abhishreshthaa
Abhijeet S
Pest Analysis On American Apparel : American Apparel (AMEX: APP) is the largest clothing manufacturer in the United States.[4] It is a vertically integrated clothing manufacturer, wholesaler, and retailer that also performs its own design, advertising, and marketing. It is best-known for making basic cotton knitwear such as T-shirts and underwear, but in recent years it has expanded—to include leggings, leotards, tank tops, vintage clothing, dresses, pants, denim, nail polish, bedding and accessories for men, women, children, babies and dogs
American Apparel was founded in 1989 by Canadian Dov Charney, who had a long history with T-shirts and a fascination with American culture. It was during Charney's freshman year at Tufts University that the company took on the name "American Apparel" and began to experiment with screenprinting, importation and other parts of the apparel business.[5] In 1997 after a variety of iterations, including a period of manufacturing in South Carolina, the company moved to Los Angeles. Charney began to sub-contract sewing with Sam Lim who, at the time, had a shop with 50 workers under the Interstate 10 freeway in east LA. Months later the two became partners.[6] In 2000 American Apparel moved into its current factory in downtown Los Angeles where it continued to grow primarily as a wholesale business, selling blank T-shirts to screenprinters, uniform companies and fashion brands.[7]
After its success as a wholesale brand, the company moved into the retail market. The company was ranked 308th in Inc.'s 2005 list of the 500 fastest growing companies in the United States, with a 440% three-year growth and revenues in 2005 of over US$211 million.
CONOMIC FACTORS
Inflation- Inflation affects Tesco in much the same way as changes in
tax would. So if the changes in interest rates went down so may the
prices. The lower the rate of inflation, the better it is for
businesses, as it means that people can spend more and the prices of
the products will be affordable. If the rate of inflation was high,
people will be spending less, as their income will be less. This will
also lead to the increase of the prices of goods.
The inflation will affect employment as if the inflation is high,
people will be spending less as their income is low, which means the
Tesco will not be making enough money therefore resulting in the
increase of products' prices. If Tesco is not making a great deal of
profit, then it cannot afford to pay its employees, and therefore
there will be a low rate of employment. Low employment will mean that
people will not be able to afford to buy a lot of goods, and so Tesco
may become extinct.
Unemployment- may affect sales of Tesco because if the unemployment
rate was to rise this would mean that people would not be earning as
much money and they might have to cut back on luxuries such as
chocolate and other things that are not needs.
Energy Prices- Energy prices rise as do interest rates and taxes, so
if electricity costs were to be rise this would mean that it would
cost Tesco more to run their machinery and this would lead to price
increases. As a result again this could mean that Tesco lose out on
customers as a result of over pricing.
Interest Rates: Interest rates can affect the Tesco because if the
interest rates were high then Tesco would not want to borrow as much
money for expansion. Also if consumers had loans they would again have
less disposable income to buy luxury items. If the minimum wage was
brought down, this would mean more money for Tesco as they won't have
to pay their workers as much money but would also result in low sales
from the consumers as their wages could go down and they might not be
able to spend money their products. Also if the unemployment rate was
high or the disposable income rate was low the potential customers may
be forced to buy different products that are cheaper and that they
need rather than desire.
The diagram below shows the effect of a rise in aggregate demand on
real GDP (Gross Domestic Products). Expansionary fiscal policy and
monetary policies may have undesirable side effects. One consequence
may be a rise in the price level as the economy approaches the full
employment level. The higher level of spending may also increase any
existing deficit on the current account of the balance of payments so
Tesco will be able to afford high wages and even expand their business
in most countries.
Exchange Rate A change in exchange rate affects aggregate demand of
Tesco. If a government wants to raise aggregate demand to reduce
deflationary gap, it may try to reduce the exchange rate. This
reduction would increase the price competitiveness of Tesco's products
and therefore increase exports and reduce imports of Tesco. If the
fall in the exchange rate increases demand for Tesco's products, it's
likely that employment and output will rise in the short run. However,
by increasing demand for Tesco's products and raising import prices it
may lead to inflationary pressures.
American Apparel was founded in 1989 by Canadian Dov Charney, who had a long history with T-shirts and a fascination with American culture. It was during Charney's freshman year at Tufts University that the company took on the name "American Apparel" and began to experiment with screenprinting, importation and other parts of the apparel business.[5] In 1997 after a variety of iterations, including a period of manufacturing in South Carolina, the company moved to Los Angeles. Charney began to sub-contract sewing with Sam Lim who, at the time, had a shop with 50 workers under the Interstate 10 freeway in east LA. Months later the two became partners.[6] In 2000 American Apparel moved into its current factory in downtown Los Angeles where it continued to grow primarily as a wholesale business, selling blank T-shirts to screenprinters, uniform companies and fashion brands.[7]
After its success as a wholesale brand, the company moved into the retail market. The company was ranked 308th in Inc.'s 2005 list of the 500 fastest growing companies in the United States, with a 440% three-year growth and revenues in 2005 of over US$211 million.
CONOMIC FACTORS
Inflation- Inflation affects Tesco in much the same way as changes in
tax would. So if the changes in interest rates went down so may the
prices. The lower the rate of inflation, the better it is for
businesses, as it means that people can spend more and the prices of
the products will be affordable. If the rate of inflation was high,
people will be spending less, as their income will be less. This will
also lead to the increase of the prices of goods.
The inflation will affect employment as if the inflation is high,
people will be spending less as their income is low, which means the
Tesco will not be making enough money therefore resulting in the
increase of products' prices. If Tesco is not making a great deal of
profit, then it cannot afford to pay its employees, and therefore
there will be a low rate of employment. Low employment will mean that
people will not be able to afford to buy a lot of goods, and so Tesco
may become extinct.
Unemployment- may affect sales of Tesco because if the unemployment
rate was to rise this would mean that people would not be earning as
much money and they might have to cut back on luxuries such as
chocolate and other things that are not needs.
Energy Prices- Energy prices rise as do interest rates and taxes, so
if electricity costs were to be rise this would mean that it would
cost Tesco more to run their machinery and this would lead to price
increases. As a result again this could mean that Tesco lose out on
customers as a result of over pricing.
Interest Rates: Interest rates can affect the Tesco because if the
interest rates were high then Tesco would not want to borrow as much
money for expansion. Also if consumers had loans they would again have
less disposable income to buy luxury items. If the minimum wage was
brought down, this would mean more money for Tesco as they won't have
to pay their workers as much money but would also result in low sales
from the consumers as their wages could go down and they might not be
able to spend money their products. Also if the unemployment rate was
high or the disposable income rate was low the potential customers may
be forced to buy different products that are cheaper and that they
need rather than desire.
The diagram below shows the effect of a rise in aggregate demand on
real GDP (Gross Domestic Products). Expansionary fiscal policy and
monetary policies may have undesirable side effects. One consequence
may be a rise in the price level as the economy approaches the full
employment level. The higher level of spending may also increase any
existing deficit on the current account of the balance of payments so
Tesco will be able to afford high wages and even expand their business
in most countries.
Exchange Rate A change in exchange rate affects aggregate demand of
Tesco. If a government wants to raise aggregate demand to reduce
deflationary gap, it may try to reduce the exchange rate. This
reduction would increase the price competitiveness of Tesco's products
and therefore increase exports and reduce imports of Tesco. If the
fall in the exchange rate increases demand for Tesco's products, it's
likely that employment and output will rise in the short run. However,
by increasing demand for Tesco's products and raising import prices it
may lead to inflationary pressures.
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