ASOS U.S. Market Strategic Importance

Introduction

Business in international markets is often considered to be full of vulnerabilities and challenges. There can be some factors which can affect the business of an organization in the international market as well as its sustainability (Braun and Latham, 2014). For this reason, it becomes essential for the organizations active in international scenarios to develop feasible approaches and strategies for complying with conditions in the market and gain operational excellence. ASOS is one of the leading retail organizations based in London UK, which also manages its operation in international markets through an online portal. The organization came into existence in the year 2000 and is currently have an employee count over 4000 (Ireland et al., 2016). The product range in ASOS includes clothes, beauty products, shoes, and accessories. Some of the prominent markets for the business of the organization include UK, US, France, Australia, Spain and many others. This report is all about international business operations of ASOS. For this purpose, the report critically analyses the importance of US markets to the organization. Along with this, political factors affecting the business of ASOS in US and recommendation are also included in the report. Further, information related to corporate social responsibilities and supply chain management of the organization is also mentioned in the following report.

1) The U.S. Market

a) Key factors of U.S. market making it strategically important market for ASOS

However, almost all the markets in different countries in the world play a significant role in determining the success of ASOS; but, the US is exceptionally contributing to the business of the organization. There is some factors that are associated with US markets, which make it strategically important for ASOS. Some of these factors are explained in the following manner.

Highest sales

One of the prominent factors due to which managing business in the US is strategically important to ASOS is the sale figure. Studies in marking are helpful in understanding that US markets usually have a contribution of 12% in total sales of ASOS. It is also found that in the year 2016, the contribution of US markets in total sales of the organization reached near 50% as depicted below in figure 1 (Bain, 2017).

It can be analyzed form the above sale graph that sale figure in the US for ASOS is highest as compared to that of countries in the European Union, UK and the rest of the world. Such data indicate that the organization has more likelihood to gain significant profitability in the US and the country is strategically very important to ASOS.

Online Operation and Purchase

Another key factor that makes the US an important market to ASOS is the mode of operation of the organization. It is found that the majority of the business operations in ASOS is e-commerce. The organization sells the products of more than 850 brands across the globe.

As far as online purchase behaviors of the customers are considered; the study reveals that on the parameter of average e-commerce revenue by online shoppers, US has the supreme position in the world as depicted in figure 2. Along with this, it is also found that e-commerce spending per capita in the US is $3428, which makes the country to stand in the second position after the UK (Saleh, 2017). For this reason, in the international business of ASOS, US markets are highly valuable to the organization.

Open foreign trade policies in the US

Similar to the UK, US is also a leader in e-commerce and international trade. For this reason, the country has open foreign trade policies due to which it can target the business markets of other countries (Frisby, 2018). Such approaches in the trade make a gateway for ASOS to acquire business opportunities in US markets at nominal foreign trade policies as compared to other countries. For this reason, the US and much strategic importance as far as the international business of ASOS is considered.

b) Significant political factors affecting the ASOS business in the U.S

America is one of the largest economies in the world with the very strong political setup. Two major political factors that affect the business of ASOS are described in the following manner.

Elections in the US: One of the noticeable political factors in US business markets that affect the growth of ASOS is a general election in the country. After the establishment of President Trump’s government, there have been significant changes in foreign trade policies in the country. The study reveals that Trump’s government has followed “Americans First” policy due to which most of the business advantages are provided to American companies rather than outsiders (Hill and Jones, 2011). This is one of the significant political factors in the US that are accountable for altering the outcomes of the business of ASOS at great scales.

Tax fluctuations: However, the US government follows the approach of open trade policies; but, the rate of taxes for international organizations is considerably high. Such policies in the country are established to benefit the American more (Hamilton and Webster, 2015). For this reason, increase in taxes is accountably increasing the prices of the fashion apparels and beauty products sold by ASOS. As a result, other domestic companies can acquire the benefits of low taxes and play exceptionally well in the American business markets.

This way, it can be analyzed that high scale fluctuations in taxes and policies set after general elections in the US are the two biggest political factors affecting the business of ASOS in the country.

c) Recommendations to deal with political factors/challenges identified above

It is found that general elections in the US and increased taxes are the two main political factors that affect the business of ASOS the most. Certain recommendations can be provided to the organization to deal with the political factors identified above, which are explained in the following manner.

