VRIO Analysis of Abercrombie Fitch

The Abercrombie Fitch is exposed to, as well as has ownership of different resources. The Abercrombie Fitch uses these resources for meeting its goals, as well as for developing and expanding different growth opportunities. The VRIO analysis is used by the Abercrombie Fitch for assessing and evaluating these resources to help leadership and management to identify different strengths and weaknesses, and work towards using the same to enhance the business standing and proposition (Knott, 2015).

VRIO importance

More importantly, the VRIO analysis is used by the Abercrombie Fitch to evaluate and identify the different competitive advantages that different resources can offer. In doing so, the Abercrombie Fitch is able to identify resources that offer a long-term sustainable competitive advantage, and work towards building the same for increased opportunities (Chatzoglou, Chatzoudes, Sarigiannidis, & Theriou, 2018). Abercrombie Fitch VRIO analysis is a strategic tool that allows the Abercrombie Fitch to identify resources that offer a temporary competitive advantage – allowing the company to strategize tactics to then turn these into factors of long-term competitiveness.

The VRIO analysis largely assesses resources as being Valuable, rare, inimitable, and organized.

Valuable

Resources are valuable if they allow the Abercrombie Fitch to enhance its efficiency and effectiveness through facilitating strategy implementation and realization. Moreover, resources are also valuable if they allow the Abercrombie Fitch to successfully manage the threats it is exposed to, and capitalize on different opportunities through helping build internal strengths, and manage weaknesses appropriately (Lasserre, 2017). Some examples of valuable resources for Abercrombie Fitch include the following:

Strong global presence

The Abercrombie Fitch has a presence across various international locations and countries. The Abercrombie Fitch has expanded its manufacturing operations across different countries in Asia and Europe. The Abercrombie Fitch uses these manufacturing sites as central supply locations and hubs for different regions as well (Abratt & Bendixen, 2018).

Branch network

The Abercrombie Fitch has a strong branch and store network across different regions in various international locations – including the UK, USA, China, and Australia, and across Europe. The Abercrombie Fitch has developed its store network in locations that offer the company high visibility, and promise a high customer footfall (Baines, Fill, & Rosengren, 2017).

Supply chain management

Owing to the global presence, and international operations, the Abercrombie Fitch also has an internally managed supply chain network. The supply chain network ensures consistently high quality, and timely manufacture and delivery of the products offered by the Abercrombie Fitch to retailers, distributors, as well as end consumers (Chernev, 2018).

Risk management

The Abercrombie Fitch has developed an internal means and system for identifying, managing, and mitigating environmental risks and threats. These risks include fluctuation in prices of raw materials, as well as political instability in regions where it operates. The internal risk management system for Abercrombie Fitch comprises of continuous observation of the environment, and development of proactive strategies, as well as training of its personnel for responding to the same (Deepak & Jeyakumar, 2019).

Technological advancement

The Abercrombie Fitch makes use of technological advancement for achieving economies of scale. The presence across various global locations has allowed the Abercrombie Fitch to develop a seamless technological infrastructure for knowledge sharing. Abercrombie Fitch is also able to implement processes of improvement internally (Iacobucci, 2021).

Use of AI

The Abercrombie Fitch also makes use of AI for improving internal efficiencies and processes as well as for improving the consumer experience. The use of AI internally has allowed the Abercrombie Fitch to reduce the error rates, and improve logistic management, for example.

User experience

The Abercrombie Fitch focuses on enhancing the user experience for maintaining loyalty. The use of AI especially has allowed the company to improve the user experience through providing 24/7 customer support, as well as developing relevant purchase prompts for consumers based on their browsing histories (Sahaf, 2019).

Customer service

The customer service offered by Abercrombie Fitch is an important and valuable resource that helps the company differentiate its offerings from that of the competition. The Abercrombie Fitch offers 24/7 online support to consumers, and has a team of trained personnel for providing customer services on physical locations (Gillespie & Swan, 2021).

