Levis Strauss & Co. an Analysis

Levi Strauss & Co. An Analysis EEP 142 throng Project Young Lee throng Moon Michael Lin conundrum The Levi Strauss companion is experiencing losings and is chronic to under-perform in the denim dung bee merchandise. The firm faces the general problem of a dominant firm losing foodstuff trade when to a greater extent than firms enter the mart. difficulty stress Successes challenger Solutions province goal Q&A minimise History The society was founded by Levi Strauss in 1853 primarily fail sell dry goods. The society was founded in San Francisco, California. A tailor named Jacob Davis thought of an idea to enjoyment dogshit rivets to rein pluck the points of strain on pants. Davis and Strauss purchased the procure of the idea of using copper rivets in clothing on whitethorn 20, 1873. Problem mount Successes contention Solutions duty culture Q&A stage setting political pa delectationy Growth The innovation of the rivets in the dungargones tell apart Levi s denims from an other(a)(prenominal)s because of its increased durability. Over the long time, Levis jeans fix become more popular, ab initio collectible to its durability. Jean returns expanded, targeting different consumers. Levi Strauss & Co. in the end translate hold ofs most of the denim jean trade, becomes the largest manufacturing business of jeans, and profits reach $1 cardinal by 1974. Problem context Successes disceptation Solutions indebtedness Conclusion Q&A emphasize Time Line 1853 Levi Strauss begins selling dry goods in San Francisco. 1873 Levi Strauss & Co. patent riveted jeans and begin selling them. 1912 Koveralls, denim playsuit for children, is front nationally sell product for the caller. 1935 telephoner sells first relentless jeans for women. 1940s U. S. overnment issues denim work vestments for employees in the defense industry. 1974 Company gross gross revenue reach $1 billion 1986 Company introduces Dockers as a unsanded routine ru n along of clothes Problem stress Successes Competition Solutions province Conclusion Q&A Successes Monopoly Since the patent of the rivets in jeans in 1873, the family achieved monopoly power. Monopoly power was gained through entry barriers. The patent granted the firm monopoly rights to sell riveted jeans. to a fault by product differentiation The rivets on the jeans allowed for longer durability, a form of good differentiation. Product differentiation and barriers to entry allowed the company to gain more popularity and market part. Problem ambit Successes Competition Solutions function Conclusion Q&A Successes Expansion By 1977, Levi Strauss & Co. is the orbs largest jean manufacturer. Department stores and boutiques sell Levis products and are additional convey of distribution for the company. Levis provides a colossal range of products that target different market segments, capturing fartings. After the passing play of the 501 product line, Levis enjoys world a stray market potentiality in the denim jean market. Levi Strauss & Co. hold backs its anatomy as an American Icon and the agent of American jeans. Problem place setting Successes Competition Solutions Responsibility Conclusion Q&A Successes spatial relation Other marketing strategies, handle the impersonate of the product, created increased differentiation, contributing to the companies market power. In 1930s, the company survived the Great Depression due to increased interest in westerly culture. Jeans were positioned as organism worn by cowboys. cowboys. Levis jeans were issued to employees in the defense industry (including veterans) during land War II. Post piece War II, veterans that went to college wore Levis jeans on Levi campuses, increase popularity. WWII veterans were regarded as heroes. Jeans were shown to be suitable for everyday wear, quite than work. work. During the Baby Boom era, Levis targets younger consumers and Levi positions product as cool. coo l. azoic movie stars wore Levis jeans. An example of credit endorsement Levi Consumer gather up shifts from durability of jeans to mould of jeans. Culturally, jeans became symbol of youth and rebellion In 1960s, student protesters wore jeans as a indian lodgeed In 1970s, company sells bellbottom jeans The firm positioned its products with ever-changing quantifys and changing demands, keeping vivacious customers and capturing new markets. Increases in sales ultimately increased profits Problem reason Successes Competition Solutions Responsibility Conclusion Q&A Competition Effect Levi Strauss & Co. was threatened by competition, because barriers of entry were relatively low in the jean market. (excluding the patent) more or less of Levis challengers accept Calvin Klein Gap Jeans VF Corp (Lee, Wrangler) Tommy Hilfiger The entrance of new competitors had many effects on Levis. Levis no longer has monopoly power more competitive prices Levi lower profits availableness o f substitutes firm faces increase in childs play of demand Consumers prefer other tell ons. Levis customers buy from competition Levi lowering Levis market share. Levi These newer arrivistes are able to geek away at Levis market dominance because they are able to capture segments. VF Corp captures low-end jean consumers Calvin Klein captures highlowhighend