Abercrombie & Fitch: An Upscale Essay

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Identify and describe a&F's greatest organizational strengths.

The biggest strength of the company is its ability to control debt. This is important because during times of economic prosperity, many companies will often finance their growth through debt. Instead, a & F. has been focused on delivering consistent results, and the using the additional profits that they have made to improve the overall financial strength of the company. As a result, the operations and departments of a & F. function more effectively because the management has focused on prudent growth strategies. A good example of this can be seen by looking no further than current cash to debt levels. Where, the company has $712 million in cash and $111 million in debt. ("Abercrombie & Fitch," 2010)

Identify and describe the company's greatest weaknesses.

The biggest weakness that the company is facing is a slowdown in consumer spending. This can take place because energy prices rise sharply or a particular event could affect consumer psychology. Once this occurs, it means that same store sales will drop and the overall bottom line of the company could begin to weaken.

Describe how a&F's strengths can be used to deflect environmental threats to further the company's success in the industry.

The large amounts of cash can be used to repurchase stock. If a double dip recession occurred, then you could see such moves help to mitigate the effects on the company. Where, the earnings per share would be higher because of such actions.

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Secondly, it would help show that the company is financially sound by repurchasing shares of stock. Together, these elements will allow the company to shield itself against the possible effects of another down turn in the economy.

Describe how a&F's strengths can be used to take advantage of opportunities to further the company's success in the industry.

A & F. can use the large amounts of cash to purchase those competitors that have been severely weakened by the tough economic conditions. This would allow the company to expand their reach with in the retail industry and to offset the various shocks that could occur in the economy. Where, this could be used to effectively build their profit margins and reach into other areas of retail. Over the course of time, this would increase the financial soundness of the company and improve their success within the industry.

Conclusion

Clearly, a & F. has a number of different opportunities, threats, weakness and strengths. Given the current financial state of the company and the fact that the economy is starting to show signs of improvement; means that they could be able to take advantage of these opportunities as well as strengths (to help mitigate the various environmental effects). Once this takes place, the company will be able to increase its overall dominance in the specialty retail industry......

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