As per your request, please accept this careful strategic analysis of
your respective organization Abercrombie and Fitch Co., which address the
key issues currently experienced by its subsidiary brands, as well as a
recommendation of a competitive strategy for the next five years focused on
alleviating the key issues as well as improving the profitability and
profit growth of the company as a whole.
Through analysing the industry, internal aspects, key issues, and
current strategies in place, an evaluation of strategic alternatives has
indicated following the diversification into a new product line strategy.
Continuing as a focus differentiator with related diversification allows
A&F to increase its domestic sales without markdowns, builds its weak home
brand equity, and gives it a competitive advantage over its rivals through
using its value chain activities to create consumer demand for this product
The criteria used to analyse this strategy includes: its feasibility
to satisfy A&F's current business strategy of a focus differentiation,
ability to address key issues currently experienced, and net cash flow
analysis of future cash streams under the most likely scenario. There are
financial implications of implementing this strategy such as an NPV of cash
flows amounting to $25,301,804. Financing this strategy involves taking on
additional debt or issuance of shares or a combination of both. The non-
financial implications of not engaging in this strategy include the
inability of A&F to remain competitive, experience decreasing consumer
demand, and not capitalize on industry's evolving fashion threat. Benefits
include: expansion of new product line, greater market share, increased
sales, and ability to capitalize on industry threat.
Abercrombie and Fitch Co. (A&F) is experiencing multiple key issues
that need to be addressed. A pressing issue is the fact that A&F's share
price has...