Pestel Analysis And Pest Analysis: American Apparel

1. Introduction
Founded by Dov Charney in 1989, American Apparel is the largest clothing manufacturer in North America. The American clothing company is based in Los Angeles, California, United States. The vertically integrated company focuses on manufacturing clothes made only in America (Mathew, n.d.). American Apparel has over 10,000 employees worldwide. Moreover, most of these jobs are in America. By doing so, it helps increase employment opportunities in the States. Today, American Apparel has 260 retail stores all around the globe, in over 19 countries, with five in South Korea (American Apparel, n.d.).

2. PESTEL Analysis
2.1 Political
South Korea has a stable political system. Furthermore, the risk of the country encountering any financial

Focused Cost Leadership
With the price that American Apparel has, it targets the young and more well to do South Koreans. Being part of a niche group makes an individual feel more privileged, and would not mind spending more. By doing so, it will also help to build the brand loyalty, and consumers will purchase from them because of their need and desire.

2. Focused Differentiation
By focusing on simple basics and key wardrobe essentials, American Apparel can still earn profits despite the ageing population and the homogeneous nation. This is because not only will young people buy their products, but also those in their 30s, as these products do not necessarily follow a trend. In addition to that, consumers do not have to be following a fashion trend. American Apparel should also consider releasing designs inspired by the South Korean culture so as to lure customers into their stores.

Hence, despite being an ageing and homogeneous population, American Apparel can still break into South Korea’s market as the younger population are fashion forward and do not find it a concern splurging on clothing items, especially because of the ‘hallyu’ wave and having the need to dress fashionably.

4.2 Recommendation

To overcome this, American Apparel has to follow the five steps in managing competitive advantage stated below:
1. Innovation
By implementing fresh ideas and introducing new products in creative ways, American Apparel can attract and retain consumers’ attention.
2. Quality
Their products are made of best quality materials, and rated four out of five on average.
3. Service
American Apparel’s service is only rated one out of five on average. This is due to poor efficiency, mainly caused by lack of email response, plus a failure to check products before delivering out.
4. Speed
Customers stated that shipping takes long – there is often no update on the parcel’s location – and sometimes they go missing. American Apparel should use trustworthy mailing providers and to ensure that customers are kept updated on their mailed parcels.
5. Cost Competitiveness
According to consumer reviews, the products are overpriced. Since it is almost impossible to suddenly reduce the price of the items, American Apparel should not increase their price