ASOS CASE STUDY

ASOS Case Study

ASOS Case Study

Question 1: Apply Michael E porter 5 forces and competitive advantage to the ASOS case Study?

Porter's Five Forces

The threat of substitute products and services

Providing products at a cheaper cost are the main factor for the ASOS as they rely on cost leadership. They provide products at a lower price than their competitors, to make their customer loyal to the company and satisfy them with quality products. They major threat for the company is that if another company launches same clothing wear to the market they might face an enormous competition. There is a chance to lose their customers. ASOS have to control on their price and quality as if the other company also started providing products on low rates, ASOS might face an enormous loss (Michael, 2008).

The threat of the entry of new competitors (barriers to entry)

As ASOS is the famous company and have a lot of market share, other new entrants would start copying their products and start a business. If new entrants enter in to the market ASOS profit may affect. In order to increase their profit, on the products they are providing they should focus on Porter's five models as it will provide them to control new entrants to copy retail websites. If ASOS fail to prevent new entrants to enter in the market, then it is obvious that they will fall to a competitive level.

The intensity of competitive rivalry

This force of Porter's is a major determinant of the competitiveness for most industries, but especially in retail as rivals usually compete forcefully on price alone. ASOS competes in this way with competitors like topshop.com and riverisland.com as they sell the same clothing. ASOS must make sure that they offer the clothes at the lowest price otherwise the customers will buy from the competitors, whoever is offering the item at the lowest price (as the clothes are the same consumers will buy on price alone as that is the only thing that differentiates it from the others). As well as this ASOS must ensure that they keep up with the current trends, and they must offer their new ranges as soon as they possibly can before their rivals have the chance to copy and release their designs as their own (Kevin, 1996).

The bargaining power of customers

Customers of ASOS have much chance to bargain, as the customers are powerful for any company doing business. ASOS collectively rely on their customers. They also listen to their customers and take a proper care of their feedbacks. If customers of ASOS seem the price of their product is too high they forced to reduce their price on the products otherwise their customers might shift to different brands. E-commerce strategy helps a lot for ASOS customers to buy their products, as it easy for them to chose and shop a product online. ASOS must make sure that the prices of their products are not that much high they can use market skimming ...