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American Eagle Outfitters:
Social Responsibility, Community Betterment, and Philanthropy.
May 2016
Team:
Business, as Usual
Team Members:
Yuen Allison, Gabe Heaton, Rowan Murdock, Hannah Slinkard
Table of Contents
Executive Summary 4
About Our Team 5
Organization Chart 7
About the Company 7
Vision 8
Purpose 8
Organizational Culture 8
Social Responsibility 8
Environmental Responsibility 9
Strategic Leadership 10
Stakeholders 11
Analysis 13
Company Analysis 13
Strengths 13
Weaknesses 14
Opportunities 14
Threats 16
SWOT 17
Financials 17
Industry Analysis 20
Potential Entrants 20
Rivalry among Existing Firms 21
Bargaining Power of Suppliers 21
Bargaining Power of Buyers 21
Substitute Products 21
Economic Environment 22
Demographic and Economic Trends 22
Sociocultural Trends 22
Technological Trends 22
Global Trends 23
Strategy Formulation 23
IFAS 23
EFAS 24
TOWS 24
Strategic Opportunity 25
Implementation 27
Reward Program 27
Make It Right 28
Test Market 28
Marketing 29
Timeline 29
Evaluation 30
Reward Points 30
Goodwill 31
Sales 31
Control 32
Balanced Scorecard 33
Success/Failure 34
What We Learned 35
References 36
Executive Summary
American Eagle Outfitters (AEO) is a socially responsible company that currently has its hands in many different projects and causes that truly make a difference in the world. These include charity donations, scholarships, and clothing drives. With so many different interests, AEO hasn’t truly received the potential image boost that is available, nor have they been able to focus on the development of one particular venture. Narrowing their focus would allow them to most effectively use their capital in a way that benefits the company and the causes they try to serve. This paper focuses on the proposed strategy to form an alliance with Make It Right, a charitable organization formed by the actor, Brad Pitt. Pitt’s A&Ffiliation and social standing alone will help shine the spotlight on the good that American Eagle Outfitters is doing. We propose to partner with Make It Right, and donate used jeans that we have collected from customers, to be recycled and used to insulate homes for people in need. We want to align with Make It Right to decrease waste, oppose fast fashion, and support the community.
Our strategy is to focus our resources more effectively and increase sales as a consequence of further brand awareness and a desire to support AEO in its efforts as a good corporate citizen. We will market our campaign to existing customers in hopes of increasing our customer base for a trial period when retail sales are high, catching both the back-to-school and holiday shoppers. Customers who bring used AEO jeans into the store will be rewarded with extra points on their rewards card. This will increase the foot trA&Ffic in stores, as well as incentivize the customers, both contributing to increased sales. This image of giving back will also attract those customers, as well as investors, to spend their money with AEO rather than a competitor with a slightly different image like Abercrombie & Fitch. Through a variety of audits and control processes, at the end of a 6-12 month period, we will be able to determine if our strategy increased AEO’s goodwill, sales and image, particularly with the Make It Right program.
About Our Team
Yuen Allison
My name is Yuen Allison. I was born in China. I moved to the United States in 1999. After working as a Bookkeeper for 10 years, I have decided to work part-time so I can focus on my Accounting education. I will graduate in May with a Bachelor’s degree in Business Administration with Accounting Emphasis. I have an 11-year old loving son who has changed my life completely and taught me what unconditional love is. I have been accepted by Gonzaga University to attend their Master in Taxation program with two scholarships. I will start the program right after graduation and I plan to study for the CPA exams at the same time. After that, I would like to teach accounting classes at colleges and universities.
Gabe Heaton
My name is Gabe Heaton, and I was born in Fargo, North Dakota. On May 1st, 2016, I will be graduating from LCSC with a Bachelor’s Degree in Business Administration with an Accounting Emphasis. Currently I am an intern at Magnuson, McHugh & Company, a local accounting firm. After graduation, I will start the process of studying for, and taking the four parts of the CPA exam. I also plan to coincidently continue my education by pursuing a Master’s of Science in Taxation at Gonzaga University. I look forward to taking the knowledge and skills that I have attained at Lewis-Clark on to Gonzaga and eventually a career in accounting.
