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American Apparel Drowning In Debt Case Study Analysis

Background and Facts

American Apparel Drowning In Debt an office materials retailer for little and medium sized organisations has just recently been associated with planning for a merging with its competitor Residence Deport, which has actually influenced effectiveness degrees in departmentswith the elderly supervisor associated with legal complications presented by the government Trade Commission. With the Advertising and marketing Head putting forward the news of his separation from the business in one year, Jeannie Lewis, the present head of operations has been asked to take the role in the future. With obstacles in the form of a potential cultural change as well as reduced staff member morale, the company wants a full reengineering effort at the advertising division.

Trouble Statement
Porter's 5 Forces Analysis
The potential social modification at the advertising department of American Apparel Drowning In Debt is increasing unpredictability in the working environment bring about various challenges for the Jeannie Lewis who would be changing the head of the department in one year. nalysis

PEST analysis

Political Factors: Political factors play a major function in impacting tactical decisions considering that Stapes Inc. needed to abandon its strategies of merging with Office Deport after the Federal Trade Payment's treatment at the same time. Given the truth that the shop has a global existence with branches in UK, UNITED STATES, Canada and Germany, political consider each of these countries might be able to influence performance or critical objectives. Federal Profession Commission's antitrust suit versus the merging occupied valuable time of the company's senior administration suggesting that 'political' factors can have major ramifications for an international organisation.

Economic Factors: Financial factors such as the introduction of small companies in the worldwide circumstance suggest that American Apparel Drowning In Debt is flourishing in a setting where there is possible growth of companies. Reality that store consumers are mainly looking for office products for house workplaces recommends that the market has a climbing pattern of entrepreneurs and also house based services.

Social factors: Social trends in the economic situation show that consumers are searching for ease in addition to eye-catching prices. Marketing research demonstrates how the client for American Apparel Drowning In Debt does not have understanding about locating remedies which can provide a mix of benefit and low costs.

Technical factors: Technology plays a crucial function in American Apparel Drowning In Debt's company technique specifically as the company is piloting Innovation centers which would certainly provide modern technology sales as well as assistance in the type of memory upgrades, peripheral installations. (Summary of PEST in appendix 2).

OB Issues and also Effects.

Several underlying Organizational Habits issues can be seen in American Apparel Drowning In Debt's case as highlighted in this section.

Worries about social modification: There is worry regarding a social modification that would take place as soon as Todd Krasnow leaves from his position as the Exec Vice Head Of State of Marketing with most of the team member currently revealing discontent over this possible move. This expected adjustment has actually produced tension in the work environment which has actually been paired with the past anxiety of preparing the company for a possible merging with Residence Deport.
Pest Analysis
Difficult Task Environment for Newcomers: There is lack of workers that can match the stressful atmosphere of a busy organization. Not only does this cause difficulty in locating the ideal people, it puts tension on brand-new hires as can not hold up against the speed and pressure that the company expects them to birth.

Double Coverage Lines: Newbies locate this organizational society troublesome and also tough to deal with especially as dotted line relationships are suggested to be weak in general and also objective setup as well as performance examination is still done by the strong line supervisor. This means that novices might lose clarity concerning their corresponding duties as well as purposes specifically as dotted line coverage does not keep them in straight communication with the solid line supervisors.

Animosity From Cross Departmental Hiring: Krasnow's choice to make Lewis his successor rather than Bridget Coles despite the fact that it had actually been speculated that the last would certainly take Krasnow's placement came as an impact to her spirits. Lewis may have been qualified as well as appropriate for the job yet the fact that Kransnow's separation would make Coles a direct report to Lewis may have been the factor for Coles' resignation from services.

Worry & Job Instability: Worry and insecurity can be identified as 2 significant worries that Lewis would be dealing with especially as the merger has now be cancelled as well as two senior executives of the marketing division would be leaving. The whole obligation of the department would be dropping on Lewis's shoulders that would certainly not simply be in charge of brining about a cultural modification yet would also have to verify herself in her new duty.

Inappropriate Management Design of Leader: Lewis's management design and also its incompatibility with the marketing department's role can also be seen as an OB obstacle especially as she has actually been used to handling problems in the operations department where personnel are educated to focus on processes and also obtain them. The advertising and marketing division on the various other hand can be viewed as a team of individuals that are utilized to being nurtured by Krasnow who focused a lot more on output than procedures.

Interdepartmental Differences: Interdepartmental differences in between 3 departments, advertising and marketing, merchandizing and operations specifically over the appropriation of the advertising and marketing mix can be recognized as an additional OB issue. Although the marketing division does not share the same vision as the other two departments regarding the aloocation of the marketing mix twoards promos as well as advertsing, the merchandizing as well as operations divisions do not concur over the advertising mix allotment amongst one another either.

Disintegration in Advertising Department: Disintegration between the marketing and advertising departments can be recognized as one more OB issue which could need additional interest. The reality that the marketing and advertising sections in the marketing division are separated is preventing both departments from getting from each other's experience and knowledge. Assimilation of advertising with retailing and procedures would certainly come to be more difficult if the advertising department itself is degenerated which can be another potential OB problem.

American Apparel Drowning In Debt Analysis

Different concepts have actually been utilized to describe the scenarios to get further clearness concerning the situation at hand.
Swot Analysis
McGregor's Concept X & Y: According to Douglas McGregor's Theory X, most supervisors believe that juniors are passive as well as careless, have little ambition as well as stand up to modification. The tough variation of this theory highlighted coercion, limited controls, dangers and penalties. In time it produces reduced performance, refined sabotage as well as competition (Deal, 2003). Although the scenario at American Apparel Drowning In Debt is not completely complying with Theory X, it can be seen that new hires are finding this environment rather demanding which might ultimately result in a higher inclination of the monitoring in the direction of Theory X. As per McGregor's advocated sight, which he called Theory Y, the essential task of the management is to prepare organizational conditions to make sure that people can achieve their very own goals best by guiding their initiatives in the direction of organizational benefits. If individuals find no satisfaction in their work, the administration would certainly have little selection yet to depend on theory X and also external control (Bargain, 2003). Even while analyzing Lewis's monitoring style, theory X may have appropriated in the procedures division somewhat yet the Advertising division would certainly need reliance on Theory Y so as to get the imagination and creativity from the teams.

