OL 501 Milestone One PDF

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Don Wells OL-501 Sep 1, 2019 Final Project Introduction Having the vision of being one of the top clothing companies in the world, American Apparel planned on keeping “everything in house” (Mehta, 2016). Based out of Los Angeles, the retailer has approximately 246 stores in 20 countries internationally (Mehta, 2016). With the focus of their mission being “to make great quality clothing without using cheap “sweatshop” labour and exploiting workers”, CEO and Founder Dov Charney strove to provide “vision, passion, intensity, brand-free, sustainable, fair wages, solar power, recycling, creativity and the can- do spirit” (Mehta, 2016). Challenges that American Apparel were faced with included debt, hiring employees, competition after a recession, and the CEO being accused of willful misconduct. They became inundated with debt by not properly investing their profits such as using most of their profits to enhance already profitable stores. As a result, they had to fire about 2,000 employees putting most of their production on hold because they didn't have the manpower to produce the product. When American Apparel went through a recession, other companies had the financial revenue to lower cost of their product creating a competition between the other retailers and American Apparel. Potentially on of their biggest challenges faced by the company was the CEO and founder being surrounded by sexual allegations presented by employees. There are a lot of threats and opportunities from the outside when dealing with a company as big as American Apparel. A couple of threats being the outside competition and the economic market. Working to come back from the economic recession, the company competed

with numerous big-name stores such as Gap, Urban Outfitters, and American Eagle who had better financial revenue (Mehta, 2016). By not knowing the future of the economic market, this becomes a threat to retailers. If American Apparel were able to foresee the recession in 2009, they most likely would not have become so in debt. Switching from the negative to the positive impact, a couple of opportunities included an increase in job positions and the appeal to various demographics (Mehta, 2016). Staying with their vision, by not outsourcing their work, the job positions were found within the company and filled by individuals within the community. In order to fulfill the goal of being the best clothing store in the world, the company needed to appeal to all types of individuals and different views in clothing (Mehta, 2016). When it comes to dealing with as big company as of American Apparel there are going to be weaknesses and strengths. As for weaknesses the company was not properly staffed. They had to fire about 2,000 employees which put most of their production on hold because they didn't have the manpower to produce that much product. Another disadvantage that American Apparel dealt with was spending money that they didn’t have. The company would spend money to enhance its stores while also drowning in debt. The company had a great CEO at the beginning, he would come up with great fashion plans that would be appealing to the consumer's eye. Charney's mission for the company brought a great image to American Apparel and he made it his number one objective to have his employees treated right. American Apparel was excellent at upholding its mission of making great quality clothing without using sweatshops. They would make all their clothing in the house and would use quality material for their products. A strategy that CEO Charney should have followed is focusing more on online sales rather than in store sales. This would help focus more on reproducing the product and still be able to make a profit from online. A good plan to come up with to eliminate bad hiring is to make

sure human resources is doing a deep background check to make sure the employees meet the qualifications. A way to grab more customers would be by improving their mission by saying that not only do we want to please their employees but satisfy customers. By having the company add opportunities to the market they would be able to keep the product in inventory, so that will have enough product to restock. “The impact of the labour termination of employment was so severe that the company could not fully recover.” (Mehta, 2016) American Apparel employment issues were so bad that when the recession hit, the company had a net profit of $1.11 million and had a net loss of $86 million. The company needed to improve on how they would spend their money while being in debt. “Despite all of this debt, the company kept enhancing its stores. Because of significant efforts, the net loss declined in 2011 to $39 million compared with $86 million the previous year.” (Mehta, 2016) As a whole, American Apparel has a great mission statement, but when looking at the situations, their focus was on the quality of their clothing and not enough on the employees to see if they have the right documentation, their budget was being followed, and no outside influences such as criminal charges affected their reputation.

Reference: Mehta, A. (2016). American Apparel: Drowning in Debt? Ivey Publishing, 1-5....