Assignment on Business Environment Ethics and Strategy

Business
Environment Ethics
and Strategy
Student Name:
Student University:
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Introduction
In the competitive market, Forever 21 is the largest fashion retail brand with rapid
increase across the globe competing based on merchandise, cheap price points, rapid global
logistics and prime locations. The company is based in Los Angeles competing directly with
iconic fashion brands globally such as Zara, Uniqlo, H&M and many other players within the
industry. Forever 21 operates with over 30,000 employees in above 790 stores covering 48
countries (Martin Roll, 2018). The company follows the retail clothing stores chain mainly
concerned towards young women and teenage girls where the focus in on delivering latest
trends at low prices. Now, the company is accomplishing remarkable achievement with
opening of 600 stores across the globe (Forever 21, 2019). This assignment will focus on the
problem statement of Forever 21 and analysing it along with the challenges faced by the
company.
Problem Statement
Forever 21 is one of the top brands across the globe in retail but still faced some
problems that are need to be analysed consisting defective apparel rotation, repetitive trends
and unorganized store layout. The company lack in innovation and creativity so Forever 21
makes sure to aim at product attributes for customers while shopping which shows trend as
an essential factor affecting the consumer buying behaviour. There is an issue of quality
satisfaction sometimes from the people’s side of products. It is essential for the company to
provide better quality and new trends by working with creativity for consumers rather than
providing products at affordable prices considered as primary motive. Thus, Forever 21 faced
the problem of restructuring plans development and financial trouble with the hope of
avoiding bankruptcy or sale possibly (Mensik & Peltz, 2019).
Challenges
Forever 21 face several challenges due to competitors, for instance, H&M suing the
company for copyright infringement because of ripping off cheeky “Beach Please” tote bag
of H&M. This showed the habit of Forever 21 to copy designs of other companies which will
obviously hurt the company’s reputation. Also, Forever 21 was sued by the Asian Pacific
American Legal Center for making employees work allegedly over 12 hours every day
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paying less than minimum wage in such filthy conditions with rodents (Schlossberg, 2015).
Still, Forever 21 maintained its capturing of target customer with proper awareness for
consumers about the derivative brand based on the target demographic as a fleeting and cheap
fashion. The problem faced by the company after the bankruptcy protection though for
possible closure where the stores affected were about to shut within the year end. Moreover,
employees were about to lose their jobs but not waiting for learning their fate (Bellware,
2019).
Moreover, Forever 21 started a fast-fashion model to gain success due to proving the
point of providing trendy clothes at low prices but after sometime, it got fizzled where the
company was not able to increase its competition with the companies like H&M and Zara for
providing better quality products at high costs (Cline, 2019). This costs the company to
provide much of its products online and downsizing the presence in malls slowly. There were
some unethical practices in business founded by the US Labour Department where Forever
21 paid less to workers which is really a minimum wage in California specifically (Kelly,
2019). Also, there were many retailers involved in this wage theft scandal along with some
worst offenses.
The filing of voluntary bankruptcy was done by Forever 21 for the US brick-and-
mortar chain embarking on restructuring where shoppers are migrating online. The step taken
for protection is a decisive and deliberate step putting the company on successful track for
future named as reorganization to make sure about the possession and control of its assets to
carry out (France-Presse, 2019). Accordingly, the company decided to shut down over 100
stores while restructuring which requires continuous funding in operations securing $350
million in financing. Among which, $275 million consisted from JPMorgan Chase as an
existing leader. The company has also obtained $75 million from “TPG Sixth Street Partners”
and its affiliates in new capital. There was drop in ownership maintained at 99 per cent by the
founders Do Won and Jin Sook Chang of the company being a retail after hitting a rough
patch. After the filing, Forever 21 net worth was fallen from $600 million as estimated after
combining where the company once worth billions (Debter, 2019).
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