Global Strategic Management, International Strategic Management: Corporate Level Strategy. Case Analysis of LEVI STRAUSS & COMPANY including SWOT Analysis

1. Problems/Key Issues

Difficulty in strategic decision making: Strategic decisions at the company were difficult to make due to the "principled reasoning approach" promoted in the company's leadership courses that called for consensus decisions.

Wrong corporate direction: Difficulty in strategic decision making led the company to the wrong way inserting too much attention on work environment enlightenment instead of corporate benefits as a whole - both value-based and monetary benefits.

Failure to introduce new jeans styles: This problem was caused by the previous issue, wrong corporate direction. Levi Strauss & Company failed to introduce new jeans styles that appealed to consumers aged 15 to 24, who accounted for the largest percentage of blue jeans purchasers. At last, this failure caused company's declining sales and market share in its core jeans business.

SWOT Analysis

Strengths:

The world's largest branded apparel manufacturer

In-depth industry experience and insight

Leader in promoting corporate social responsibility

Weaknesses:

Consensus management style and a management team that was characterized as insular, paternalistic, and quite frankly, a little smug

Inability to keep jeans styles fresh

The reliance on outsourced offshore contractors to operate the business due to its downsizing decision

Opportunities:

Participation within growing apparel industry

Decreased production costs through downsizing

The ability to leverage other industry participants' marketing efforts to help grow general market

Threats:

Competition from its rivals like Gap, Tommy Hilfiger, Polo and other incumbents (threat of intense segment rivalry)

Future/potential competition from new entrants (threat of new entrants)

Substitutes for Levi's products are offered to the market (threat of substitute products)

2. Alternative Actions

Maintain company's democratic decision-making authority

Implement both value-based and monetary intents into corporate culture

Downsize the corporate structure

Bring in new outside managers

Hire a new advertising agency

Announce new styles and subbrands of jeans

Price cutting sales promotion

3. Evaluation of Alternatives

Benefits

Perceived as "good and appropriate" management style in American culture

Participation by all management members

Costs

Difficult to make strategic decisions

Take longer time to make decisions

Might not prevent and address the would-be problems and occurred problems in time

Benefits

Enlightened work environment

Profit making company

Costs

Difficult to implement due to possible uncooperative actions by management

Benefits

Cost competitiveness in long-term

Potentially growing profits in the long run

Costs

Unemployment of company's employees

Severance package expenses paid to laid off workers

Negatively affect local economies

Reliance on outsourced offshore contractors

More difficult to control the production quality

Benefits

Creative/new ideas in management

Costs

Current managers may be laid off or changed their positions within the company

Does not guarantee the better or improved management decisions

Training program expenses

Benefits

New and more creative advertisements can be produced

Can possibly change the brand perception by the targeted customers

Costs

Currently hired advertising agencies will be discontinued

Does not guarantee the success in changing the brand perception

Benefits

Customers have more choices by new styles and subbrands of jeans offered by Levi's

Possible increasing sales and market share

Costs

Might not work effectively since the customers may be loyal to other brands

Take some time to create new brand perception

Benefits

Can increase sales and market share in short-term

Draw a lot customers' attention to Levi's brand in the short period of time

Costs

Not sustainable sales and market share

Affect the brand image of Levi's

4. Recommendation

Strategic Intent

All LS&C employees aspire to be part of a winning organization built on the strong foundation of accomplishments, traditions, and values that [the company] have to inherited and that continue to lead [the company] to commercial success.

Levi's 506 jeans

Levi's 506 jeans

Levi's 506 jeans

Strategic Mission

To achieve and sustain commercial success as a global marketer of branded apparel

Key Result Areas

Corporate direction

Cost-competitiveness

Levi's jeans products

Strategies

Maintain company's democratic decision-making authority

Implement both value-based and monetary intents into corporate culture

These two strategies could help the firm to operate on the right corporate direction by focusing on both value-based and monetary benefits since the firm cannot survive by only one-sided perspective - to be the most enlightened work environment in the world.

Objectives

Downsize the corporate structure

Bring in new outside managers

Hire a new advertising agency

Announce new styles and subbrands of jeans

These four strategies could help the firm to place attention on cost-competitiveness and Levi's jeans products. One alternative action which was not selected, price cutting sales promotion, could ruin the brand image/position perceived by customers. This action is not suitable for the market leader like Levi's in the long run.

For downsizing the corporate structure, the firm has closed down a number of factories and removed some workforce. This step was taken to reduce its cost disadvantage which is considered the right action despite of various costs occurred as explained in evaluation of alternatives part. However, the firm has offered the suitable severance packages to those laid off employees.

Bringing in new outside managers, hiring a new advertising agency, and announcing new styles and subbrands of jeans could address the issue of declining sales and market share. Nevertheless, prevention is always superior to correction. In the long run, Levi Strauss & Company is recommended to pay more management attention on its profits by frequently catching up with the jeans market trends and apparel fashions. It is highly recommended that research and development must be regularly conducted. In addition, the results illustrating the current trends and styles of consumers in apparel industry must be perceived and received attention by management teams in common with CEO of LS&C, Mr. Robert D. Haas.