Levi’s is Hiking Up its Pants Essay Example

production because of a high barrier to entry for other jean companies.

Implications on the Organization

• There was an immense amount of money wasted on the special reserve promotion, that didn't even come through
• The company's profit will continue to decline if; Levi's will not implement some type of change.
• Levi's current image isn't stylish, resulting in a drop in market share from 30.9 percent of the blue jean market in 1990 to 18.7 today.

Implications on Personnel

• The personnel has a lack of focus on product design and quality.
• Therefore, they lack innovation. Without new ideas for the product itself, there is room for competition to challenge the plant and control some of the market.
• The employees are not encouraged to reach their full potential. Employees should be encouraged to find ways that will help reduce costs.
• Tensions are high because no one is used to this level of insecurity due to the layoffs
  

of one third of the North American Levi's workforce.

Alternatives Solutions

Status Quo The no-change scenario is when management does not change any aspect of the business.

Levi Strauss; co. would continue as it is, without acknowledging any problems in the company. They would continue on with their ignorance of the organizational environment. If this is continued many problems will arise for the formidable jean entity.

Pros

• For a while longer, this organization would continue on as a textile and apparel giant in the economy.
• Levi Strauss ; Co. would still be loved as a brand name due to its brand loyalty
• The company's will still be viewed as a generous company and will still receive high praise for perks and pay.

Cons

• There would be no new business; the company's only consumers would be the slowly recessing and dying out crowd of older clients.
• The wishes of the new generation of hip-hop-inspired, teenagers who want baggy clothing, will remain unanswered.
• This is a huge missed opportunity due to the facts that, "By the time they're 24 they've adopted brands that they will use for the rest of their lives."  And, "...teens set fashion trends that influence even older shoppers..."

Competitors like Tommy Hilfiger, Ralph Lauren, Wrangler and Lee would in the near future, console the needs of today's customers better than Levi's.

This would result in loss of market share and profit by Levi's.By not changing anything at Levi's, the company will continue to be run with emphasis only on sales. This would ignore other aspects such marketing, planning and, globalization. Key marketing factors such as new products, consumer service, public relations and advertising or expansion would become obliterate therefore, keeping

the company at a stand still.

Management has a great company with a solid and trusted brand name, which is synonymous with quality and value. Unfortunately, with no action taken to appeal to new customers, the company will not have a prolific future.Change in ManagementWhile change in management seems like a drastic measure, it may be one of the most rational alternatives. Robert Haas became president in 1984, being the son of the previous CEO of Levi Strauss ; Co., Walter Jr. Haas.

Through a 1996-leveraged buy-out, Robert Haas caused the arrears of US$3.3 billion in Levi's finances. In response to changing external market conditions, Haas left Levi's in organizational chaos, out of touch with their customers, and trying to lower costs. While re-privatization was the clear motivation for the first leveraged buy-out in 1985, Haas' 1996 motivations, were simply strengthening family power.

Robert Haas is too emotionally involved and, this affects his capabilities of making clear and logical decisions that are beneficial for the company.

Also, the majority of management at Levi's is from the inside and management does not solicit enough independent opinions.

Pros

•  Hiring the "right new manager," perhaps from the outside, that has been through a similar situation would be crucial in getting Levi's down the right path.
• Acquiring new managers from different domains, would import new fresh ideas for Levi's. This would be beneficial as opposed to having everyone think the same way.
• New unconstrained outlooks of all aspects of management would now be heard.
• Allows for strategy to be created for all three levels of a company; corporate, business and functional level.

Cons

• The "right new manager" for Levi's would require one of the best
  

of the best in terms of management. Finding someone like this, who is willing to accept the position is a difficult task.

If such reconstructing were emplaced using steps, it might actually work. This alternative would bring about new managers that have been adapting to dynamic environments that could in the long run help out. But, considering Robert Haas and his family own seventy percent of Levi shares it would be near impossible to take the position away from him. To make this alternative succeed, Robert Haas must accept that he cannot fulfill his role as a manager and step down to allow someone who can.Restructuring of the marketing departmentThe restructuring of the marketing department encompasses many aspects of productive business planning.

These include product, distribution, advertising, public relations and customer service. 1 Levi's new marketing department will focus on what the consumers want as opposed to just sales.

Pros

• Improving the customer relationships of the company will lead to increased competitiveness
• Levi's perception of itself will broaden resulting in understanding of problems and challenges related to changing consumer preferences.
• Development of new types and styles of jeans will be created relating to the vast range of customers. These new styles will be sexy and rebellious which will cause a positive feedback from the younger
  

customers.

Cons

• It may be difficult for previous marketing managers used to make one-sided decisions for particular products or product lines agree to the new structure
• Researching and developing the new styles of clothes would take a bit of time
• Higher funding for advertisements will drain add to the company's expenses this alternative the funding and time invested would pay off with customer satisfaction and a new youthful image of the Levi's company.

This alternative solves the problem of the study of the organizational environment by actually doing so and responding to the weaknesses. This alternative will open the eyes of the marketing division and eventually, the new consumer attentive Levi Strauss ; Co. will flourish as a jean global power.

Further Global ExpansionLevi Strauss ; Co. production costs are considerably higher than its rivals. Levi's still produces a substantial amount of its apparel in company-owned factories in the United States and never followed the trend of moving and manufacturing overseas where labor is significantly cheaper. At this time of when this company is losing profits, a good choice for Levi's would be to acquire the cheapest labor possible

Pros

• Labor in countries such as Mexico or China is a fraction of the cost that Levi's pays here for them this would lead to cost reductions.
• The selling price could be decreased increasing competitiveness amongst other jean labels.

Cons

• Layoffs of North American workers and
  

hiring new workers abroad would not look good to the public, resulting in a negative image for Levi's.

The generous severance packages that would be issued would distract the public from seeing the global expansion into lower waged countries. This alternative would help in the analysis and coping with the dynamic environment in North America by increasing competition through reducing prices of Levi's jeans. Although there is numerous start-up costs, they would pay themselves off with the money saved on cheap labor.