Abercrombie & Fitch UK Abercrombie Term Paper

  • Length: 8 pages
  • Subject: Business
  • Type: Term Paper
  • Paper: #58837744

Excerpt from Term Paper :



Finally, in terms of innovation, the company strives to align itself to the latest it tendencies. In response to the rapid pace of development imposed by the advancements in Information Technology, Abercrombie & Fitch has launched its website as a means for customers to shop online. The website presents the user with a multitude of features and with the possibility to customize his/her shopping activities. Aside the website however, Abercrombie & Fitch is generally criticized for its low levels of innovation. Corey Lorinsky (2008) for instance goes as far as to argue that the lack of innovation, combined with the strategy of maintain prices higher than the competition, are reducing the investors' interest in the organization.

3. SWOT Analysis

Internal Strengths

The company has a vast expertise pegged to more than a century of existence in a dynamic market; this materializes in positive results, including strong financial highlights

They secured a global presence across four countries (U.S., Canada, UK and more recently, Italy), throughout 1039 stores and they employ 80,100 dedicated staff members

They sell their products in five specific brands -- Abercrombie & Fitch, AbercrombieKids, Gilly Hicks, Holliester and RUEHL (Abercrombie & Fitch Website, 2009)

The fashion retailer has recently launched online operations through which it reaches larger audience bases and sustains higher levels of sales through the removal of the geographical and temporal barriers

Internal Weaknesses

Due to the nature of the operations conducted and the products served, Abercrombie & Fitch requires the support of highly skilled staff members, which translates into increased costs with the personnel

The company has in many instances registered lower sales volumes than other companies due to its strategic decision to implement lower levels of discounts (Gnedash, Petrushin and Hanson); nevertheless, this has often materialized in higher value of revenues, meaning then that the feature can be perceived as both weakness as well as strength

2008 has revealed reductions in several of the company's financial highlights: net sales decreased from $3.75 million in 2007 to $3.54 million in 2008; the gross profit decreased from $2.51 million in 2007 to $2.36 million in 2008; the net income registered a dramatic decrease from $475.69 million in 2007 to $272.25 million in 2008 (Abercrombie & Fitch 2009 Annual Report)

The advertising strategy is often considered unsuitable; most of Abercrombie & Fitch's advertisements feature semi-dressed people who seem to enjoy life. While this may be seen as an intriguing approach to capture the attention of their young and libertine target segment, the more traditional young customers might not relate to the company's ads

External Opportunities

Since Abercrombie & Fitch only operates in the four countries, a major opportunity is constituted by the possibility to expand to other global regions. This opportunity is supported by several features, such as the growing forces of globalization, the increase in income per capita at a global level, which will materialize in an increased access to the more expensive Abercrombie & Fitch products, but also the origin country, which is considered a fashion capital

Abercrombie & Fitch has often been criticized for its reduced interest in innovation. The modern day society however presents them with the opportunity to easily use innovative technologies and then reap off the benefits of investments, such as an increased operational efficiency

External Threats

The UK government strives to regulate the market in the advantage of a lower retail price for the consumer, which means that Abercrombie & Fitch will have to launch strategies of cost reductions

Intense pressure from social and regulatory fields to deliver environmentally friendly products, demand which could significantly increase operational costs and complexity

The customers are well educated and highly pretentious, meaning that serving their needs and ensuring revenue sustainability is often a challenging task for the UK offices

References:

Gnedash, O., Petrushin, a., Hanson, B., Abercrombie & Fitch Co., Dickinson State University, http://www2.dsu.nodak.edu/users/rbutz/E-Commerce/PowerPoint/S08/Brent_ANF.ppt last accessed on December 2, 2009

Lorinsky, C., 2008, High Prices and Lack of Innovation Kill Abercrombie & Fitch, Business Insider, http://www.businessinsider.com/2008/9/high-prices-and-lack-of-innovation-kill-abercrombie-fitch-anf- last accessed on December 3, 2009

Porter, M., 1980, Competitive Strategy, Free Press

Seager, a., September 3, 2007, Political Climate is Changing Faster than Our Prime Minister, the Guardian

2008, Abercrombie & Fitch's CRS Attempt, Consuming PR, http://consumingpr.com/2008/04/22/abercrombie-fitchs-csr-attempt/#comments last accessed on December 3, 2009

2008, UK Summary, Cabinet Office, http://archive.cabinetoffice.gov.uk/e-envoy/reports-benchmarking2002/$file/0.11.pdf last accessed on December 2, 2009

2009, Global Business Environment, Center for Management Research, http://www.icmrindia.org/courseware/Global%20Business%20Environment/GBE-DS10.htm last accessed on December 2, 2009

2009, the World Factbook -- UK, Central Intelligence Agency, https://www.cia.gov/library/publications/the-world-factbook/geos/uk.html last accessed on December 2, 2009

2009, the Industry Handbook: The Retailing Industry, Investopedia, http://www.investopedia.com/features/industryhandbook/retail.asp last accessed on December 2, 2009

Abercrombie & Fitch 2009 Annual Report, http://www.abercrombie.com/anf/lifestyles/html/investorrelations.html last accessed on December 3, 2009

2009, Abercrombie & Fitch Website, http://www.abercrombie.com last accessed on December 2, 2009

2009, Primark Website, http://www.primark.co.uk / last…

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