Research and development

The Abercrombie Fitch makes a substantial investment in research and development. The research and development allows the Abercrombie Fitch to stay updated with the market and consumer trends – thereby allowing the Abercrombie Fitch to tailor its offerings and marketing efforts accordingly. The research and development also allows the Abercrombie Fitch to improve its production processes, and improve efficiency levels continuously (Grewal & Levy, 2021).

Product offering

The Abercrombie Fitch focuses on maintaining consistent quality for its product offerings. Moreover, the Abercrombie Fitch also ensures that the product offerings meet the consumer needs and demands. For this purpose, it engages in the localization of its product offerings across different regions and locations (Abratt & Bendixen, 2018).

Financial resources

The financial resources and capability at the Abercrombie Fitch allows minimum dependence on debt. The Abercrombie Fitch has a higher dependence on equity for expansion and development purposes. This ensures lower vulnerability of the company, and gives the Abercrombie Fitch increased freedom and independence for pursuing business objectives and goals (Groucutt & Hopkins, 2015).

Marketing activities

The Abercrombie Fitch engages in marketing activities for appealing to its target audience across different countries and regions. The marketing communication is tailored to take into account different cultural considerations across these locations and regions. Moreover, the Abercrombie Fitch ensures to appeal to the functional as well as emotional fronts of the consumers - using insights from its research and development activities (Kotler & Keller, 2021).

Rare

Rare resources for the Abercrombie Fitch are those which are not easily and readily available for the competing players. These resources are rare for the Abercrombie Fitch because of the firm’s unique position and access to the resources – which is otherwise difficult and challenging to acquire. This makes rare resources cost-intensive for other organizations (Phillips & Moutinho, 2018).

Manufacturing and distribution licenses

Abercrombie Fitch has gained special licensing permissions for manufacturing and distribution in various regions ad countries – some of which are more remote and stringent towards international firms. The Abercrombie Fitch has been able to do so based on its strong team of lawyers and policy interpreters, as well as because of the goodwill it has developed over the years (Kotler & Keller, 2021).

Access to raw materials

Abercrombie Fitch has access to different raw materials that support its quality maintenance of product offerings. The access to raw materials for the Abercrombie Fitch is largely based on the company’s unique position and its investments in research and development. Both of these have allowed the Abercrombie Fitch to substantially develop its capabilities (Buchanan & Huczynski, 2019).

Equipment

The Abercrombie Fitch has access to world-class equipment. This equipment and technology is not readily and easily available to its competing players. The Abercrombie Fitch has access to this equipment for increasing efficiency, and improving economies of scale based on its vast operations, and partnerships with various regional governments (McShane & Glinow, 2017).

Intellectual property

The Abercrombie Fitch has multiple policies regarding intellectual property, and thoroughly implements policies and regulations regarding the same internally. In addition, the company also follows external regulations for intellectual property protection. This allows the Abercrombie Fitch to sustain its creativity and successfully continue to experiment with new product ideas (Chernev, 2018).

Patents

The Abercrombie Fitch has different patents registered under its name. This is done by the Abercrombie Fitch to safeguard its innovative capacities, and maintain regulated intellectual property rights. This helps the Abercrombie Fitch stay ahead of the competition, and secure new technology and ideas to maintain the first mover, and unique competitive advantage over other players (Wunder, 2019).

Sustainable manufacturing

Based on its unique environment for development and innovation, as well as because of its engagement with advanced technology and equipment, the Abercrombie Fitch has developed processes for successful sustainable manufacturing. This resource allows the company to appeal to green consumers, and at the same time, maintain higher internal efficiencies and profitability (Tonelli & Cristoni, 2018).

Eco-packaging

The Abercrombie Fitch is also successfully engaging with, and producing eco-based packaging. This resource is important for the Abercrombie Fitch, and allows it to improve its processes as well as brand perception. Competing players do not have access to the needed intellectual property, ideas, or machines to successfully, and efficiently apply this to their internal business processes and offerings (Tonelli & Cristoni, 2018).

Inimitable

Inimitable resources for the Abercrombie Fitch are those which are hard and costly to copy and imitate by other players, and competitive rivals in the industry. Inimitable resources offer a long-term competitive advantage to Abercrombie Fitch. Abercrombie Fitch has different resources that are hard to imitate, or are perfectly inimitable largely because of factors of historical context; and unique historical conditions; causal ambiguity, and/or social complexity (Stead & Stead, 2014).

