“Creativity plays an important role in economic competitiveness of advanced economies”

Introduction
This report will look at how the concept of creativity and innovation are significant to Asos and what stimulates Asos to implement creativity and innovation into their operations. The report will also discuss challenges that the business is facing to sustain a competitive edge and how Asos organizational culture foster creativity and innovation in the workplace. To finalize the report a comprehensive conclusion will be discussed whether creativity and innovation play an important role in economic competitiveness of advanced economies.
“ASOS is a global online fashion and beauty retailer and offers on the ASOS.com website over 50,000 branded and own label product lines across womenswear, menswear, footwear, accessories, jewellery and beauty with approximately 1,500 new product lines being introduced each week.” (1)

Managing change in organizations
Businesses within the 21st century are faced with constant change which affects the traditional organisational structure and the way people work, which forces companies to be highly adaptable to unforeseen changes. For example change within Asos helps them to identify the areas of their strong and weak points, which enhances their productivity and efficiency. Change aids to predict challenges that could affect Asos operations by reacting to it effectively in terms of how big and radical the change is and how many parts of the business is taking part.
Asos adjusts to the developmental proactive change which focuses on developing and enhancing its existing e commerce. They heavily invest into advanced technology to avoid potential threat in the online fashion market.
The external factor that promotes change i.e. the Eurozone market crisis affects Asos operations. The reason for this is because it is “continuing to worsen and presents a real risk that could tip the UK back into recession.” (2) This could have an impact on Asos demand for products and level of service they provide because inflation is rising and they are receptive to the economic climate. The market crisis has lead to a weak labour market which affects consumer spending and profit performance of Asos.

Creativity
“Creativity is the process of having ideas that have of value. It involves putting ideas into practice in terms of which ones are appropriate and which ones work. As the world economy is developing and integrating, the ability to be creative is fundamental. It makes companies adaptable to new changes that are happening within advanced the economy.” (3)
We are faced with an unpredictable economic climate due to the slow economic growth, increase of tax, soaring unemployment and declining house market. Creativity is a fundamental characteristic in advanced economies as we live in a knowledgeable society. Consumers look for value in a product/service which leads to a soaring demand. This obliges companies anticipating consumer’s desires and needs by signifying a brand they can aspire and relate by exceeding its consumer expectation. This involves companies to exploit competitor’s weaknesses to gain competitive advantage.
Emerging markets reduced technological barriers to movement of goods and increased global competition has increased competitive pressure in terms of quality, pricing and product portfolios whereby businesses need to be driven to develop their performance by implementing creativity.

Why is Asos creative?
Asos is a creative and dynamic fashion industry due to advanced development of technology and rapid internet connectivity. This has resulted Asos to build an online presence rather than starting off with a physical store, primarily targeting 16-34 year olds. “Asos has quickly developed into a significant player on the apparel scene. In its 2012 financial year results Asos' retail sales have jumped by almost 50% and for the first time the majority of sales came from overseas.” (4) Asos is continuing to expand its product range via enhancing its brand awareness through the online fashion market. For example new items are heavily promoted on the homepage which creates an emotional bond between the consumer and the brand. Asos products feature Asos brand, high street fashion as well as designer brands.
They have gained a competitive advantage in the fashion world because they started the online trade 10 years ago, which was when technology started to evolve majorly. Technological expansion has led to population growth which has affected family sizes, and occupations. This is currently a social trend within our society as we live in a communicative society and individuals have high demand on their professional life’s which results to high usage of the internet. This illustrates that Asos have addressed this niche market by creating an ecommerce business to meet the social trend of today. It enables customers to shop in their own comfort zone 24/7, as well gaining the whole shopping experience. However it can be argued that Asos creativity may be limiting their customer base in terms of people who are not very familiar with the new technology. Asos online shopping experience is convenient, presents choice, caters for different taste of styles and provides prompt customer service.
This affects the competitiveness of advanced economies because it reduces consumer transaction as the internet allows consumers to gather information, reviews and 360 degree view of the product. Therefore consumers are most likely to spend more since they don’t have to drive or travel to search for products which help the GDP growth of the economy.
Asos service innovation allows them to attract a mass market due to no geographical limitations as they trade in USA, France, Germany, Italy, Spain and Australia. This avoids cost and economic resources which enhances the quality of their service by providing prompt free delivery worldwide which none of the fashion industries offer. Asos offers competitive pricing which makes it affordable for everyone else to buy. This affects the competitiveness of advanced economies because “the complexity of international logistics systems in many sectors has grown as a result of increasing product variations and differentiation.”(5) This has a positive influence on the advanced economy because it keeps the price mechanism in control and makes it difficult for new entries to enter the market which encourages companies to be more creative.

