CHAPTER 11 OF FOREVER 21 –

TECHNOLOGY APPLICATION AND CONTROLLED SUPPLY CHAIN

In fulfillment of the requirements under MBA 231 - A: Strategic Management

Submitted By:

John Paul T. Balistoy

Arnel A. Calubag

Michael Louis R. Ong

Vanessa A. Chiu

Louise Marie Y. Lucio

Cara R. Ledesma

Submitted To:

Dr. Jimbo A. Fuentes

 I. Title:

CHAPTER 11 OF FOREVER 21 - TECHNOLOGY APPLICATION AND

CONTROLLED SUPPLY CHAIN

II. Introduction

Forever 21, a family owned business by Do Won Chang and Jin Sook Chang of South
Korea which originated in Los Angeles in 1984, is known as one of the top retailers of
latest fashion trends and deals. Its fast pace in the industry has reached a remarkable
success over the past 30 years which operated 800 stores worldwide with more than
$3 billion in estimated annual sales.

Its fate however changed in the middle of this year as they plan to file Chapter 11
Bankruptcy. This chapter of the Bankruptcy Code generally provides for
reorganization. A chapter 11 debtor, in this case Forever 21, proposes a plan of
reorganization to keep its business alive and pay creditors over time.

This analysis reviews how the current practice of the firm particularly on Technology
and Supply Chain have contributed to its present state and how this can be turned into
an opportunity as they are to make a fresh start of the business through reorganization,
restrategizing and repositioning to battle the current competition and address the
behavior in the market hence continue their operation. The group wants to establish
the pros and cons of the applications of strategies in these fields so as to recommend
ways to maintain its balance.

III. Problem/s Identifications

● Technology

○ What were the shortcomings of Forever 21 in meeting the current trends

of technology application?

○ How to appropriately use technology advancement in the fashion

industry where Forever 21 is in?

● Supply Chain

○ What are the negative impacts of the current supply chain of Forever
21?

○ How should Forever 21’s supply chain create value - increase revenue,
lower costs, compare with competitors?

● How to maintain balance in application of strategies through technology and

proper supply chain management?

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IV. Introduction of Strategic Management - suggest model/framework

Our platform identifies the various advantages of using appropriate technology and
proper supply chain management to this particular industry. This keeps us up to date
to the new applications and practices arising into these fields and use it as a
competitive advantage that will make the company rise above competition. It also on
one hand, keep us aware of the possible negative impact on their misapplication and
over implementation hence, could lead to company’s failure. Given these two
scenarios the group will be guided on how to keep the balance of these strategies into
the business.

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V. SWOT Analysis

VI. Solutions

1. Revisit their corporate strategy management

a. Competitive Advantage
b. Business Capabilities
c. Risk Management
d. Organization Alignment

2. Combine Lean and Agile approaches in Supply Chain. (Leagile)

Lean Supply Chain- eliminating all types of non-value added steps along the
value stream.
■ E.g. eliminate Work in Process in the value stream and have parts
needed for the next process arrived right when they are needed
ensuring a smooth operation flow.
■ Agile Supply Chain- service optimization, value driven

3. Improve Information and Communication Technology

● The need to incorporate ICT in supply chain

● Enable the visibility of product demand and stock levels through the
full length of the pipeline. With this, e-commerce exists.

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 4. Supply Chain Strategies with the use of ICT:

 Quick Response
 Value Information
 Value Relationships
 Fast Fashion

Highly responsive to prevailing customer demand, and dynamic, denoting its

continuous adjustment to external alterations.

5. Some of the most essential technology that can build a comprehensive

information system:

 Enterprise Resource Planning (ERP)- joins the stand-alone software

modules together that enables visibility across the entire supply chain, from
the design process to the store shelf.
 CAD/CAM and PLM- software and hardware tools which assist in realizing
designers’ ideas into finished products
 POS (Point-of-Sale Systems)- to streamline inventory management and
 transaction handling with customers and vendors
 EPC/RFID- to identify and track merchandise throughout the supply chain

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  Ensure the best security of the software used. E.g. strong encryption on all
POS terminals
6. E-commerce (Online Merchandising)

Keep customers up to date

7. Review market segmentation, identify and focus on the target market

E.g. Fashion industry has two main currents:

1.) Haute couture-exclusive designer fashion, caters extremely

wealthy clients

2.) Ready to Wear (RTW). RTW can be further separated into:

a.) High-street - such clothes and accessories follow trends

brought by the major catwalks but sell at favorable prices

-further drilled down to: mid-market and down-market

b.) Premium

8. Strengthen Business Ethics

VII. Recommendations

a. Reorganization of Forever 21

i. Reallocation of resources - allocate resources to more profitable

investments, i.e. IT infrastructure, mobile apps, technology related.
Reduce the number of retail stores in order to cut down expenses on
rental & manpower (consider closing down non-profitable stores).

ii. Re-visit the target market - review the shopping behavior of the target
market: Baby Boomers, Gen X, Millennials, especially the Gen Z.

b. Supply Chain Management

i. Sustainability - Review the existing supply chain. Invest more on

sustainable/green suppliers. Customers today tend to consider
sustainable products. They are more conscious on what, where, how
their clothes are manufactured.

ii. Capture the Gen Z Market - The Gen Z dislike the “Fast Fashion”
trends. Though they are shifting to e-commerce, most Gen Z customers
tend to stick to physical shopping. They also want technology (that they
have) to be combined or be experienced during their physical shopping
event.

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 c. Technology

i. Locate the Customers: Online Presence - Invest more and develop

the Forever 21 IT infrastructure. Do away with the conventional Brick
and Mortar footprint as customers are no longer in the physical market,
they are already in the online world.

ii. Customer Participation: Gen Z - Involve the Gen Z in their marketing

activities. Today’s emerging generation wants to be involved and to
experience technology in almost everything they do.

VIII. Conclusion

Balance - the core of everything.

References:

Video link: https://www.youtube.com/watch?v=YzcS4XYW6Is

Slides link:
https://docs.google.com/presentation/d/1jpADw_5XTNt_yGCSVHcdn4JX__qIg-
3bHNP3shPmZgM/edit?usp=sharing