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Forever 21 is an online clothing store that filed for bankruptcy recently. However, the conditions that led to its filing for bankruptcy were based on its poor business model. The organization was incorporated in California in 1987 and opened its first store in 1989. It is an umbrella with multiple brands under it, making a profit. Forever 21 is a subject of interest because it experienced steady growth until business slowed down in 2015. Organizational behavior is tied to the organization's strategy, and a business's mode can influence employee behavior and effectiveness.

There are multiple organizations like Forever 21, and the PEST and the two-factor models can be used to analyze the root of its challenges (Chiat & Panatik, 2019). The PEST model sets the context, and the two-factor model explores the context through employees.

The PEST analysis examines business from political, economic, social, and technological views (Leyva Vasquez et al., 2018). These four aspects can help organizations identify opportunities and mitigate risks. The political aspect deals with the political factors that challenge a business.

A store like Forever 21 is international and has more than 540 locations globally. The store deals with international shipping and manufacturing in different countries, which is affected by the legal restrictions of the specific countries. Governments also set working policies for workers. Suppose a government sets a minimum wage like the United States, Forever 21 revenues would be affected. Governments can also set environmental policies which affect the organization's manufacturing process. According to the PEST analysis, the political environment of a country can impose tariffs on the importation and exportation of products (Leyva Vasquez et al., 2018). Importation and exportation tariffs affect the prices of goods and services, thus influencing consumption. A government that sets trade restrictions also affects international businesses like Forever 21.

The economic aspect of the PEST analysis refers to deals with economic growth and decline. If an economy is doing well, people have more money to spend, and organizations benefit. Exchange rates are also part of the economic aspect; since Forever 21 is an international brand, consumers can shy away from purchasing if the exchange rate is too high. The skill level of the workforce will also influence how organizations operate. For example, Forever 21 is a brand that is built on fast fashion. Its workers must be able to deliver quality work on time and have a specific skill level. Globalized countries have better trade conditions for consumers and staff, thus making it easier for organizations to conduct business.

The social aspect refers to an attitude towards work. Workers in some areas have a positive attitude towards work where they are willing to put their work ahead of themselves (Leyva Vasquez et al., 2018). A motivated workforce produces more output for less leading to increased revenues for the organization. Diversity and inclusiveness are also part of the social aspect, and it is essential to note whether the organization is inclusive as it influences consumer behavior.

The technological element refers to disruptive technologies and social networking. The analysis of the company through the PEST analysis will show how Forever 21 succeeded in culture but failed to consider multiple factors. Social, political, economic, and technological aspects affect employees' behavior, leading to positive or negative organizational culture.

Organizational Analysis

Forever 21 has a hierarchical organizational structure, with a clear chain of command and centralized decision-making. The CEO, currently Daniel Kulle, oversees the entire company and reports to the board of directors. Under the CEO, there are several key departments such as Finance, Marketing, Human Resources, Operations, and Merchandising, each headed by a senior executive. Each department is further divided into sub-departments or teams, and employees have clear job descriptions and roles. The company has a centralized organizational culture, with all decisions made at the corporate headquarters in Los Angeles. The company's product development, design, and purchasing decisions are all made centrally, which enables the company to respond quickly to changing fashion trends and consumerpreferences. However, this centralized structure can also result in slower decision-making and reduced flexibility, particularly when it comes to responding to local market conditions.

Forever 21's business strategy is based on a fast-fashion model, which involves quickly turning over inventory to stay on top of the latest trends. The company's strategy is to offer trendy and affordable clothing to young consumers who are looking for the latest styles without breaking the bank. Forever 21 achieves this by designing and manufacturing its clothing in-house, which reduces production costs and enables the company to quickly respond to changes in consumer demand. The company's business strategy is supported by several key factors, including a large and loyal customer base, a strong brand identity, and a focus on customer experience. Forever 21's stores are designed to be fun and interactive, with bright colors, music, and engaging displays. The company also uses social media extensively to connect with its customers and promote its products.

Despite its success, Forever 21 has faced several challenges in recent years. One of the biggest challenges has been the rise of e-commerce and online shopping. Many consumers are now shopping online, which has led to a decline in foot traffic at brick-and-mortar stores. Forever 21 has responded to this by investing in its online presence, but this has come with its own challenges, such as increased competition from other online retailers.

Another challenge that Forever 21 has faced is increased competition from other fast-fashion retailers. Brands such as H&M, Zara, and Topshop offer similar products at similar price points, which has led to increased competition and price pressure. This has forced Forever 21 to continually innovate and differentiate itself from its competitors in order to maintain its market position.

