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American Apparel

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American Apparel

American Apparel, founded in 1997, began its business strategy differently than most other companies. The founder, Dov Charney, believed in the philosophy of being a vertically integrated company. This means they manufacture, produce and sell their own products. Sales were slowly decreasing over the years because of poor fiscal management. To remain the largest U.S. apparel store they needed to tighten the reins on their financial management.
Synopsis of the Case American Apparel is the largest clothing manufacturer located in the U.S that is sweat-shop free. They are infamous for selling their sexually explicit t-shirts as well as other clothing. All American Apparel operations are done within their facilities located in downtown LA. They enjoy high retention rates through generous benefits packages and other incentives. American Apparel strives to grow to be the most recognized clothing line in the U.S. by properly managing their finances. Relevant Factual Information about the Problem or Decision the Organization Faced American Apparel offers a comfortable environment for their employees. They offer incentives such as health care for employees and families, free parking, bus passes, low auto insurance, health and wellness centers, subsidized lunches and training to improve their job and management skills (Grant, 2010, p.259). Charney realizes that the benefits he offers are costly but they ensure continuity amongst his employees. Since 2004 profits have doubled for American Apparel. The hope of expanding nationally and even internationally was a realistic goal until profits slightly slowed in 2009 and further decreased in 2010 (Chang, 2011). The blame was thought to be because of rising cotton prices and a decrease in work productivity.
Explanation of Relevant Concepts, Theories and Applications Derived from Course

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