The paper "American Apparel - Strategic Issues and Problems" is an outstanding example of a business case study. American Apparel is a company in dealing with basic apparel and branded fashion. American Apparel engages in the production of T-Shirts – common American summer wear that may carry statements of personal identity that shows one association with the charity, religion, sports teams or political groupings. The United States imports T-shirts made from the cotton it grows locally. However, the company would later venture in creating other goods in clothing industry such as sweaters, scarfs, and socks in an effort to diversify its share of the market.
Internal and external conflicts have badly hit the American firm forcing it to rethink its strategies to retain as well as regain most of its customers. Identification of Strategic Issues and Problems American Apparel uses the vertically integrated model to produce its products. This approach is characterized by the production of its good in Downtown Los Angeles whereby every process from designing, marketing, and distribution amongst other business operations. This method upholds speed at the center of its core as a way of meeting market demands.
However, many CEOs have termed this approach as risky as it may lead to failure in the whole of the supply chain if proper measures are not enacted to sustain its viability (Bowersox, Closs & Cooper 2010). In line with the case study at hand, American Apparel stock price has dipped and it is increasingly failing in meeting its debt obligations since the beginning of 2011. Its management team seems not to agree on what exactly causes it to fail to break even and earn profits.
Some attribute the company’ s downward vertical integration model is the one preventing it from making profits, as it cannot outsource production work to subcontractors operating in low labor cost countries. American Apparel has aimed its marketing strategy at increasing brand awareness and set positive brand recognition among urban youth. The company has been organizing focus groups and conducting market research against its existing and prospective consumers as a way of understanding consumer behavior in relation to marketing trends. The objective of these extensive marketing campaigns has been to position American Apparel as a retail brand that focuses on premier fashion, especially for the youthful urbanite thus strengthening its brand presence (Kozami 2002).
Certain problems arise due to this notion. It has become hard for the company to venture into new markets as the brand has been associated with a particular demographic (Butner 2010). This, in turn, has made it hard for the company to widen its profits margins. The management strategy embraced by American Apparel in handling its employees is aimed at making them feel comfortable in the workplace thus increased productivity.
The employees are encouraged to dress casually in line with their line of duty while the human resource team proactively works to ensure that the employees have access to services such as healthcare to increase their morale in the workplace. Therapists, free lunch, and parking are some of the privileges employees are assured of when working for American Apparel. It stood out for paying competitive rates of wages and benefits to its employees. This strategy is aimed at ensuring that employee satisfaction is met as a means of achieving long-term continued success for the firm (Aswathappa 2005).
With a case in point, American Apparel CEO, Dov Charney was found to be employing workers who were not registered as US citizens. This was a crippling blow to the firm as it had to dismiss approximately 1500 workers who were played a vital part in ensuring that the vertically integrated model. Additionally, major shareholders deemed this inappropriate for business as financial information on the dismissed employees was found to be inconclusive.
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