Vertical business approach model
Unlike most of the world’s clothing companies, American apparel has stuck to its made-in-America philosophy. This is primarily to ensure that their clothes remain sweat-shop-free. However, most companies get their products from suppliers in developing economies. Since the American apparel competitors have an advantage of lower labor costs, it is not easy to understand the logic behind their strategies. Besides, mass-market branded companies such as H & M, Gap, Zara & Levi’s subcontract their entire manufacturing process to other economies. In contrast, American apparel ensures that all the production processes of their clothes are done within America for easier delegation and monitoring.
Primary stakeholders of American apparel
The functioning of American apparel is sustained by several stakeholders. For instance, the company has employees. However, this makes the cost of production more expensive than in the case of their competitors who use local labor far from home. For example, in the US, workers are guaranteed a minimum of $ 1,250, which makes it expensive since the Chinese workers are paid $ 200 monthly. Besides, American apparel requires designers, stitchers, marketers, retailers, accountants, and distributors for the business to run smoothly. This is because all the stages of the production process are done in-house.
The workers have an advantage because they are paid well, above-average, pays for apparel industries in the United States. Besides, teachers are required to offer English class lessons to immigrants since they constitute the most significant employee population. Moreover, the company leaders, such as the CEOs and customers, make another group of consumers — for example, the LGBTs (lesbians, gay, bisexual, and transgender). The firm has given away some T-Shirts to this particular group and even to other organizations campaigning for the legalization of same-sex marriage.
How the firm has prioritized its stakeholders
The firm has prioritized its workers in that it pays the workers almost twice the minimum wage earned by workers from other apparel companies. Besides, their workers are guaranteed promotion opportunities and full-time employment. This is a priority because it is typical of apparel industries to offer only precarious work, casual and part-time work. Besides, employees enjoy several benefits. For instance, the employees enjoy onsite medical clinics, subsidized health insurance, free on-site massages, and supported public transport. The immigrant workers are also prioritized by offering English classes to them.
Besides, the company prioritizes its customers and, therefore, ensures it produces quality products. For this reason, it works with a vertical business model such that all the products are manufactured in-house. Despite such production being costly than outsourcing the production to contractors from developing economies, they still do it to satisfy the needs of their consumers. For instance, vertical production allows the firm to respond rapidly to changes in the fashion industry and also to control the quality of the products being produced so that the customers are fulfilled. It maintains these priorities despite the challenges in the market.
Is it right to prioritize the stakeholders this way?
Prioritizing the needs of stakeholders creates motivation among them to be loyal to the firm. Therefore, it is right to prioritize them in the way the American apparel does. This is because this priority protects the rights of the minorities in that particular group. For example, it ensures the workers’ power to good health. Besides, the products are of better quality hence fulfilling the needs of the customer. Since the firm also has excellent leadership and exercises change with changes in fashion, the business is more likely to stand the test of time.
In conclusion, the vertical business approach model, as used by American apparel, is not an easy road to travel. However, since the firm sees the long term, it still believes in its long-term course. It also assumes that its model will stand the test of time. Besides, the firm acknowledges that long term investment and risk-taking is essential for the manufacturing industries.