Rowan Murdock
My name is Rowan Murdock, and I was born in San Jose, California. I was raised primarily in Santa Cruz, California until my family relocated to Northern Idaho in 2007. I will be graduating from Lewis-Clark State College in May with my Bachelors of Science in Business Administration with a minor in Marketing. In the fall I plan to attend the University of Idaho, where I will be studying Law, possibly with an emphasis in business. I am excited to live in Moscow, along with my two siblings who are both there studying Chemical Engineering. In my free time I enjoy being outside, hiking, swimming, doing yoga, and am perpetually looking forward to summer.
Hannah Slinkard
My name is Hannah Slinkard and I am currently a senior at LCSC, majoring in Business Administration with a minor in Psychology. After obtaining my bachelor’s degree, I aspire to earn a master’s degree in Business. I will look to hold true to my original goal of zero student loans before embarking on that journey. I was born in Coeur d’Alene, Idaho in 1993 and my grandmother and I are two of the only individuals in our family who were not born in Sandpoint, Idaho. When I am not at school, I am typically working at Costco Wholesale where I have been working now for three years in May. In my few moments of spare time, I love spending time with my boyfriend Logan, my family, and my friends. Activities that I enjoy with these individuals include; dirt bike riding, camping, fishing, snowmobiling, and snowboarding.
Organization Chart
About the Company
Vision
“Live Your Life, Love Your Planet, Build a Better World.”
Purpose
“Deliver performance that rewards our investors, creates economic opportunity for our associates and allows us to leverage our success to have a positive social impact on the communities where we live, work and play.”
Organizational Culture
American Eagle Outfitters has a strong desire to better the world through social and environmental changes. This mentality is embraced by all company associates. American Eagle Outfitters understands that the heart of the company resides in people: their contacts, customers, and partners. AEO not only values and respects different backgrounds, but also appreciates unique talents. Diversity will strengthen the company’s ability to succeed. They care about their associates, empower them, and reward them.
Social Responsibility
American Eagle Outfitter’s social responsibility is top priority in everything they do as a company, and they encourage customers to be a part of the journey in building a better world. AEO has participated in a variety of socially responsible projects in the past and continues to find new ways to give back to communities.
· Pittsburgh Promise- This program provides the opportunity for students of all backgrounds to continue their education. American Eagle Outfitters has donated $1 million to this foundation.
· Teach for America (TFA)- In 2013 American Eagle Outfitters partnered with TFA where they contributed $400,000 in cash and kind donations.
o This program provides the opportunity for college graduates and professionals to teach in low-income communities.
· Big Brothers Big Sisters- American Eagle Outfitters donated $117,000 last December alone, through gift card purchases.
· Bright Pink- In-store donations for this project were $250,000 which was used to fight breast and ovarian cancer through early detection.
· Other Projects:
o SCA Alternative Spring Break- American Eagle Outfitters has donated more than $5 million dollars to this foundation.
o 21st Century Conservation Service Corps- This inspires the youth to “play, learn, serve and work outdoors.” American Eagle Outfitters was the first company to pledge $1,000,000 to support this project over the next four years.
Environmental Responsibility
American Eagle Outfitters has participated in multiple other projects and continues to support new ways to create a positive change in the world we live in. This company also takes great pride in the environment, and has participated in countless efforts to conserve the planet we call home. Some of these programs include:
· Boot the Bottle- This program brings awareness to recycling day-to-day products such as disposable water bottles. Currently, AEO has prevented over 50,000 bottles from hitting the landfill.
· I:CO- AEO has partnered with I:CO allowing associates to donate clothing to be recycled and transformed into reusable bags or insulation.
· Blue to Green: This is a recycling program that AEO has partnered with to extend their recycling venture. Blue to Green takes the gently used denim recycled by AEO to provide insulation for homes built by Habitat for Humanity.
