Business proposal(reserch) - Essay Example

Business Proposal - Abercrombie & Fitch - Company Background: Abercrombie & Fitch Abercrombie & Fitch started its business as Hunting-and-Fishing-Supplies back in 1892. (Banay, n.d.) Over the years, the company shifted its focus and became an American brand company that specializes in casual luxury apparel for the young adult men and women between the ages 16 to 25 (Callanan, 2005) aside from selling kids clothing. A&F produces casual cotton tee-shirts, fleece, polo shirts, crewnecks, sweaters, henleys, outerwear, pricey denims, shorts, underwear for men and women.

Other special clothing and accessories for women include skirts, leggings, flip flops, and tanks/tubes aside from selling accessories ranging from belts to perfumes. (Abercrombie & Fitch, 2007) A&F clothing are manufactured in different countries all over the world including El Salvador, Indonesia, Peru and Thailand among others. (Pascal, n.d.) By subcontracting the production of clothing in Asia and other third world countries, the company is able to save more money at the expense of low-paid labours.

The difference between the high selling price and the cost of clothing per unit makes the high profitability of the company. Considering that the brand name A&F sells on its own, the company saves a lot of money from the need to invest on expensive external advertising.Distribution Channel of A&FA&F products are delivered straight to the consumers via branded retail stores, catalogs, and on-line networks. (Abercrombie & Fitch, 2007) As of June 2007, the company operates 355 A&F stores, 182 Abercrombie stores, 409 Hollister Co.

stores, and 17 RUEHL stores selling young adult clothing all over the United States. Six of these stores are located in Canada. (PR Newswire, 2007) A&F has recently opened stores in Savile Row, London and expanded its store outlets in North America in Edmonton, Alberta, and Canada. (Earnest, 1999) For kids clothing, the company has opened a total of 175 stores to serve customers between ages seven to 14 years old.In June 2007, as part of A&F global expansion, the company announced its plan to expand its retail store throughout Europe particularly in Italy, France, Germany, Spain, Denmark, and Sweden.

An Australian retailer Harvey Norman opens a store in Ireland. (Callanan, 2005) In line with store expansion, A&F invests on Oracle system to enhance the efficiency of its supply chain network across more than 950 stores. (Friedlos, 2007) Strategies on Outsourcing A&F ProductsA&F outsource the manufacturing of its products offshore by entering into a contract with MAGIC. (Sourcing at MAGIC, 2007) Through MAGIC, A&F place the order by bulk in order to maximize the cost-efficiency of the outsourcing strategy.

MAGIC handles the outsourcing of A&F products through a long-list of global fabric suppliers or contractors. The list allows A&F to bargain the cost of production based on the quality and price. A&F should establish service-level agreements regarding its expectations and performance requirements upon choosing an outsource partner. (blackenterprise, 2003)Outsourcing today uses either information technology outsourcing (ITO) or business processing outsourcing (BPO) w/c includes call center, HR, finance & accounting, and claims processing outsourcing.

(Sourcingmag.com, 2007) Implementing ITO and BPO should be flexible to allow the business to make changes due to market influences. Regardless if the company decides to go for ITO or BPO, A&F should consider the costs and benefits on implementing outsourcing. (The State of Texas, 1998) By recognizing the complexity of the outsourcing arrangement, the company will gain a better understanding of the costs that may occur in the process. *** End *** References:"Abercrombie & Fitch." 2007. 1 October 2007 .

Banay, Sophia. "Top Company Profiles - Abercrombie and Fitch." Conde Nast Portfolio. 1 October 2007 ."blackenterprise." 1 October 2003. Sound Strategy? Outsourcing in Todays Economy. 1 October 2007 .Callanan, Neil. "Abercrombie & Fitch in Talks about Irish Store." 27 February 2005. The Sunday Business Post Online. 1 October 2007 .Earnest, Leslie. "Towering Over Retail Rivals: Abercrombie & Fitch, Helped by Shifts in its Strategy, Saw Holiday Sales Jump while Other Apparel Stores Dragged." The Los Angeles Times 6 August 1999: p. C 1.Friedlos, Dave.

"Abercrombie & Fitch Stocks Up on Software." 16 May 2007. 1 October 2007 .Pascal, Afton. "Abercrombie & Fitch: The Suburban White Kids Niche." English 240. 1 October 2007 ."PR Newswire." 13 July 2007. Abercrombie & Fitch Announces European Expansion Plan. 1 October 2007 ."Sourcing at MAGIC." 12 - 15 February 2008. About the Show: Where the Fashion World Turns for Sourcing. 1 October 2007 ."Sourcingmag.com." 2007. Outsourcing - What is Outsourcing? 2 October 2007 ."The State of Texas." June 1998.

Outsourcing Strategies: Guidelines for Evaluating Internal and External Resources for Major Information Technology Projects. 2 October 2007 .