Compliance with American foreign trade policies is one of the recommendations that can be given to strategic managers in ASOS for mitigating the effects of policies under Trump’s government (Frynas and Mellahi, 2014). Along with this, the organization can also consider adopting fair trade approaches for reducing the government intervention in trade in the US. Such approaches can bring high scale trade benefits to ASOS directly resulting in enhanced profitability of the organization in international business.

To reduce the effects of increased taxes over the products sold by ASOS in US business markets, the organization can consider its supply chain management and obtain the fashion and beauty products from American markets and sell there (Cscmp and Fawcett, 2014). However, such approaches are likely to increase the operating income of ASOS due to plant set up in the country; but, over the course of time, such approaches will be greatly helpful in reducing the cost as well as the associated taxes.

This way, it can be said that there is some approaches considerable for business managers in ASOS that can reduce the effects of political factors.

2) Corporate Social Responsibility in ASOS (CSR)

a) Identification of CSR issues faced by ASOS

However, it is found that business approaches considered by ASOS are highly ethical, and there is ken focus on corporate social responsibilities of the organization; but, there are certain social platforms on which the organization is facing certain issues. These CSR issues are explained in the following manner.

Use of child worker to manage supply chain: One of the significant issues in corporate social responsibilities of ASOS is the use of child workers in the supply chain of the company. The study reveals that the organization in 2016 has considered utilizing children belonging to the age of 7-8 years (Cadle et al., 2014). Along with this, it is also found that the hours of working with children were nearly 60 hours in a week. As compared to other employees in the organization such working hours were high enough. As a result, the children working in ASOS were also unable to attend the schools. This was the serious issue faced by ASOS as far as effectiveness and fairness in corporate social responsibilities are considered.

Use of low-quality fabric in production: This is another significant issue that was faced by ASOS in the year 2010. The study reveals that in that year the organization launched a new collection into the markets, which was named “Eco Edit.” The vision behind the lunch of this collection was to reduce the environmental impact of the organization and bring sustainable approaches (Braun and Latham, 2014). The collection Eco Edit included beauty products, clothes and different types of accessories. It was found that the fabric used by ASOS in the production of the clothes belonged to low-quality fabric, Tencel. This was also a major issue in the corporate social responsibility of the organization which affected its brand image and reputation.

Issues of customer-oriented service: Another issue that currently exists in ASOS in corporate social responsibilities is the low-quality service. Various customers and consumers of the organization have filed complaints about the low quality of products that were shipped by ASOS (Harrison and Freeman, 1999). It is also found that the organization promises to provide products to their customers that belong to supreme quality. For this reason, it is also one of the noticeable issues in corporate social responsibilities of ASOS.

Evaluate the recent and current ASOS CSR policies

Some of the corporate social responsibilities that are conducted by ASOS in its business markets are explained in the following manner.

The organization as well-set plans to reduce its carbon emission and water waste by 15% by 2020. This is one of the remarkable decisions taken by ASOS in its corporate social responsibilities.

Along with this, it is also found that the organization in the year 2017 recycled 352 tonnes of cardboard and reprocessed it (Frisby, 2018). This way, ASOS reduced its dependency upon the external supply of cardboard, which is one of the magnificent steps in the environmental sustainability of the organization.

Further, it is also found that ASOS donated £89,229 in the form of products to the charity for aiding the people facing the conditions of disability.

Currently, the organization has also commenced a programme named Ethical Trade Programme. The vision of the organization behind this programme is to make sure that all the employees and workers in the supply chain of ASOS are treated with respect.

This way, it can be said that there is some corporate social responsibilities that are performed by ASOS in its business markets. These activities are accountable for increasing the value of the organization and bringing trade ethics to it.

Activities and plans to deal with these issues

Various issues related to corporate social responsibilities are accountable or declining the performance of ASOS in its business markets. For this reason, it becomes essential to the organization to tackle these issues and regain effectiveness in business activities. Some of the possible measures that can be recommended to ASOS for mitigating these issues are explained in the following manner.