Innovation
“Innovation is the use of new knowledge to offer a new product or service that customers want. It is invention + commercialization. It is, according to Porter “a new way of doing things that is commercialized.” (6)
Innovation plays an imperative role in the advanced economy because “Innovation Nation states that “innovation is essential to the UK’s future economic prosperity and quality of life. To raise productivity, meet the challenges of globalization and to live within our environmental and demographic limits, the UK must excel at all types of innovation.” (7)
This affects the competitiveness of advanced economies as the creation of new products and services lead to a predominately increase of demand for business products. There will be more efficient businesses entering the market and that is very beneficial for advanced economies.
It can be argued that innovation requires a large amount of investment which could be risky because it is an unpredictable approach due to the fact that ideas are put into practice. These ideas might not work for every aspect of the business operations.

Why is Asos innovative?
“Radical innovation implies that the development of a highly novel or unique product/service or production process and are based on changes in firm’s technological trajectory and associated organizational competencies (Tidd, 2001; Bennerand Tushman, 2003).” (8)
Asos radical innovation approach has enabled them to utilize the whole concept of today’s social media i.e. Facebook, Twitter, Blogging and Instagram because “there is a growing realization that firms can sustain strategic IT innovation and differentiate business success by developing superior technological capabilities.” (9) Asos technological innovations provides consumers a personalized web experience via phone applications, due to the target market having busy lives. Asos were the first online fashion market to incorporate a Facebook store which comprised in the whole products they offer. This was a creative approach because it created distinctive brand exposure as well many consumers visiting the website on a daily basis which enhanced their competitiveness. Social media has brought Asos and its consumers much more closely, by putting customer first at all times which features their twitter “Asos Here to Help page” on Facebook and Twitter to answer customer inquiries.
Social media affects the advanced economies because it gives companies the opportunity to promote its brand awareness, it allows market penetration as existing products are advertised to new potential consumers. For example if an individual is using Facebook and sees an offer for an Asos dress they are more likely to substitute their loyalty at Boohoo or River Island to purchase the dress.
Asos has also added complementary features on their website which includes “Asos Fashion Finder, which gives consumers the opportunity to share their style from Asos to other high street collections via Facebook and Twitter. This feature enables individuals to interact with one another, gain style inspiration from catwalk trends and entering competitions. This is an engaging method to entice consumers because it develops the positioning of Asos brand as it is driven to a fast paced fashion environment.
The second complementary feature is the “Asos Marketplace” this allows customers to resell their vintage items. It is a distinctive characteristic of Asos brand because it collaborates with vintage and boutique brands across the globe. Asos Marketplace features a blog that is connected to Facebook, Twitter and Google which gets updated on a weekly basis. Also at the end of each month Asos sends printed magazines to its customers to increase its brand awareness and to promote its digital offerings.

