In this assignment, you are to use the same corporation you selected and focused on for Assignments 1, 2, and 3. ( THE COMPANY IS AMERICAN EAGLE)Consider the corporation you have selected to use in yo

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Week 8 Assignment 3

Week 8 Assignment 3

This paper describes the business-level strategies, corporate-level strategies, competitive environment, and market cycles of American Eagle Outfitters intricately. The thorough discussion goes ahead to identify how these concepts relate to the real world/corporations. The development of this material has followed the course material, amongst other academic sources, to support the data.

Business level strategies are the various integrations of actions/activities that a business commits to gain a competitive advantage over competitors (Hitt, Ireland, Hoskisson, 2020). American Eagle Outfitters is an experienced company in the industry that has tried out various business-level strategies. The identified business-level plans include its cost leadership strategy, differentiation, and focused differentiation strategy. American Eagle Outfitters has differentiated from competitors by developing a unique and identifiable brand logo. AEO imprints this logo on its products to make them recognizable to the customer. Competitors find it hard to beat this differentiation strategy because of their weak brand names. American Eagle Outfitters has incorporated the focused differentiation strategy by identifying a niche market. AEO targets young customers aged 15-25. That allows the company to provide the best quality and fashionable clothes and products to this group. This focus differentiation strategy has helped AEO gain a substantial market share in the industry. However, this analysis will focus on the cost leadership strategy.

American Eagle Outfitters is best suited to the cost leadership strategy for its long term agenda. Cost leadership strategy for American Eagle Outfitters aimed at producing quality and fashionable clothes, among other products, at the best consumer price in the market. American Eagle Outfitters manufactures standardized garments in large quantities for its large market. Some of the same materials sourced from multiple suppliers. This process allows American Eagle Outfitters to cut on costs of dealing with one executive supplier who may demand privileges. This is some of the inbound logistics that the company aims to optimize and cut on costs. American Eagle Outfitters preserves its market position through effective value chain management (American Eagle Outfitters Reports Record Fourth Quarter and Fiscal year sales, 2018).

The middle-class market share is what American Eagle Outfitters targets. This is because the middle class opts for quality products at the best price possible. Middle-class people are engulfed by multiple activities and events needing money; hence, they tend to conserve their money the most. This consumer segment places high importance on a company's pricing factor. American Eagle Outfitters targets the middle class through an effective cost leadership business strategy. The company's cost leadership strategy is also evident in its focus on the easy accessibility and affordability of products. This has enhanced brand awareness and high sales in the market. American Eagle Outfitters has gained a unique competitive advantage in most of the market segments around the world. American Eagle Outfitters offers coupons and sales discounts to hit sales targets. Most of the competitors may not keep up with such strategies hence giving AEO the upper hand in the fashion and clothes industry. American Eagle Outfitters' core competencies include customer service, quality control, job knowledge, organization, and pricing strategy. American Eagle Outfitters has used its pricing strategy and cost reduction techniques to come up with a satisfying cost leadership strategy in the retail industry. American Eagle Outfitters' choice of the cost leadership strategy may become obsolete soon. In their aim to reduce cost American Eagle Outfitters could fail to identify key market and environmental trends. Moreover, competitors in the retail industry are willing to keep up with the low prices. American Eagle Outfitters needs to integrate more strategies than cannot be mimicked by competitors.

The corporate-level strategy involves a business taking specific actions to gain a competitive advantage by identifying and monitoring other companies that are successful in different product markets. American Eagle Outfitters has utilized the corporate-level strategy in new market entry. The company has a well-established network. Hence, it is quite easy to penetrate new markets. The cost leadership strategy supports such diversifications through the use of existing infrastructure for the new business. Existing infrastructure enhances cost minimization ability for the company. New markets and products bring numerous opportunities for the company. American Eagle Outfitters does not put much effort into unrelated diversification because growth is only achieved through product development and market penetration.

American Eagle Outfitters aim to reduce costs. Hence, they are not much of risk-takers. Risk factors lead the company away from trying out new markets that are not entirely known. The presence of risk factors leads the company to focus on related diversification by avoiding unknown regions. To cater for this, American Eagle Outfitters utilizes brand awareness to infiltrate the new market with their product. American Eagle Outfitters' unrelated diversifications for new markets include products like glasses, pens, fridges, and shirts. American Eagle Outfitters aims at effect acquisition strategies, which helps expand the business portfolio. The company reduces costs as well as increase revenues (Damron, Melton, Smith, 2016).

American Eagle Outfitters uses a related diversification strategy by carefully analyzing the situation in the new market segment. Fist, the company acquires profitable businesses in line with their plan. Additionally, American Eagle Outfitters analyzes the market trends, including changing customer expectations in the new market segment. American Eagle Outfitters has faced reprimand from environmental conservation groups. In response, the company diversified by investing in environmentally healthy green businesses. This has dramatically enhanced the company's brand name in the retail industry. Through this diversification, American Eagle Outfitters has reclaimed losses resulting from the criticism coming from environmental protection groups.

I think that related diversification as a corporate-level strategy is sufficient to help American Eagle Outfitters run the show in the retail industry for a long time. Such wise applications of related diversification enhance the sustainability of the business. The long term objectives of American Eagle Outfitters become achievable amidst turbulence in the retail industry. The market can avert certain risks by managing product portfolio very well. Emerging new trends to products can help salvage obsolete products for the company.

