Abercrombie and Fitch, Strategic Managment

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Table of Contents

INTRODUCTION3
ABERCROMBIE AND FITCH4
Pest Analysis of A&F4
1.Political Factors4
2.Economic Factors5
3.Sociological Factors5
4.Technological Factors6
Michael Porter’s Five Force Framework6
1.Threat of New Entrants6
2.Substitutes7
3.Threat of Bargain Power of Supplier7
4.Bargain Power of Buyers7
5.Rivalry8
SWOT Analysis A&F8
CONCLUSION9
REFERENCES10

INTRODUCTION

Every business in the world has to look for different strategies that will help it to improve and raise more profits. This has become in the ultimate goal in any organisation and it only becomes a reality if the best technique and methods are used. For this, there are some analyses that at the same time need to be done to arrange the most useful tools to achieve the company’s objectives. These procedures, that can be used to study the different strengths, risks or opportunities in externally and internally in each organisation, could be and PEST analysis and a SWOT analysis.

These two different systems to analyse a company’s strategy force will be study in this paper. For this, the company that has been chosen for this purpose is Abercrombie and Fitch. This has been denominated as one of the most important brands in the retailing business.

ABERCROMBIE AND FITCH

The company Abercrombie & Fitch (A&F) is a retailer of informal clothes and accessories. These accessories include including cologne and perfume for men and women. A&F has its operations based in more than 300 stores that at the same time incorporate "abercrombie" stores for children; Hollister (Southern Californian style) and the new brand Gilly Hicks for underwear (Abercrombie and Fitch, 2010)

Its history starts in 1892 when David Abercrombie opens its first store called Abercrombie & Co. This was a camping equipment shop but in 1904 his name was change to Abercrombie and Fitch when Ezra Fitch decided to join the company (Weber, 2010. P. 3).

However, by 1982 the company style changed and its main target was 18-24 age male and women, to sell them casual clothes (Fragance X, 2010). With sells higher than £3.75bn, this company is considered one of the most popular brands in the world (Cartner-Morley, The Guardian, 2009)

Pest Analysis of A&F

A PEST Analysis is used to identify the different impacts that in the external context a company has to face. The operation of any project needs evaluation of its external environment and the best way to do it is to enhance a PEST Analysis (Basu, 2008). This kind of analysis studies the political, economic, social and technological factors that can affect the realisation of a project.

Political Factors

These factors refer to “what is happening politically in the environment in which the company operates” (CIPD, 2010). This includes different areas such as tax guidelines, employment regulations, environmental policy, trade and tariffs limitations and laws, and political stability. Every regulation or change by the government can affect the organisation directly or indirectly (Weber, 2010. P. 4)

Abercrombie and Fitch operates in countries that have free trade regulations. Countries where the economy approach is free market oriented. This has bring advantages to the company due to the lower percentage in regulations and laws to the entrance of products and the sell force (Abercrombie & Fitch, 2010). However, there are some rules that must be followed such as the employee’s regulations, shareholders rights, etc.

Economic Factors

Here, all what is related to economy can affect a business. Examples of that could be the decline or growth of the economy in any country, interest and exchange rates, wages, cost of living, credits, etc. (CIPD, 2010). For Abercrombie and Fitch, the economic crisis that affected the most important economies during 2008 and 2009 were the cause of a decline in A&F profits. In the second quarter of 2009 the profits were down a 30% with around...
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