The ups and downs of Forever 21

The ups and downs of Forever 21

In the global economy,entrepreneurship is one of the business ventures with a high success rate for self-employment population. In fact, current market survey shows that entrepreneurship in the United States is growing at a steady rate of 6.4 percent annually. This means that alteast about 1.8 million people work as entrepreneur. Also, it is imperative to note that under effective management, entrepreneurship businesses have opportunities to be scaled up into corporations or companies. For example, studies show that the Information technology industry was made by simple entrepreneurial sectors such as call centers, network maintenance,and hardware providers that aimed at solving unique communication problems. This implies that solution-focused and critical entrepreneurial skills can readily map an entrepreneur venture into a large enterprise. Even though it is also credible to note that there are ups and downs subject to this industry. A good example that helps understand this is the case study of forever 21 companythat recently has been a headline in business media and business journals.

Founded by Don won chang and sook chang, in 1984, Forever 21 is an example of an entrepreneur retail company with an apparel line in fashion clothes. Particularly, it sells clothes and accessories for men, women, and kids. However, more emphasis is created on women’s clothes with a broad focus on slacks, dresses, skirts, and shoes. Also, a few years ago, the company had a worldwide market with about 623 locational units. In 2017 the company is said to have sourced an annual revenue of 3.4 billion, which was a great improvement from 1.4 million net income as of 2011.  In the early phases of its operations, the company seems to have made tremendous growth as Chang, the founder said, they shifted from 6 to 47 countries with a span of six years.

Equally, the company flourished at a steady rate with a booming sales in designer styles.  Infact, it is said that within this time, the company would have new wares in stores that were widely available in America. More so, implied as first-line fashion retail shop. Also, it was noted that with high evolvement of technology, the company was again able to aggressively expand its business. However, since the technology was all round for all clothing enterprises, Forever 21 experienced stiff competition from booming malls and online sales that changed the taste and preferences of consumers, as Chang the executive founder, reported that“softening mall traffic has led to shift of sales on online platforms.”.

Ideally, the above implication is a business change that any entrepreneur should think of in his or her line of operation. That is, in as much as technology is a business booster, failure to update with it can mean suffering from its effects of shifting consumer taste and preferences. Within this context, it is also realized that Forever 21 announced its bankruptcy state. In a statement, it issued that, as of 2017, the company’s net income had dropped to $ 3.3 billion from $ 4.4 billion in 2016. Further, the company reduced its employee population from 4300 to 32800 as of 2017. Additionally, the company implies to cease its operation in about 40 countries while also aiming to close about 178 stores in the United States, amounting to 350 closed stores in total, which are also deemed to bear the $500 debt the company owed before declaring its bankruptcy state.

To a greater extent, it implied that Forever 21 had now narrowed to operations within the domestic sphere. In a statement, Chang, the founder of the company, issued that “it would now wish to operate hundreds of stores in the United States where it remains a large tenant for mall owners and stores in Latin America and Mexico.” In extension, the vice president Linda chang suggests that their downsizing process is primarily based on embarking on what they do best.  From an analytical perspective, this implies that as an entrepreneurial enterprise, the retail apparel was overwhelmed by rapid international expansion and massive stores. Equally, changes in technology appeared to elicit some market deviation with malls and online business having an added advantage. As a matter of fact, it is said that online competition from online enterprises such as London Based ASOS and amazon shifted millennial taste and preferences, creating a pace that the company would not keep up with. The contrary effect is that its cheap chic fashion would make millennials demand expensive goods at a cheaper rate. This indicates that while the company had perceived cheap sales as a ladder to a steady business growth, it could not keep the pace upon emergence of other fashion shops. In fact, the company is also said to face some lawsuits by Ariana Grande for using her concept and color scheme without her approval.

Ideally, the case study of this company implies that a strategic business plan that has en emphasis on risk management is of great importance in any entrepreneurial activity. Similarly, it suggests that in as much as growth is important in any thriving business, stability value should be the key aspect driving the business. This means that a business plan must always be monitored and adjusted as per the economic and general business trends. Also, it implies that cheap sales is not always a strategic approach for growth; rather, product-led growth should be the core major of any business envisioned for long term success. Basically, this ideology is based on the assertion that product usage is the driver of customer expansion. It’s also based on reducing time to value, that is, using more time to create value rather than sales, which would mean automating business analytics to centralize customer value. In other words, this means drawing focus on channeling an entrepreneurial activity by product showcase rather than sales. More openly, this implies the need to create customers connections for self-interpretation and sharing of insights.

Undoubtedly, the above approach creates self-sale products, and to no point, consumers changes can overwhelm the business since there is close monitory of market trends and changes. In relation, I think failure to have this focus is what pulled down the growth aspect of Forever 21. That is, focusing more on sales than the value of the product. Hence, rather than too much expansion, it would be advisable for entrepreneurial activities to be based on user analyses and prioritization based on associated impact. Equally, it is imperative to consider operating within legal lanes. This includes having certified licensure and focusing more on solving problems. Ultimately, this case study implies that failure of a business is not merely based on enterprise choice but management and orientation towards ever-evolving business challenges.