Strategic Realities of Abercrombie and Fitch - Case Study Example

Reflection Report Pertaining to the Strategic Realities of Abercrombies and Fitch AFFILIATION: Contents Research Methods and Processes 3 Literature and Resources 4 Knowledge Applied 5 Lessons Learned and Outcomes: Need to Refresh Competitive Advantage 6 Findings and Critical Analysis 8 Barriers Met 9 Professional Development 9 Objectives 10 Finding and Outcomes 10 References 12 Reflection Report Pertaining to the Strategic Realities of Abercrombies and Fitch Research Methods and Processes The objective of this paper was to analyse the effectiveness and efficiency of strategic changes that Abercrombies and Fitch brought into the play so that its corporate objectives can be fulfilled. This report however, will work in order to evaluate the research conducted in the previous regard (Objective). The organisation is a living being, and her entity resembles that of an organism that adapts to its external environment in order to ensure its survival (Baker & Hart, 2007). The business has to decide on the method that it will use in order to extend its life. The lifeline of an organization has a close link with the organizational ability and power to innovate and re-innovate in order to keep the competitive advantage valid in the long run. The companies have to ensure that they find fresh streams of revenue on a regular basis so that they can keep their sales volume steady and intact over the passage of time (Badelt & Weiss, 1990). The companies have to deal with traditional and conventional needs and wants of the customers in a new and inventive way. In the language of marketing, one can say that modern companies require fulfilling expectations of the customers by innovating in terms of finding new ways to satisfy them. The featured company did not innovate on an operational level, but they took their offering to a new level by making a tough and difficult decision of going global when the odds against them were simply overwhelming to say the least. The company made a bold strategic choice of performing international market development (Auger, Burke, Devinney, & Louviere, 2003). The choice was valid, but it was risky, and that helped the company regarding tapping into the latent sources of revenue worldwide (Baron & Tang, 2011). The research effort lifted various sort of data and information about the company through running internet search, and the net profit remained significant in the year of 2011. The abovementioned annual period was lucrative in nature because the company started to reap benefits and results of the decision that involved taking the business to the global level (Elenkov, Judge, & Wright, 2005). The domestic markets were not generating sufficient returns, and therefore, the company had to innovate with reference to establishment of international outlets. The company was manufacturing sports and excursion goods, but they were not able to crunch significant corporate success in the opening years. Besides, the company was operating since 1892, and they decided that they did not have sufficient satisfaction from the level of profitability that the business was generating. The company created different and distinctive brands that had the designs to fulfill various needs of the divergent market segments (Etzkowitz & Leydesdorff, 2000). The product lines are Abercrombies kids, Hollister Co., RUEHL No. 925 and Gilly Hicks. They targeted various populations of children, and majorly, the companies had to divide them with respect to their ages. RUEHL was a big deal because it worked in order to fulfill the needs and wants of people with ages between 25 to 35 years. The sublet performed well enough, and gained the degree of a cash cow because it revitalized the traditional culture of New York. Literature and Resources The work is greatly inspired from the literature of strategic management, and the idea of making strategic changes, and reaping long term goals and objectives remained a cornerstone of this work. The major learning that occurred during the project enlightened the team about the fact that strategic choices made by the top management of the organisation significantly impacts the future (Fang & Qi, 2011). The teamwork will also determine the success of the company because the construct has its basis in the development of collective wisdom in the organisation, and therefore, single person will not have the duty and responsibility of making decisions (Cefis & Marsili, 2005). The proper departmentalisation helped the company in the process of serving different needs and wants of the customers. The research team used qualitative research methodology in order to conduct the project. However, they should have applied increasingly intensive approach to perfect the findings. The work however, remains a subjective one that received a great degree of influence from the beliefs, emotions, and feelings of the research team. The completed research adventure despite all the effort fails to provide any concrete measure of organisational success. It does not mean that the organization failed to create success in the market as well, and that is the whole point, the research project does not prove or disprove anything (Elenkov, Judge, & Wright, 2005), and detailed research needs to be conducted before one can file formal findings about the company (Hashmi & Biesebroeck, 2013). The company nevertheless applied eccentric technique of human resource management, and they hired locals from international markets because indigenous professionals have sufficient level of knowledge about the cultural realities of the region (Etzkowitz & Leydesdorff, 2000), and therefore, they are fully capable of dealing and maintaining relationships with all of the stakeholders. Knowledge Applied The research team applied Porter’s five forces model, and SWOT analysis as well. The development in the organizational context occurred due to powerful participation of the marketing department, and therefore, there is hardly any chance of seeing real and valuable level of innovation and invention in the making of the company’s products. The company applied the basic economic philosophy of differentiation that is psychological in nature, and the customers might not receive any benefit in terms of value, and they might have a mental