American Eagle Outfitters takes pride in not only donating and giving back to communities, but also in surpassing the social responsibility expectations of the public through their work in helping the environment.
Strategic Leadership
American Eagle Outfitters strives to be a top competitor in their field while holding true to their social and environmental standards. As a whole, American Eagle Outfitters continues to believe that recruiting both externally and internally is beneficial for their team and the overall success of the business. Recently in 2015, Jay L. Schottenstein was promoted to Chief Executive Officer. Schottenstein has been with the company since 1992. In addition to this, he continues to serve as Chairman and president at his family business, Schottenstein stores. Schottenstein stated that, “delivering performance that rewards our investors, creates economic opportunity for our associates, and allows us to leverage our success to have a positive economic and social impact on the communities where we live, work and play.” Furthermore, Schottenstein will be the ultimate decision maker on future products including our new strategy.
Mary Boland is another key player to the American Eagle Outfitters team. She has been the Executive Vice President, Chief Financial Officer, and Administrative Officer at AEO since 2012. She previously worked for Global Levi’s at Levi Strauss & Co. and as the Senior Vice President for Finance of Americas for five years. Boland will be retiring in April of 2016. Boland said, “the company is in strong financial condition and well-positioned for future success.” Boland will be the financial commander and will guide the company in terms of economic opportunities, and help develop potential strategies.
Michael Rempell has been the Executive Vice President and the Chief Operations Officer at American Eagle Outfitters since 2012. He has various experiences in other companies including the New York Design Center as both the Senior Vice President and the Chief Supply Chain Officer for three years. Rempell adds value to new strategies in terms of implementation and offering extended support from the supply chain.
All key players that AEO has on their team bring a variety of unique experiences and diversity that offer various advantages. Charles Kessler is a perfect example of this. Kessler has worked for the company since 2014 but offers credibility and experience from other retailers including Urban Outfitters, Coach, and Abercrombie & Fitch. Todd Snyder also brings various insights from companies such as, Polo Ralph Lauren, The Gap, and J. Crew. Overall, American Eagle Outfitter's team is a huge part of their success as they continue to innovate and set the bar high in regards to company goals.
Stakeholders
Customers- AEO understands that customers are the reason for their current success, and therefore strive to exceed their expectations. They continue to provide opportunities for consumers to give feedback through their website. With this feedback, AEO is then able to continue their customer-focused business strategies to better meet customer demands and wants. From offering clothing in their retail stores, to creating projects and providing funding to causes that can change the world, customers are the center of the AEO enterprise.
Associates: AEO strives to incorporate diversity in all aspects of the work environment. AEO employs over 30,000 people worldwide and that number continues to grow, as the company does.
Shareholders: American Eagle Outfitters is a publically traded company that continues to increase profits over the long-term for investors. Shareholders include associates, individuals, large financial institutions, and socially responsible investment funds. Fiscal responsibility and a strong financial position allow AEO to consistently retain investors. This approach continues to improve as they withstand various external events of the economic environment.
Supply Chain Partners and Stakeholders- AEO ensures that the supply chain is operating efficiently at all times. The supply chain has specific guidelines, codes of conduct, and inspections they must constantly uphold. AEO’s supply chain is a major part of the business and will remain productive as long as suppliers continue to operate within company guidelines.
Analysis
Company Analysis
Strengths
Brand Loyalty: American Eagle Outfitters has loyal customers who both value, and hold a positive perception of the brand. These people shop at the retailer regularly, and are a benefit to the company. This loyalty is fostered through product quality, customer service, and consistently fashionable pieces, all working together to increase profits.
High Quality Product: AEO sells high quality products that are not considered “disposable fashion.” This sets them apart from competitors such as H&M and Forever 21. Further, this gives their brand a more positive perception in regards to the public’s view as they are more responsible in regards to conservation. Their clothes are also more durable and therefore have more wear value.