Ol 501 - American Apparel

OL 501 Milestone Three Worksheet

In this milestone, discuss what the company needs to do to change direction and what the success will look like. Complete the following:

1. “American Apparel is about vision, passion, intensity, brand-free, sustainable, fair wages, solar power, recycling, creativity and the can-do-spirit,’’ according to the past CEO Dov Charney (Mehta, 2016)”.  They are a vertically integrated manufacturer, distributor and retailer of branded basic fashion apparel and accessories for consumers, widely known for their iconic basic t-shirt! For my (SWOT/TOWS) analysis some of the weaknesses and threats I found with American Apparel were that they are deeply in debt, currently without leadership due to the recent firing of the CEO, their current marketing strategy is sexually provocative and controversial, and facing high competition and the cost of raw materials is rising.  The strategy that I would recommend for American Apparel to implement in order for them to move in a new direction would be to immediately hire a new CEO that would help to rebuild the company and propel them in the right direction and out of debt for long term growth.  Tackling the massive debt should be first on the agenda when the new CEO steps in and seeing where they could cut cost for example closing underperforming stores.

1. An effective board or Board of Directors responsible for decisions related to high company financial performance. Ultimately it is the role of the board of directors to hire the CEO or general manager or CFO of a business and assess the overall direction and strategy of the company.  In the strategy for American Apparel the Board of Directors with help from HR would interview and hire a the new CEO who they feel would represent the company positively, has an extensive and proven successful background in running a business and who would ultimately turn the company around.

1. “With a net loss of $106 million in 2013, a substantial increase over its net loss of $37 million in 2012, the company had been struggling for survival (Mehta, 2016).” American Apparel has not been a profitable company since 2009 and they took a major hit when shares of the company drastically fell from $15 per share to only $0.56 per share. Trouble repaying debt, declining profits, lack of cash flow and their provocative advertising all negatives for American Apparel. They are some of the main reasons for the brand being in their current financial state. My plan to improve organizational performance to improve profitability would be to replace the CEO, hire legal documented workers for fair wages and create a new ad campaign that isn’t so sexually provocative but still appeal to consumers.

1. The strategy and performance improvement plan will affect all functional departments of American Apparel. The marketing department will play a critical part in the plan as they will need to really promote American Apparel through major campaigns and advertisements. Maybe create a commercial with a catchy jingle and invest in billboards in locations such as malls or major highways. They should run ads through all the social media platforms like Twitter, Facebook and YouTube. They should also redesign the website in order to help increase e-commerce. HR or human resources would be responsible for recruiting new employees and staff that employ the values and mission of American Apparel and are willing to put in hard work for a fair wage and help the company rebrand.  Financial team or department would have to work on ways to reduce debts