ASSE 3211 Case Study: Analyzing the Fall of Forever 21

This case study examines the factors contributing to the downfall of Forever 21, a once-dominant fashion retailer. The assignment begins with an introduction to the company and its initial success, followed by a research question addressing the causes of its decline. The investigation highlights the importance of understanding business administration and its impact on decision-making. The scenario focuses on Forever 21's aggressive expansion strategies, which, coupled with a decline in product quality and a failure to adapt to the rise of e-commerce, led to financial difficulties and bankruptcy. The analysis identifies key participants and root causes, including overexpansion, decreased product quality, and the company's inability to keep pace with market changes. The study proposes solution strategies such as modernizing operations, embracing e-commerce, and improving product design. The conclusion emphasizes the significance of effective business administration and provides recommendations for the company's revival. The assignment includes references to relevant academic sources.

Case study/Scenario Assignment

Introduction
Business management is a difficult process and requires specific understanding of the field along
with long term vision for managing the sudden issues and complications across their operational
region. Different sectors have a diverse operational mechanism related to their management
requirements but there are some core signals which remain similar for each and every type of
business process. This assessment is based on an organization named Forever 21 which has been
facing operational difficulties all along their designs. The company has recently filed for
bankruptcy that will be followed by the closure of company’s 350 stores across the globe
(WANG, KIM, 167). During the initial phase of operation, the company became the most
significant choice across its consumers. Its trendy designs and progressive culture made them
successful eventually. This company is led by a couple from South Korea and the initial success
made this couple one of the wealthiest couple across the world. In the year 2015, the company
had a net worth of $5.9 billion.
Research question
What are the causes which led to the downfall of Forever 21?
Importance of the investigation
This study holds major importance as it signifies the growing insecurities of bad business
decisions which lead to unfortunate events such as this. It describes the long term issues which
are prevailing across the entire scenario and the implications of these events over the long term
irregularities all along the business. The study will also enhance individual understanding of
different channels that are supported with efficient decision making and their respective impacts
all along the process. According to the views of there are significant implications which add up
to a decision making and in many cases these sections are not considered while making an
important decision and thus the issues prevail and a disruption in business is felt (Arts, Fine, and
Global Economics, 46). This factor across the assessment is also effective in order to facilitate
distinctive and more impactful process based decision making by the management. As business
administration holds an important position across any organization's success, the liabilities and
equity management decisions are under this factor. Business administration requires a skilled and
supportive framework so that it can provide better outcomes and attract new business

opportunities. On contrary to that, an inefficient business administration section often leads to
less productive atmosphere and unhealthy financial situation.
Context of scenario
The scenario is related to Forever 21, which was once a major brand across the New York region
and soon after across the whole world. Few days back, the financial statements of this
organization are not in to good health and thus the company has been planning to go bankrupt.
The scenario is important as it describes a healthy organizational structure disintegrate in to loose
operations and ineffective decision making across its expansion possibilities. Different causes
which can be held responsible for the current situation of this organization are assessed and
analyzed in the below mentioned sections (Sainz, Alvarez, and Xabier Apellaniz, 1). These
reasons are based on association, expansion and decision making perspectives of an organization
and are highly helpful in understanding the limitations which occurred while practicing them. As
the initial journey of this organization was very successful, the current miserable situation is
completely based on uncertain and short goals driven decisions around its business
administration. The responsibilities and associations for this particular organization are based on
ineffective management system.
Identification of participants and root causes
The fallout of Forever 21 was mainly based on a single factor which was integrated across the
organization's mainframe. This was its aggressive expansion strategies across the world. The
company since for its starting was based on this model of immediate expansion possibilities but
with increase in its capital capacities and revenues this strategy was taken to a newer level. The
organization integrated huge expansion proposals all along the world to attract a larger customer
base. It was aimed that the company will be opening six hundred new stores across the
timeframe of 2018-2021 (WANG, KIM, 169). The initial developments based on this structure
was very extensively invested which led to a financial burden over the company. The
complexities of expansion and limitations in sales and revenue generation from these newly
operating stores impacted the financial health of the company and ultimately decreased the
potential of this plan. The company was very determined to attain the set target number of new
stores which were planned to be opened that it lost control and concentration across its products
and factors such as customer retention strategies. This led to a decrease in the performance of

