Identify and Describe the Greatest Environmental Threats That Have Immediate Implications Abercrombie & Fitch
Abercrombie & Fitch
July 25, 2010
Identify and describe the greatest environmental threats that have immediate implications for Abercrombie & Fitch. Hitt, Ireland and Hoskisson define a threat as, “a condition in the general environment that may hinder a company’s efforts to achieve strategic competitiveness.” (Hitt, Ireland and Hoskisson, page 37)
Abercrombie & Fitch are in the retail industry, selling everything from clothing to jewelry to fragrances for men and women. Abercrombie & Fitch’s top competitors in this industry are American Eagle Outfitters, Gap, Inc., and J. Crew. While Abercrombie & Fitch has gone global with companies in other countries and now has online capabilities, these competing companies have also spread to some of these same countries and also has online capabilities. Abercrombie & Fitch and American Eagle Outfitters are running neck and neck in the areas of revenue and market capitalization. Another threat to Abercrombie & Fitch is that these companies, American Eagle Outfitters, Gap, Inc., and J. Crew all have higher price to earnings ratios. Abercrombie & Fitch also comes in second behind J. Crew in price to cash flow ratio and rates third behind J. Crew and American Eagle Outfitters in revenue.
Outside of finances, another threat to Abercrombie & Fitch is their perceived lack of diversity as it relates to its consumers and its employees regarding who can wear their clothing and who can sale their clothing by catering towards a younger, predominantly college-aged group. This limitation on the type of people to wear and sale their clothing, also limits their earning potential. Also, because of the past decrease in the economy due to the housing market taking a dive and the unemployment rate rising every day, people are not as willing to spend a large amount of money on clothes. Now many people are becoming conservative, saving money and shopping for bargains. Abercrombie & Fitch refused to
July 25, 2010
Identify and describe the greatest environmental threats that have immediate implications for Abercrombie & Fitch. Hitt, Ireland and Hoskisson define a threat as, “a condition in the general environment that may hinder a company’s efforts to achieve strategic competitiveness.” (Hitt, Ireland and Hoskisson, page 37)
Abercrombie & Fitch are in the retail industry, selling everything from clothing to jewelry to fragrances for men and women. Abercrombie & Fitch’s top competitors in this industry are American Eagle Outfitters, Gap, Inc., and J. Crew. While Abercrombie & Fitch has gone global with companies in other countries and now has online capabilities, these competing companies have also spread to some of these same countries and also has online capabilities. Abercrombie & Fitch and American Eagle Outfitters are running neck and neck in the areas of revenue and market capitalization. Another threat to Abercrombie & Fitch is that these companies, American Eagle Outfitters, Gap, Inc., and J. Crew all have higher price to earnings ratios. Abercrombie & Fitch also comes in second behind J. Crew in price to cash flow ratio and rates third behind J. Crew and American Eagle Outfitters in revenue.
Outside of finances, another threat to Abercrombie & Fitch is their perceived lack of diversity as it relates to its consumers and its employees regarding who can wear their clothing and who can sale their clothing by catering towards a younger, predominantly college-aged group. This limitation on the type of people to wear and sale their clothing, also limits their earning potential. Also, because of the past decrease in the economy due to the housing market taking a dive and the unemployment rate rising every day, people are not as willing to spend a large amount of money on clothes. Now many people are becoming conservative, saving money and shopping for bargains. Abercrombie & Fitch refused to
References: "ANF: ABERCROMBIE & FITCH CO Top Competitors." Business News, Stock Quotes, Investment Advice - DailyFinance. AOL@MONEY, n.d. Web. 20 July 2010. <http://www.dailyfinance.com/company/abercrombie-and-fitch-co/anf/nys/top-competitors>. Cowan, K. Abercrombie & Fitch—aka Cool Kids Only?. (May 2007). http://blogs.payscale.com/salary_report_kris_cowan/2007/05/abercrombie_fit.html Hitt, M, R. D. Ireland, and R. E. Hoskisson. "The External Environment: Opportunities, Threats, Industry Competition, and Competitor Analysis." Strategic Management: Competitiveness and Globalization, Concepts and Cases. Mason: Cengage Learning, 2009. 37.