consumers.Problem range Successes Competition Solutions Responsibility Conclusion Q&A Competition Strategies contentions successfully were able to take from Levis market due to sober advertising and stigmatiseing. stationing was especially stiff for companies wish Calvin Klein that targeted high-end consumers. Some of the marketing strategies that competitors like Calvin Klein utilise to differentiate their product and fire fool included Celebrity endorsements (Calvin Klein and Brooke Shields) Up-to-date European product designs (low- establish, tighter) Up- to(lowAdvertise jeans as designer. designer. These adverti sements were used as a barrier to entry, because of meretricious product differentiation. Although Levis jeans may be physically the same as its competitors, consumer preferences are affected by brand name. In addition to the idea of branding, Levis largest consumer market were Baby Boomers, and by the time competitors increased in the 1980s, the Levis brand was perceived to be mommy jeans. This beef up the more youthful perception of other brands. Problem background Successes Competition Solutions Responsibility Conclusion Q&A Competition agiotage Jeans Levis failed to recognize and enter a new and booming superior jeans market, originating in 2000 and led by brands such as Seven For All globe, True Religion, and shiver & Republic. Levi executives themselves admitted failing to see the premium jeans trend, and the company was forced into radical cost-cutting, closing scads of factories and laying off thousands of workers. The premium jeans market has over the last five ye ars largely driven the growth of an otherwise stable jeans market, as premium jeans sales grew at a 40-45% rate for treble years.Levis failure to adequately answer to this trend was a large part of its posting declining sales in nightspot out of ten years anterior to 2007. Problem Background Successes Competition Solutions Responsibility Conclusion Q&A Solutions Advertising With the rise of competitors and decrease in brand image, Levi Strauss & Co. makes use of edgy advertisements. Brand Loyalty many a(prenominal) of Levis ads stress brand committedness to maintain existing customers. Levi The word reliable is used many times. original Some tv ads are set in the late 1800s, stressing the historic value of the company. Brand Image At the same time, Levis ads stress the young of their brand Levi youthfulness jeans. The 501 product line and the Red oral contraceptive collections offer jeans that appeal that to younger consumers competing with the high-end jean competitors. h ighTelevision advertisements are more innovative and target younger crowds. http//www. youtube. com/ view? v=CSG807d3P-U http//www. youtube. com/ discover? v=CSG807d3Phttp//www. youtube. com/ adopt? v=skWFyop_pxU&feature=related http//www. youtube. com/ lookout station? v=W-SZN1VRIl4&feature=related http//www. youtube. com/watch? v=W- These marketing strategies however did not help with the worldwide decrease demand for jeans. This implies that other clothing is becoming a substitutable good for jeans. Problem Background Successes Competition Solutions Responsibility Conclusion Q&A Solutions Alternative Although Levi Strauss & Co. had worldwide market dominance in the 1980s after the release of 501 product line, profits continue to go due to (1) decrease of demand for jean products and (2) more competition. In 1996, revenues were reported at $7. 6 billion and a U. S. market share of 18. 7%. By 2001 revenues discard to $4. 5 billion and U. S. market share of 12. 1%. In order to ma intain revenues, the company releases the Levis signature jeans. This product line appeals to the low-end consumers. Decrease in demand for jeans causes market price to drop, so consumers emergency cheaper jeans. Problem Background Successes Competition Solutions Responsibility Conclusion Q&A Solutions Alternative (cont. ) In 2002 Levi Strauss & Co. makes an agreement with largest retailer Wal-Mart as a supply-chain strategy to massmarket consumers. Levis Signature brand to be sold in Wal-Mart stores unaccompanied This was an excellent strategic move because Wal-Mart was devising large sales while Levis could not keep up in sales. This had potential to benefit twain parties. By 2002, Wal-Mart was 1 in the Fortune ergocalciferol rating. Levi Strauss & Co. was ranked 383 in 2002. Although this partnership was a success, Levi Strauss could not offset the slowdown in the aggregate denim jean market, continuing to loss profits. 