Case Study: American Apparel
The competitors had better financial power and lower cost because of their outsourcing model. Something American Apparel will never do. I do think American Apparel needs to worry about substitute products. Even though their product is a bit unique from their competitors just because its made in the states, their competitors might have the same quality products but cheaper, therefore, becoming a substitute product for American Apparel products.
Trend Analysis During the years 2008 to 2013, American had more down than up both financially. The company’s net sales increased from 2009 to 2013. Even though there was an increased, the company resulted in a net loss between 2010 and 2013. The increases in sales were not enough to cover all the losses, taxes, and interest. The company saw their profit slowly decrease from 2008 to 2013, while their expenses were increasing. Furthermore, the company’s share price drop significantly from 2008 an approximately 15 to an approximately 2 in 2013. I complete detail of the trend analysis is on the spreadsheet.
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Was American Apparel creating value for customers? The answer depends on the year. At first, the company was creating value for their customer with a slightly differentiated product. When the company started struggling with the loss of the workers and the company was transitioning to a new distribution center that product delivery was delayed, the company experienced, each time, a freeze in their value creation for their customers. The next group American Apparel needs to create value for are their employees, which they did very well. According to the Los Angeles Times, in 2003, the company again differentiated itself from the competition and the industry by providing higher than normal wages and benefits to all their employees. Last, but not least are the stakeholders. The company was barely creating value for their stakeholders. The company’s return on equity was negative for 3 years in a row, 2010 to 2012. It got a bit better for 2013, where it went to the positive