The main competitor are T-shirt Giants Hanes and Fruit of the Loom (Grant, 2010). The clothing sector is vertically de? ntegrated to include: designs, textile manufacture, clothing manufacture, distribution are undertaken by specialist firms. Synopsis of the Case Founded in 1997, in Los Angeles, California, American Apparel took pride itself by operating as Sweatshop Free manufacturing facility. In 2007, American Apparel employed more than 5,000 workers and operated 155 retail locations across 11 countries (Grant, 2010). American Apparel was a wholesaler and retailer of garments and T-Shirts. Their headquarters and manufacturing facilities were located in the former 1917 Southern Pacific Railroad depot in downtown Los Angeles (American Apparel, 2012).
American Apparel centralized all stages of production in its factor to include designing, cutting, sewing, distributing, photography, and marketing (American Apparel, 2012). With these strong core competencies that made American Apparel stand out from their competitors. Relevant Factual Information about the Problem or Decision the Organization Faced American Apparel ran into many risk factors such as finances and growth which included the ability to gauge fashion trends to consumer preference while still being able to be highly competitive (American Apparel, 2012).
Global economic condition also had a great affect in sales as the consumer purchased by on their income. Another risks when breaking into new foreign markets, was gaining the acceptance for the American Apparel product (American Apparel, 2012). Most importantly, American Apparel recognized that if the cost of the U. S. labor market and raw material increased, it would have had an adverse effect in their financial results and their ability to compete against companies with a lower labor cost structure (American Apparel, 2012).
If due to financial issue they would have to move the manufacturing out of the U. S. this would then affect the branding and marketing image as the 100% made in the U. S. manufacturing company. Explanation of Relevant Concepts, Theories and Applications Derived from Course Materials American Apparel learned from their feedback that they were receiving not only from their consumers but as well from the employees. American Apparel offered a Sweat-Shop free environment by offering incentives to their employees as well as pay raises. American Apparel also developed their own marketing and advertising in-house (Grant, 2010).
The material used for the marketing and advertising were employees or amateur models who appealed to the consumer, The fundamental performance of Speed to Market attributed to the speed and flexibility of the company (Grant, 2010). American Apparel would need to seize the opportunities available for growth as well as internal development by focusing in growing the store base, expand internationally, enter new markets, improve productions efficiently, improve productivity, and expand brand awareness, to name a few (Grant, 2010).
American Apparel has demonstrated remarkable ability to be diverse and adapt to change as well as seize the opportunities available to them. Recommendations American Apparel needs to continue to move forward with their knowledge base that that have been working with. But also to be more diverse within the market opening another manufacturing company so that he is able to keep up with the demand of the consumer (Grant, 2010). Also one main course that would help the company is to make sure that their advertising and marketing is more tasteful and more appealing to the consumer.
They also need to continue to make sure that their Made in USA continues as such due to the consumer not wanting to keep their business and money within the US. Alternative Recommendations American Apparel needs to expand brand awareness to more than the younger generations. Also expand their line of products and availability to stores also making sure that the price is comparable or better to their competition. Continue to make sure that they continue with the incentives to the employees and expand the company in order to reach more people and locations.
Overall the company is on a great path but they need to use the feedback from their consumers in order to continue growing and have a strategy in place for the possibilities that may occur. Conclusion American Apparel does have some strong company strengths as well. When examining American Apparels unique strengths, the manufacturing operations strategy really stands out. American Apparel is a fully vertically integrated corporation. With this American Apparel has controls of everything from the sewing and cutting to the marketing and distribution of their products.
What stands out the most is that their business is a building at their California based headquarters. American Apparel believes that this is a very distinct advantage over their competition as they are able to use their superior manufacturing control to respond to market demand at a faster pace. The highest compliment is their vertical integration is their made in the USA branding campaign. Due to the fact that all of American Apparels products are manufactured in the USA, they are able to promote the fact that they have a sweatshop free environment. In turn this helps to increase brand reputation and drive business with their consumers.