Abercrombie and Fitch Company is a fashion retailer with its headquarters in the US, while also operating in other countries such as the UK and Canada. The company is assertively pursuing organic expansion strategies in its quests to investing in new plans and concepts aimed at creating iconic brands. For instance, the company developed a strategic plan of launching a new brand known as concept 5 in seven of its stores in early 2008. All through the same year, the company developed a strategy aimed at adding 110 more stores- both domestically and overseas-thereby increasing its square footage to 11 per cent.
Moreover, the company plans to invest 300 million dollars in order to complete the New York’s Hollister flagship, as well as those in Tokyo and Copenhagen. In Europe, the company also plans to fully operate in cities such as London and Dublin in the UK. It is also in the process of securing locations such as Sweden, Denmark, Spain, Germany and France. The Copenhagen flagship, as well as another in Milan is set to be opened in 2009. The company’s flagship for Paris is set to open its doors in 2011. In Asia and Latin America, the company is targeting Ginza in Tokyo and Caracas in Venezuela respectively.
Abercrombie and Fitch Company’s managers have a great vision for the company. However, they do not have a good record in the way they treat their internal stakeholders-the employees. The company has been accused of discrimination and racism against a number of its employees. Claims of racism and open discrimination have also been reported among the employees themselves in some of the stores, especially those located in cross-cultural positions. For instance, the company was sued in 2004 for its discrimination against the ethnic minorities and favoring White American employees by offering them desirable positions.
These practices seem to contradict the company’s strategic plan since it cannot achieve it when discrimination and racism reigns in its operations. The company has also been accused of mistreating the outside stakeholders-the customers and the community-by its insulting advertising campaigns. These campaigns have been accused of being homoerotic and sexually explicit. The company was also accused of copying the designs of other companies such as American Eagle Outfitters. Such incidences have exposed the company to numerous lawsuits, which are not only costly, but also tarnish the company’s corporate image.
The company must therefore avoid such practices if it is to succeed in its strategic plan. The company’s expansion plans may have a big impact on its short term goals (Goodstein et al, 1993). For instance, its immediate profitability will decline, and so will the shareholder dividend pay out, due to the added expenses of running the new stores. Moreover, expansion will put a strain on the company’s cash flow and liquidity since the money will be tied in the establishment and running of the new stores (Pearce and Robinson, 2004).
On the other hand, the company’s strategic plan will go well with its long term goals. The strategy will boost investor confidence, hence lead to a rise in their share price (Goodstein et al, 1993). The company’s long term profitability will increase tremendously due to this strategy, leading to better dividend pay out. On the whole, the company is doing the right thing, especially as far as long term goals and objectives are concerned (Pearce and Robinson, 2004).