American Appareal

Topics: American Apparel, Clothing, Vertical integration Pages: 5 (910 words) Published: June 29, 2014

Michael Fleming


Dr. Massecar

PHIL 2600

November 15th, 2013

The Good of Apparel;
(Chapter 7)

1) American Apparel is a multinational corporation at the crossroads of profitability and nationalism. The clothing industry is one of the biggest manufacturing sectors with respect to the exploitation of human rights. American Apparel has made numerous landmark moves to get away from the negative connotations of the clothing industry. There are 3 main ways that American Apparel has tried to combat these negative associations; utilization of Vertical Integration, Sweat Shop Free and 100% Made in USA. Vertical Integration allows for AA to know exactly who makes, and how they make it for every input in the manufacturing process. This means that the business is consolidated and every decision comes from the same place allowing for autonomy across business segments. “In the past decades, it has become the norm amongst the majority of US apparel companies to move their manufacturing operations abroad to third party vendors. American Apparel has kept it local. We are vertically integrated, and operate the largest apparel manufacturing facility in North America, right in Downtown LA. Though it's not the easy road to travel, this has always been our business model.” ("Vertical Integration") As outlined on the website, American Apparel prides itself on not leveraging sweat-shops in efforts of higher profit margins. Instead of exploiting a poor country for its low cost labour, American Apparel utilizes thousands of American workers making a competitive wage with benefits. American Apparel believes that this is actually a competitive advantage because of the amount of people who would associate with the importance of USA made clothing. “Thousands of indutrial workers making our clothing at our state-of-the-art facility in Down Town LA earn an average of $12 per hour, plus medical and other comprehensive benefits for themselves and their families.” (“Sweat-shop Free”) Lastly, American Apparel is 100% American made from design to production. More specifically, LA receives a huge boost to the local economy from the large number of employees based there on top of additional taxes from large number of workers in the area. This on top of healthy food choices available and on-site gyms make American Apparel a respecting place to work.

3) By producing all clothing nationally American Apparel has given itself a collection of competitive advantages, the biggest of which being the marked stability over competition. If the price of cotton went up internationally, a firm that relied on being the cheapest is at a disadvantage because the difference in price is shrinking. People who buy for the cheapest product will be more subjected to price changes but people who buy American Apparel will still purchase American Apparel. Anothe huge advantage is the ability to utilize infrastructure/economic stability of USA. Who says cost of labour doesn’t drastically rise in the next 10 years. Being based in the infra-structure rich USA allows for easier barriers of entry into new markets in addition to a more stream-lined supply chain. Another huge advantage for American Apparel is that they know that the business environment for which it operates in will not go through any huge changes. They are not in existence as a company because a political dictator has allowed only there company to prosper. No huge changes will happen to the US business system. Another huge benefit is the positive press/ customer recognition of good manufacturing practices. The positive word of mouth and the large presence in LA gives American Apparel a strong “grass-roots” feel to the company.

5) If American Apparel exploited developing countries for their labour resources or did not support ethical manufacturing processes, there would be a lot of suggestions...

Bibliography: Simon, Michele. Corporate Accountability International,
"Clowning Around with Charity: How McDonald 's
Exploits Philanthropy and Targets Children." Last modified
October 29, 2013. Accessed November 15, 2013. philanthropy-and-targets-children.
American Apparel, "Vertical Integration." Accessed November
15, 2013.
American Apparel, "Sweat-Shop Free" Accessed November
15, 2013.
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