each section of the market and threat from the available competitors (Cuccurullo, Corrado, Aria,
and Sarto, 600). Initially, while the brand was established, it had its products as the best positive
point for attaining a better customer structure all along the targeted markets. But with its business
expansion strategies in place, the quality of service and products decreased and that ultimately
put them across a financial distress.
Initially, the company which was considered as the major trendsetter got reduced to just a
product based organization in the fashion industry. The company lost its basic essence which
gained in popularity and business across the initial phases. The challenges associated with this
organization were increasing rapidly but despite of addressing them the organizational
management was involved in its aggressive expansion strategies and its implementation across
the world. The fact that this organization was not able to retain its quality in terms of both
products and services. This encouraged a limitation in the relative competition for other similarly
operational brands and thus the popularity for this organization decreased many folds (Qin,
Chuan-Zhi, 209). This factor is equally responsible for prevailing the current status of the
organization and its business as the unavailability of quality also impacts growth. The changes
and modifications which the fashion market is going to observe were completely ignored and
thus a stage of decisions were made. These were not at all related to any fashion industry based
forecast, but these were based on limitations across the desired networks and the complications
which are established while achieving global expansion program.
In addition to this, the huge developments across e-commerce solutions are also an important
reason for the financial hardships occurring at Forever 21. Within the past few years the craze of
traditional outlet based shopping processes have been limited to a further level. This has been
overtaken by the technology driven e-commerce platforms which provide cheaper, faster and
more comfortable ways to shop for their respective consumers. As the basic ideology of
expansion at Forever 21 is based on physical stores, it could not keep up with the pace of
development and failed. The growing e-commerce solutions across the world were completely
ignored by the boards of management at Forever 21 and this impacted them by exhibiting a 20%
to 25% decrease in the company’s share prices (WANG, KIM, 165). Irrespective of putting a
stop to the ongoing expansion projects, the organization included expansion of its existing stores

with adding up several sections and subsections such as men and kids (Fu, Hong, 151). This was
indeed a major mistake which ultimately costs the company with bankruptcy.
These causes remain as the top most influential factors which have led the company in their
present condition. Thus considering these as the milestones for underestimated decision making
and voiding the business demands across a process, the company can put a check and bounce
back with a constructive ideology which can help them provide a fair and competitive markets
across the fashion sector (Wang, Rui, 65). The company was not at all successful in keeping up
the pace of development across this sector and thus lacked primary decisions and concerns.
These were the initial sections which reflected the changing business environment and marked
the downfall of the company. It also reflected the issues and implications which were not
addressed in the due timings and as the gaps widened these aspects led to impact the
organization's performance.
Solution strategies
The current situation for the company is largely disturbing and in order to provide a supportive
aspect, there must be sufficient changes across the organizational management process and
decision making. The organization needs to regulate its traditional operating segments and
include modern ways of expansion. Factors such as e-commerce solutions and inclusion of better
product designing departments must be introduced. In addition to this, the organization needs to
sustain its basic operational obligations related to enhanced product development process and
define the changing market requirements (Telnova, Natalia, 297). The organization also needs to
include better aspects of design related enhancements which are significant to attract a detailed
analysis of the current trends and operational obligations all along the process. The entire process
of product based marketing must be included as it will help in building better organizational
image across the process. It will also help in guiding customer interaction in a new string.
Conclusion
Business administration is an important section related to any sector based business. It helps in
establishing better goals and outcomes across the entire scenario and attracts a suitable analysis
which is associated with the process. In addition to this, the overall operability of a business is
overviewed by the administration department thus it holds an important position across the

businesses. This assessment describes a case study of Forever 21. Discussions reflect some of the
most important reasons which ultimately led to a downfall of the organization. Once, across the
earlier years this organization was a major performer and was related to support a variety of
customer groups with its unique and trendy clothing designs. The assessment also provides some
specific recommendations which can help this particular organization revive and hold a
progressive position. Each of the sections mentioned across this assessment are based on
defining the ideologies and operations which were carried out by the company in regards to the
business administration process.

References
Arts, Fine, and Global Economics. "Business Administration." Social Policy &
Administration 40 (2017): 46.
Cuccurullo, Corrado, Massimo Aria, and Fabrizia Sarto. "Foundations and trends in performance
management. A twenty-five years bibliometric analysis in business and public administration
domains." Scientometrics 108.2 (2016): 595-611.
Fu, Hong. "Introduction to the Management and Service of Industrial and Commercial
Administration." International Conference on Education, Management, Computer and Society.
Atlantis Press, 2016: 145-160.
KAITLYN WANG, IRENE KIM. “At its peak, Forever 21 made $4.4 billion in revenue. Here's
what lead to the brand's downfall and near bankruptcy.” Business insider, regular edition, 14
September 2019: 164-170.
Qin, Chuan-Zhi. "On the Role of Business Administration in Promoting Economic
Development." 2018 International Seminar on Education Research and Social Science (ISERSS
2018). Atlantis Press, 2018: 200-211.
Sainz, María Alvarez, and Kepa Xabier Apellaniz. "The Main Challenges to 21st-century
Business Administration: The management of people and knowledge with the “ner”[New Style
of Relationships] Group case." Journal: Vol 5.1 (2017): 1.
Telnova, Natalia N., et al. "Role of business administration in the process of formation of post-
industrial economy." European Research Studies Journal 19.2 (2016): 294-301.
Wang, Rui. "Analysis on the Business Administration Problems in Market Supervision and the
Countermeasures." 2016 2nd International Conference on Social Science and Technology
Education (ICSSTE 2016). Atlantis Press, 2016: 65.