
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Section 4
Suggestions to ASOS’s Senior Management team to support their position in achieving
sustainable competitive advantage
According to the past success of the company it is quite clear that ASOS is a very strong company.
But the company needs to continue its operations in a proper way so that the company can sustain
in the market for a long time (Ansoff, 2014). In order to understand and refers some suggestions
to the company a SWOT of ASOS is attached here.
Strengths:
ASOS is highly strong for the competitors because of its resources and capabilities of using those
resources. The international wide market for selling goods, a wide range of products and
international revenue generation capability are the major strengths of the company.
Weaknesses:
ASOS has higher number of strengths but some weaknesses are also needs to be identified to
overcome them. The company has a bigger market where it can offer more products that’s why
the product line is the weakness of the company that needs to be developed adding more products
to the product line.
Opportunities:
The company has a market of 240 countries and it also has the ability of generating big revenue
from international market. ASOS needs to capitalize the opportunity by offering even wider range
of products and this will definitely give competitive advantage and longtime sustainability.
Threats:
According to the market position the major threats for ASOS is the high market competition and
wider product line of some competitors. That’s why the company needs to develop in these issues
for achieving a sustainability advantage.
TWOS Elements Suggestions
Threats
Higher market competition • Competitive pricing
• Quality product offerings
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• Strong marketing activities
Weaknesses
Low product line compared to the
global presence
• Develop more and more product to
increase the offerings for the
customers
Opportunities
Increasing revenue by increasing
the number of offered products
• Merger and acquisition can increase
product line
• Development of new products
• Joint venture with other brands
Strengths
• Wide market presence
• Wide product line
• Worldwide popularity
• Try to increase product offerings in
more countries
How strategic alternative will support the company to achieve sustainable
competitive advantage
In case of achieving even more sustainable competitive advantage the major strategic alternative
identified is developing the product line that will be wider than now. It is believed that this strategic
alternative will create a higher competitive sustainable advantage for the company and the
argument is given as follows.
ASOS is operating its business in 240 countries of the world that means the company has a bigger
market to offer products but according to the market the product line of 80,000 products are not
enough because the company cannot maximize the sales with this product line. If the product line
is increased the offer able products number will increase for the company and revenue of the
company will grow. At the same time the current market position will be even stronger because
the capability of offering of the company will be increased with the increasing of the product lines.
That’s why the competitors will have less competitive advantage in comparison to ASOS. As the
company is generating more revenue and achieving more competitiveness the shock absorbing
capability of the company will increase that will give a stronger and effective sustainable
competitive advantage to the company (Lynch, 2015).
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References
Ansoff, H. (2014). Strategic management. [Place of publication not identified]: Palgrave
Macmillan.
Appannaiah, H., Narayana Reddy, P. and Ramanath, H. (2009). Strategic management. Mumbai
[India]: Himalaya Pub. House.
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Hitt, M., Ireland, R. and Hoskisson, R. (2017). Strategic management. Boston, MA: Cengage
Learning.
Kotler, P. and Armstrong, G. (2016). Principles of marketing.
Lynch, R. (2015). Strategic management. Harlow, England: Pearson.
McGee, J. (2014). Strategic management. Chichester: Wiley.
Sadler, P. (2004). Strategic management. New-Delhi: Koganpage India Prt. Ltd.
White, C. (2004). Strategic management. Basingstoke, Hampshire: Palgrave Macmillan
Conley, R. (2012). Eli Lilly & Company. Schisophrenia Research, 136, p.S61.
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management. Strategic Direction, 27(7).
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