Strategic Management and Strategic Competitiveness
What started as a store geared towards the rugged outdoorsmen has grown into one of leading retailers for the upscale college student as well as the adventurous young adult with a fashion to go along with their adventure. Abercrombie & Fitch (A&F) sells a variety of casual sportswear apparel, including shirts, graphic t-shirts, jeans, shorts, and sweaters, as well as perfumes/cologne and personal care products, and accessories for both sexes and children. As of February 1, 2014, the company operated 843 stores in the United States and 163 stores outside of the U.S. (SEC, 2014). With a footprint this large in the outdoor apparel it only made since to look into the e-commerce market to continue to expand and grow their business.
Strategic management deals with decisions a company makes to stay afloat and have a competitive advantage. Over the past years, A&F has encountered a few financial setbacks brought forth by turbulent economic times and a controversial advertising campaign that not only affected sales, it drew negative publicity and sometimes not all publicity is good publicity. If, however, the leaders of the organization can make good tactful and strategic moves, this company might be able to turn around and be profitable. Globalization and Technology
A&F understood that in order to be competitive, they must venture overseas and do it wisely as well as strategically. Companies that take the chance on foreign opportunities are often met with challenges set forth by governments, including local sourcing requirements, tariffs and restrictions on foreign direct investment. Not only must the area be able to support the new business, A&F had to make sure any other requirements from local areas are met. This may be why competitors American Eagle Outfitters Inc. and J. Crew Group Inc. had not made the move. Despite the challenge, Abercrombie took their business overseas in 2007, starting in London (Eaton, 2013). At that time, Gap Inc. was the only major competitor overseas, with one hundred sixty eight stores internationally. Having the information available that Gap Inc. has been successful, allowed for A&F to save on financial resources of placing stores in certain areas. Knowing that Gap Inc. stores were making profit then A&F stores should make a profit in the same area. The company capitalized on this opportunity, and it paid off. The company recorded revenues of $3,318.2 million during the fiscal year ended January 2007, an increase of 19.2% over 2006. The operating profit of the company was $658.1 million during fiscal year 2007, an increase of 21.3% over 2006. The net profit was $422.2 million in fiscal year 2007, an increase of 26.4% over 2006. The company has made over $7 million in the current year with direct to consumer sales (Abercrombie & Fitch, 2007). Bringing the product to the consumers’ fingertips allows for them the opportunity to shop from their couches, beds, or even workplace and have their items delivered to their homes. The world of e-commerce has helped A&F solidify itself as a leading outdoor clothier. Dramatic changes in technology have occurred rapidly over the last ten years. As noted in the textbook, “personal computers, cellular phones, artificial intelligence, virtual reality, massive databases, and multiple social networking sites are only a few examples of how information is used differently as a result of technological developments” (Hint, 2012). With such advances over the past decade, there has been an increased focus on online sales in order to remain competitive. Multichannel shopping has enabled companies to expand margins and tap into new and emerging markets including China, the leader in use of Internet sales channels (PricewaterhouseCoopers, 2013). Abercrombie has a good online store, accessible to both domestic and international consumers which expand the number of customers dramatically compared to...
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