American apparel vertical integration case analysis highlights the product diversification and global expansion problems of American Apparel which faces the challenges of efficient supply chain operations to take advantage of global retail expansion. In this case study, three alternatives have been sort out, each of which pros has as well cons. Based on thorough analysis of the case and management literature, the disintegration along with integrated supply chain has been recommended to enable the company to add more lines of products and target more markets of the world.

The distinctive feature of American Apparel vertical integration is high level of its integration. The company undertakes most stages of its production. It performs its own design, marketing and advertising and owned and operated its entire retails stores even it’s overseas.

Problem Statement:

“how to support product diversification and global retail expansion while overcoming the challenges of complex supply chain”

American Apparel underwent various changes in 2008 by going publicly to follow expansion of stores and diversification of the products. However, as American Apparel diversifies & expands internationally, the company is expected to face issues concerns regarding Financial Management as they are diversifying, expanding and even going overseas.

The current structure of the organization is supportive to the medium sized company where the founder is engaged in approval of design, taking advertisement photographs, selecting sites for new retail outlets. Owing to the targeted expansion, the company is expected to face inventory management a biggest issue. As mentioned in the case study that the auditors have pointed material weaknesses in the company. However, the company is planning for the implementation of Hyperion Financial Management. Further, the company is going for the transformation of its systems to Enterprise resource planning ERP in 2009 due to growing network and effective usage of the resources. Hence, with the diversification and expansion the control on the inventory will pose serious threats. This threat can lead to the halt of all operational activities of the company.



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