Bankruptcy Statement of Diesel

Bankruptcy Statement of Diesel

Introduction

With its headquarters in Breganze, Italy, the Diesel brand was found in 1978. The company specializes in clothing such as jeans and various accessories like watches. Throughout the years, Diesel has seen significant growth; as a result, it has transformed from leading in denim production into a world-leading premium casual wear producer in the luxury industry. The diesel brand majorly stands for passion, individual confidence, and self-expression. The extensive development of Diesel was based on the (4ps) marketing strategy. That is a product: the firm has a wide range of products spread all over the globe, including denim and clothing, shoes, and watches. What is more, all these products are available for women, men, and children. Pricing: the outcomes are quite expensive, but this is because it is a premium brand that targets the upper-class customers. Place: first of all, the Diesel brand is spread all over eighty nations globally; secondly, it has twenty subsidiaries all over Europe, Asia, and America. Lastly, promotion: Diesel implements advertising campaigns combined with creativity and talent all over the globe. Despite all the previous development of the company, the Diesel brand filed for the chapter 11 Bankruptcy Act in March 2019. According to the administration, this move was unavoidable due to sinking sales that result from Levi’s competition (AIMEE, 2019). What is more, their real estate deals were costly and were not giving back profits. During the filing period, there were twenty-eight functioning stores; however, as a result of the filing, the firm had to terminate some of the active leases. Filing for bankruptcy will enable the firm to maintain the global customer base while restructuring payments of debts. Through the critical analysis of Chapter eleven bankruptcy acts, this paper presents a negative message statement that attempts to manage the negative perception of Diesel to protect the image of the firm and foster development.  

The problem

Due to an accumulation of over fifty million in debt, the famous apparel Diesel brand filed for bankruptcy protection to prevent foreclosure and continue operation regularly. Until the 2008 recession, the Diesel had been performing very well, evident in the brand’s popularity and profitability (Tiffany and Anna, 2019). However, after the recession, the company could not recover even after the 2011 improvements. Also, customers’ preferences are constantly shifting, especially in the United States, which had one of the most important markets for the Diesel brand. In that, they prefer sweatpants, yoga pants, and other premium brands like Levi’s as opposed to Diesel. A while back, Diesel’s management decided to adopt new leases due to diversity in production and varying geographical locations, and this initiative was profitable in the short-term. However, after a long, while the real estate became too expensive, and leases led to significant losses. Diesel branch of the United States has no plans to close, but plans leave to terminate the lease contract with some of the twenty-eight stores, which led to extensive losses since the owners could not offer lease concessions. The move to file for bankruptcy was essential since it prevents lawsuits of foreclosure or the cases that the creditors might file against the company. Secondly, it enables the firm to re-strategize on the best way to pay off debt defaults. Filing for bankruptcy is essential since it minimizes the pressure of loan payment form the firm’s core lenders. That aside, filling gives Diesel time to evaluate active leases and contracts; in a bid to choose what is suitable concerning the financial challenges facing the company. Also, in any case, the firm had secured debts, then the moves help to reorganize the payment methods of the loans (Kou, 2020). After filling, the company continues to run normally, and this is essential since it maintains the existing customer base and goodwill. Lastly, filing for bankruptcy ensures that the firm can still benefit from an active debt repayment plan, and can last up to ten years.

Research Summary

Regarding the overall research of this paper, it utilizes the three times three witting procedure, which has three main stages; that is prewriting, writing, and revision (Guffey et al. 2013). On prewriting, the first step in this process is analysis. It involves deciding upon the purpose, and here the core function of the negative message statement is to maintain the positive image of the company. Since the company is still running, we want the consumers to have faith in Diesel; thus continue buying products regularly. Yet, on prewriting, the second stage is anticipation: we have profiled the audience through random interviews, and it is clear that know Diesel USA has financial challenges. Therefore the statement will communicate some of the strategic decisions that Diesel is making to pull back resources and boost productivity. The last stage under prewriting is adaptation. Since there will be diverse reactions from the consumers Diesel, will present a graphical analysis of its past performance concerning the diverse range of products Diesel has produced before filing for bankruptcy. The complete information will be delivered on various online platforms to ensure it reaches a vast number of customers all over the globe.

