Aligning Operational Needs with Business Strategies
Aligning Operational Needs with Business Strategies
University of Phoenix
December 7, 2020
Abercrombie & Fitch Company Proposal
Porter Five Forces Analysis refers to a strategic management instrument that analyzes organizations and understands the prevailing profitability controls in a particular industry. The management at Abercrombie & Fitch Company can apply it to comprehend how those five competitive powers affect productivity. They can then create a policy for improving their competitive gain.
Porter Five Forces Analysis for Abercrombie & Fitch Company
Threats and New Entrants
New entries in Apparel stores come with inventions and new operational ways. These pressurize Abercrombie & Fitch Company due to their lower pricing plans, reduced costings, and new value proposals to their clients (Fern Fort University, n.d). A&F Company must manage these issues and create an effective barrier for safeguarding its competitive advantage.
Suppliers’ bargaining Power
According to Fern Fort University (n.d), almost every organization in the Apparel stores business purchases its raw materials from various suppliers. Superior suppliers are likely to reduce the margins A&F should earn in the industry. They use their negotiation skills to attract higher prices for organizations in the Apparel industry.
Buyers Bargaining Power
Usually, buyers demand a lot, including wanting to purchase the best products while paying the least amount possible. The long-term profitability of Abercrombie & Fitch Company is under pressure due to these issues (Fern Fort University, n.d). The smaller and more powerful A & F Company’s client base is, the better their negotiating process and the greater their proficiency to seek increased incentives and price cuts.
Threats of Substitute Products or Services
When a new product or service meets the same client requirements in various ways, the industry’s profitability faces challenges. For instance, services such as Google Drive or Dropbox are alternatives storage hardware devices (Fern Fort University, n.d). If the alternative product or service provides a unique value proposal from what the industry offers, such a substitute’s threats become high.
Rivalry from the Existing Competitors
If existing organizations’ rivalry is intense in an industry, it is likely to reduce prices, hence decreasing its overall profitability. A & F Company functions in a very competitive Apparel Stores industry (Fern Fort University, n.d). This competition affects the overall organization’s profitability.
The Effectiveness of the Leadership Model A & F Company is currently using
The organization develops pressure to implement digital business models. This is an approach for the company to remain relevant (IMSA Search Global Partners, 2017). Digital business models have covered several business areas, and to “include clients whenever, wherever and however they decide to connect with the company’s brands.” According to the company’s CEO, the purpose of such a method was “to permit clients to start a single average, shift to another and involve the product in sales completion across locations and platforms.” (IMSA Search Global Partners, 2017).
Effectiveness of the leadership Style/s used at A & F Company
The organizations’ leadership style has been effective. Their transformation has improved the visibility of data analytics, social media sites, pushing the gaming spectators, developing video content, and optimization of mobiles. These help the corporation enhanceme brand concern, plus engagement in the digital era (Leavy, 2016). Besides, the organization’s CEO has been implementing its technology behind the scenes to improve daily business operations. However, including other leadership styles would be more beneficial to the company.
Determine Effective Leadership
Apart from providing direction, effective leadership involves inspiration and guidance. Good leaders show courage, confidence, passion, ambition, and commitment. Besides, they nurture their subordinates’ talents and strengths and create teams committed to achieving common objectives (Leavy, 2016). The most effective leaders also have other qualities like sharing their vision, leading by example, showing integrity, effective communication, motivating others, and recognizing success. On the other hand, ineffective have poor communication skills, do not recognize talents, and do not motivate others, among other reasons.
Sources of Managerial Power for Effective Leaders
Companies consist of people that exercise lesser or greater power. Some of the sources of these powers are legitimate, which leaders also call positional power. A leader derives it from a position he or she holds in a company hierarchy (Natter, 2019). The second source of power is expert power. Leaders derive this power from the expertise or knowledge they possess in a specific field. Organizations high-value such individuals due to their problem-solving prowess. They perform essential organizational tasks and are thus deemed vital. The third source of power is referent power. It refers to power leaders derive from interpersonal associations that an individual develops with other individuals in the company (Natter, 2019). The other source of power is coercive power. Leaders derive it from their ability to influence others using punishments and threats. Finally, there is reward power, which is the power that arises from an individual’s ability to influence resource allocation in a company.
Recommendation for Leadership Model Changes
Company strategies include seeing an organization as a system of related departments. Recommended extra key strategies that A & F Company implement should support their corporate plans and utilization across cross-functional relations. They include client-driven strategies to meet the desires and needs of the target market. Secondly, A & F Company develop key competencies. These are strengths and resources in the organization. Although they can vary by business and industry, some hire well-trained, marketing and financial proficiency, and businesses’ optimal locations. The final recommendation is the creation of competitive priorities. These originate from developing organizational strategies, market analysis, describing key processes, and conducting a needs evaluation. Companies assess operational expenses, product and service quality, and the time the workers take to produce and diver goods or services to develop competitive priorities.
Fern Fort University. (n.d.). Abercrombie & Fitch Co. Porter five (5) forces & industry analysis [Strategy]. https://fernfortuniversity.com/term-papers/porter5/analysis/2558-abercrombie—fitch-co-.php
IMSA Search Global Partners. (2017, December 21). Abercrombie & Fitch CEO Horowitz builds leadership model for the digital age. https://www.imsa-search.com/articles/abercrombie-fitch-ceo-horowitz-builds-leadership-model-for-the-digital-age/
Leavy, B. (2016). Effective leadership today–character, not just competence. Strategy & Leadership. https://doi.org/10.1108/SL-11-2015-0081
Natter. (2019, February 4). 5 types of power in businesses. Small Business – Chron.com. https://smallbusiness.chron.com/5-types-power-businesses-18221.html
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