Ann Taylor Case

1983 words 8 pages
Introduction/Case Issues

Ann Taylor is being affected by external and internal factors that are making the company fight for survival in the specialty retail industry.

Ann Taylor is being affected by the declining economy, which is generating a wave of retail closures. The company is being threatened by slowing consumer demand due to the worsened macroeconomic conditions. Shoppers are now more careful when spending their money and as a result Ann Taylor lost $333.9 million in 2008 and the uncertainty continued for 2009. This loss also affects the company in the stock market because it makes it reluctant to give any profit forecast for the coming quarters and therefore causes lack of confidence from investors. The economic situation
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The threat of new entrants is high when economies of scale are low, which makes it more expensive for the company to produce clothes. When the product differentiation is low there is greater threat of new entrants because the customer can perceive all brands in the same way without any competitive advantage or value. Also, when capital requirements are high it is more costly to produce the product and sometimes even unaffordable.

The buyer power is high when product differentiation of supplier is low, which gives the customer the freedom to choose among the different alternatives without relying on specific characteristics of the product.

Supplier Power is high when the differentiation of the supplier’s products is high, which makes them take advantage of the benefits that the product gives and therefore create a competitive advantage. If the clothes are the same the customer can purchase the competitors since it’s not very different from the one desired (e.g. Ann Taylor) and it might provide another benefit such as price.

Internal Analysis
Tangible Resources
• Positive year 2009 total asset turnover= sales/total assets= 2,194,559 / 960,439= $2.28. This amount represents that for every dollar in assets the firm generates $2.28 in sales. This valuable result shows how effective the assets are being used to generate sales in Ann Taylor.
• Production outsourcing at locations in over 19 countries and from approximately 220 manufacturers and vendors,

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