MBA 735 - Final Progress Report Slides

Slide 1: 

A STORY OF AN AMERICAN BUSINESSMAN USING GOOGLE TRANSLATE. . .

MBA 735 – International Business Project: 

MBA 735 – International Business Project Abercrombie & Fitch Market Entrance Proposal into the Central/Eastern Europe (CEE) Market Christopher Connell, Jenny Lee, Jerry Ludlow, Jakub Medrala & Nakul Patel

Product Selection Criteria: 

Product Selection Criteria Consumer v . commercial product Unsatisfied demand that can be met with an existing product Minimal government regulation of the industry Minimal barriers of entry Non-perishable product Lifestyle/Brand Name Product

Market Positioning : 

Market Positioning A retailer carrying a wide number of products, but offering a relatively small range of these products in each category to satisfy consumer’s preference for wide product portfolio. Retailer that serves a segment of the market thereby creating a market niche, but with an ability to improve its market share by attracting customers of existing market participants (business stealing opportunities).

Abercrombie’s Product: 

Abercrombie’s Product Casual sportswear apparel, including knit and woven shirts, graphic t-shirts, fleece, jeans and woven pants, shorts, sweaters, and outerwear; personal care products; and accessories for men, women and kids under the Abercrombie & Fitch, abercrombie kids, and Hollister brands. Direct-to-consumer operations offering bras, underwear, personal care products, sleepwear and at-home products for women under the Gilly Hicks brand. Near-luxury lifestyle concept

Situational Analysis: : 

Situational Analysis: Company Background Current Brands Core Competencies Competitive Environment Company Financial Situation

Company Background: 

Company Background Abercrombie and Fitch was founded in 1892 as a luxury sporting goods retailer Brand was reposition in 1992, by new CEO Michael Jefferies Focus on 18-22 year old styles Publicly traded since 1996 Currently operates 1,069 stores 52 stores in Japan and Europe

Current Brands: 

Current Brands The company operates under the brands A&F, Abercrombie kids, Hollister and Gilly Hicks. A&F focuses on laidback, carefree and “effortlessly cool” themes featuring east coast and ivy league styles Hollister portrays an image of the southern California lifestyle. The brand is inspired by laidback, relaxed, carefree, spirited themes Gilly Hicks instills a brand image of the All-American girl and tomboy image.

Core Competencies: 

Core Competencies Marketing clothing and setting trends Primarily by providing an instore experience that communicates an aspirational lifestyle Use sense of sound, smell, sight and touch Purchasing and reselling merchandise Use 191 vendors through the world Primarily in Asia and South America

Competitive Environment: 

Competitive Environment The “Brick and Mortar” retail clothing industry is fragmented and highly competitive” Numerous individual and localized competitors Large national competitors include: American Eagle Outfitters, comparable size Gap Inc. - Largest competitor, over 3,000 stores J. Crew - New competitor

Financial Situation: 

Financial Situation Strong growth between 2002-2008 Net income increased from $195 million to $475 million The economic downturn has a significant impact on the company’s financial statements Income was down 74% in 2009 fiscal year compared to 2008 Strong recovery in 2010 $150.28 million net income

International Objectives: 

International Objectives Corporate Objectives International Sales account for 74% of growth Looking to capture a greater share of the international market through store openings and increasing same store sales Degree of Involvement Currently opening 40 stores in Paris, Madrid, Hong Kong, Brussels, Dusseldorf, and Singapore.

International Objectives (Con’t): 

International Objectives ( Con’t ) Competitive Advantage Strong brand equity Stable growth Increasing sales in other international locations Product Positioning Abercrombie sells a lifestyle, not just a brand This lifestyle is popular in emerging economies Looking to capture market-share in countries where Zara, Gap, and H&M are already operating

International Objectives (Con’t): 

International Objectives (Con’t) Degree of Company Involvement How much time, effort, and capital is worth committing to the CEE market? How will we mitigate risks? Currency Shipping/Logistics Political Other

Opportunity Identification: First Filter: 

Opportunity Identification: First Filter Country Selection Criteria Population Demographics/Market Size Global Competitiveness Economic Freedom Growth Rates GDP (per capita) Debt Trends in Data Is the country becoming more or less attractive?

Country Selection: 

Country Selection

Country Selection: 

Country Selection

Market Data/Attractiveness: 

Market Data/Attractiveness Clothing market size Germany Decreasing in most Central Europe Consumer Spending on clothing Increasing rate : Poland Growth rate of clothing industry in CEE Forecasted to rise by 12.6% by 2015 Strong growth forecast: Czech, Poland, Hungary

Competition: 

Competition Current Competition in CEE GAP (Opened in Poland, entering in CEE Market) H&M – 5% market share Zara – 5.1% market share Potential Future Entrants American Eagle Exploring European expansion Urban Outfitters CEE – Germany, exploring other CEE expansions

Market Presence of Key Competitors: 

Market Presence of Key Competitors Unmet Demand Demographics Age group 14-35 Receptiveness to American Culture Market Characteristics Clothing Specialists Market share increase in Hungary, Poland, Czech

Final Screening: 

Final Screening Ease of Market Entry Minimal Regulatory Differences Market Infrastructure Poland Major infrastructural developments # of Metropolitan Areas, infrastructure for accessing target market Development of Market Presence Poland homogeneous Consumer Preference of American Culture