Strategy: Choices and Impact (MN6005)
Submitted By: Ashish Baniya (12063747) Submitted to: Dr. Yuva Raj
Contents
Introduction
Levi’s was founded by a
Bavarian migrant Levis Strauss in 1853. It’s headquarter is situated in San
Francisco. Levis Strauss & Company is an American Company recognized as the
world’s largest pant makers and is famous for its blue denim jeans. The
company has four brands classified as Levi’s, Denizen labels, Dockers, and the
budget conscious signature. Levi’s also produces other clothing items such as
tailored trousers, jeans jacket and
jeans shirt, hats, Shirts, jackets,
belts, and skirts. Levis is famous for its blue denim jeans and it is their
unique selling point compared to its competitors. At
present, there is no other company with an equivalent international presence in
the jeans and casual pants markets. The Levi’s trademark is
one of the most recognized in the world and is registered in more than a
hundred and sixty countries.
Porters five force Model
Threat of new entrants: low
Threat from new competitors is less. Levis is known for its
denim blue jeans and to compete against Levis is very difficult for new
competitors. It is difficult to get more market share for competitors so the
threat from new competitors is very low.
Bargaining power of suppliers: low
For Levis who have been working in clothing industries
from 1853, the bargaining power of suppliers is low. As an
old company they have a loyalty suppliers.
Threat of substitute product: high
In recent years people are shifting from jeans to wear to “athleisure”
wearing gym clothes in day to day works. The market shares of yoga pants in
recent years have increased, decreasing the overall lsales of jeans.
Bargaining power
of customers: High
As there are many substitute brands to choose from the
bargaining power of customers is high. If customers are not satisfied with Levi’s
they will simply chose from its competitors such as wrangler.
Competitive rivalry: high
Levis has many competitors. Levis do not tend to decrease
its cost to increase its sales. They have a set price and are not willing to
decrease their price because of which customers chose from its competitors who
provide similar quality jeans at a lower price compared to Levi’s.
SWOT Analysis
Strength:
Levis brand name is its strength as it is one of the oldesr
brand of clothes. It has perfect blend of design and comfort. Levis has a
status symbol of upper class. Youths are more attracted to Levis.
Weakness:
Its weakness is its external competition and competiveness because the price of Levi’s is too high.The rate of growth is decreasing and slow.
Opportunities:
Its weakness is its external competition and competiveness because the price of Levi’s is too high.The rate of growth is decreasing and slow.
Opportunities:
There are opportunities increasing for Levi’s jeans because
of growing casual wear market. The manufacturing and production cost in various
international market is decreasing which will decrease the cost of the product.
One of the main opportunities to grow Levi’s market share is the acceptability
of western wear around the world and increase in popularity between youths.
Threats:
Levis has more threats than opportunities. Consumers taste
are changing rapidly, they have variety of casual wear to choose from nowadays,
instead of jeans women prefer yoga pants. There is lack of protection of property
rights in some countries and dublicate products in the name of Levis are being
sold. There is increasing competition from its competitors such as Wrangler, Lee,
and Calvin Klein jeans.
PESTEL analysis
Political/Legal
Promotional activities are regulated in all countries by
legislation. Levi Strauss's most famous television commercials used the music
of Martin Gaye as a background to 1950s image of young man stripping to his
boxer shorts and washing his 501's in a launderette. This advertisement had to
be adjusted in many Western countries and was banned from Asian countries. There
are relatively few legal restraints upon the choice of distribution channel.
Economic factors:
The economic factor is increasingly important in enhancing
adaptation. markets vary enormously by their disposable income per capita.
Therefore, having standard set prices would mean that poor countries are likely
to have reduced market for jeans. Different levels of income and changes in
income levels will affect both the price that can be charged and the product
quality that is appropriate for each local market. Prices for jeans do vary
very substantially between markets and price discrimination may be to some extent
for reasons of income but may also be because of the increase of competition.
Social factors:
Socio-cultural consists of language, religion, ethnics,
values and customer perceptions. In addition to the effect on the design of
advertisement, cultural differences have linguistic implication(language
meaning) with regard to the product name. The brand name of product is a key
element of its promotion but care has to be exercised to avoid causing offence
in translation or using symbols that do not have the same significance
worldwide. Japanese consumers prefer tighter fitting jeans than the Americans.
