Levi Strauss Co

1、Project Title: Levi Strauss Co.ByJason LeeJin M KimJohn GlennTom MatsonYong KimBUSA 499-01 Strategic ManagementSpring 2021Chung-Shing Lee, Ph.D.Table of ContentsIntrepid International3Executive Summary 4Strategy Identification5Segmentation Graph6Strategic Evaluation6Industry Defined7Porters Five For

2、cesThreat of Entry8Threat of Rivalry10Threat of Substitutes11Threat of Suppliers12Threat of Buyers13Competitor Analysis13Customer/Marketplace Trends & Environment Forecast15VRIOValue16Rarity17Imitability17Organization17VRIO Table18SWOT Analysis18Strengths19Weaknesses20Opportunities20Threats21Strateg

3、ic Option DevelopmentNew Premium Denim Line21Fast Fashion22Strategic Option Evaluation22Trade-Off Table24Strategic Selection24Strategy Implementation25Measuring Competitive Advantage26To Whom This May Concern:Intrepid International is an external consulting agency founded in 2007, located in Tacoma,

4、 Washington. The company consistently performs consulting audits for the surrounding community and both private and publicly traded firms across the United States. At Intrepid International, we take pride in excellence in both external and internal audit reports. The excellence committed to at Intre

5、pid International merits admiration and respect amid all peers of commerce. Intrepid International executed this external consulting audit report with a high degree of responsibility, due care, and accuracy independent of the company audited. This consulting audit is a qualified audit report because

6、 the information contained in this report is of true and fair view of the state of the companys affairs. This audit also investigates the fact that analysis conducted has limitations. Some of the limitations consist of, but not limited to: financial information not presented, current economic condit

7、ions, and/or company data not released as a result of the distinctive nature of the industry.Executive SummaryLevi Strauss and Co. is a privately held company owned by the family of its founder, Levi Strauss. The company was created about 130 years ago and currently is one of the leading apparel com

8、panies in the world. The company produces and sells a range of mens, womens and childrens jeans and casual wear including cotton and cotton blend casual and dress casual pants, tops and seasonal pants and shirts, denim jackets, accessories, and footwear. Data monitor. Retrieved March 26, 2021, HYPER

9、LINK :/web.ebscohost /bsi/pdf?vid=11&hid=106&sid=fb3ed91a-cfb9-4a4d-abc1-473c2bdd5ac6%40sessionmgr106 :/web.ebscohost /bsi/pdf?vid=11&hid=106&sid=fb3ed91a-cfb9-4a4d-abc1-473c2bdd5ac6%40sessionmgr106 The company has three major brands Levis, Dockers, and Levi Strauss Signature. Even though Levis bran

10、d image is very strong, it cannot maintain its brand image anymore as a result of missed fashion trends. Levi has to come up with new strategies to overcome its competitors that have brought new fashion trends and low price products to the apparel industry. Its competitors including VF Corporation,

11、Gap, Abercrombie & Fitch, and Tommy Hilfiger have also gained strong brand images by producing their products at low cost and continue to gain perceived value in the industry. The apparel industry is considered a mature industry with numerous competitors. The competitors offer similar products and s

12、ervices that Levi can produce. Therefore, product differentiation will be the key issue in order to increase the perceived value of the new product. Intrepid International recommends that Levi Strauss should create a new premium denim brand. The new premium denim brand must be cheaper, high quality

13、and a trendy design clothes. To produce cheaper, high quality and a trendy design clothes, the company must begin with a Cost Leadership Strategy. The company needs to implement a low-cost manufacturing process to increase margins. We believe there is still a lot of room for improvement. Once the co

14、mpany decreases its average total cost by adapting a Cost Leadership Strategy, it will be able to maximize its profit and increase market share. Strategy IdentificationLevi Strauss states, “our values are fundamental to our success, and identifies these values as “Empathy, Originality, Integrity and

15、 Courage. The vision of Levi is to be a company where people love their clothes and trust their company. Levi intends to market and distribute the most appealing and widely worn apparel brands that define quality, style and function. Levi Strauss proclaims, “We will clothe the world. Levis Strauss &

16、 Co. (2006). Retrieved March 25, 2021, HYPERLINK :/ levistrauss /Company/ValuesAndVision.aspx :/ levistrauss /Company/ValuesAndVision.aspxLevi Strauss operates within the top ten apparel industry companies. Fortune Magazine ranked the company 510th but they were listed as number five in the industry

17、.Additionally, Fortune identifies a revenue difference of two and three less than it leading competitors, which is a sign of trouble for Levi. :/money n /magazines/fortune/fortune500/2007/snapshots/785.html Levis lawsuits of competitors caused them to be identified as a leader in legal actions and n

18、ot apparel competition. Levi states that it is compelled to file the lawsuits to safeguard the “defining features of its products and removing copycats from stores. Levi competitors characterized the lawsuits as a “last resort of a poor loser. Barbaro, M., Creswell, J. (2007). Levi Strauss sues comp

