Abercrombie and Fitch Organizational Structure Assignment

Link to the Organizational Structure of Abercrombie and Fitch:
http://www.cogmap.com/chart/abercrombie-fitch-co

Company Profile:
Abercrombie and Fitch is an American retailer clothing shop, run by the CEO Michael Jeffries. This company started out as a clothing shop situated around the United States. Abercrombie owns four other brands (Abercrombie Kids, Hollister Co., Gilly Hicks and RUEHL No.925). To enhance sales and profitability of the company, Abercrombie and Fitch has expanded into the international markets in Canada, UK and Italy to increase customer base and attract more people to buy its products.

Organization Structure:
Looking at the organizational structure of Abercrombie and Fitch’s senior management, it is evident that the company uses a ranking system or hierarchical structure. The company is organized along different major business processes/functions, each headed by a Executive VP or Senior VP. These functions are Finance (including Information and Store Operations), Planning (encompassing Store Design and Sourcing) and General Counsel and Secretary.

With functional set-up, Abercrombie and Fitch maintains a taller organization structure. There are four basic layers at senior management level, with the CEO at the top, EVP/SVP on the second, EVP/SVP on the third and SVP at the fourth level. The many layers of organization structure allows the management at Abercrombie and Fitch to have a narrower span of control, therefore concentrating on managing their own lines of functional areas. It is therefore easier for Abercrombie and Fitch management to improve the efficiency and the quality of work within respective business functions as communication will be easier thus enabling quicker decision making within its own function.

Lines of command, authority and accountability are clearly defined and understood by employee. For example, the SVP in charge of Stores are held accountable for only the functions of Technical Design and Design of Stores. However, there is less delegation of authority and empowerment as senior managers at the top tend to grasp a tighter control over the subordinates.

There are disadvantages in organizing the company into a tall structure. There is a bigger communication distance between the CEO and the employees as layers of hierarchy increases. For example, Katherine Rigby, the SVP Design, needs to go through five management layers in order to reach Mike Jeffries, the CEO of Abercrombie and Fitch. The tall structure delays communications between management and staff which may have adverse impact on work co-ordination and employee motivation.

With regard to the decision making process of Abercrombie and Fitch, the tall and functional structure facilitates each business management to make their own decision within their functional areas. The functional heads are empowered to make tactical decisions in order to ensure smooth operations of day to day business. However, when it comes to important or strategic decision making which will have impact on the company as a whole, the decision making authority is still centralized at the very top level. The CEO, together with the next level of EVPs/SVP who command the overall views of the company operations, will be responsible for making decisions.

Abercrombie and Fitch does not operate on a flexible organization structure which is more appropriate for companies which need to collaborate across different business processes/functions more frequently and/or work on project basis for new product development . Instead, Abercrombie and Fitch opts for a more conventional tall structure which are quite costly to maintain. Hence, in times of financial downturn, there may be opportunities for the company to delayer its structure in order to reduce costs, improve communication, and encourage delegation within the business organization.