It is therefore clear that fit, design and style of jeans need to be adapted to
meet the requirements of the local buyers.
Technological factors:
High technologies are required to make full use of the
variety of promotional methods using alternative advertising media such as
television or Web sites. With the help of technology the cost can be reduced as
computer can do the work of 10 human sources which decreases the overall costs.
Environmental factors:
Environmental factors have to be looked by every company or
else it will have to shut down its company. Government has different policy for
company. They have restriction on buying raw materials and are not allowed to pollute
the local environment.
Value Chain Analysis
Inbound Logistics:
Levis Strauss identifies the
internal connection and use it to figure the organization. It signifies the
tough guarantees to the reputational properties in relations with suppliers.
Operations:
Different approach has been
applied by the CEO Bergh. New machines are being used to enhance productivity. In
last decade, Levis has also used high technological sewing systems. Investment
of 10 million dollars have been made since 1992 for converting assembly line
machines to the team manufacturing procedures.
Outbound Logistics:
Levis policies in accomplishing
an extra-ordinary status in outbound logistics by the strong relationship with
retailers. Levi Link, an EDI system that straightly attaches definite retailers
to the complete distribution system of Levis Strauss. Information about
point-of-sale from Levis chief accounts offers the capabilities to produce
instant records related to an invoices, reorders and shipments.
Marketing and Sales:
Levis has competitive advantage over original
and progressive marketing campaigns as it has 50 years connections with Foot,
Cone and Belding. The company has just been competent to beat the joined sales
of Lee and Wrangler in market share. Levis has also traditionally construct its
market shares by connections between self-regulating distribution networks.
Sales Service:
Denim Paper product produced from
Denims scraps minimizes shipping and discarding of Denim scraps to landfills.
Various others environment sensative
creativities are portion of Levis actions involving such as copper
rivets, recycled paper tags and eco- friendly clothes item due to the
production of naturally painted cotton.
Mckinsey 7’s model
Strategy:
Levi’s has been able to stay on the top of this denim industry for 162 years
because of their simple but effective strategy. They make denim with authentic
jeans and last for long period of time. As they have adapted with the changing
fashion trend, it has been able to make a mark on customer mind.
Structure:
The structure of employees is like a path for the company. There are many
workers working under the top-level executives who control the business on
other and home country. The chairman Bob Haas remains on the top of this
privately owned organization.
Style: Levi’s
is the oldest and a worldwide recognized brand. To maintain their standard and
brand image, they have been providing high quality denim products. The
employees are paid a minimum wage depending on the country.
Staff: Levi’s
Strauss has been managing their huge demand of jeans by employing more than
15,000 people around the world. They give emphasis on hiring the best staffs in
their company.
Skill: As
mentioned above, Levi’s Strauss hires very qualified people with certain skills,
who understand the significance of this industry. They are the person who helps
to create the brand image of this successful company.
System: This
Company gives their employees the opportunity or referendum to express their
ideas. This is how Levi Strauss comes out with very attractive designs. They
also motivate their staff to understand the current fashion trends.
Shared Value:
Every single employee in this company has a shared value or similar goal. This
is to love what they do and achieve excellence in what they are doing. If
everyone in the team has a similar value or vision, it will be easier to
achieve huge success.
Recommendations:
These
above analyses help to recognize all the internal and external factors that
might influence the performance of Levi Strauss.Because of their brand name and
product they have loyal customers. It is every business’s objective to
maximize their profits and lessen their expenses. Levi’s has invested on one of
the most important resource that a company could have – its employees. It must
be noted that losing an employee can be very expensive and high staff turnover
can eventually ruin a business. The last thing that businesses need is for its
competitors to benefit from the training, knowledge and experience that it has
built within its workforce. The traditional company benefits package often has
a strict “one size fits all” approach; it fails to consider the changeable
needs of individual employees. In addition, the traditional company benefits
package may sometimes be complicated and difficult to manage. Therefore, it is
greatly recommended that companies like Levi Strauss and Co. implement a
flexible benefits package to help reduce costs and provide a greater choice for
their workforce. Furthermore, flexible benefits provide additional lifestyle
choices along with traditional company benefits such as private healthcare and
the company pension scheme which will allow employees to choose the benefits
that they want which in turn will motivate them and make them more productive.
