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Case Analysis Of American Apparel

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Background

Dov Charney, who rose to profitability as a T-shirt by applying unique business model, founded American Apparel in 1997. Company’s headquarters and manufacturing facility were located at the same building in downtown Los Angeles, with Charney paying his workers high salaries and providing all- inclusive benefits. While the costs of manufacturing process were significantly higher than other company’s, the company made itself capable to grow by applying “vertically integrated” structure. In this structure all features of business operations were combined for maximum efficiency and speed of production.
However, since 2000 company was continuously doubling sales, therefore American Apparel expended into retail, along with expanded offering …show more content…

Its official values have been stated as:
"Passion, innovation & ethical practices for the clothing industry. - That's American Apparel.

• Apparel workers paid up to 50 times more than the competition
(At American Apparel they call it “Sweatshop-Free”, term they coined in 2002)
• They make their own product
(They have the belief of integration of their manufacturing; distribution and creative process keep their company more efficient than those that rely on offshore or onshore sub-contracting)
• New standard others will follow
(They are confident that they will prove that vertical integration is a valuable business model that can work even better than the status quo model of continuous outsourcing)
• Environmental commitment
(By concentrating their entire operations within a few square miles, American Apparel has a smaller carbon footprint than their competitors)

There are several other clothing and footwear makers that are trying to compete with exploitive mega corporations. An inspiration for developing and applying this vertical integration business model Charney found in the magazine Adbuster. The Adbuster magazine sough to change the power structure within the companies, along with the exploitative norms that have been present gradually in the 21st century

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