American Apparel Case Analysis Essay

Key Facts of the Case (no analysis)-Who is the decision maker? (Remember in analyzing a case you bind to put yourself in the position of the decision maker and try to figure out what YOU would do in his/her position). -maximum 5 key facts that summarize the case.Key closing churchmanBoard of Directors (AA is a publicly traded lodge)Key FactsAmerican Apparel minimized their use of outsourced labour. They localized their manufacturing activities and were known for their anti-sweatshop practices The social club was also praised for their environmentally social practices such as using organic and recycled materials in several of their products, and participating in charitable causes Their advertising campaigns stirred up a lot of disceptation for the company, as roughly consumers believed them to be too sexual and borderline pornographic Charney (CEO) took the ad pictures himself using women he found on the streets or his own employees. As a hiring practice, employees were requi red to provide full length self-portraits to him Charney brought heat to the company via sexual harassment lawsuits and by creating a hostile working environment (using severe language, walking around in his underwear, flirting with employees, etc.)Problem(s) Statement-What is the main problem(s) or opportunity(s) that you (as decision maker) must deal with? -How urgent and how important is this issue and why? important ProblemThe main problem presented for American Apparel is that there are discrepancies between their controversial advertisements and study practices and their positive business initiatives, which has resulted in a sacking of sales for the company. They must determine how they are going to move forward and inspire a turnaround.UrgencyModerately urgentThe company forecast a turnaround by 2015 (3 years to the future)Problem(s) Analysis-What is the background that has led to the problem(s)?-What are the key points that the decision maker must consider when figuring o ut a solution? (eg. constraints that limit the possible solutions or opportunities that could arise) -If a financial analysis is required, outline that in this section. -Perhaps a different format for analysis is more provide? (eg. SWOT, PEST, Porters Five Forces).BackgroundAmerican Apparel strived to promote raw natural beauty. To do this, they used real, non-photo-shopped, airbrush-free models in their advertising campaigns Their signature advertisements have women in racy outfits and poses Charney took the pictures himself and either found women on the streets or used his own employees Charney said it was the companys way of marketing to millennials, targeting contemporary adults who sought after sexual freedom, and fighting against the pressures on women to achieve perfection Charneys strange and inappropriate workplace behaviours made some employees feel uncomfortableSWOTStrengthsPro-labor practicesAnti-sweatshopmake in USA labelPay their employees nearly double minimum wage Provide job security and good benefits for employeesEnvironmentally friendly practices usance of organic and recycled materialsStrong international presence 253+ retail stores in 20 different countries Reasonably priced and good quality productsWeaknessesProvocative advertisementsStore environment makes some customers feel uncomfortable reeked of sexual sin CEO Dov Charneys workplace behaviour and practices which have led to complaints and lawsuits The companys cost of production is presumable higher than their competitors because of their made in USA policy High labour costs$120 million in debtOpportunitiesThe company has the opportunity to tame their challenging advertising campaigns They can also steer the focus back onto their positive business initiatives Ethical buying habits are on the rise consumers are proper more conscious of the environment Expand online and catalog business sectors Focus product lines eliminate those that arent as successful and profitable Reform advertising campaign focus more on AAspositive political activism and homegrown products Restructure corporate-executive-suite and construct a more positive public shape Expand online and catalog business sectors Focus product lines eliminate those that arent as successful and profitable Reform advertising campaign focus more on AAspositive political activism and homegrown products Restructure corporate-executive-suite and construct a more positive public image ThreatsTheir competition who offer analogous products at equal or lower price points, and have cheaper production costs Threats of lawsuits against Charney which create a negative public image Threats of consumers shopping elsewhere due to dissatisfaction with AAs sexual advertisementsSWOT Findings The SWOT analysis shows that American Apparel needs to bring the focus back onto the strengths of the company. They need to remind consumers of the ethical motive the company was built on and their good leave behind and valuab le contri scarceions. Their weaknesses primarily revolve around being too overtly provocative, whether this is towards consumers or within the workplace itself. The company clearly can non go on with this dispute, as they risk overshadowing the positive aspects of their business.Decision Criteria for Solutions-What goals or objectives must be achieved by any potential solution to the problem? (eg. essential maximize market share) -What constraints limit the range of solutions (eg. Cant cost more than $1 Million)Goals and ObjectivesThe goal is to save the companys reputation which allow for in turn stop their money-losing streakConstraintsMust not incur further debt10Identification of Realistic & Practical Alternatives available to the Decision Maker In most situations there will be at least 3 alternatives, one of which can be status quo. One or ii short sentences to describe each. Each alternative MUST be a stand alone solution to your problem(s).Alternative 1 American Appare l should firing their current CEO, Dov Charney,and elect a replacement.Alternative 2 American Apparel should change their advertising strategy by toning down their sexual nature and charge on their business strengths to create positive publicity.Alternative 3 American Apparel should continue with their current advertising strategies.Pros and Cons of each AlternativeAlternative 1ProsCharneys provocative vision and proneness to scandal will leave the company with him It shows that AA will not stand for sexual harassment and inappropriate workplace behaviours The company can bring in a new vision and have a fresh startConsThe company may lose customers who back up Charney and his vision The replacement CEO may not be any better than Charney at running the business Alternative 2ProsIt helps AA to fix the disjunction between their ethical and wrong practices It reminds consumers of the companys positive valuesConsCharney may not go for the new vision he may campaign backIt doesnt s olve the issue of unethical workplace incidents The company may lose customers who support the provocative and natural ads Alternative 3ProsNo changes will need to be made, therefore employees will not need to be trained or guided through any change The controversy surrounding the company may actually bring in customersConsDiscrepancies of the companys business practices will not be solved Consumers who do not like the provocativeness of the company may continue orstart to avoid itRecommendation & Implementation Plan You must have a sentence that says, I recommend alternative Do not combine alternatives. Pick just one. Defend your choice of alternative. Explain WHY it is better than the others. If applicable, explain how the alternative will be implemented. (who, what, where, when, how)RecommendationI recommend alternative 1 firing Dov Charney.I do not believe alternative 3 is an option because the unethical advertisements and workplace practices would likely catch up with the co mpany and really affect their performance in the long run. The reputation of American Apparel would just continue to deteriorate if nothing is changed, which would deter consumers from shopping there.Alternative 1 is a better path to take than alternative 2 because it really gets at the base of operations cause of all the issues Dov Charney. The provocative and controversial advertisements were largely inspired by the CEO himself. Simply changing the companys advertising campaigns is good and well, but there is no guarantee that Charney will even go for that. And whats to say he wouldnt go back to his old ways in the future? Also, alternative 2 doesnt fix the issue of employee complaints and sexual harassment lawsuits that have given the company a bad image. Alternative 1 has the potential to resolve both the advertising strategies and the inappropriate workplace incidents.ImplementationWhoBoard of DirectorsWhatFire Dov CharneyWhereAt a board meetingWhenAs curtly as possibleHowGa ther all documentation of Charneys inappropriate behaviours Review the termination agreement that was made at the time of hiring Charney Review the companys succession plan for the CEO determine who may be able to take Charneys place in the interim Seek rede from the companys lawyers on the best method to fire CharneyOverall Quality (logical consistency & readability)