External Environmental Analysis

ASOS Plc is a British organization founded in 2000 in London with the main focus on retailing the fashion and cosmetic product for the young people in their 20s. The headquarter of ASOS Plc is in London, England, United Kingdom. There was a gap of fashionable products for young individuals on the market. ASOS Plc is the global fashion retailer that provides lifestyle products to both men and women. The organization sells a mixture of private labels, local as well as global brands through 8 websites in the US, UK, German, Spain, Russia, Australia, Italy, and France. The founders of ASOS Plc are Nick Robertson, Andrew Reagan, and Quentin Griffin. The major products offered by the company include shoes, clothes, beauty, and other accessories (Nguyen, 2019). By 2019 the number of employees were more than 4000. ASOS Plc falls under the industry of retail discretionary while in the consumer discretionary sector. The sub-industry is the E-commerce discretionary.

The organization’s CEO is nick Neighton, and the chief financial officer happens to be Mathew Dunn. Clifford Cohen is the chief information officer while Jo Butler is the chief people officer. The opportunities the founder of ASOS Plc focused on was the fact that there wasn’t huge appetite to invest in e-commerce and that is how they took advantage. The factor that online shopping and e-commerce were less expensive motivated the team.” British online fashion retailer ASOS plc. It is amongst the leading apparel brands with the highest brand value worldwide, ranking alongside retailers who sell both online and in-store. In the six-year period between 2012 and 2019, ASOS quadrupled its worldwide revenue and reached 2.73 billion British pounds as can be seen in this statistic” (Nguyen, 2019). The paper will focus on the external environment analysis of ASOS Plc

PESTEL Analysis

ASOS Plc. Uses internal and external resources to examine and evaluate opportunities as well as trends that impact their business. The organization applies PESTEL analysis to determine the outside factors which act as the source of the opportunities that influence the company. The external factors which affect the market and the business include legal, political, technological, economic, and social factors. Given the varieties and pertinent of  data gathered, it helps  to increase the quality of the marketing decision and then access the solution to the opportunity that may affect the business in adverse manner if the problem is addressed (Nguyen, 20190. PESTEL analysis to access the options for market development internationally, product development, as well as the strategic alternative of the market penetrations.  Minus, taking into consideration the above mentioned dynamic ASOS Plc as an organization is bound to decline or fail.

Political

Political factors play a very important role in examining the elements that can affect ASOS plc ‘s long-term profitability in different markets or countries. ASOS Plc operates in form of retail in multiple nations as such become challenging to succeed in dynamic political system operates in form of retail in multiple nations as such  become exposed to diverse political as well as  political environment as well as political systems risks. Therefore to achieve in such dynamic retail industry, requires diversification of the systematic risks of the political environment (McCreesh et al. 2019). Since the organization is an international company stepping into a different border requires them to obey and comply with the diverse laws and legislation of the foreign country. In relation to the business location, a different aspect of government regulation can greatly impact the business. ASOS Plc should be vigilant with the changes conducted by the government’s officials both internationally and locally to prevent its adverse impact on the business. ASOS Plc should be keen with wage legislation before working in the other diverse market. Operating in the market that easily affected by military invasion such as Somalia can reduce sales. Bureaucracy and interference in the retail industry by the government is also common

Economic

The macroeconomic factors, including saving rates, interest rates, foreign exchange rate economic cycle, and inflation rates, act as indicator s of aggregate demand and investment in the economy. Being an international company, the ASOS Plc should worry about consumer spending and retail industry growth rates. Before investing in the business, the organization should look at the economic system and how stable it is before going ahead to invest. Issues such as government intervention in free market matters a lot (McCreesh et al. 2019). The education level in the economic projects the performance of the organization. If the market or region of investment have a low level of education, the ASOS Plc will not find top-notch employees who will offer services to the company. This point also goes hand in hand with the presence of the skill level of the workforce in the retail industry. Another important point to consider is exchange rates and the stability of the host nation. If the exchange rate in a foreign county is volatile and not stable, this will affect the business in the long run. Labor cost and productivity in the economy influence the running of the business. For instance, ASOS Plc should opt for the nation that has reduced labor costs with increased productivity in the economy. As a result, the company will maximize its profit.