The second stage of the three times three writing process is the writing stage; here the first stage is research (Guffey et al. 2013), and Diesel will carry out an extensive study from the internet on some of the cooperation that has filed for bankruptcy and then bounced back to high performance. After research, the firm will categorize responses and strategies into various groups. Since filing for bankruptcy depicts that the firm’s performance is unstable, Diesel will include a different problem-solving approach that will make the consumers happy to stay with Diesel. The last stage of the writing process is to compose. Here Diesel will provide clear and precise information that is mostly in active voice. The data will be genuine and direct to the point regarding the reasons that led to the filing act. The last stage of the three times three writing process is the revising stage, and here the full information content will be analyzed to ascertain that it is clear, understandable, and conventional. Also, the firm will eliminate long sentences that do not communicate efficiently. Additionally, the statement will utilize parallelism through numbering, bulleting, and headline to ensure quick comprehension by the readers. Still, on revision, the second stage is proofreading. The statement will be read repeatedly to ensure no detail is left out. What is more, proofreading will ensure errors that could arise from grammar; punctuation and poor formatting are all eliminated for clarity and accuracy. The last stage of revision is evaluation. The bankruptcy topic is susceptible; therefore, the final assessment will ensure the entire content is appropriate with regards to the consumers’ expectations.

Indirect Strategy

After writing the whole statement content, the indirect information delivery strategy will be implemented. Indirect delivery will help avoid losing consumers to other competitors since it will help them understand to accept the information regarding the bankruptcy petition. After the consumers agree to listen, accurate information is provided to ensure they understand the gravity of the company’s financial state (Ruytenbeek,2020). The indirect information delivery system is vital since it follows four significant steps. First is the buffering stage. Here the firm will first acknowledge the importance of consumers. Since Diesel has been a global competitor and high performer, the statement will begin by appreciating buyers for their long-term loyalty to the premium brand. Then the next stage is an explanation. Here Diesel will illustrate every detail regarding the causes, events, and possible solutions to the bankruptcy challenges. Then the third stage is delivering the bad news then redirecting to the positive side of the business. For instance, Diesel filed for bankruptcy due to massive debt. However, the company will function normally; what is more, there will be discounts for most of the products. The last stage of the indirect strategy is positive action closing. Here, the consumer will be told something that will make them happy; for instance, a ten percent reduction in all the clothing products. It makes them stay to save money will boosting sales. The indirect strategy is better than direct information delivery.

Negative News Statement

Memorandum

Date:

To: All Diesel customers

From: Diesel Marketing Director

Subject: Filing for the Chapter 11 Bankruptcy Act.

Of course, most of you, if not all, have heard that Diesel’s branch in the United States filed for the Chapter 11 bankruptcy act. Honestly, since the 2008 recession, the company could not recover to full financial stability even after the 2011 improvements; and this has accumulated a debt of over fifty million United States dollars. Also, customers’ preferences are constantly shifting, especially in the United States, which previously had one of the most significant market shares of the Diesel brand. What is more, consumers prefer sweatpants, yoga pants and from premium brands like Levi’s as opposed to our company which specializes in jeans material. A while back, Diesel’s management decided to adopt new leases, which have led to massive losses in the long-term. Despite these challenges, the company will not close, and business will continue as usual. However, we will have to close some of the stores in the United States whose landlords cannot offer lease concessions. What is more, there is a three-year plan that will primarily focus on and diversify the other stores that are performing well. Also, we plan to initiate an extensive social media presence by recruiting professional influencers to help us boost sales and attract more consumers. To all Diesel customers all over the globe, we appreciate your loyalty and will continue to maximize quality while making us more affordable.

Thank you.

Diesel

References

AIMEE, P. (2019). Diesel, a Jeans company, known for pricey denim, goes bankrupt. CBSNEWS.

Guffey, M., Loewy, D., Rhodes, K., & Rogin, P. (2013). Business Communication: Process & Product, Fourth Brief Canadian Edition. United States of America: South-Western Cengage Learning.

Kuo, H. S. (2020). The Business of Double-Effect: The Ethics of Bankruptcy Protection and the Principle of Double-Effect. Journal of Religion and Business Ethics, 4(1), 11.

Tiffany, K., & Anna R. (2019). Jeans Brand Diesel USA Files for Bankruptcy. Bloomberg

Ruytenbeek, N. (2020). Do indirect requests communicate politeness? An experimental study of conventionalized indirect requests in French email communication. Journal of Politeness Research, 16(1), 111-142.