American Apparel Essay

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Pages: 9
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American Apparel: Vertically Integrated in Downtown LA

Table of Contents

Introduction 1
The first advantage and disadvantage 1
The second advantage and disadvantage 2
The third advantage and disadvantage 3
The fourth advantage and disadvantage 4
Conclusion 5
References 6
Appendix 7

Introduction
American Apparel is one of the largest clothing manufacturing companies in the United States. The main manufacturing base for American Apparel is located in downtown Los Angeles. American Apparel not only produces basic apparel for men, women, kids, babies, and pets, including, but not limited to underwear, swimwear, shoes, and vintage accessories. American Apparel was founded by Canadian Dov Charney and Sam Lim in 1989. Within seven years, American Apparel became the largest apparel factory of the United States by 2005 and American Apparel was listed on the New York Stock Exchange (NYSE) by 2007. Since Charney mainly focused on selling basic high quality T-shirts, by 2012, the company rapidly became the leading supplier of T-shirts in the United States (Grant, 2013). Charney’s ultimate goal was to build the American Apparel brand and make the company a nationwide and then a worldwide leading manufacturing company. The key principles that he applied to American Apparel are vertical integration, and differentiation. Moreover, he emphasized the role of corporate social responsibilities and resources and capabilities. Currently, American Apparel is a multinational business that has 260 stores worldwide in 19 countries. American Apparel also offers an online shopping in some countries (About us, n.d.).
The first advantage and disadvantage
Charney developed vertical integration for American Apparel, which made American Apparel into a complete garment manufacturer. Charney integrated every step of the manufacturer from design to preparation of material such as knitting and sewing cotton, painting and dyeing the fabric, and distribution to the retail stores (Grant, 2013). American Apparel has not only integrated the manufacturing process but also integrated marketing and advertising. American Apparel performed their own advertising by using their employees and customers as their models. Charney does not want perfect models with good shapes and nice hair. He only wants ordinary models with natural looks. The reason he uses normal marketing strategy is that he wants his customers to see how they will really look with American Apparel clothes, not what they want to look like. Vertical integration in both the production process and the marketing can increase the speed of the production and reduce the whole process time. Most steps of the production are located in downtown Los Angeles, which is the headquarters of American Apparel. Since Los Angeles is one of the most fashionable cities in the US, American Apparel designers will know the market trends of the fashion industry more easily and faster. It allows faster change in the current product and can create new products more quickly. For example, if a jacket has huge sales and a skirt has small sales, then they can increase the production of the jacket and decrease the production of the skirt.
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