Finally, Forever 21 has faced challenges related to its corporate culture and practices. In 2019, the company filed for bankruptcy and faced allegations of labor violations, including underpaying its workers and failing to provide a safe working environment. These challenges have led to increased scrutiny of the company's practices and a need for improved transparency and accountability.

Economic Environment

The Forever 21 brand 2015 thrived using the fast fashion business model. The economic conditions at that time were perfect. The brand was geared towards young Korean American and American women in their late teens and early 20s who wanted to wear trendy items for a lower cost. Economic growth also dictated that the brand would grow fast due to the availability of disposable income. Economic factors are essential in organizational behavior and are connected to the two-factor motivational theory (Chiat & Panatik, 2019). The two-factor theory posits that job security is important to employee motivation. But job security does not cause job satisfaction. In the peak season, employees of Forever 21 are assured of a steady job and paycheck, unlike when the season is low. Employees looking for seasonal jobs are not concerned with job security. Unfortunately, the prevailing economic conditions also determine job security. For example, many employees were fired during the pandemic because businesses could not stay afloat.

According to the two-factor model, a combination of hygiene and motivation factors can increase or reduce employee output (Acquah et al., 2021). The hygiene factors in a job are pay, company policy, physical working conditions, job security, relations with managers, and quality of supervision. The motivation factors are achievement, recognition, responsibility, promotion opportunities, and opportunities for personal growth.

At Forever 21, the peak season and the organization's rapid growth meant that diligent employees could get more responsibility and opportunities for personal growth. According to some of the Glassdoor reviews, there were opportunities for growth, which can be attributed to organizational growth. After Forever 21 started making significant profits, it expanded rapidly into various malls in multiple states across the United States. The rapid expansion meant they could employ more people and promote the existing ones (Vafokulova & Juraev, 2022). However, the rapid expansion was a terrible strategic move when most retail companies were downsizing. The company had branches in expensive locations, so the maintenance and rent costs were high. When consumer trends started changing, there was a significant downturn in the organization's revenue. During the pandemic, the sales reduced drastically, which meant that the stores had to fire some employees leading to job dissatisfaction. The expensive spaces also made maintaining many employees and the location challenging.

The organization also treated employees differently. Forever 21 has been accused of using sweatshops to produce fast fashion items. Sweatshops utilize unskilled labor and are cheap. The use of sweatshops gave a negative image to the organization since it showed discrimination (Vafokulova & Juraev, 2022). However, the quality of the garments showed that employees working at the sweatshops were not motivated to do their work. There was increased supervision leading to micromanagement and severe working conditions. The views of people who worked as sales representatives and managers were vastly different from those working in the factories. There were also no motivation factors for employees working in the sweatshop, that is, no opportunities for personal growth or recognition. They were treated like disposables.

Social Factors

The Forever 21 business model's target audience is young adult women. The young population is the leading demographic in fighting for environmental sustainability. The Forever 21 employees' age range is typically 21-30 years. According to research, most of the employees are also Liberals. Given the characteristics of their target audience and employees, it would be logical to state that today's employees may be dissatisfied with their job though they are compensated well. Forever 21's business model is based on fast fashion. Fast fashion came to the forefront when clothing retailers realized that most people wanted to wear designer clothing, but they could not afford it (Gupta & Gentry, 2018). Since there was a gap between luxury clothing and fashionable materials, fast fashion retailers stepped in.

For fast fashion to work, the companies must produce items faster than luxury clothing companies. Given the many seasons, the production rate was very high since there must be a spring, summer, autumn, and winter collection. All these seasons had new clothes produced at a fast rate and it was a repetitive cycle annually. Employees and consumers would purchase the clothes, and since they were not built to last, they fell apart quickly. Today, there are numerous landfills globally filled with fast fashion items (Gupta & Gentry, 2018). The fast fashion clothing industry also had better supply management and could distribute its items much faster. A solid distribution and supply chain management is good from a business sense, but the effect of that supply chain management is that mediocre goods reach most parts of the world, thus contributing to environmental pollution.

After the effects of fast fashion became evident, most consumers started shying away from working with an environmentally unconscious brand. The lagging sales at Forever 21 since the environmental sustainability movement gained momentum is evidence of that. The falling sales meant that the organization needed to cut costs, and the burden fell on the employees who worked at the sweatshops or the floors (.Vafokulova & Juraev, 2022). The modern employee is also environmentally conscious and is more satisfied working with a company that reflects their values. Unfortunately, Forever 21 is not one of those brands that reflects the values of the modern employee.

