American Apparel: Drowning in debt is the case study of a company passing through a critical juncture because of the debt burden. The company faced an immense crisis in the form of debt repayments and corruption scandals of its leaders that have engulfed its prosperity prospects.
TOWS Analysis
Threats to the organization
American Apparel is facing multiple threats that are detrimental to its prosperity. In this regard, the increased cost of production owing to hikes in environmental taxes is one of the major threats. Additionally, the over-dependence on credits has posed severe threats to the company’s progress. It has led the company towards bankruptcy and has posed financial distress. The ongoing trade war between America and China is also a major threat to American Apparel that is hampering its supplies to many markets, including China (Mehta, 2019).
Opportunities for American Apparel
Many ongoing trends in the external environment can be used as opportunities for the company’s future growth. In this context, the global world order is one of the great opportunities for American Apparel that can expand its sales and maximize its financial gains (Noel, 2015). Simultaneously, the trend of standardization in the market is another opportunity that can be used to limit the number of offerings and can produce the most refined products (Mehta, 2019). Likewise, the technological interventions and amalgamation of Artificial intelligence in businesses can also maximize the gains and minimize the losses for American Apparel.
Weaknesses of American Apparel: Drowning in Debt
American Apparel has some weaknesses as well that are hindering its prosperity. The absence of diversity in its workforce is one of the major deficiencies of the company. It relies mostly on domestic workers, limiting its access to international markets. American Apparel is also getting low returns on investment that needs to be replaced with a return on an equity basis (Mehta, 2019). The company’s tarnished image of its unhealthy environmental policies is also a weakness that needs to be improved.
Strengths of American Apparel
There are many skills and capabilities of American Apparel that can boost the productivity of the company and can provide a competitive advantage to the organization. The policy of no compromise on the quality of products is the strength of American Apparel that grabs consumers’ attention (Mehta, 2019). A diverse products portfolio is another attribute of American Apparel that serves the choices of multiple domestic market segments. The strong bonding of American Apparel with its existing suppliers is the company’s strength that is catering to the company’s financial needs.