satisfaction of using an updated product only (Herrmann, 2011). The company is creating monetary welfare for the owners by lifting economies of scale and scope only, and they have created a bubble for themselves that can burst anytime. The researchers appear to be the undisputed fans of the company, and they are allowing their emotions, and personal feelings to cloud their good judgment. The element of bias might be present in the structure and theme of the paper. The paper still remains a notable effort to say the least because it highlighted success of a downed company that used modern day management practices in order to overcome the invincible odds. The company has to balance out the need to develop cost leadership along with differentiation, and in this way, price sensitive and quality conscious customers will experience attractiveness towards the brand (Keating, 2012). The company has to design its outlook in such a manner that the children’s products must take the lead in the stores. The kids are known for their impulsiveness, they can drag their parents into making an irrational choice, and each irrationality committed by the customers can generate abnormal profits for the company. The company will need to backward integrate so that they can produce goods on their own so that they can drive down the commissions of the suppliers as well. The lack of true innovation will have the potential to emerge as the greatest undoing of the company in this regard (Herrmann, 2011). Human capital development is yet another need that the company neglected so they have to take some bold and fearless steps in order to develop future layer of managers in the long-run perspective (Keating, 2012). The technology along with human capacity will determine the futuristic success of the company. Lessons Learned and Outcomes: Need to Refresh Competitive Advantage The information management system needs an upgrade as soon as possible. The company capitalised on others’ strategic weaknesses, but it will not be long before the competitors can move into the market to gain lost grounds. The leading company is a leader because it developed a portfolio of different products in order to meet various needs of the customers, and that is its competitive advantage in the market. However, the market is dynamically changing, and the competitive advantage of the company will not last forever. The report did not present any viable suggestions that would help the company in validating its edge in the future. The company needs to develop entrepreneurial skill within the leaders so that they can start new projects, and products that will contribute towards enhancing the profitability of the company (Melles, Vere, & Misic, 2011). The company will need to run a university like environment in order to train the employees in a novel way. The department heads have to take a leading role in this regard so that the second-generation managers can be grown in house. The Japanese philosophy in the direction of human resource management will be ideal in terms of forging employee commitment. The company does not have the ability to withstand growing cost of rehiring so they have to retain their existing employee base in order to maintain their cost leadership status. The report failed to identify the mission and vision statements of the company that would have given the readers an idea about the company’s purpose of existence (Lee, Olson, & Trimi, 2012). The company created partial success in the market of sports apparel and specialized products. However, time is nearing when the company has to formalise its competitive advantage in the market by following more traditional managerial approach. Again, the development of human capital will create a cornerstone of success that the company is going to achieve in the market. The company has to enter the niche of sports products especially designed for players with disability. The company cannot survive without performing constant and successful innovation and inventions as well. The moment, the company stops innovating then, they will start dying (Cefis & Marsili, 2005). The businesses either grow or die out with the passage of time, and there is no concept of stability in the market of the 21st century. The organizational success is a collective picture of the efforts that the employees made in order to achieve stated goals and objectives. The concept of departmentalisation, and product line development was theoretical in nature. The traditional economic landscape was designed in order to facilitate product specialization, and diversification was prohibited. However, the Abercrombies and Fitch gave a new concept of diversification to the world of business that could be used in order to develop new streams of revenue (Naranjo-Valencia, Jiménez-Jiménez, & Sanz-Valle, 2011). Findings and Critical Analysis The key findings of the project included some important realisations about the value of strategic changes in terms of sustaining the company in the long-run. The company’s management was not performing well in the local markets, and therefore, they had decided to expand to international markets. The managers would have grown hopeless and pessimistic as a result of falling sales volume in the local markets, but they did not do so, and remained significantly motivated. They eventually carried the business forward, and made history in the process as well. The company was no doubt operating in dire circumstances, difficult times bring best in the people, and that is what happened with the supplier of sports and excursion goods. The analytical report highlighted the fact that business professionals simply cannot afford to lose their hearts even in the face of utmost adversity (Stark, 2011). Human and corporate development cannot possibly occur without the will and power to expand beyond one’s existing horizons. The company did that exactly, and they went global when challenges were appearing to be unmanageable. The manager’s skills do not emerge as successful ones without being tested on the roughest roads of the fate. The human intellect will never be ready to try new and novel adventures, but those who try them eventually listen to the tiniest of the voices that come from their hearts, and tell them that they are ready. It was easy for the company’s management to