OL 501 Milestone One Worksheet

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OL 501 Milestone One Worksheet American Apparel’s mission was “to make great quality clothing without using cheap “sweatshop” labour and exploiting workers” (Mehta, 2016. Their goal was to make product that consumers loved without using cheap or exploitative labor practices by having consolidating every step of their production in-house (Mehta, 2016). Former American Apparel CEO Dov Charney listed their values as “vision, passion, intensity, brand-free, sustainable, fair wages, solar power, recycling, creativity and the can-do spirit” (Mehta, 2016). American Apparel’s values are detailed on their website. It promotes, “American Apparel has always been a voice for inclusiveness, equality, human rights, and basic freedoms. Freedom of expression and an empowered individuality have always been central to the love, passion, and discourse around American Apparel. We find our models from all over the world, emphasizing real beauty and individuality. Our ads feature diverse individuals selected not just for their appearance but also for their intelligence, unique perspectives, and interesting personalities. At American Apparel, we don’t believe in borders; in fact, only a small percentage of us are actually American. Since our creation, we have embraced the idea of globalism and diversity, bringing together people from all around the world. Our commitment extends to providing better working conditions for our employees, ensuring they earn significantly more than legally mandated minimum wages and receive valuable benefits” (https://retail.americanapparel.com/about-us/what-we-stand-for). The case study also highlighted some of American Apparel’s challenges. Due to hiccups in its inventory management system a new distribution center in Los Angeles,

American Apparel experienced increased operating costs (Mehta, 2016). American Apparel also faced other challenges including CEO Dov Charney’s continued controversial lawsuits and his firing for personal misconduct, shipment delays due to immigration-related employee loss, and controversy over its sexualized advertisements (Mehta, 2016). American Apparel encountered various challenges, including the impact of the 2009- 2010 global recession, which made it difficult for them to recover from labor shortages due to immigration issues. They also faced challenges such as rising raw material costs, inventory management issues, and competition from more affordable brands like Gap, Urban Outfitters, American Eagle, and Express (Mehta, 2016) American Apparel has opportunities to expand globally, raise awareness about their online shopping option among customers, and secure additional share capital (Mehta, 2016). American Apparel also can create more sales by expanding their product and style range. Their original mission was to, “We are trying to rediscover the essence of classic products like the basic T-shirt, once an icon of Western culture and freedom” (Mehta, 2016) If they expanded their product range beyond classic t-shirt designs, they could compete with other brands that feature less conventional designs. American Apparel faced weaknesses such as CEO Charney's controversial lawsuits and personal misconduct, immigration-related issues causing incomplete orders, and sexualized advertisements (Mehta, 2016). American Apparel’s strengths include its emphasis on ethical labor practices and the fact that their products are made in the US., strong brand recognition, use of a vertically integrated business model, and its strong e-commerce platform.

TOWS Matrix for: American Apparel List of Threats : 1. competition they faced from more affordable brands including Gap, Urban Outfitters, American Eagle, and Express 2. Global Recession 3. Increased cost of raw materials and inventory management List of Opportunities : 1. global expansion 2. increased customer awareness of their online shopping options 3. raising more share capital 4. Expanding product line beyond classic designs List of Weaknesses : 1. Past financial instability and bankruptcy 2. High production costs in the US 3. Poor public image as a Charney’s lawsuits and misconduct and their sexualized advertisements. 1. American Apparel could source some of its materials and production steps outside of the US. 2. American Apparel could create less sexualized ads and use more family and friends themed ads like their competitors (GA, etc.) 1. American Apparel can expand their product range beyond classic t-shirt designs allowing them to compete with other brands that feature less conventional designs. List of Strengths : 1. Emphasis on ethical labor practices and the fact that their products are made in the US. 2. Emphasis on inclusivity, equality, human rights, and basic freedoms 2. Strong brand recognition 3. Vertically Integrated business model 4. Strong e-commerce platform 1. Since American Apparel has a strong vertically integrated business model, they could open more additional US factories in a cheaper location that LA and increase their productivity. 1. Since American Apparel places an emphasis on ethical labor practices and the fact that their products are made in the US, they could use that same ethical business model outside of the US granting them greater opportunities for global expansion. American Apparel’s strengths include its emphasis on ethical labor practices and the fact that their products are made in the US., strong brand recognition, use of a vertically integrated business model, and its strong e-commerce platform. Based on the TOWS analysis, some strategic areas for improvement in the organization’s approach to doing business would include sourcing some of its materials and production steps outside of the US, replacing sexualized ads with more family and friends

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themed ads like their competitors (GAP, etc.). American Apparel could also expand their product range beyond classic t-shirt designs allowing them to compete with other brands that feature less conventional designs. American Apparel has a strong vertically integrated business model (Mehta, 216), so they could open more additional US factories in a cheaper location that LA and increase their productivity. Since American Apparel places an emphasis on ethical labor practices and the fact that their products are made in the US, they could use that same ethical business model outside of the US granting them greater opportunities for global expansion ( https://retail.americanapparel.com/about-us/what-we-stand-for ). Based on American Apparel’s mission and values, I would suggest they start with the strategies of using their ethical labor practices outside of the US. Since that is such a large part of their core value, the public would have a more positive response to it and they would see an increase in their global expansion efforts. References https://retail.americanapparel.com/about-us/what-we-stand-for Mehta, A. (2016, April 14). American Apparel: Drowning in Debt? Ivey Publishing. https://services.hbsp.harvard.edu/lti/links/content-launch

OL 501 Milestone One Worksheet

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