Levi’s is Hiking Up its Pants Essay Example

apparel dominance has made them reluctant to venture beyond their niche.

Implications on the Organization

• A significant amount of money was wasted on the unsuccessful special reserve promotion.
• Without implementing some form of change, the company's profits will continue to decline.
  • Levi's current image is not fashionable, resulting in a decrease in market share from 30.9% of the blue jean market in 1990 to 18.7% today.

  Implications on Personnel

  • The personnel lack focus on product design and quality.
  • As a result, they lack innovation. Without fresh ideas for the product itself, competitors can challenge the brand and gain control of some market share.
  • The employees are not motivated to reach their full potential. They should be encouraged to find ways to reduce costs.
  • Tensions are high due to layoffs affecting one-third of the North American Levi's workforce, leading to increased insecurity among employees.

  Alternative Solutions
  Status Quo: The management does not make any

changes to any aspect of the business.

Levi Strauss & Co. would stay stagnant, disregarding internal issues and remaining oblivious to the organizational environment, which could result in numerous problems for the renowned jeans entity. However, there are both advantages and disadvantages to this approach. On the positive side, despite facing challenges, Levi Strauss & Co. would continue to dominate the textile and apparel industry for a while longer. The company would also maintain its strong brand loyalty, keeping it as a beloved brand name. Additionally, it would still receive praise for its generosity and recognition for its perks and competitive pay.

However, persisting without making any changes has drawbacks. Without adapting to new business opportunities, Levi's would miss out on attracting newer clientele and rely solely on older customers whose numbers are declining over time. This is especially detrimental as it fails to meet the desires of the new generation inspired by hip-hop culture who prefer baggy clothing – a significant missed opportunity considering teenagers' influence on fashion trends that even impacts older shoppers.

In contrast, competitors such as Tommy Hilfiger, Ralph Lauren, Wrangler, and Lee are better positioned than Levi's to cater to today's customer demands in the near future. Consequently, Levi's market share and profit would suffer due to these missed opportunities.Levi's may be excluding important elements necessary for sustained success by not making any changes or considering aspects beyond sales prioritization. This includes marketing strategies, planning techniques, and globalization. If the company eliminates key marketing factors such as new products, consumer service, public relations, advertising, or expansion, it could result in stagnation. However, management is known for its strong and respected brand name that

is associated with quality and value.

Without efforts to attract new customers, the company's future prospects are unfortunately grim. One possible solution is a management overhaul. Levi Strauss & Co experienced a change in leadership in 1984 when Robert Haas became president, following his father Walter Jr. Haas, who had previously been CEO. However, it was during Robert Haas' time as president that Levi's finances took a major hit due to a leveraged buy-out in 1996, resulting in a debt of US$3.3 billion.

Haas left Levi's in a state of disarray, disconnected from their customers, and attempting to reduce expenses in response to evolving market conditions. The initial leveraged buy-out in 1985 was driven by the goal of re-privatization, while the 1996 buy-out aimed to consolidate family power. Robert Haas' strong emotional attachment impairs his ability to make sound, rational decisions that would benefit the company. Additionally, a lack of diverse perspectives is evident in Levi's predominantly internally sourced management, who fail to seek enough independent opinions.

Pros

• Hiring the "right new manager," possibly from external sources, who has experienced a similar situation is crucial for guiding Levi's in the right direction.
• Bringing in new managers from different fields would introduce fresh ideas to Levi's, which can be beneficial compared to having uniform thinking.
• New and unrestricted perspectives on all aspects of management will now be considered.
• This approach allows for strategy development at all three levels of the company: corporate, business, and functional level.

Cons

• Finding the ideal manager for Levi's requires someone with exceptional management skills, which makes it challenging to find a candidate willing to take on this role.
• New
  

business strategies like SWOT analysis are detailed and time-consuming, which may discourage companies from pursuing this path.

If such restructuring were implemented using systematic steps, it could potentially yield positive results.

This alternative proposes bringing in new managers who are able to adapt to dynamic environments, which could ultimately benefit the company. However, it would be extremely difficult to remove Robert Haas, who owns seventy percent of Levi shares, from his position. In order for this alternative to succeed, Robert Haas must acknowledge that he is unable to fulfill his role as a manager and step down to allow someone else who is capable.

The restructuring of the marketing department involves various elements of effective business planning, such as product, distribution, advertising, public relations, and customer service. Levi's new marketing department will prioritize meeting consumer demands rather than solely focusing on sales.

Pros

• Enhancing customer relationships will increase competitiveness.
• Levi's perception of itself will broaden, leading to understanding of challenges related to changing consumer preferences.
• Creation of new types and styles of jeans will cater to a wide range of customers, especially younger ones who prefer sexy and rebellious designs.
• New advertisements incorporating sex appeal, rebellion, and youth will attract younger buyers seeking the latest fashion trends.
• Sponsoring concerts attended by teenagers will improve Levi's image among the younger audience.

Cons

• Previous marketing managers may struggle to adapt to the new decision-making structure.
• Researching and developing new clothing styles will require time and resources.
• Increased funding for advertisements will add to
  

the company's expenses, but it can result in customer satisfaction and a refreshed image for Levi's.

This alternative effectively addresses the problem of studying the organizational environment by proactively responding to weaknesses. It brings awareness to the marketing division and, in turn, leads to the success of Levi Strauss & Co. as a dominant player in the global jeans industry.

Levi Strauss & Co. incurs higher production costs compared to its rivals due to its continued use of company-owned factories in the United States instead of outsourcing to cheaper labor markets abroad. In order to address their decreasing profits, one possible solution for Levi's is to consider acquiring cheaper labor options. Pros

• This would lead to cost reductions as labor in countries like Mexico or China is significantly cheaper than what Levi's currently pays.
• By decreasing the selling price, Levi's could enhance its competitiveness among other jean labels.

Cons

• However, layoffs of North American workers and the hiring of new workers abroad would create a negative public image for Levi's.
• If some North American plants were to remain open, the low morale and job insecurity among workers could result in decreased productivity, potentially leading to more plant closures.
• Training new inexperienced workers and establishing a new factory abroad would involve significant expenses.
• In order to maintain their image, Levi's would need to provide severance packages to laid-off North American employees, which would generate substantial expenditures.

• The need to pay tariffs and taxes due to global business would contribute to operating costs.
• The issuance of generous severance packages would divert public attention from the expansion into countries with lower wages.

This alternative aims to address the dynamic environment in North America by enhancing competition through

price reduction of Levi's jeans. Despite the presence of various initial expenses, they would be outweighed by the savings on low-cost labor.