For Abercrombie Fitch, a number of resources are inimitable because of their uniqueness to the company itself. These include:

Organizational culture

The organizational culture is unique to the Abercrombie Fitch – developed through the Abercrombie Fitch’s core values and beliefs, as well as its structure and managing style. The culture of the Abercrombie Fitch leads to improved employee performance, and facilitates organizational success (Abbas, 2017).

HRM policies and activities

The Abercrombie Fitch has also built a strong HRM department internally which supports the business, and its strategies. This support is extended through various HRM functions such as hiring, and training activities and opportunities. These activities are aligned with the business goals and strategic direction for ensuring high organizational performance, and the right talent match for the Abercrombie Fitch (Mariappanadar, 2019).

Compensation Framework

The Abercrombie Fitch also has a unique compensation system to support internal activities and functions. The compensation system is rooted in employee motivation and needs. The Abercrombie Fitch invests in understanding the needs of the employees, and then designs rewards accordingly- linking them with the job responsibilities and tasks (Mariappanadar, 2019; DuBrin, 2013).

Brand equity

The Abercrombie Fitch has developed strong brand equity over time. The Abercrombie Fitch has successfully, and continually delivered on its brand promise by providing high quality offerings. This has allowed the buildup of consumer trust as well as positive brand perception leading to higher brand equity for Abercrombie Fitch (Kotler & Keller, 2021).

Brand loyalty

The Abercrombie Fitch has a high brand loyalty. Based on its offerings, quick customer service, and after-sales service, the Abercrombie Fitch has developed a high brand loyalty amongst customers. These customers conduct repeat purchases of the Abercrombie Fitch’s offerings and products because of higher satisfaction levels (Baines, Fill, & Rosengren, 2017).

Brand awareness

The marketing activities of the Abercrombie Fitch are carefully tailored and targeted, and based on the emotional appeal that the company provides in its offerings to the customers. This in turn leads to a positive buzz. The viral buzz, as well as positive marketing efforts, have led to high brand awareness for the Abercrombie Fitch amongst not only its own target customers, but also amongst secondary groups (Sahaf, 2019).

Goodwill

Abercrombie Fitch has continually delivered on its promise, and has thus developed a positive brand perception. As a result of this, the Abercrombie Fitch has built positive goodwill over the years. This goodwill allows the Abercrombie Fitch to confidently launch new products in the market that consumers readily accept and consume (Grewal & Levy, 2021).

Innovation

The Abercrombie Fitch continually engages in innovation and creativity as well. The company has a team for business development that engages in the process of new product design and development. The Abercrombie Fitch also invests in the creative development of its employees for facilitating and encouraging new idea generation, and emphasizes on employee empowerment for the same purpose (McShane & Glinow, 2017).

Organizational leadership

The Abercrombie Fitch has a supportive leadership. The leadership style at Abercrombie Fitch is participative which encourages discussion, and creates trust and a positive work environment. In addition, the leadership at Abercrombie Fitch is transparent and accessible, and works closely to improve and build the organizational culture through promoting core beliefs and values (Schein, 2010).

Employee commitment

The employees at the Abercrombie Fitch display high levels of job satisfaction. This is because the Abercrombie Fitch continually engages the employees with challenging tasks, trainings for personal and professional development, as well as motivational work responsibilities and teamwork. This results in increased levels of job satisfaction amongst employees of Abercrombie Fitch, leading in turn to high levels of employee commitment (Mariappanadar, 2019).

Branding activities

The Abercrombie Fitch invests in branding activities for building its brand as well as a positive consumer perception. These branding activities for the Abercrombie Fitch involve not only the marketing communications, but also the development of a suitable marketing mix for the company. The branding activities help the Abercrombie Fitch increase brand awareness, as well as increase its reach and penetration amongst the target audience (Iacobucci, 2021).

