Strategic Management Analysis Report: Abercrombie & Fitch Case Study

This report provides a comprehensive strategic analysis of Abercrombie & Fitch (A&F), examining its strategic capabilities, including threshold and unique resources, and core competencies within the retail industry. It assesses the impact of external forces using a PESTLE analysis, considering political, economic, social, technological, and legal factors affecting the company's operations. The report then explores the company's distribution channels, including the shift towards online retail and the challenges faced by traditional retailers. Furthermore, it analyzes A&F's competitive landscape, including the bargaining power of suppliers and threats of substitutes. Finally, the report outlines a strategic statement for A&F, focusing on its mission, vision, and values, and providing recommendations for enhancing its competitive advantage, including diversification, market research, and advertising strategies.

Running head: STRATEGIC MANAGEMENT
Strategic Management
Name of the Student:
Name of the University:
Author Note:

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Contents
Answer to Question 1......................................................................................................................2
Answer to Question 2......................................................................................................................3
Answer to Question 3......................................................................................................................4
Answer to Question 4(b)..................................................................................................................5
References........................................................................................................................................7

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Answer to Question 1
Abercrombie and Fitch (A&F) is a brand i.e. targeted to the youths. The company has
generated a huge amount of revenue in US. The strategic capability analysis of A&F is described
below.
In the threshold capability, the threshold resources comprises of the tangible and the
intangible resources. The tangible resources include the supply chain network of the company.
There is transparency, control and reliability in the global supply chain of A&F. The selected
management dynamics of the company in delivering the supply chain visibility solutions as well
maintaining high quality data of the company. It has more than 30 trading partners. The company
manages the logistics team and it tries to streamline the process from the vendor to the
distribution center. It also takes special care in shipment delays and thus tries to improve the
customer service. Another important area of threshold resources is its differentiation in business.
It is very difficult for the company to survive and sustain the competitiveness as there is large
number of competitors in this industry. The intangible resources in the threshold resources are its
brand image and the perception of the customers. The company has developed a good brand
image among the youths of this generation. With the passage of time, the company has lost its
competitors because it could not face the steep competition. In the threshold competencies, there
is differentiation in the retail services of A&F and this has attracted a large number of customers.
The unique design of the retail stores has attracted the customers and thus this has increased the
profitability of the company. The unique resources in the capabilities of competitive advantage
of A&F include the tangible and the intangible resources. The supply chain network and the
recent trends and style are included in the tangible resources. On the other hand, the brand

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identity and the brand awareness among the youths are includes in the intangible resources. The
core competency of the company is its differentiation of clothing in the retail industry. It is
becoming difficult for the company to differentiate and stay ahead in competition in the clothing
industry. This is becoming a threat for the company and the company must try to develop or
improve its product design and quality. This will help the company to stay ahead in competition.
It must also improve its supply chain network and thus this will help in improving the
profitability of the company (Pham et al. 2014).
Answer to Question 2
The impact of external forces on the company using Pestle is described below:\
Political: As A&F manufactures their product within USA and Asia, The products that
are imported must accrue an import duty. This may increase the price of the product as the
company has to pay a high amount of import duties. The company also needs to ensure that the
labeling of the products is as per the requirement of UK. They must also check that it is
accordance with the law.
Economic: The company is not reducing the price of the product in times of recession
and thus it is forcing the customers to look for cheaper competitors in the economy. A&F is also
constantly trying to promote and maintain the brand image and thus it has successfully created
the brand image in US. The company was also criticized for over pricing of the products and this
had a major impact on the profitability of the company. The company must also consider the
effects of trade such as imports and exports which are necessary for international marketing.
Social: A&F must also be aware of the different values and beliefs that are followed by
the people of UK. The advertising must also be done in such a way so that it will not affect the

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ideas and sentiments of the customers. The company must try to be different and stand separate
in the competition with its unique products
Technological: With the increasing use of internet, A&F must advertise its product to the
consumers through website and it must also try to build its own website so that the customers
will not face difficulty in purchasing the products. This will also help the customers to purchase
the product quickly and in a short span of time. The online technology helps the products and the
services to be cheaper as there are no middlemen involved and thus this will also help in
improving the quality of the product within the same cost. These technologies will also offer the
businesses and the consumers for more innovative products and services.
Legal: The employment law of UK is strict and the company is recruiting the employees
without any discrimination. The employees are aware of the UK legislation as the high profile
laws may affect the brand image of the company (Wang et al. 2015).
Answer to Question 3
A&F is one of the leading brand with a single division. The main advantage of the
company is its choice which can be explained as a desire in the control over each brand. There
are many global layers which are engaged in the distribution and supply of the product to the
next level of manufacturer. It also involves catalog distribution before the products reach the
market. There are more layers of distribution of the product such as the export brokers who are
engaged in distribution in the US market. The large companies directly distribute the product
from the offshore manufacturing level and there is no distribution channel or middleman
involved. The companies directly handle the sales report and the various brand lines which are
associated with different retailers (Ahmed et al. 2014). The Internet has also made a significant

