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Levi Strauss & Co

Levi Strauss & Co. Session 13. The Situation. Should LS&Co continue sourcing and purchasing fabric in China Should the company make direct investments in marketing and manufacturing venues in China. Background. LS&Co traced its roots to 1850s

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Levi Strauss & Co

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  1. Levi Strauss & Co Session 13

  2. The Situation • Should LS&Co continue sourcing and purchasing fabric in China • Should the company make direct investments in marketing and manufacturing venues in China

  3. Background • LS&Co traced its roots to 1850s • Early success producing and selling canvas trousers to miners during the gold rush • Strong brand identity-synomous with jeans • Company went public in 1971 • Experienced a difficult times in ‘80s • Executed a LBO in the 1985, by 1993, 95% of shares were owned by the descendants and certain non-family members

  4. Backround (Cont’d) • In the ’90s-Shifted from being a just a manufacturer to a marketer • Jeans epitomized much of American cultures: freedom, originality, youthfulness

  5. Internal Context • Marketed its clothes in more than 60 countries • Production and distribution in more than 20 countries • Enjoyed a market cap of $5.5B in 1993 • Strong international sales in the ‘80s and early ‘90s • Market leader in every country where LS&Co jeans were sold

  6. Internal Context (Cont’d) • By 1993-Shifted from companied owned manufacturing to about a half of its production outsourced and offshored • Faced significant criticism for closing U.S. plants and offshoring and outsourcing • With changing customer tastes-sought to speed the introduction of new products and shorten the customer service supply chain

  7. Internal Context • Faced increased scrutiny from employees and customers • Was the company doing the right thing?

  8. External Context • Trade Issues were source of significant concern in America • Trade friction with Japan was at its most serious point ever • Media and unions were increasingly raising concerns about working conditions in Asia

  9. Core Values • Core values- How we do things around here • Values were use to align the firm’s strategy, people, and resources • Focused on creating a culture that employees and customers could be proud of • Wanted employees to bring their whole self • Responsible “commercial success” • Moved to principles-based code of ethics and statement of social responsibility

  10. Core Values (cont’d) • Adopted the “principled reasoning approach” • Define the problem • Agree on the principles to be satisfied • High-impact and high influence stakeholders • Brainstorm possible solutions • Test the consequences • Develop an ethical process for implementation • Linked compensation to the new way of doing things

  11. The Saipan Incident • What was it? • What was the impact?

  12. Business Partner Engagement • What? • Why?

  13. The China Situation • Opportunity • Challenges • Human Rights • Intellectual Property • MFN • Engage or Withdraw?

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