The retail industry is cupped by multiple competitors, both tough and small. American Eagle Outfitters faces competition giants like The Buckle, Gap, H&M, UNIQLO, Forever 21, and Inditex. The most significant competitor to American Eagle Outfitters is Gap Inc. Both giants in the industry have grappled at obtaining better market share and customer preference for their products. Gap Inc offers fashionable accessories and clothes to customers at excellent and affordable prices. This is a clear indication of the cost leadership strategy by Gap Inc.

Moreover, Gap Inc provides innovative casual designs and casual clothes for its customers. Gap Inc has enhanced its online presence to optimal performance for both males and females through the use of psychological factors in consumers and integrating these psychological instances with technology. While Gap Inc is innovative with its products, American Eagle Outfitters tends to be more rigid and focuses on producing already certified designs. American Eagle Outfitters may manage to fallout in the long run if they do not change their deployment and business strategy tactics (United States Securities and Exchange Commission, 2017).

Gap Inc has various strategies that help it in sustainability. Gap Inc aims at reducing its environmental footprint. This will enhance the company’s brand name and goodwill among customers. American Eagle Outfitters has also engaged in environmental conservation efforts through its diversification efforts. Both companies can be noted to care for ecological and societal interests. Gap Inc has identified with focus differentiation strategy in its business-level strategy. Gap Inc has gone the extra mile to focus on each gender for its products. Gap Inc has identified the disparities in male and female buying patterns and online shopping experiences. On their e-commerce site, Gap Inc has prepared male and female user interfaces differently to ensure everyone gets the best customer service. American Eagle Outfitters has also used a focus differentiation strategy by identifying their unique niche market. American Eagle Outfitters produces fashionable wear for 15-25-year-olds. Hence, both companies can be noted to undertake their lengths of focus differentiation strategies. Gap Inc's mode of focus differentiation appears to be more intricate and sophisticated. Customers who visit their online platforms will always want to return. Competition in the retail industry has evolved, organizations like American Eagle Outfitters should be more open to innovative measures that will help them attract more customers.

Gap Inc has a differentiation strategy that offers three different kinds of clothing brands targeting three demographic groups. All three brands are distributed differently and have different price tags. This is a unique differentiation strategy, and no other competitor in the clothes retail industry has incorporated such separate entities. Gap Inc also differentiates by offering clothes for the entire family conveniently in one location. I deem this to be very satisfying and convenient, especially for mothers with young children. Gap’s ability to clothe an entire family from a single store is on another level. This cutthroat competition schemes have come to the aid and benefit of the customer. American Eagle Outfitters uses the differentiation strategy of the brand logo to identify its products in the market uniquely. With it, the big brand name American Eagle Outfitters has cemented its hold in the market. However, it is essential not to lose customers to the competition by not providing customer satisfaction.

The corporate-level strategy of Gap Inc is diversification. Gap's three retailers have added other diversifications like Gap body, Gap baby, Gap maternity, and Gap kids. All these diversifications have ensured that each segment is fulfilled in this retail industry. The Gap is looking to diversify into international markets by conducting extensive customer research. For example, Gap Inc researchers have identified that Japanese women prefer tighter-fitting jeans as opposed to American women. By matching products to geographical segmentations, Gap Inc is achieving the ultimate corporate strategy through diversification. Event through diversification to new markets, Gap Inc, has built brand equity for itself and customers from all over will continue to buy their products. As discussed earlier American Eagle Outfitters has its diversification policy of acquiring the most profitable organizations in line with their plan as well as search market segments for the best options. According to this evaluation, it is evident that Gap Inc will outlive most of the competition in this retail industry. Gap’s advanced diversification and other business-level strategies will enable it to satisfy the majority of customers in the market. Their implementation of multiple retail shops and various products in one shop provides the best customer experience and satisfaction.

Fast-cycle markets are when a company’s competitive advantages are exposed to imitation, preventing the business's future sustainability. On the other hand, slow-cycle markets are characterized by the protection of the company's competitive advantages from copying. Imitation in slow-cycle markets is very costly; there is long-term sustainability (Hitt, Ireland, Hoskisson, 2020). In the case scenario of Gap Inc, the company fits into a slow-cycle market. Gap Inc has efficiently differentiated from other competitors in its strategy. Trying to imitate Gap's plan would be extremely costly for other companies.

Moreover, there is a high probability that imitating Gap's approach would lead to its failure. Because Gap's trajectory is unique, and they have finessed their strategy. Hence, the diversification strategy for Gap Inc is a slow-cycle market.

1. Hitt, Ireland, & Hoskisson. 2020. Strategic management: Concepts and Cases: Competitiveness and globalization (13th ed.). Mason, OH: South-Western Cengage Learning

2. The United States Securities and Exchange Commission, (2017). American Eagle Outfitters, Inchttps://www.sec.gov/Archives/edgar/data/919012/000156459017003969/aeo-10k_20170128.htm

3. American Eagle Outfitters Reports Record Fourth Quarter and Fiscal year sales, (2018). AEO Investor Relations http://investors.ae.com/news-releases/news-releases-details/2018/American-Eagle-Outfitters-Reports-Record-Fourth-Quarter-and-Fiscal-Year-Sales/default.aspx

4. The United States Securities and Exchange Commission, Washington, 2020. American Eagle Outfitters Inc For the Fiscal year ended January 28, 2017, https://www.sec.gov/Archives/edgar/data/919012/000156459017003969/aeo-10k_20170128.htm

5. Damron, T., Melton, A., & Smith, A. D. (2016). Collaborative and ethical considerations in the vendor selection process. International Journal of Process Management and Benchmarking, 6(3), 404-418.