The organization plays a significant role in contributing to environmental pollution and dealing with counterfeits. As more young people move into the creative industry, there is a growing awareness of how counterfeits in the market affect a producer, even an individual producer. Employees are likely to shy away from Forever 21 because hygiene factors like company policy are not compatible with their beliefs.

Technological Factors

Technology disrupted most businesses, especially retail. Forever 21 management did not foresee the disruption of the digital space in the fast fashion industry. Most retail stores that had been around for much longer were looking to downsize their physical space and embrace online shopping. Forever 21 took the opposite approach and expanded into bigger and bigger spaces that were more expensive and were left behind. The digital space meant that consumer trends were changing, and people were purchasing differently (Vafokulova & Juraev, 2022). The rise of shopping in digital spaces also came with influencer culture, where Instagram and YouTube influencers had hauls. Forever 21 still focused on the physical and lagged because there were fewer and fewer walk-in consumers.

Technology also means that information reaches consumers and employees much faster. When stories of corporate social responsibility started circulating in the media, Forever 21 was found to be lacking. The company received backlash for its corporate social responsibility policy but did not do anything to change it. Consumers were warier about shopping at an environmentally conscious brand, and the employees who worked there were out of necessity. The company attracted employees who believed climate change was inaccurate or needed a paycheck no matter where it was coming from. Forever 21's organizational and strategic problems were amplified by technology, and it is essential to note that the management did not change its approach after the evidence was presented (Vafokulova & Juraev, 2022). Forever 21 declared bankruptcy due to the compounding of the issues mentioned.

Global Issue

The primary global issue for Forever 21 is environmental sustainability. Forever 21's business model is based on environmental degradation from manufacturing to consumption. In manufacturing, the organization pollutes the environment by releasing various gases. Shipping products from one country to the next also contributes to air pollution (Gupta & Gentry, 2018). According to the fashion transparency index, Forever 21 rates below other global fashion brands like H & M. It is challenging to make fashionable items below $70, but other brands are making efforts. Forever 21 has ignored corporate social responsibility by continuing to manufacture clothing that is not sustainable and shipping the products globally. Since the products are not sustainable, they do not last and end up in landfills. The material used is a primarily synthetic fiber which is also slow to biodegrade, leading to land pollution.

The company does not have a corporate social responsibility policy to guide suppliers, manufacturing, and consumption. The environmental sustainability issue extends to its employees and consumers (Vafokulova & Juraev, 2022). Consumers are not willing to shop from brands that are not environmentally conscious. The sentiment is similar across the board, thus Forever 21's declining popularity and filing for bankruptcy.

Recommendations

According to the PEST theory and the two-factor model of human management, Forever 21 must change its business model to influence organizational behavior. The PEST analysis showed that Forever 21's business model is flawed because it is based on the fast production of cheap clothes. On the social aspect, the fast fashion trend that made it famous is tanking the brand as consumer and employee trends change (Gupta & Gentry, 2018). Consumer trends show that people are more invested in shopping at environmentally sustainable brands. Forever 21 must overhaul its whole system and switch to making more environmentally sustainable clothing. Fashion brands that were on the same level as Forever 21 and switched strategies show that it is possible. Forever 21 can become more environmentally sustainable if it invests. By investing in environmental sustainability, the organization can attract employees who care about the environment.

The Forever 21 brand also thrived on cheap labor. Severally, the brand has been in the media for exploiting its workers and having unsafe working conditions. As the brand restructures its strategy, revising company policy is vital. Company policy should reflect sustainable development goals like decent work (Vafokulova & Juraev, 2022). The organization should also ensure that it treats all its workers equally. Stories in the media showed that the organization tended to treat factory workers poorly, where there were unsafe working conditions. The hazardous working conditions did not inspire the employees to produce quality work combined with the low wages.

Management and leadership are something that Forever 21 was also lacking; although the organization was based on a poor business model, it could have improved other sectors. For example, expanding the brand to significant malls was good for employees but bad for the business due to expenses (Vafokulova & Juraev, 2022). The organization should also adjust according to consumer trends to stay afloat.

In conclusion, an organization's strategy also affects organizational behavior. Although the two-factor lists some hygiene and motivational factors, there are new factors that influence job satisfaction (Acquah et al., 2019). Modern employees want to work with sustainable brands. The organizations must reflect their values. According to Herzberg's theory, sustainability can be classified under motivation factors, where employees will be more motivated if they work with a conscious organization. It is also essential to note that when employees work with companies pursuing a sustainable goal, they feel more significant and motivated at work.