A look at how the management style at Forever 21 compares to McGregor's Theory X Managerial Assumptions

1. FOREVER 21
A C O M P A R I S O N O F F O R E V E R 2 1 ’ S T R E A T M E N T
O F W O R K E R S A N D M C G R E G O R ’ S T H E O R Y X
M A N A G E R I A L A S S U M P T I O N S
Pamela Mohar
CTAC 354

2. THEORY X MANAGERS ARE
INFLUENCED BY CLASSICAL
MANAGEMENT STYLES
• Division of Labor – work is best accomplished if
employees are given a limited number of specialized
tasks
• Order – there should be an appointed place for each
employee and task inside the organization
• Span of Control – managers are most effective when
they have control over a limited number of employees

3. THEORY X MANAGERS ARE
INFLUENCED BY CLASSICAL
MANAGEMENT STYLES
• Scalar Chain – vertical hierarchy of organizational
communication
• Unity of command – only one supervisor should be
giving tasks to an employee
• Unity of direction – group activities with similar
goals should be overseen by a single supervisor

4. THREE PROPOSITIONS OF THE
THEORY X MANAGER
• Theory X Managers are responsible for organizing
–Money
–Material
–People
• People must be controlled and motivated to fit
organizational needs
• Without intervention and direction, people would be
passive or resistant to the achievement of
organizational needs

5. D O WON
CHA NG, OWNER
A ND F OU ND ER
OF F OR EV ER 21
“For me, family is the
most important…when
people talk about the
American dream, they
are talking about a
better life. However,
if the business is
doing well but your
family is broken, that
isn’t quite success to
me.” [Chung, 2016]

6. LIVING YOUR VALUES –
STORE EMPLOYEES
• Farmington, Connecticut store cited by OSHA [OSHA, 2015]
– December, 2015
– Boxes stacked in ways that could be dangerous to
workers
– Emergency exits blocked off
• Shows a trend in behavior – fined over $200k in the past
few years for similar dangerous working conditions in at
least two other New England stores [Sheff, 2014]

7. LIVING YOUR VALUES – STORE
EMPLOYEES
• Forever 21 is opening a new store every six months
– Aim to adding 7,000 jobs in a year [Chang, 2016]
• Store employees claim they don’t receive fair pay [Parrish,
2016]
– Forced to skip meal breaks
– Work late without any overtime hours
– Work hours past the time their shift was supposed to end
• Forever 21 is accused of taking advantage of college-age
workers that don’t know their labor rights [Parrish, 2016]

8. THE FUTURE OF FOREVER 21
STORES
• The retailer is preparing for e-commerce as customer
traffic dissipates in malls [Chang, 2016]
–Focus on creating jobs, not just sales and profit
• 2008 was the last year Forever 21 made their financial
records available – profit was $135 million [Fickenscher,
2016]
–The Changs are worth $4.4 billion
–Industry experts estimate the company has done
negative same-store sales for years

9. THE FUTURE OF FOREVER 21
STORES
• Vendors have taken to removing lines of credit and cancelling
contracts [Fickenscher, 2016]
– Delivery contract cancellations cite a drop in product from
last year
– Vendors claim Forever 21 has been paying accounts up to 30
days late
– Working on a case to case basis with the company now
• Company over expanded when they held the market share
[Fickenscher, 2016]
– New stores average 35,000 sq ft

10. F21 RED – HOW FOREVER 21 CAN
POSSIBLY GET ANY CHEAPER
• Sells the same cheap clothing as Forever 21
–Markets all of the cheapest clothing together in
F21Red with massive quantities available
–30 stores have opened [Merrick, 2014]
• The amount of product required for these stores puts
pressure on the garment industry for low wages and
fast product turn around [Merrick, 2014]

11. FOREVER 21: LEADING THE WAY
FOR THE GARMENT INDUSTRY
• 2007 – developed “Vendor
Agreement” [Merrick,
2014]
– Requires manufacturing
plants to adhere to the
“highest level of safety
and human right
standards” [Merrick,
2014]
www.voucherbox.co.uk/vouchers/forever-21