The organization can consider stopping the use of child workers for preventing the issue in its CSR. Use of children in supply chain management of the organization can also be considered an offence by the judiciary system of the country (Masaka, 2008). Ignoring such issues can also create big troubles for the organization. For this reason, strategic managers in ASOS are required to consider adult people in place of child workers. Such approaches to the proper public informing system can enhance the reputation and recognition of the organization in its business market.

Along with this, it can also be recommended to the organization to prevent the use of Tencel in the production of the Eco Edit collection. However, it is found that ASOS has already considered this approach and have considered the use of more qualitative fabric in the production of the clothes. This way, ASOS improvised the loopholes found in the corporate social responsibilities.

Further, it can also be recommended for the organization to implement more employees in its customer services. Such approaches will gradually decrease the number of issues raised by the consumers on shipping services (Braun and Latham, 2014). Along with this, use of the more qualitative material in production and assembly lines can mitigate the issues related to corporate social responsibilities of ASOS.

This way, it can be said that various recommendations depicted above can be helpful for ASOS in reducing the issues in CSR.

3) Supply Chain Management in ASOS

ASOS supply chain management (SCM) in the UK and internationally

Supply chain management in ASOS plays an important role in determining the success of the organization in it different markets (Rašković and Mörec, 2013). The organization is known to have a well-classified supply chain management system, which is explained in the following manner.

The above figure depicts the typical supply chain management process in ASOS. It is found that suppliers in the organization provide raw material to the processing unit of ASOS. In this process approaches of logistics can be seen (Ross, 2010). Further, upon reaching the production and assembly department of ASOS, the supplied material is processed by the workers of the organization.

After this stage, manufactured products in ASOS are escalated to warehouses of the organization which are located in different parts of the world. These warehouses store the products for the time till they get an order from the customers (Tang and Musa, 2011). Furthermore, after attaining orders, these manufactured products are levied on the shipping process for making them available to the customers. Use of shipping and transportation lines can be seen at this stage.

This way, supply chain management in ASOS is regulated, and delivery of the products is carried out to the end customers.

Strengths and weaknesses in SCM

Use of warehouses: In the supply chain management of ASOS, the use of warehouses is highly noticeable. The organization has established some warehouses in different parts of the world as well as in the UK to ensure faster delivery and service (Parjogo et al., 2012). Fashion products manufactured by ASOS are directly supplied to these warehouses, which are stored for a long time. Along with this, it is also found that upon getting an order from the customers, warehouse managers commence the supply of the products by the location. It is one of the noticeable strengths associated with supply chain management in the organization.

Faster delivery: One of the most noticeable approaches in supply chain management of ASOS is the faster delivery of the material and the processed products to the end customers. The organization makes use of fast courier services for delivering its products in different parts of the world (Ordoobadi, 2009). The study reveals that faster delivery of the products to the customers is helpful in attaining their trust and reliability on the same organization for future purchases. For this reason, approaches for faster delivery in supply chain management in ASOS can be considered as strengths of the organization.

Connectivity with suppliers: To ensure fast and efficient delivery of the products, management in ASOS has a great network of suppliers. The study reveals that there are thousands of suppliers that are considered by the organization for upgrading its supply chain management process.

Very less physical store: As far as the supply of the products is considered in ASOS, it is found that in the majority of the countries, the organization manages its supply through online retail. For this reason, there are very fewer physical stores available for the customers to visit and acquire the products (Nyaga et al., 2010). This is one of the prominent weaknesses of the organization, which sometimes create issues also in customer satisfaction.

The contribution of strengths and weaknesses to competitive advantage or disadvantage of ASOS

As far as the contribution of strengths and weaknesses is considered in the competitive advantages and disadvantages of ASOS, the following facts are highly noticeable.

Use of a large number of warehouses is one of the remarkable approaches in ASOS that bring highly competitive advantage to the company. Such approaches allow the organization to provide faster delivery to their customers and improving the efficiency of supply chain management. ‘

Along with this, it is also found that the organization has a vast grid network of suppliers (Nazari-Shirkouhi et al., 2015). This approach of being connected with more suppliers also brings competitive advantage to ASOS. The organization can manage regularity in operations due to such an approach.

