Strategic Management of Hollister Corporation - Essay Example

?Running Head: STRATEGIC MANAGEMENT Inserts His/Her Inserts Grade Inserts Strategic Management The business organizations in the present times are progressing towards attaining resilience, flexibility and advancements. In order to improve their performance and enhance their productivity and efficiency, the organizations in the business industry tend to move forward for gaining competitive edge in both local and international markets and manage them strategically. This paper shall elaborate upon the strategic management of Hollister Corporation in a detailed manner. It will discuss upon the micro environment, macro environment, and the future strategic implications of the organization. Hollister Co. Hollister Co., generally known as promoted as HCo or Hollister, is a lifestyle brand based in America and has been originated by Abercrombie & Fitch Co. Hollister Co. has presented a concept, which is actually made to catch the attention of the young segment of consumers aged between 14 and18. It offers reasonable, rather lower, price point as compared to the parent brand. The major promotion of the brand is done by the inspiration of casual wear and image of SoCal. The company provides the goods both through online platforms and the company’s own stores (Hollister California, 2012). Goods are available in-store and through the company's online store. The company is acknowledged to be the owner of the United States’ second most ideal and preferred brand of amongst the teen’s segment as indicated in the list of actual West Coast companies issued by Piper Jaffray for the year 2008. Initially, the company opened up its first store in Columbus, Ohio at the Easton Town Centre in July 2000. The drastic success of HCO made it noticeable for Abercrombie & Fitch Co. that the Abercrombie & Fitch brand was superseded by the HCo brand. The A&F brand was properly made to stand out in competition from HCo. Brand through the use of materials of higher quality and there were strict introductions of construction in the A&F facility for goods and clothing. This made the cost of merchandise go higher with the store mainly centring its resources and attention on the clothing for the consumer segment aged between 11 and17 years. Hollister Co produces and sells accessories and apparel for women and men. The products of the company includes knits, logo tees, sweaters, shirts, pants, jeans, outerwear, shorts, tanks, winter wear, and sleepwear; and bracelets, necklaces, hats, totes, caps, belts, scarves, and flip flops. The brand also offers to its consumers a wide variety of perfumes, colognes, gloss products and lip shine, lip balms, and body care products, along with the gift cards (Bloomberg Businessweek, 2012). Along with many other countries, the company operates in Canada, UK, and US and owns more than 1,039 stores all across the world with over 80,100 employees. Macro Analysis An organization can be judged for its competitiveness, strengths and other factors on the basis of its macro environment. The factors contained in the organization’s macro environment are those elements which influence the organization in an indirect manner but do not give it the ability to control them. These factors include the PESTEL analysis of the industry which stands for political, economic, social and technological, environmental and legal factors. They are described as below: Political Factors The political factors comprise of the government decisions which have an indirect or direct impact on the organization’s activities. In this context, A&F operates in many countries which have an economy that is free-market oriented with regulations and rules to safeguard the intelligent rights and patents from being copied. These patens assist the organizations to protect their rights on any property that they own. However, other political implications that A&F is required to follow include the rules and regulations such as rights of workers, employees, and shareholders. Since, the company operates in the apparel segment which is employee intensive, the organization is subject to significant employee laws. The company also faces the trade regulations in the industry because it encounters overseas competition from various nations which pay much lower wages to their employees and workers. Economic Factors The business environment of an organization is also impacted by the economic factors that might affect the activities of the organization directly or indirectly. Just like other businesses in the industry, the slumps and booms of the economy also impact A&F. Moreover, many other factors including the prices of oil, interest rates and inflation influence the industry. The organization spent 90% on the major elements like food, housing, apparel and services. Of all the segments, only the services and apparel segment has faced a statistically momentous decrease of 6.2 percent in the year 2003 (BLS, 2006). There was once a time when Abercrombie sold their items of basic needs at usual and affordable prices, for instance, jeans for $98 and a sweater for $58-$68. The consumers then were even ready to purchase the somewhat costly items for the reason that they bought style and luxury of the Abercrombie brand. However, since the economy begun moving south, the company initiated unheard things and contexts for the brand which also included supply sale clothing. Now, the economy has sharply declined to a considerable extent, and this has resulted in a general decline in the profitability of the company. Therefore, Abercrombie is compelled to draw new tactics for marketing its brand in order to attract consumers. The company now frequently