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American Apparel

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Robert Rosendale

on 7 December 2010

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Transcript of American Apparel

American Apparel “We believe that having manufacturing under the same roof as design, marketing, accounting, retail and distribution gives us the ability to quickly mobilize all departments, to respond directly to changes in the market, and to have complete visibility over our product - start to finish. An added bonus - this business model is inherently sustainable” (American Apparel). American Apparel is a clothing store that was founded in Los Angeles in 2003. Our Enabling Factors:
Satisfied employees
Superior manufacturing technology
Efficient management team
True company values
In 7 years we have managed to.... Our company serves as an
emerging retail option for
casual, solid-colored basics
of all designs. Open 285 retail stores
Pay the highest hourly rate to 5,000 factory workers ($12-14)
Advertise clothing with everyday people
Incorporate trends with traditional designs Recently many South American countries
are becoming more "Americanized." There are many choices of countries for entry into South America, but Peru has the most significant void in the market for an iconic, American clothing brand. Situation Analysis We planning on bringing our company to a
broader market by opening our 2nd store
in South America. American Apparel will introduce American classics with a combination of fashion trends to the Peruvian culture. In order to distribute to all of Peru for online shoppers we will open a warehouse. There will be a basic shipping fee on all online orders in order to accommodate our client’s anticipated needs. Our retail personnel in Peru will be composed and hired locally; upper-level management and a director will be hired from within the company in the United States as American Apparel does in all international stores. Doing so will allow employees to provide
service to their people. Total employment is not expected to exceed 150 people. Our desired location is the Jockey Plaza which is one of the most famous shopping centers in Lima. By increasing our market internationally, we are expecting to increase the value of our share in the stock market. Peru will be the 21st country that American Apparel has established itself in; we picked Peru because of the promising growth that they have displayed in recently years. S.W.O.T Analysis:
Strengths: Cost and customer service
Weaknesses: No current presence and image in Peru; Instability of USD
Threats: American retailers; Market needs; Government regulations; Emerging competitors; Current Peruvian retail companies
Opportunities: Labor cost Porter's Five Forces: Threat of potential entrants - market already taken by Peruvian and Colombian companies.
The bargaining power of buyers - our low costs will not give buyers much bargaining power.
The bargaining power of suppliers - our only supplier will be our main factory. Threat of substitue products - the previously mentioned Colombian products.
Rivalry among competitiors - no direct US competitors, but South American companies will be strong competition. Goals and Objectives Our next move is to open a vast number of locations and eventually branch out into having an American Apparel in every developed country. The next immediate step forward is to open a store in Lima, Peru by the fall of 2011 and increasing to five stores by 2014. Lima is the largest city in Peru and is the fifth largest city in Latin America. American Apparel will enter Peru with the same rules and guidelines that we have in the other 20+ nations that we currently operate in. Strategy, Tactics and Entry Reasons we chose Peru... 9% Economic growth two years in a row (2007-08)
American exports to Peru increased 50% in 2008
Peru is the 35th largest market for US exports Peruvians also have higher purchasing power
and they, on average, buy garments every 15
days in retail stores. The average amount spent on retail clothes is 65 to 70 soles. The exchange rate between the US Dollar
and the Peruvian Nuevos Sols has fluctuated
quite a bite during the global recession. It has not fallen below $2.50/S in five years,
and is currently at $2.82/S. We would use foreign direct investment as our entry mode. Our company would estbalish new operations
facilities in the form of new stores and a warehouse. Through this entry mode, we can make sure that our products are quality and are what our consumers expect from American Apparel. The Peruvian stores would be customized with casual beach clothes from American Apparel and other products that would cater to the culture, weather and needs of our new consumers. In order to have full control of the store we decided against franchising. Budget Media Type Cost
T.V. $21,000
Internet Ads $2,000
Print Media $12,590
- Newspaper $9,950
- Billboards $3,000
Specialty Media $3,690
- Parachute $1,690
- Basic Contest $2,000 Keeping that in mind we want to target Peruvians between
the ages of 20 and 43 who make $30,000 or more, have at
least a high school diploma, and are a variety of marital statues. Our marketing campaign will start on September 30th and end October 20th. For this campaign, we will utilize broadcast media,
print media, and sales promotions. Commercials will run on Peruvian television channels such as
Frescuencia Latina, Television Nacional de Peru, and America TV. When it comes to print media, we will use the local newspaper and billboards. There will be four large billboards throughout Lima, one will
promote American Apparel clothing with the help of pro surfer Sofia Mulanovich. We will have two different sales promotions. The "Coupon Parachute Drop:" coupons will be dropped from the rafters
of the ceiling on October 12th. The coupong will provide customers with
free lunch on American Apparel and a 9S (~$25) gift card. The “Basic Contest:" it will begin October 14th and end October 20th. This contest is essentially getting people involved with what American Apparel is known for and being creative. Those who participate in this contest will be instructed to design and create a creative basic clothing item. Total: $39,280 Summary: Our entry into Peru will be an achievement for the American Apparel brand as the 21st successful foreign market entry. Action Programs Action programs for our entry into Peru depend on
how much money we plan to invest to take American
Apparel into the country. Our carbon footprint will be reduced due to
the environmental
regulations in Peru. The distribution system is going to be efficient, economical, and reliable. The distribution center will be based in California and the
shipments will be sent directly to our warehouse in Lima. Our pricing strategy is one of our main focuses when we
implement our plans into action. American Apparel's values are based on a good
quality of clothes at a low cost. This approach will surprise the market when they see our brand at such a low cost. Questions? . Product: Simply designed basic clothing made in America; seasonal styles for climate adjustment
Price: Technology is the means to penetrate the market by offering low prices than other foreign competitors in Peru
Promotion: Billboards, Print Ads, Facebook, Online Shopping Discounts
Place: Distribution channel from LA to Lima, Peru retail store; warehouse in Peru for online customers. The 4 P's: Target Market: Male and Female young adults - Ages 20-32 years old - Annual income of $30,000+ Trivia!
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