12. FOREVER 21: SWEATSHOP
ALLEGATIONS
2001 – Sued by Asian Pacific
American Legal Center on
behalf of 19 garment
workers for “sweatshop-like
conditions”, unfair pay
(workers toiled 6 days/week
at 12 hours/day), and rat
and roach infested factories.
[Merrick, 2014]http://mjcdn.motherjones.com/preset_12/sweatshop300x200.jpg#sweatshop%2030
0x225

13. FOREVER 21: RESPONSE TO
ALLEGATIONS
• They cannot be held responsible for how their contractors do
business
• Forever 21, in turn, sued the Garment Worker Center, among
other organizations, for defamation
• Called the public campaign against their company “vicious”
• Settled in 2004
• Did not admit any wrongdoing
• Agreed to help activist improve the local garment
industry
• [Merrick, 2014]

14. EVIDENCE AGAINST FOREVER 21
• 2012 – US Department
of Labor found evidence
of minimum wage and
overtime violations in
Forever 21 sewing
factory in California
[Merrick, 2014]
– Sued Forever 21 after
they refused to hand
over employee records http://la.indymedia.org/news/2004/05/111521.php

15. FOREVER 21: LEADING THE WAY
FOR THE GARMENT INDUSTRY
• Forever 21’s response to the allegations [Merrick, 2014]
– Claims to have “promptly responded” to all requests for
documentation at their manufacturing factories
– As recently as 2013 the US Department of Labor was in
court again with Forever 21
• 2013: Forever 21 was ruled against in a federal
court and forced to provide documentation to the US
Department of Labor

16. HOW FOREVER 21 IS OPERATING
TODAY
• Chang claims to take a
smaller profit from F21Red
stores, making them able
to pass the savings onto
the customer [Merrick,
2014]
• Company has a code of
conduct – but it is not
available to the public
[Whitehead, 2016] http://ivptc.wordpress.com/2014/04/29/forever-21-opens-new-
store

17. HOW FOREVER 21 IS OPERATING
TODAY
• This multi-million dollar retail giant refuses to join any
Bangladesh retail groups in the wake of the Bangladesh Rana
Plaza factory collapse in 2013
– Forever 21 is on a short list of major retailers that refuse to join the
Alliance for Bangladesh Worker Safety or the Bangladesh Accord on Fire
and Building Safety
– Forever 21 stated that they do not feel the need to join because only a
“small amount” of their product is manufactured in Bangladesh [Merrick,
2014]
– What amount of manufactured product is enough for them to care about
workers’ safety?
• Forever 21 has also refused to join other major retailers in their
commitment to not purchase cotton from overseas factories that
use forced child labor

18. WHY AREN’T WE MAD?
• How has fast fashion become such a power house that we
are willing to forget about our ethics and values?
–In response to declining sales, Chang opted to open an
even cheaper clothing store – F21 Red – putting more
pressure on the garment industry for cheap products and
quick turnaround
–It strikes this author as the opposite of what he should be
doing, in light of the legal problems regarding his support
of sweatshops

19. HOW WILL FOREVER 21 BOUNCE
BACK?
• Why won’t Forever 21 publish their company culture and code
of ethics?
– If they consistently speak it and live by it, the workers in the
company will hold each other, and upper management,
accountable to those standards
• Why isn’t Forever 21 open about employee records?
– Theory X Managers utilize people for the same reasons they
utilize resources and money – strictly for economic reasons
• Consumers are losing faith in the company, but is that enough
to shut them down?

20. REFERENCES
Forever 21 Sues Another Retailer for Copying. Fashion Law, 29 Aug
2016. http://www.thefashionlaw.com/home/forever-21-sues-
another-retailer-for-copying. Accessed 16 Oct 2016.
Parrish, Elena. Understanding Forever 21’s Unethical Practices. Uloop
College Fashion News, 28 Sept 2016.
http://www.uloop.com/news/view.php/215329/Understanding-
Forever-21s-Unethical-Practices. Accessed 15 Oct 2016.
Sheff, Harry. Forever 21 Stores Fined for OSHA Violations. Menswear
Industry Magazine, 8 Jan 2014. http://www.mr-mag.com/forever-
21-stores-fined-for-osha-violations/. Accessed 16 Oct 2016.
Whitehead, Shannon. Brand: Forever 21. Project Just, 23 June 2016.
http://projectjust.com/brand_forever21/. Accessed 15 Oct 2016.