Abercrombie & Fitch: Is It Unethical To Be Exclusive? SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Sales & Marketing
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Abercrombie & Fitch: Is It Unethical To Be Exclusive?
The CEO of clothing manufacturer and retailer Abercrombie and Fitch defends his decision that the company will not offer plus sizes for women, although extra large sizes are available for men, because average- to large-sized female consumers do not fit the company's target market. This insistence on a standard of female beauty as young, svelte and tall has enraged consumers who have criticized the company, and the CEO in particular, in both the traditional and social media for exacerbating problems of body image and gender stereotypes, especially among teens. Increasing sizes, however, presents not only logistical and manufacturing challenges but may lead to charges that the company is encouraging obesity and unhealthy lifestyles as happened when a competitor, H&M, introduced large-size models and mannequins in its stores. Abercrombie and Fitch's popularity with its target teen market depends on its promulgation of exclusivity, which in turn depends on its vision of what is "cool." Yet, in the face of mounting criticism and declining sales, does sticking to the segmentation strategy make sense?
Authors :: Seung Hwan (Mark) Lee, June Cotte, Danae Blanchard
Swot Analysis of "Abercrombie & Fitch: Is It Unethical To Be Exclusive?" written by Seung Hwan (Mark) Lee, June Cotte, Danae Blanchard includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Abercrombie Sizes facing as an external strategic factors. Some of the topics covered in Abercrombie & Fitch: Is It Unethical To Be Exclusive? case study are - Strategic Management Strategies, Social platforms and Sales & Marketing.
Some of the macro environment factors that can be used to understand the Abercrombie & Fitch: Is It Unethical To Be Exclusive? casestudy better are - – increasing household debt because of falling income levels, competitive advantages are harder to sustain because of technology dispersion, supply chains are disrupted by pandemic , increasing energy prices, central banks are concerned over increasing inflation, geopolitical disruptions, increasing inequality as vast percentage of new income is going to the top 1%,
talent flight as more people leaving formal jobs, there is backlash against globalization, etc
Introduction to SWOT Analysis of Abercrombie & Fitch: Is It Unethical To Be Exclusive?
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Abercrombie & Fitch: Is It Unethical To Be Exclusive? case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Abercrombie Sizes, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Abercrombie Sizes operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Abercrombie & Fitch: Is It Unethical To Be Exclusive? can be done for the following purposes –
1. Strategic planning using facts provided in Abercrombie & Fitch: Is It Unethical To Be Exclusive? case study
2. Improving business portfolio management of Abercrombie Sizes
3. Assessing feasibility of the new initiative in Sales & Marketing field.
4. Making a Sales & Marketing topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Abercrombie Sizes
Strengths Abercrombie & Fitch: Is It Unethical To Be Exclusive? | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Abercrombie Sizes in Abercrombie & Fitch: Is It Unethical To Be Exclusive? Harvard Business Review case study are -
Ability to lead change in Sales & Marketing field
– Abercrombie Sizes is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Abercrombie Sizes in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Analytics focus
– Abercrombie Sizes is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Seung Hwan (Mark) Lee, June Cotte, Danae Blanchard can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Innovation driven organization
– Abercrombie Sizes is one of the most innovative firm in sector. Manager in Abercrombie & Fitch: Is It Unethical To Be Exclusive? Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Learning organization
- Abercrombie Sizes is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Abercrombie Sizes is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Abercrombie & Fitch: Is It Unethical To Be Exclusive? Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Cross disciplinary teams
– Horizontal connected teams at the Abercrombie Sizes are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Superior customer experience
– The customer experience strategy of Abercrombie Sizes in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Successful track record of launching new products
– Abercrombie Sizes has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Abercrombie Sizes has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Digital Transformation in Sales & Marketing segment
- digital transformation varies from industry to industry. For Abercrombie Sizes digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Abercrombie Sizes has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Sustainable margins compare to other players in Sales & Marketing industry
– Abercrombie & Fitch: Is It Unethical To Be Exclusive? firm has clearly differentiated products in the market place. This has enabled Abercrombie Sizes to fetch slight price premium compare to the competitors in the Sales & Marketing industry. The sustainable margins have also helped Abercrombie Sizes to invest into research and development (R&D) and innovation.
High switching costs
– The high switching costs that Abercrombie Sizes has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Effective Research and Development (R&D)
– Abercrombie Sizes has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Abercrombie & Fitch: Is It Unethical To Be Exclusive? - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Diverse revenue streams
– Abercrombie Sizes is present in almost all the verticals within the industry. This has provided firm in Abercrombie & Fitch: Is It Unethical To Be Exclusive? case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Weaknesses Abercrombie & Fitch: Is It Unethical To Be Exclusive? | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Abercrombie & Fitch: Is It Unethical To Be Exclusive? are -
High cash cycle compare to competitors
Abercrombie Sizes has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Interest costs
– Compare to the competition, Abercrombie Sizes has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Slow decision making process
– As mentioned earlier in the report, Abercrombie Sizes has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Abercrombie Sizes even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
Products dominated business model
– Even though Abercrombie Sizes has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - Abercrombie & Fitch: Is It Unethical To Be Exclusive? should strive to include more intangible value offerings along with its core products and services.