Further, it is also found that ASOS considers the use of faster courier services for delivering the products to the customers. This is also one of the noticeable competitive advantages attained by the organization. Faster delivery of the products is helpful in bringing satisfaction to the customers with supply chain services of the organization.

It is also found that the organization has very few physical stores in noticeable cities in some countries. For this reason, it can be said that this is one of the prominent disadvantages of ASOS, due to which the profitability of the organization is limited (Rašković and Mörec, 2013). On the other hand, various competitors of ASOS, which may include Marks and Spencer and many others have a well-established network of physical stores. For this reason, maintaining business online is one of the competitive disadvantages associated with supply chain management of ASOS.

This way, it can be said that the strengths and weaknesses identified in the supply chain management act as competitive advantages as well as disadvantages to ASOS.

Conclusion

It can be concluded from the above report that ASOS is one of the leading online retailers in the UK, which also manages its business in international markets. It is found that the US is one of the markets to ASOS, which has great strategic importance to the organization. Some of the factors making US important for a business to ASOS include high sales, open trade policies and many others. Political factors such as fluctuations in taxes and many others affect the business of the organization considerably.

Further, it is also found that there is a certain issue in CSR approaches of ASOS, which may include the use of child workers and many others. It becomes essential to the organization to mitigate these issues with suitable approaches.

Along with this, it can also be said that the supply chain in ASOS is comprised of suppliers, processing departments, warehouses, and customers. Use of warehouses, faster delivery modes, and many others are some of the strengths of ASOS bringing competitive advantage to the company. On the other hand less, some physical stores are a great competitive disadvantage associated with the supply chain of the organization.

References

Rašković, M. and Mörec, B. (2013) Determinants of Supplier-Buyer Relationship Competitiveness in Transnational Companies, Economic and Business Review, Vol. 15, No. 1, pp. 5-31.

Ross, D. F. (2010) Competing Through Supply Chain Management: Creating Market-Winning, US: Springer Science & Business Media.

Tang, O. and Musa, S. N. (2011) Identifying risk issues and research advancements in supply chain risk management, International Journal of Production Economics, Vol. 133, No. 1, pp. 25-34.

Parjogo, D., Chowdhury, M. and Cheng, T. C. E. (2012) The relationship between supplier management and firm’s operational performance: A multi-dimensional perspective, International Journal of Production Economics, Vol. 136, pp. 123-130.

Ordoobadi S (2009) “Application of Taguchi loss functions for supplier selection” Supply Chain Management: An International JournalVol.14, No.1,pp.22–30.

Nyaga, G. N., Whipple, J. M. and Lynch, D. F. (2010) Examining supply chain relationships: Do buyer and supplier perspectives on collaborative relationships differ?, Journal of Operations Management, Vol. 28, No. 2, pp. 101-114.

Nazari-Shirkouhi, S., Keramati, A. and Rezaie, K. (2015) Investigating The Effects of Customer Relationship Management and Supplier Relationship Management on New Product Development, Tehnički vjesnik, Vol. 22, No. 1, pp. 191-200.

Braun, M. and Latham, S. (2014) Mastering strategy: Workshops for business success. United States: Praeger.

Cadle, J., Paul, D. and Turner, P. (2014) Business analysis techniques: 72 essential tools for success. London: BCS, The Chartered Institute for IT.

Frynas, J.G. and Mellahi, K. (2014) Global strategic management. United Kingdom: Oxford University Press.

Hamilton, L. and Webster, P. (2015) The international business environment. United Kingdom: Oxford University Press.

Hill, C.W.L. and Jones, G.R. (2011) Essentials of strategic management. United States: CENGAGE Learning Custom Publishing.

Ireland, D.R., Hoskisson, R.E. and Hitt, M.A. (2016) Strategic management: Concepts: Competitiveness and globalization. United States: CENGAGE Learning Custom Publishing.

Harrison, J., & Freeman, R. (1999). Stakeholders, social responsibility, and performance: Empirical evidence and theoretical perspectives. Academy of Management Journal, 42(5), 479-485.

Masaka, D. (2008). Why enforcing corporate social responsibility (CSR) is morally questionable”, Electronic Journal of Business Ethics and Organizational Studies, 13(1), 13-21.