Social

Social factors have to do with ways of life in society. This encompasses the culture of the company in an environment. Where there are shared beliefs and the attitudes of the entire population, it implies that the markers at the organization will understand customers of the market and how they also design the marketing message for the retail industry consumers. Before investing or handle a specific market place, ASOS Plc should take note of the demographic factors.  The skill level in the population has a great effect on the company swell. Class structure and power and hierarchy in the society determines the leadership to be applied. The education standard or level in the ASOS Plc.’s industry plays a critical role in the success of the business. For instance, it mostly deals with fashion items for the people who are in their 20s. the fashion sense is for both men and women.” the symbols and icons of cultures and subcultures establish foundational values for many types of product markets” (McCreesh et al. 2019)

Technological

Technology is fast disrupting different industries across the board. The symbols and icons of cultures and subcultures establish foundational values for many types of product markets” should identify the recent technologies adopted by the company’s competitors. If there is the speed of the competition in the industry is too high, the companies will not have enough time to cope or make a profit. How the product is distributed or offered is equally affected by technology (McCreesh et al. 2019). The rate of technology diffusion in the fashion in retail industries very high with e-commerce in the process; a slow organization might be left behind. Social media such as Instagram and Facebook, among others, are playing a key role in product expose. Social media, if well utilized, leads to an economy of scale due to increased coverage of the population segments.  “Operating in a highly competitive economy based on information technologies and telecommunication, required firms to adopt new business models” ( Pan, Chen, & Zhan, 2019). ASOS Plc, through technology, has provided the online options to do shopping online by downloading their apps, which can access any form of cell phone tablet as well as apple watch and card scanner for secure checkout.

Environment.

Markets have various environmental beliefs that influence the profitability of the company. In the US, the countries have varied laws and liability laws belonging to different states and the federal government. Therefore it is crucial for the ASOS Plc To identify and analyze the standard and norms of the market before starting any operation (Pan, Chen, & Zhan, 2019). The law and regulation of the environmental population differ from one market to the other; therefore, ASOS Plc should examine it first. Weather condition can affect retail business. Based on the weather in a certain market place, people do not wear some type of clothing throughout the year. Recycling is an important factor to consider. Some nation has improved waste management system such that everything is recycled.

Legal factors

            In other market place and countries, the legal system is not strong enough to protect the intellectual property rights of the company as such ASOS Plc should be careful enough to examine such issues because it can result in the theft of the company’s secrete sauce or information as such the overall competitive edge. Discrimination law should be taken into consideration before entering a market. Consumer protection and e-commerce issue may lead to legal tussles if not properly handled. Markets have varied consumer protection laws; as such, the product should meet the standard measures required by the law. Health and safety laws regarding the employees and other stakeholders should be adopted in relation to the uniqueness of the market and the country (Pan, Chen, & Zhan, 2019).

Trends from PESTEL

Economic

In 2019 the ASOS Plc financial year profit falls by the two-third according to the CEO Nick Beighton the financial year was pivotal.” The bottom line was hit by £51m of “transition and restructuring costs” — double the amount of the previous period. Gross margin slipped 2.4 percentage points to 48.8 per cent. ASOS Plc has gone from net cash of £42.7m at the end of August 2018 to net debt of £90.5m this time around.”

Social

ASOS Plc appoints Robert Birge as the chief growth officer on 25^th 2019. This is a good news and trend because the organization have never had chief growth officer. The organization is focusing on the utilization of 80 percent cotton from the sustainable, organic, or recycled source as per this year and aims into making it 100 percent by 2025. The 2019 focus on social responsibility for the organization was on mental health the organization introduced Get Stuck to create awareness around mental health issues in the community (Thompson, & McLarney, 2017).