Tuckman's Synergy Theory: As far as Lewis's issue regarding bringing harmony between the marketing and marketing department is worried, this would originally lead to clash as talked about by Bruce Tuckman in his 'Team effort Concept'. By combining the advertising and also advertising division's job, there might be the very same initial disconnect which might lead to the 2nd stage of 'storming' where the teams challenge one an additional.

Bridges' Change Design: According To William Bridge's concept (appendix 4), individuals are rather unpleasant with modification, which is apparent by the scenario at American Apparel Drowning In Debt The scenario can be seen as a regular course of life if is studied according to Bridge's concept where he explains that individuals go through 3 phases of change when they experience modification. 'Closing, shedding as well as Releasing', The Neutral Zone and also 'The New Starting' (Bridges, 2004). When people are presented with modification, they get in phase one and so there might be feelings like unhappiness, uncertainty, disappointment, rage, fear, rejection and also disorientation.The circumstance at the advertising department of American Apparel Drowning In Debt is comparable so Lewis can get comfy with the concept that it is not phenomenal habits. In the second phase, there may be a demand to connect the space between the brand-new as well as old culture so Lewis might need to encounter this challenge when Krasnow leaves. There may be low morale and also reduced efficiency at this stage which must not be taken as an obstacle. It is during this phase that Lewis will certainly have to give support to the division so that they can discover an orientation. It can be seen exactly how Krasnow has actually already made this change much easier by making Lewis obtain associated with the division a year before his actual departure. As per Bridges' Model, stage three will bring about openness to learning, High power and also commitment as individuals will certainly welcome the change (Bridges, 2004).
Vrio Analysis
Abraham Maslow in his Theory of 'Demands Hierarchy' (appendix 5) has discusses the significance of 'security needs as being a lower level need of a human for causing motivation. As seen in the pyramid shared in appendix 3, we can see just how 'the demand to feel safe and secure as well as out of risk' is at the second level of demands. Before an employee can be made to develop emotionally, he requires to have his 'Physiological 'and 'Security' requires met.

SWOT Analysis for American Apparel Drowning In Debt Case Study

Effects of Analysis.

The OB analysis has actually taken a look at various theories to understand how to handle the existing scenario available. The following 3 choices have actually been proposed to assist Lewis deal with the business obstacles in the marketing division. Each of these alternatives has been proposed for reducing the transition needed to bring the marketing division according to the needs of the marketplace as well as for making the social change that would comply with when the present leader leaves.

Integration of advertising and marketing functions. Separating Adverting as well as Manufacturing functions. Integration of Advertising with Operations.

Analysis of Alternatives.

Judith Shapiro who has earlier been interviewed by Lewis throughout the earlier merger days has knowledge in business-to-business advertising along with agency and retail marketing experience. When Krasnow leaves, Lewis can hire Shapiro as an EVP for marketing to manage both advertising and advertising functions.

The advantage of this technique is that it will certainly incorporate the two functions while reducing the requirement for employing an extra resource for advertising. Lewis would certainly be heading the advertising department and in any type of case her replacement would certainly be needed for the existing duty that she is executing. The disadvantage of this alternative is that exterior hiring may produce animosity from inner workers who might be eying the placement of EVP after Lewis takes over Krasnow's setting.

Dividing Adverting as well as Manufacturing: Given the competitive stress and also high quality work required from the marketing firm, it is recommended that Lewis must allow the manufacturing system to be a different feature from the advertising system. Considering that a lot of marketing firms had these 2 features as different systems, it makes more feeling to adhere to the norm.

Integration of Marketing with Procedures: Since Lewis is already taking care of the marketing as well as procedures divisions at the same time; it makes feeling to integrate the two functions given that she has actually been successfully taking care of both ends. The fact that Lewis has to adjust her management design for the advertising department suggests that these two departments would certainly be culturally diverse.


An examination of the 3 choices indicates that integration of advertising and also procedures would not be a viable step due to the vast distinctions in between both divisions despite the fact that presently Lewis is handling both. While separation of the production function might have been a desirable relocation for the advertising and marketing department, the truth that it would certainly indicate putting a 3rd function under Lewis's wing means this need to be avoided also. The assimilation of the advertising and marketing department is the most effective option in terms of obtaining the optimal results from the department. An action plan for this choice is talked about below.

Action Plan.
Lewis will take control of the function of EVP Marketing after Krasnow leaves.

Marketing and advertising functions would certainly be combined.

Judith Shapiro will certainly be worked with to take Lewis's place as SVP of marketing and advertising.

Production function will stay component of advertising and marketing under advertising and marketing feature.

Lewis will certainly separate herself from operations.

An autonomous leadership style with staff member empowerment will be utilized in advertising and marketing division.

Open door policy and also focus on cross department communication will be aimed at getting rid of disharmony.

Backup plan.

If the integration does not exercise as prepared, a contingency strategy would adhere to which would separate the manufacturing function from the advertising function to reduce the lots on the SVP of marketing and advertising. In case Judith Shapiro does not obtain worked with, Lewis will certainly be heading the advertising division without an SVP. In that case the manufacturing function will definitely be separated by positioning it under an SVP manufacturing.