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change in the retail apparel. The various cost savings technology used by different companies
has also increased the profitability of the company. The garments are also sold in the overstock
market and it consists of the discount retailers and the factory stores such as online retailers. The
omnichannel efforts include the customer experience, smart phone connectivity, bricks and
mortar stores have helped the retailers to be successful. This has helped in increasing and
boosting up the sales and profitability of the company. There are many traditional retailers who
are associated with the healthy growth of sales and thus it is also helping the online company in
increasing their revenue. The multiple supply chain and the support networks are also increasing
the profitability of the company. The traditional retailers are trying to address the different
shortcomings and thus the omnichannel model is becoming difficult for them. The threat of new
entrants is low as the industry requires huge investment in this business. The rivalry among the
existing firms is high as there are many fashion brands that are operating in this industry. The
online retailers are finding it hard to handle the retail operations such as managing the supply
chain network, investing in the accumulated savings and increasing the profitability of the
company. The online retailers are in a better position than the traditional retailers and they have
to overcome the challenges which are faced by the company. The bargaining power of the
suppliers is high in case of this industry as the customers have many alternative choices across
USA. The bargaining power of the suppliers is low and A&F have excellent supply chain
networks that source the raw materials. Moreover, threat of substitute products is high as the
consumers are able to go to different shops rather than visiting A&F retail stores (Ambroise et al.
2014).

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Answer to Question 4(b)
A strategy statement helps in communicating the strategy of the company. The statement
comprises of three important components such as objective, competitive advantage and scope.
The three components must be in accordance with one another. The following strategy statement
will help the board of A&F.
As the mission of A&F is to deliver fashionable clothing at a competitive price, the
company must try to focus in this area. Its vision is to become one of the leading teenage fashion
brands of USA. It is also trying to expand in the global market. The value of A&F is to satisfy
the customers and thus they will build their business model accordingly. The company is also
trying to build integrated supply chain system for the businesses and this will help in the
expansion of the business. The company must also try to bring diversification in the clothing and
fashion industry. It is also trying to focus on the current competitive advantage and enhance the
target market segment. It must also try to increase its global presence in the new destinations and
thus pay more attention to the various macro environmental factors. The new product
development strategy will also help in adding to the new customer segments. Moreover, the
company must make better use of advertising and promotion to boost its profitability. It is also
important to concentrate on the market research and find out the trends and demands of the
consumers accordingly. The company must also be aware of the price wars which are going on
in fashion and clothing retail industry. The strategies adopted will help in increasing the brand
awareness and brand equity of A&F. The company must also try to expand the market and thus
target the adult customer groups (Cortez et al. 2014).

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References
Ahmed, M.U., Kristal, M.M. and Pagell, M., 2014. Impact of operational and marketing
capabilities on firm performance: Evidence from economic growth and downturns. International
Journal of Production Economics, 154, pp.59-71.
Ambroise, L., Pantin-Sohier, G., Valette-Florence, P. and Albert, N., 2014. From endorsement to
celebrity co-branding: Personality transfer. Journal of Brand Management, 21(4), pp.273-285.
Cortez, M.A., Tu, N.T., Van Anh, D., Ng, B.Z. and Vegafria, E., 2014. Fast fashion quadrangle:
An analysis. Academy of Marketing Studies Journal, 18(1), p.1.
Pham, C.N., Ozdemir, R.A., Pham, H.H. and Wang, N., 2014. Is sex still effective in fashion
clothing? Understanding the changing dynamics of heavily using sexual appeals in current
fashion marketing context via abercrombie & fitch case. CENTER FOR THE STUDY OF
WESTERN HEMISPHERIC TRADE, p.295.
Wang, H., Huang, H.C. and Hsieh, M.H., 2015. Capturing Rainbow Men's Hearts: a Mediated
Moderation Model of Brand Gay Image, Brand Attachment and Gay Identity. ACR Asia-Pacific
Advances.