become hopeless, and lazy, and they must have taken the path of the least resistance. However, they made a choice, and it was a bold one, and they chose not to back-down. They went global, and saw the opportunity where others saw chaos. They saw patterns of customer demands when others saw nothing valuable (Vernon, 1966). The management of the company was laughed at, and they were considered to be dumb because they were trying to do something new. Those who made fun of the company were left on the sidewalk when the producer of sports goods cruised in order to explore new ways of doing things in the world of commerce and economics. Barriers Met The barriers we had to go through during the effort were significant in nature, and therefore, we had to demonstrate a lot of patience. However, we faced difficulties in terms of finding the company’s historical financial data. Professional Development This reflective essay revealed quite a few realities about the success story of Abercrombies and Fitch. The company successfully developed a portfolio of products that helped them in terms of creating strategic level of profitability. There are a few weak areas that need development as well. The first and foremost in this regard will be the area of human development because the company is not paying much of the attention towards the developmental needs of their employees. The company needs to incorporate entrepreneurial spirit into its ranks so that the journey of profitability does not stop at any given time. Humans are responsible for operating the infrastructure of the company, and therefore, they have to receive special attention regarding their personal development because organizational success is a collective of efforts made by employees in order to achieve stated goals and objectives. I have seen practical application of the knowledge that is being professed under the subject area of strategic management for the first time. Objectives Objectives are important to be set when working towards a goal. Based on my MBA degree accomplished so far, I have realised that it is extremely important to set milestones at each stage of the research project so that gradually one can move towards successful completion of the project. The first milestone usually is to complete the research phase that is primary and secondary research. Both research phases require ample of time but secondary research requires comparatively less time and hence I have completed a major chunk of my secondary research. Primary research requires interviewing people and taking surveys. This requires time and a lot of patience as people usually are not willing to respond. They need to be convinced and then they agree to give surveys and other interviews. Research projects are done extensively and it requires a lot of hard work to be completed successfully. For implementing research projects successfully, one needs to come up with solid conclusions and recommendations so that the project can be implemented in reality. I am doing research on studying the behaviour and interest of children as they are the main target segments for the product. Some more time needs to be sent on gaining knowledge in this area. Also I need to fully understand the legal requirements so starting a business so that the project can be a reality. One of the objective is to develop links with other suppliers so that in future partnerships can be formed for successful and profitable situation of the organisation. Finding and Outcomes Findings and outcomes are the most crucial part of any research project. They are the crux of our hard work and these reflect the potential and credibility of the project. In short, this section needs to be powerful and convincing that the research has produced the desired results from all its phases. For me the findings outcomes are a challenge and this challenge would help me to polish my professional abilities of deriving conclusion from the outcomes in front of me. My decision making ability would strengthen and this would help me in my future professional life. My future employer would gain a competitive advantage as I would be experienced in making decisions based on the various outcomes of the project. For example, in department based projects the manager may set certain goals to be achieved by the employees. If at all we run short on time or some urgency comes up that we have to deliver the project immediately, I can demonstrate my skills by deriving conclusions and also give recommendations based on the scenario of the company. This would allow the manager to make timely decisions. References Auger, P., Burke, P., Devinney, T., & Louviere, J. 2003. What Will Consumers Pay for Social Product Features? Journal of Business Ethics Vol 42 No 3, p. 281-304. Badelt, C., & Weiss, P. 1990. Specialization, Product Differentiation and Ownership Structure in Personal Social Services: The Case of Nursery Schools. Kyklos Vol 43 No. 1, p. 69–89. Baker, M., & Hart, S. 2007. Product Strategy and Management . Prentice Hall, New York. Baron, R., & Tang, J. 2011. The role of entrepreneurs in firm-level innovation: Joint effects of positive affect, creativity, and environmental dynamism. Journal of Business Venturing Vol 26 No. 1, p. 49–60. Cefis, E., & Marsili, O. 2005. 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Global best practices, national innovation systems, and tertiary education: a critique of the World Banks Accelerating Catch–up. International Journal of Public Policy Vol 8 No. 4, p. 251-265. Lee, S., Olson, D., & Trimi, S. 2012. Co-innovation: convergenomics, collaboration, and co-creation for organizational values. Management Decision Vol 50 No 5, p. 817 - 831. Melles, G., Vere, I., & Misic, V. (2011). Socially responsible design: thinking beyond the triple bottom line to socially responsive and sustainable product design. CoDesign: International Journal of CoCreation in Design and the Arts , Vol 7 No. 4, p. 143-154. Naranjo-Valencia, J., Jiménez-Jiménez, D., & Sanz-Valle, R. 2011. Innovation or imitation? The role of organizational culture. Emerald Vol 49 no.1, p. 49-56. Stark, J. 2011. Product Lifecycle Management. Springer Link, New York. Vernon, R. 1966. International Investment and International Trade in the Product Cycle. The Quarterly. 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