ITM 100 CASE 7 notes class PDF

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Lecture notes and helpful case studies with answers to a case from the book...

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ITM 100 CASE 7 1) Social media was a major part of Nasty Gal’s business model as it was their main advertising platform. The site started on my space with 60000 fans and later was present on all major social media platforms such as Facebook, Twitter and Snapchat. Nasty Gal focused most of its marketing budget online on banner ads and paying social media influencers to promote products. Nasty Gal started as a online store on ebay and quickly transformed in to a social media brand, it’s founder Amoruso was very invested on customer feedback and she believed that customer feedback was at the center of everything her company did, that is why she was very active on the company’s social media accounts and used to post content regularly on them and read customer feedback. If there were customer complaints she put a lot of emphasis on fixing them quickly. Overall Nasty Gal was a very “social” business as customer feedback and social media was at the core of her business. 2) The factors that contributed to Nasty Gal’s failure were:  Management: Their management team consisted of young inexperienced employees from traditional companies such Urban outfitters which meant they weren’t the ideal fit for Nasty Gal’s startup business model, all these led to budget deficits, unpaid rent, outstanding payment suppliers, bad decision making and other problems which proved detrimental to Nasty Gal.  Organization: Nasty Gal as an organization wasted a lot of money on things such as it’s over sized headquarters, focused too much on creativity instead of sustainability and profitability, heavy spending on marketing and many others. These factors caused the company to burn through its cash. The founder Amoruso also lacked focus and commitment which led to employee dissatisfaction and reduced productivity, with time her attention also stretched to other parts of her life which diverted her attention from the business. Overall all these factors contributed to Nasty Gal’s demise as a failed organization.  Technology: Technology is the main factor which allowed Nasty Gal to exist in the first place so I would argue that technology wasn’t a reason that led to Nasty Gal’s downfall.

3) Yes Nasty Gal could have avoided bankruptcy. Nasty Gal focused too much on wasteful advertising, the company spent more on attracting customers than it earned from them. They should have focused more on promoting customer loyalty and retaining customers through various means such as increasing variety of clothes, loyalty programs and developing scarcity. Nasty Gal also lacked variety and couldn’t compete with other big name retailers such as Zara which provides a wider variety of clothing at more affordable prices. Nasty Gal should have branched out if its “California cool, young girl thing” which wouldn’t be appropriate in other

parts of Usa and internationally. Catering to local fashion trends would have enabled Nasty Gal to generate more sales and increase revenue. The company wasted a lot of money on big unnecessary expenditures such as its oversized headquarters and fulfillment center which didn’t add any value to the company’s bottom line. Instead Nasty Gal should have taken the advantage of outsourcing its manufacturing to reduce costs to become more competitive in this competitive industry. Nasty Gals founder Amoruso did a great job of getting the company off but as its operation grew and the company took on debt to expand rapidly, Amoruso should have stepped down as the company’s head as her personal life started to take more of her time and instead led someone else lead the company. Nasty Gal also needed to restructure the whole team and hire more experienced workers experienced in running e businesses, focus more on long term survival and customer retention. To sum things up this is how I think Nasty Gal could have avoided bankruptcy....