Environment

The reduction of carbon envision is the major focus. “Carbon intensity has decreased again to 5.2kg CO2 per customer order, keeping us on track to meet our Carbon 2020 commitment. This is large because of more efficient operations and improvements made by delivery carriers to reduce emissions” (Nguyen, 2019)

.Technological

Poor engaging digital experience is resulting in reduced profitability of ASOS Plc. Another trending issue is cybersecurity and the threats to customer data (Thompson, & McLarney, 2017)

Political

There are geopolitical factors that impact business across the border. Custom legislation and tariffs restrict free transaction of business across the border (McCreesh et al. 2019)

Legal

Incorrect adherence to the patent property rights where the brand’s image is tarnished and even used by other people to open the business.

One trend

The geopolitical uncertainty can have a great impact on the business of ASOS plc. This is because, increased restriction reduces sales. The government happens to be the primary influencer of business across the border, and if there’s no negotiation to remove such barriers and restrictions, the company’s bound to fail. The ability to sell the products across the border may be restricted, which affects the customer’s willingness to buy and engage with the company. As a result profitability may be put at risk. “We have external advisers who provide us with any additional support or information when required. — We continue to monitor Brexit as its implications become more known while continuing to structure the business to prepare for any volatility. — Specifically, with regards to Brexit, we have performed detailed internal reviews to understand the specific risks we face” (Varley et al. 2018).

The key area of uncertainty

What will happen is that due to increased tariffs, the price of the products will be raised leading to most customers running away to a cheaper products. The government puts tariff and custom duties on the imported goods so that they can allow the local industry to grow as well. This may not be good news to international companies such as ASOS Plc because a lot of customers will buy their local goods at a cheaper price (Varley et al. 2018). While the quality and standard of the product maters, globalization has resulted to standardization of products and market. People compared prices today from different regions or countries before they purchase the product. Therefore, the company can fail if it does not resolve the issue within time.

Strategic analysis of vision, the mission objective

The mission statement of ASOS Plc is to become the number one e-commerce shopping destination globally for individuals who love and are passionate about fashion. To attain this goal, the organization has positioned itself as multi-platform and unique at the same time, which truly booms with clients who use the product because it is created by them (Wei, 2016). To attain the vision statement, the organization focuses on providing the best shopping experience to the consumers in the expectation that they will return back daily. ASOS purpose of becoming synonymous with fashion for the individuals between the age bracket of 16 and 25 like; while Facebook is for social media networking, Google is for the making search. The objective of the organization is to maximize the shareholder’s value, operate effective tax governance, and engage in an open way with the stakeholders and interaction with the business.

Conclusion

Conclusively, this paper has analyzed the PESTEL environment of the ASOS Plc organization and the industry at large.  Finding out the PESTEL position of ASOS Plc, it makes it easier for the organization to enter a certain market and not. The retail industry has also been staggering for a while now due to the increased rate of competition due to the speedy introduction of technology. More so, the industry has increased the number of products that are counterfeit, and yet the prices seem to be standardized. Counterfeit is big issue in addition to geopolitical issues such as tariffs and custom legislations.

References

McCreesh, N. C., Jones, C. R., McIntosh, A., & Storey, H. (2019). Making it real: engaging the consumer in sustainable fashion consumption. In Engaging with Fashion (pp. 175-190). Brill Rodopi.

Nguyen, D. (2019). Influences of Multi-Channel Distribution Related to Consumer Buying Behavior and Profits Growth Rate.

Pan, W., Chen, L., & Zhan, W. (2019). PESTEL analysis of construction productivity enhancement strategies: A case study of three economies. Journal of Management in Engineering, 35(1), 05018013.

Thompson, J., & McLarney, C. (2017). What effects will the strategy changes undertaken by next Plc have on themselves and their competition in the UK Clothing Retail Market?. Journal of Commerce and Management Thought, 8(2), 234-264.

Varley, R., Roncha, A., Radclyffe-Thomas, N., & Gee, L. (2018). Fashion management: A strategic approach. Macmillan International Higher Education.

Wei, L. (2016). Decision-making Behaviours toward online shopping. International Journal of Marketing Studies, 8(3), 111-121.