Concepts and Connections Read: American Apparel\'s Vertical Integration Strategy

Question

Concepts and Connections

Read: American Apparel's Vertical Integration Strategy, P. 126

American Apparel, known for its hip line of basic garments and its provocative advertisements, is no stranger to the concept of "doing it all." Concepts & connections 6.2 describes how American Apparel has made vertical integration a central part of its strategy. What value chain segments has American Apparel chosen to enter and perform internally? How has vertical integration aided the company in building competitive advantage? Has vertical integration strengthened its market position? Explain why or why not.

Explanation / Answer

Well, after going through the approach and functioning of the American Apparel, one can figure out what exactly the company has done in this regard. Firstly, the company, in the value chain, choose inbound logistics as well as services as segments.

So, by getting into the vertical integration, the company got the advantage of self-relience when it came to delivery of it's products and services to the end customer. This not only builded the reputation among the customers but in the eyes of the market and the investors too. Another important aspect of this was overall low cost and more profit for the company itself. All these came as a boon to the company.

As a matter of fact, this step of vertical integration has boosted the market image of the very company to a new level. With self-relience, as mentioned earlier, the company got itself free from any dependency on other parties for it's functioning in the logistics department. This has made a lot of difference in it's business approach and has given the company the much needed competative edge over its opponents.

Regards.

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