Organized

The Abercrombie Fitch is able to capitalize on different opportunities based on the various resources available to it through being organized. This factor of the strategic framework evaluates and assesses how organized and structured the Abercrombie Fitch is. The factor also reviews how the Abercrombie Fitch is able to benefit from the various resources that are available to it towards building sustainable competitive advantage (Chatzoglou, Chatzoudes, Sarigiannidis, & Theriou, 2018; Stead & Stead, 2014). This part of the strategic framework for the Abercrombie Fitch allows it to identify and examine different resources it has closely to be able to optimally benefit from them.

Physical infrastructure

One of the best ways through which the Abercrombie Fitch is able to capitalize on the various internal and external opportunities is through the development of its physical infrastructure. The infrastructure of the Abercrombie Fitch allows it to develop economies of scale as well as enhance its various manufacturing and operational processes (Buchanan & Huczynski, 2019).

Technological infrastructure

The technological infrastructure of the Abercrombie Fitch allows it to benefit from the latest technological trends such as the inclusion of artificial intelligence and automation in its operational processes and schedules. The technological infrastructure has facilitated the Abercrombie Fitch to improve its production and efficiency rates as well as reduce its errors. The technological infrastructure also led the Abercrombie Fitch to benefit from potential advancements such as social media marketing and e-commerce (DuBrin, 2013).

Network support

The Abercrombie Fitch is able to further benefit from consuming of various resources available through the presence of a strong internal network. This network includes not only the physical and technological infrastructure but also the organizational network and alignment of operations locally and globally. This coordination and network allows the Abercrombie Fitch to realize its strategic goals (Phillips & Moutinho, 2018).

Training and development

As the Abercrombie Fitch is exposed to new resources and builds on old resources, it is important to update the skills of the employees. The Abercrombie Fitch continually invests in the training and development of its labor force. This ensures that the Abercrombie Fitch stays ahead of the competition.

The Abercrombie Fitch maintains frequent internal training and development opportunities to help the growth of employees and improve their performance (Mariappanadar, 2019; Stead & Stead, 2014).

International Exposure

The growth and expansion of the Abercrombie Fitch and its business along international fronts have given it considerable exposure to understand different cultural requirements and operational details. This exposure is important for the Abercrombie Fitch to allocate resources accordingly towards different regions and production sites; and manage them in the most efficient and effective manner possible (Kotler & Keller, 2021).

International learning

The international exposure that the Abercrombie Fitch also enables increased sharing of knowledge across borders. This knowledge sharing and knowledge development allows continuous learning internally for the Abercrombie Fitch. This learning then helps the Abercrombie Fitch to work towards to the development of strategic structures within the organization as well as design more sophisticated management styles and tools to improve the management of resources (Daneshmandnia, 2019).

Organizational hierarchy

Optimization of the resources available to the Abercrombie Fitch is because the organization has a flatter hierarchy which leads to easier access to the leadership and quicker decision-making processes. This enables higher employee empowerment and participation as well as leads to increased organizational commitment and responsibility (Deepak & Jeyakumar, 2019).

Supportive leadership

The leadership of the Abercrombie Fitch is largely supportive and ensures the development of the management team and the employees. The support of the leadership within the Abercrombie Fitch allows space for quicker decisions as well as makes room for capitalizing on the opportunities and mitigating risks accordingly. This in turn allows for improved Resource management and optimization (Schein, 2010).

Effective change management processes

The Abercrombie Fitch engages all employees in the change management process and ensures that there is transparent communication regarding the need as well as the implementation of the same. This allows the Abercrombie Fitch to manage resources more effectively as well as build on other resources to help the company achieve its strategic and business objectives and goals (Pollack & Pollack, 2015).

Conclusion

The VRIO assessment is an important strategic tool that allows the Abercrombie Fitch to identify various resources which can lead to different forms of competitive advantages. The VRIO assessment and model allows the Abercrombie Fitch to identify resources that can be used for developing sustainable competitive advantage over the long term as well as allows the Abercrombie Fitch to invest in, and build other resources for the same purpose.

In addition, the strategic tool allows managers of the company to identify resources which can lead to competitive disadvantage. As such the VRIO assessment is an important source of resource evaluation as well as identification of the same.

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