Ol 501 Milestone one Worksheet

OL 501 Milestone One Worksheet

In this milestone, consider your chosen company’s mission (purpose for existing) and values. It is also time to evaluate the internal and external environments of the company. You will do this with a Threats, Opportunities, Weaknesses, and Strengths (TOWS) analysis. Write in prose, expanding on the answers to compose a 2- to 3-page paper (exclude the leading questions).

1. Identify the organization’s vision, mission and values.

American Apparel manufactured, distributed, and retailed basic fashion apparel for all genders and ages. The mission was to bring quality clothing without exploiting workers or without using sweatshop labor. “American Apparel is all about vision, passion, intensity, brand-free, sustainable, fair wages, solar power, recycling, creativity and can-do spirit”. (2014, June 24)

1. Explain the challenge(s) facing the organization. Support with specifics from the case.

Competition began emerging, creating competition for American Apparel from other companies such as EXPRESS, URBAN OUTFITTERS and GAP. These companies could offer similar clothing to consumers at very cheaper prices because of outsourcing. Challenges that impacted American Apparel were so big that the company went from making lucrative profit to being in the negative of 86 million in 2009. American Apparel faced a drastic drop in finances very fast. The year of 2009 was a very big year that challenged the company and brought insight if the company would thrive or not. During a one year time span, American Apparel went from a trending company in 2008 to a company in debt in 2009. Global recession that year did not help the company to get out of the hole it was in; the company went from a net profit of 1.1 million to a net loss of 86 million. Losses and lack of liquidity of the company put them in bad financial shape. In  2011 the company stated that it would file for protection of bankruptcy. CEO Charney was able to bring in investors last minute to save the company from default.

1. Identify and discuss two to three threats the company faces from the external environment. Similar to opportunities, these could take the form of shifts in market taste, changes in laws or regulations, competitor actions, and others. Support your response with information from the case.

Threats American Apparel faced were government laws and regulations that made a big impact in the company’s finances. “During 2009, a federal investigation uncovered irregularities in the identity documents of workers when they had been hired by American Apparel”. (Preston, 2009) This investigation required the company to terminate 2000 workers that year ,making a huge decrease in operating profit. Debt was already taking such a toll on the company, but in the year of 2014 the company dismissed Charney because of personal behavior reasons. Another threat that made a big impact for American Apparel and to me personally, is that it became a trust or moral issue for the company. We as consumers want to buy from people we trust, and those that we view as good people with positive light. Example being the reason so many people like to eat at Chick-Fil-A is because of the rapport the company upholds. The company fired Charney from willful misconduct based on sexual assault and sexual harassment cases. “Analysts viewed this event as the last nail in the coffin, questioning whether Charney’s exit from the company would trigger the default the company had been avoiding for so long”. “Further questions remained regarding which performance areas had dragged the company down in debt and whether American Apparel had lost its appeal and Charney had lost his charm”. (Mehta, 2016)

1. Identify and discuss two to three opportunities in the external environment that the company may be able to take advantage of. These could be new products, changes in laws or regulations, a misstep from a competitor, expansion into new locations/countries, and others. Support your response with information from the case.

Change is not always bad and I believe that the company could have benefited from that statement alone. The approach that the company could have introduced involves bringing in other investors sooner than the company did. They could have incorporated financial assistance before the debt became so bad to handle. Marketing tools from change could have involved telling consumers that to benefit them with great prices the company would start to offer outsource solutions for products to be made in a timely fashion for production and lower costs for buyers. Still maximizing on their no sweat shop tolerance but benefiting them to be just as competitive as GAP and URBAN OUTTFITTERS. Having a merge line could have made them more exclusive and reputable for buyers to be intrigued to come back and buy. FOREVER 21 is doing an exclusive line with BABY PHAT, a brand that has not released merchandise to the public in years. Being that BABY PHAT has merged with FOREVER 21, everyone is flocking to the old brand that has not been popular since 2008. Being creative, thinking outside the box, and creating a better marketing campaign could have greatly benefited the company. Old Companies revamp themselves everyday such as FILA, REEBOK, and KARL KANI all revamp themselves every day and companies make a comeback because of better marketing. This marketing being a benefit to merge with another successful company or better ideas to put them in better financial futures.

1. What are the company’s weaknesses? What does it not do well or needs to improve? Support your response with information from the case.

“The operating profit decreased from 36 million in 2008 to 3 million in 2009. This change took affect when the company released 2000 workers, instructed from government regulations and orders to do so”. (Mehta,2016) The company does not thrive well for marketing purposes or being agile. When the employees were let go, there should have been a lot of hiring to keep up with the production and demands at that time. The debt had become so severe; before it became that bad, there should have been plenty of communication strategies on how the company can revamp to lower cost for consumers and make profit for American Apparel. The mission statement included that the company was creative, visionary, intense, and passionate with a can do spirit; but the weakness is that American Apparel did not seem to execute.

1. What are the company’s strengths? In other words, what does it do well? Support your response with information from the case.

The vision of the company was there, and the approach worked well. I like the strategies used within the company. The product was there; it just needed better execution or being able to change when the circumstances of the company changed. Creating so much expansion in the earlier years of the company and having the title of brand free attracted those who loved fashion. “The company created strong brand recognition and its products appealed to the young, with its trendsetting designs and Charney’s unique fashion sense”. (Mehta, 2016)

1. Fill in the TOWS matrix below based on your analysis.

Fill in the matrix below with your TOWS analysis.