2008 Rating for Levis 522 from old 510 Profits continu e to fall. Problem Background Successes Competition Solutions Responsibility Conclusion Q&A Solutions Alternative (cont. ) Forced to re-evaluate itself by years of declining sales, Levis has been able to bring forth about degree of success with primarily the opening of the Signature line and a largescale streamlining of cost and its business. Levis is alike being helped by its international presence and is soon being benefited by impacts from the global money exchange market, as the company benefited from the washed-out dollar. The company is still trying to find a way into the lucrative premium jeans market, introducing a new premium line and hiring famous artists to liven up the brand. Competitor VF Corp. ecided to purchase Seven For All Mankind as their market entry. Problem Background Successes Competition Solutions Responsibility Conclusion Q&A Responsibility Background Levi Strauss & Co. is a family have worldwide corporation with headquarters in North America, Europ e, and Asia. The company is vertically integrated, moment it owns/has owned factories for every level of turnout for the jeans. The company employs about 10,000 battalion worldwide. historically Levi Strauss & Co. is recognized as a affectionateness and corporately responsible company. After the 1906 San Francisco earthquake, he company continued to pay workers as it was build factories and buildings. During the Great Depression, the company kept workers invade installing new floors in factories rather than fire them. Problem Background Successes Competition Solutions Responsibility Conclusion Q&A Responsibility Background (cont. ) Levi Strauss & Co. has also taken the lead on social issues. During the 1940s, the company desegregated its factories transport white and black workers together. In 1980s, the company was very involved in educating people about AIDS providing $37 cardinal to HIV/AIDS services. One of the first companies to extend healthcare to their workers spou ses. Levi Strauss & Company progress to business profits through principles. As business leaders we have the obligation, both individually and collectively, to make our enterprise not but a source for sparing wealth, but also a force for positive social change in the conduct of our business. This principle of responsible commercialized success is embedded in our more than 150-year experience, and continues to anchor how we operate today. Problem Background Successes Competition Solutions Responsibility Conclusion Q&AResponsibility Sweatshops With increased competition from other jean producers in the 1980s and 90s, like any profit-maximizing corporation, Levi Strauss & Company closed many factories and subcontracted production. Subcontracted production is cost-minimizing because labor is relatively abundant and wages cheaper. In order to compete with prices, subcontracting work makes sense. Problem Background Successes Competition Solutions Responsibility Conclusion Q&A Resp onsibility Sweatshops (cont. ) The company had 6 appurtenant factories in Saipan, capital of the U. S.Commonwealth of the Yankee Mariana Islands. The U. S. Department of Labor cited that workers were paid sub-minimal wages, 7 day work weeks with 12-hour shifts in slave-like conditions. The subcontractor, suntan Holdings Corporation, had to pay a fine of of $9 million as restitution to 1,200 employees. Levi Strauss & Co. claimed no knowledge of the offense, cut-off cutties to Tan Holdings, and issued labor reforms. 1999, Sweatshop Watch, planetary Exchange, Asian Law Caucus, Unite, and workers filed a class-action typeface 3 times to 27 U. S. retailers, including Levi Strauss & Co.Levi Strauss was the only defendant to win the case. Problem Background Successes Competition Solutions Responsibility Conclusion Q&A Responsibility Environmental Continuing on the approach of profits by principles, in 2006 Levi Strauss & Co. launches the Eco clothing line. Jeans are certified to be made from 100% organic like plant plant and fully sustainable production processes. This includes cotton untreated by chemicals, pesticides, and manufactured at sustainable carbon emissions. The jeans are also packed in 100% recyclable and reusable materials. Economic implications Organic jeans are more expensive, due to the added costs to recognize these genes to organic standards. However, discouraging the use of chemicals for cotton is a step toward the right direction. Pesticides have externality costs to the environment and workers, because they are mostly improperly used in poor countries. A reduction in externalities improves social welfare. In the long-run, sustainable production has the possibility to being profitable. Corporate responsibility also has long-run profits. Problem Background Successes Competition Solutions Responsibility Conclusion Q&AConclusion Levi Strauss & Company had most of its archeozoic success because the firm was behaving monopolistically. The company procure the riveted jeans, increasing durability, and gaining popularity. Over the years, the company retained profits by providing a wide range of products, capturing new markets, and increasing its market shares. The company created barriers to entry by patents and trademarks, and by differentiating its product from generic jeans. However as more firms entered the market, the company started losing customers and incurring losses.The upstart companies captured niche market shares from Levis spacious market domination. Despite these reduction of sales, Levi Strauss & Co. maintain its corporate responsible image and modern stance on social, labor, and environmental issues, which may have long-run profit opportunities. Problem Background Successes Competition Solutions Responsibility Conclusion Q&A References Frith, Maxine. The Ethical Revolution brush Through the Worlds Frith, World Sweatshops. commondreams. org. 16 April 2005. 2 May 2008 Sweatshops. commondreams. org . .