American Apparel: Vertically Integrated in Downtown L.A. Essay example

2156 Words May 21st, 2012 9 Pages
American Apparel: Vertically Integrated in Downtown L.A.

1. The textile/clothing sector is vertically de‐integrated: design, textile manufacture, clothing manufacture, distribution are undertaken by specialist firms. Why? In this case, clothing firms like American Apparel have vertically integrated, in order to get time to market, increase resources availability, and cost efficiency. However, many textile/clothing sector is vertically de‐integrated which means that their design, textile manufacture, clothing manufacture, distribution are undertaken by specialist firms. (De-verticalization) is the process of separating functions and services from a once-integrated business model. Companies such as Levi Strauss & Co., who emphasize the
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For its wholesale operations, being able to satisfy the large demand with quick turnaround allows American Apparel to capture business. Orders received before 4:30pm are shipped in the same day.
Internally, its vertical integration saves lots of time of delivering messages and ideas in organization. Designers in American Apparel don’t have to wait for a long time for the virtual products after they finish their design. In addition, since the garment market is easy to imitate, lead time is one of the major advantage of the innovator as is first mover advantage, and its vertical integration business model plays an important role in gaining the advantage of lead time. Therefore the allowance for demand variations, easier quality control, the testing of small batches for market analysis, the tightly knitted information flows and the flexible allowance for quicker response to fashion and market changes are the advantages and reasons and the role of vertical integration in American Apparel as its part of their core competences and gives them a competitive advantage. (See Exhibit 1.1 as complimentary)

3. As American Apparel diversifies & expands internationally, should it maintain its vertical integration? Vertical integration (“make it yourself strategy”)at American Apparel is at the core of their competences and production

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