offers promotions for the products up to 30% price cuts on the complete purchase. Moreover, it also adds up to 40% off on all the items on sale and attracts the customers with offer codes which need to be used in store or online. Social Factors The population characteristics, or demographics, are one of the other growing trends in the services and apparel industry in the United States. According to the marketers and manufacturers, the clothing of the present times is required to offer something even beyond a mere fashion statement. It needs to provide practicality and value. That is the opinion behind the performance apparel’s boosting industry. In the year 2010 and 2011, the leisure-time and fitness clothing have been the hottest segments of the market for performance apparel and by the next few months, more than 50 percent of all the clothes that are sold will be required to contain some element of performance apparel to them (Phillip, 2009). Technological Factors Though, the apparel industry had recently faced a boost through the innovative technology, however, the industry is still anticipated to stay in a labour intensive mode. It has happened in many ways and one of the instances include the computerized sewing machines which are needed to lessen the training time needed and boost the productivity of the operators. E-commerce and internet have offered the company new technology and better ways for marketing and selling the products and services. It also makes the delivery and comparison processes simple and transparent for the entire market and the target group. Stakeholders The company takes into account the interests of its stakeholders and the general public, directly or indirectly related to it. The major stakeholders of the company include the customers, associates, and the community members amongst which the company carries out its operations. In order to manage them in a proper and sophisticated manner, the company has established a Board of Directors which is charged with the responsibility of overseeing the unbeaten upholding of the business of Company. For doing so, there are certain policies set by the Board, which is known as the Code of Business Conduct and Ethics, and it includes: (i) corporate opportunities; (ii) conflicts of interest; (iii) fair dealing; (iv) confidentiality; (v) compliance with laws, rules and regulations; (vi) protection and proper use of Company assets; and (vii) various other related matters which the Board considers suitable. This code regulates the ethical standards of business conducts and encourages an honest reporting of illegal or unethical behavior and guarantees a consistent and prompt action against any breeches of the Code of Business Conduct and Ethics (Corporate Governance Guidelines, 2011). Micro Analysis The business environment includes the micro environment which needs to be analyzed in order to manage the competitiveness of the business organizations. It includes the groups of stakeholder which an organization deals with regularly. The development of relationships amongst these factors can impact and affect the general success of the business in terms of its quality and cost particularly. The micro environment of an organization includes such elements as suppliers, distributors, customers and competitors, and these are all those elements which effect the environment of the business internally and directly. A brief description of these elements with respect to Hollister Co. is provided as follows: Suppliers and Distributors Abercrombie & Fitch Co. has successfully implemented the Supply Chain Visibility solutions in order to offer its consumers a real-time visibility regarding the order status such as order shipments and in-transit inventory. This visibility solution reaches out to the multimode, global level and permits the company’s logistics team to modernize and reorganize the process of supply chain to and from distribution centre and vendor. Moreover, it collaborates and communicates with service providers and merchants for the issues regarding cost reduction, improvement in customer service and shipment delays (Supply Chain Visibvility, 2012). Abercrombie & Fitch has opted for and established Management Dynamics for experiencing the industry in the delivery of supply chain visibility solutions along with its superior management capabilities for the data quality. The company has multiple international business units and 30 trading partners along with a logistics team that obtains a detailed level view of orders in-transit and shipments to track, makes efforts to manage exceptions, responds to all sorts of probable logistics crisis and pinpoints in-transit delays in a proactive manner. The company has also managed to integrate the Oracle Retail Merchandising System and the Management Dynamics’ Supply Chain Visibility solutions in order to permit the merchants to supervise the status of delivery for major orders and for the management of inbound shipments. Thus, by taking advantage of advanced technology and IT solutions, Abercrombie & Fitch has been capable of improving upon the allocations of inventory at the store-level in order to attain higher availability levels and reduced cycle time. The company has been able to create reliable supply chain across the world with the capability to respond to the potential and actual issues and challenges in order to communicate and collaborate with the distribution centres, merchants and service providers. Customers A&F operates physically and online in various regions globally. The company manages its customers in areas such as United States, Canada, United Kingdom, and the entire Europe region. It mainly targets the teens