Workers concerns about automation
– As automation is fast increasing in the segment, Abercrombie Sizes needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
No frontier risks strategy
– After analyzing the HBR case study Abercrombie & Fitch: Is It Unethical To Be Exclusive?, it seems that company is thinking about the frontier risks that can impact Sales & Marketing strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
High bargaining power of channel partners
– Because of the regulatory requirements, Seung Hwan (Mark) Lee, June Cotte, Danae Blanchard suggests that, Abercrombie Sizes is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Abercrombie & Fitch: Is It Unethical To Be Exclusive?, in the dynamic environment Abercrombie Sizes has struggled to respond to the nimble upstart competition. Abercrombie Sizes has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Abercrombie Sizes supply chain. Even after few cautionary changes mentioned in the HBR case study - Abercrombie & Fitch: Is It Unethical To Be Exclusive?, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Abercrombie Sizes vulnerable to further global disruptions in South East Asia.
Increasing silos among functional specialists
– The organizational structure of Abercrombie Sizes is dominated by functional specialists. It is not different from other players in the Sales & Marketing segment. Abercrombie Sizes needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Abercrombie Sizes to focus more on services rather than just following the product oriented approach.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Abercrombie & Fitch: Is It Unethical To Be Exclusive?, it seems that the employees of Abercrombie Sizes don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
Opportunities Abercrombie & Fitch: Is It Unethical To Be Exclusive? | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Abercrombie & Fitch: Is It Unethical To Be Exclusive? are -
Leveraging digital technologies
– Abercrombie Sizes can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Abercrombie Sizes in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Sales & Marketing segment, and it will provide faster access to the consumers.
Creating value in data economy
– The success of analytics program of Abercrombie Sizes has opened avenues for new revenue streams for the organization in the industry. This can help Abercrombie Sizes to build a more holistic ecosystem as suggested in the Abercrombie & Fitch: Is It Unethical To Be Exclusive? case study. Abercrombie Sizes can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Learning at scale
– Online learning technologies has now opened space for Abercrombie Sizes to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Better consumer reach
– The expansion of the 5G network will help Abercrombie Sizes to increase its market reach. Abercrombie Sizes will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Sales & Marketing industry, but it has also influenced the consumer preferences. Abercrombie Sizes can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Abercrombie Sizes in the consumer business. Now Abercrombie Sizes can target international markets with far fewer capital restrictions requirements than the existing system.
Manufacturing automation
– Abercrombie Sizes can use the latest technology developments to improve its manufacturing and designing process in Sales & Marketing segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Using analytics as competitive advantage
– Abercrombie Sizes has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Abercrombie & Fitch: Is It Unethical To Be Exclusive? - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Abercrombie Sizes to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Developing new processes and practices
– Abercrombie Sizes can develop new processes and procedures in Sales & Marketing industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Loyalty marketing
– Abercrombie Sizes has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Low interest rates
– Even though inflation is raising its head in most developed economies, Abercrombie Sizes can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Abercrombie Sizes can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Threats Abercrombie & Fitch: Is It Unethical To Be Exclusive? External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Abercrombie & Fitch: Is It Unethical To Be Exclusive? are -
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Abercrombie Sizes.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Abercrombie Sizes in the Sales & Marketing sector and impact the bottomline of the organization.
Environmental challenges
– Abercrombie Sizes needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Abercrombie Sizes can take advantage of this fund but it will also bring new competitors in the Sales & Marketing industry.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Abercrombie Sizes needs to understand the core reasons impacting the Sales & Marketing industry. This will help it in building a better workplace.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Abercrombie Sizes in the Sales & Marketing industry. The Sales & Marketing industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Regulatory challenges
– Abercrombie Sizes needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Sales & Marketing industry regulations.
Shortening product life cycle
– it is one of the major threat that Abercrombie Sizes is facing in Sales & Marketing sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Easy access to finance
– Easy access to finance in Sales & Marketing field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Abercrombie Sizes can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Increasing wage structure of Abercrombie Sizes
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Abercrombie Sizes.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Abercrombie Sizes will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Technology acceleration in Forth Industrial Revolution
– Abercrombie Sizes has witnessed rapid integration of technology during Covid-19 in the Sales & Marketing industry. As one of the leading players in the industry, Abercrombie Sizes needs to keep up with the evolution of technology in the Sales & Marketing sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Weighted SWOT Analysis of Abercrombie & Fitch: Is It Unethical To Be Exclusive? Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Abercrombie & Fitch: Is It Unethical To Be Exclusive? needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Abercrombie & Fitch: Is It Unethical To Be Exclusive? is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Abercrombie & Fitch: Is It Unethical To Be Exclusive? is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Abercrombie & Fitch: Is It Unethical To Be Exclusive? is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Abercrombie Sizes needs to make to build a sustainable competitive advantage.