What motivates Asos to foster creativity and innovation?
Asos is motivated to foster creativity and innovation into their operations because fashion is a fast moving industry which is extremely competitive as the seasonal product assortments have shorter product life cycles. They work on keeping up to date with trends yet making it their own to express individual styles. Asos is frequently motivated to move its business forward as they operate in a culture of restiveness and innovation.
Asos look for individuals who are commercially aware, passionate about Asos brand and that can add value to their creativity and innovation. Asos organisational culture is focused on “person culture.” (10) The person culture of Asos concentrates on developing its workforce through “inductions, structured programs of continued professional development” (11) to develop their employees because ambition is a big thing at Asos. This makes employees feel part of the company which increases productivity and efficiency within the workforce which reduces stress.
Asos organisational culture has adopted Maslow’s theory “which identifies the crucial sets of needs that present in every human being.” (12) The five sets of needs can be summarized into these categories: 1) Physiological: Asos provides a dynamic and hygienic work environment. They offer their employees lunch and a shelter accommodated with important facilities in order to complete their job duties. Their employees can wear clothing that they feel comfortable in to express individual taste of style. 2) Safety/Security: Asos ensure that the workplace is safe from hazardous areas. They have incorporated rules and procedures to increase awareness of safety practices. 3) Social Affiliation: “Every last Friday of the month Asos employees have a social gathering at a bar.” (13) It gives employees the chance to get know each other better outside the workforce which creates a vibrant workforce. It increases the cohesiveness of Asos organisation culture as it develops the bond with one another which builds a team spirit within the working environment. 4) Esteem: Asos rewards its staff with for their hard work with “exclusive discounts for them and their friend on all Asos products. They also provide an annual bonus scheme to take part in as well a summer scheme hours where their staff finish at 3pm on Fridays.” (14) 5) Self actualization: Asos offers job security i.e. career progression and effective training in order to promote innovation and creativity in the working environment.
Adopting creativity into the organisation is a motivator for their employees, this reflects throughout the whole organisation culture which has an impact on the product range and customer service they provide.

Challenges that Asos is facing to maintain a competitive edge
“The Five Forces Model sets out to identify those factors which are likely to affect an organization’s competiveness. This then helps a firm to choose an appropriate strategy to enhance its competiveness opportunities and to protect itself from competitive threats. Porter identities:” (15) 1) Threat of substitute products and services: Asos needs to keep an eye on its product range as some of the products are seasonal. This will require Asos to be up to date with new fashion trends by reading magazines such as Vogue and Cosmopolitan to gain inspiration from the catwalk and celebrity styles. This reflects on Asos product range because they offer affordable versions of attire worn by celebrities which makes Asos more of a personalized and unique fashion industry. Asos would need to keep with trends through effective marketing research as customer preferences change frequently; this will help them adapt to market demands and exceed customer expectations. 2) Threat of the entry of new competitors: Asos have to be aware of new entrants that could potentially imitate their product range and competitive pricing which could be a substantial threat to their business. This will entail Asos to closely observe other websites that are starting up as they could decrease the market share and competitiveness of Asos. 3) The intensity of competitive rivalry: Asos operate in a dynamic fast industry which contributes to tough competition because competitors such as River Island and Boohoo offer similar product assortment. Therefore Asos must continue to offer cheap pricing so they don’t lose their customer base in order to maintain its differentiation advantage in the market. 4) Bargaining power of buyers/customers: Asos doesn’t have the bargaining power because they base their market on earnings, social trend and economic climate. With the increase of online shopping industries, customers are able to shop around and compare prices and product range. If the prices are too demanding for the customer, Asos will be required to reduce its prices in order to avoid their customers shopping from their competitors. Asos must maintain selling at attractive prices, due to the economic downturn as customers are highly attracted to low prices. 5) Bargaining power of suppliers: Asos has the power of its suppliers because they work with a number of designers and high street fashion companies. This offers Asos an extensive number of preferences of suppliers because they are in control of the quality and pricing. This is really vital in the contemporary economic condition.

Conclusion
To conclude the report I strongly feel that creativity plays a significant role in the fashion industry because it has great influence in our culture. Creativity is apparent in the clothes we wear, fashion industries were formed to give people the opportunity to articulate themselves. Asos has taken the holistic approach to advanced technology, online marketing and social media which make them very creative and innovative.

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