and younger segments of customers for its product line in jeans, undergarments, fragrances and other related retailing products. The stores of Hollister Co primarily tend to provide an enhanced shopping experience to its customers by improving and increasing the coverage of it floor staff, improving its displays, store presentations, and also aim for the renovation of existing stores (Retta, 2007). Competitors The company, A&F, has been competing in the accessory and apparel industry for the last14-30 year old demographic. With respect to its sales and profitability, the company has stayed at the top of its sector since it has begun working in the industry. The competitors of A&F include some very well-established retailers including American Eagle Outfitters (AEO), Aeropostale (ARO), Pacific Sunwear of California (PSUN), Urban Outfitters (URBN), and Gap (GPS). The company American Eagle is a direct rival to A&F and Hollistoer Co. stores for the same segment i.e. young women and men between the ages of 15 and 25. However, it is smaller to them than ANF with respect to its profitability and sales generation ability but has depicted stronger growth recently. Aeropostale also targets the customer segment of 14 to 17 year olds for the apparel and outfit. On the other hand, Urban Outfitters stands out as a comparatively young retailer which functions for the three store chains for different brands, Anthropologies (30 to 45 year old women), Urban Outfitters (18 to 30 year olds), and Free People (16 to 35 year old women). The company is not directly comparable to ANF because of its differing marketing and competing strategies. Gap poses huge competition and threats to A&F for the reason that it is much larger than ANF with respect to its customer segments, sales generation, store management and popularity and revenue generation. Aims and Objectives The Hollister Co and all its stores function with an aim and a commitment to provide the customers, long lasting and comfortable clothing which looks and makes them feel good. The company works with the objectives of providing its customer with a great ambiance, good services and products and an awesome shopping environment. It tends to keep its employees satisfied and stakeholders happy with the progress of the company and provides them incentives and privileges to stay motivated. The company’s unique sales strategy for the customer includes scented stores with well decorated environment and comfortable armchairs. Future Strategy for Hollister Co The company Hollister Co has been one of the leading companies in the retailing sector with its perfect customer services solutions and great brands of goods and services. The apparel and garment section of Hollister Co along with its sensible choice to serve the teen segment of the company has been a good opportunity for the company to grow its market profitably. The current progress of the business has been sophisticated and successful. However, the company needs to enhance its strategy for the future prospects and need to avail opportunities to manage the business activities in alignment with its future challenges. The future strategy of Hollister Co should be geared towards undertaking and utilizing more opportunities to make overseas investments for the expansion of its business into Asian and European markets. However, in doing so, the organization has to look for its micro and macro business environments. In the short term, the company could stress further on sponsoring various events, online shopping portal, re-evaluating and researching the needs and shifting preferences of its consumer segments and enhance and improve its customer service procedures along with its advertisement policies. Having a dynamic management team and the integration of Information Technology solutions, the organization has to discover ways to cope up with the intense competition and remain unhurt and successful in the apparel industry. It is required to figure out alternatives and other ways to manage its growth and sustainability in front of the cut-throat competition in the garments markets. The company needs to design its brands in a more exclusive manner and adopt penetration strategy in order to make them available to a large segment of market instead of placing for the niche only. It is the brands of the Hollister Company that need to include more models and adopt uniqueness in quality, superiority and distinctiveness. Not only this, but A&F needs to take care of all the economic downturns and challenges and solve them in sensible manner. Thus, Hollister Co, though stands as leading store in the apparel industry, needs to design a more successful and innovative future strategy. It requires a dire need to manage its macro and micro environments in order to manage the business activities in a sophisticated manner. Bibliography Bloomberg Businessweek, 2012, Company Overview of Hollister Co., Web, Retrieved on May 3, 2012 BLS, 2006, Economic impacts, Web, Retrieved on May 3, 2012 Corporate Governance Guidelines, 2011, Abercrombie & Fitch co. Corporate Governance Guidelines, Web, Retrieved on May 3, 2012 Hollister California, 2012, Ordering Online, Hollister Co. Official Website, Web, Retrieved on May 3, 2012 Phillip, 2009, Abercrombie & Fitch - Marketing Analysis: A Macro-environmental and competitive audit, Mu?nchen GRIN Verlag GmbH, Print. Rette Mulugetta, 2007, Abercrombie & Fitch: Solid Domestic Performance, Strong International Growth Opportunity, Web, Retrieved on May 3, 2012 Supply Chain Visibility, 2012, Abercrombie & Fitch Establishes Transparency, Reliability & Control in its Global Supply Chain with Management Dynamics, Web, Retrieved on May 3, 2012 Read More