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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

Levi Strauss & Co

Session 13


The situation
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
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


Backround cont d
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


Internal context
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


Internal context cont d
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


Internal context1
Internal Context

  • Faced increased scrutiny from employees and customers

  • Was the company doing the right thing?


External context
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


Core values
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


Core values cont d
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


The saipan incident
The Saipan Incident

  • What was it?

  • What was the impact?



The china situation
The China Situation

  • Opportunity

  • Challenges

    • Human Rights

    • Intellectual Property

    • MFN

    • Engage or Withdraw?


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