19、etitors over pocket design. Retrieved March 25, 2021, HYPERLINK :/ iht /articles/2007/01/29/business/levis.php?page=1 :/ iht /articles/2007/01/29/business/levis.php?page=1“Executives at Levis concede that they missed important fashion trends as the denim industry exploded over the past several years

20、, but they deny the lawsuits are connected to any downturn in their business. Barbaro, M., Creswell, J. (2007). Levi Strauss sues competitors over pocket design. Retrieved March 25, 2021, HYPERLINK :/ iht /articles/2007/01/29/business/levis.php?page=2 :/ iht /articles/2007/01/29/business/levis.php?p

21、age=2 Levi Strauss, while defending current patents, has rested on its historical value and missed fashion trends. Levi has lost market share and jeopardized future sustainability in an increasing and growing market.Strategic EvaluationCharacteristics and the nature of the apparel industry are condu

22、cive and allow described strategies to be implemented. The ways the strategy shows signs of successful implementation is from cost leadership, the learning curve, and business level strategies. In the apparel industry, every firm is sensitive to costs. The most important cost is labor. Levi Strauss

23、is capable within the industry of “very tight cost-control systems; frequent and detailed cost-control reports; and an emphasis on quantitative cost goals and targets. Barney, J., Hesterly, W. (2021). Strategic Management and Competitive Advantage (2nd ed.). New Jersey: Prentice Hall, pp.138. Levi i

24、s capable of implementing a cost leadership strategy within the company and the environment, therefore, resulting in a competitive advantage. Levi Strauss Co. benefits from the learning curve because it “successfully moved down the learning curve obtaining “a cost advantage over rivals. Barney, J.,

25、Hesterly, W. (2021). Strategic Management and Competitive Advantage (2nd ed.). New Jersey: Prentice Hall, pp.122 Since Levi moved down the learning curve in the apparel industry, the company has accumulated knowledge and productive inputs. Barney, J., Hesterly, W. (2021). Strategic Management and Co

26、mpetitive Advantage (2nd ed.). New Jersey: Prentice Hall, pp.122. These benefits of the learning curve promote conduciveness within the environment and the firm. One of the common business-level strategies is product differentiation. Barney, J., Hesterly, W. (2021). Strategic Management and Competit

27、ive Advantage (2nd ed.). New Jersey: Prentice Hall, pp.10. Levi Strauss has the wherewithal to differentiate products through forecasting fashions (timing), innovative products (product complexity), and consumer marketing. Barney, J., Hesterly, W. (2021). Strategic Management and Competitive Advanta

28、ge (2nd ed.). New Jersey: Prentice Hall, pp.150. Industry definedThe apparel industry consists of menswear, womenswear, and infantswear. The menswear sector consists of clothing garments intended for boys through adult men. This sector includes all outerwear and under garments. Data monitor. Retriev

29、ed March 25, 2021, HYPERLINK :/web.ebscohost /bsi/pdf?vid=28&hid=16&sid=5494ce93-2f54-46bd-9c27-14e11e107676%40sessionmgr2 :/web.ebscohost /bsi/pdf?vid=28&hid=16&sid=5494ce93-2f54-46bd-9c27-14e11e107676%40sessionmgr2 The womenswear sector consists of clothing garments intended for girls through adul

30、t women. The infantswear sector consists of apparel specifically made for ages 0-2. Some common apparel products are, but not limited to; dresses, suits, coats, jackets, tops, shirts, skirts, blouses, pants, sweatshirts, sweaters, underwear, capris, and bags. Data monitor. Retrieved March 25, 2021,

31、HYPERLINK :/web.ebscohost /bsi/pdf?vid=28&hid=16&sid=5494ce93-2f54-46bd-9c27-14e11e107676%40sessionmgr2 :/web.ebscohost /bsi/pdf?vid=28&hid=16&sid=5494ce93-2f54-46bd-9c27-14e11e107676%40sessionmgr2Threat of EntryIn the apparel industry, the threat of entry is “moderate given a variety of increasing

32、factors. However, the low growth statistics “makes it less attractive to new entrants. Data monitor. Retrieved March 25, 2021, HYPERLINK :/web.ebscohost /bsi/pdf?vid=28&hid=16&sid=5494ce93-2f54-46bd-9c27-14e11e107676%40sessionmgr2 :/web.ebscohost /bsi/pdf?vid=28&hid=16&sid=5494ce93-2f54-46bd-9c27-14

33、e11e107676%40sessionmgr2 Increasing technological advances including the internet and the production process enable entry with very little capital. This makes the barriers to entry low. Often times because there are small amounts of capital needed to enter, it becomes very attractive for individuals

34、 and partnerships to form. According to statistics, about “10% of apparel retailers operate as a sole proprietor. Data monitor. Retrieved March 25, 2021, HYPERLINK :/web.ebscohost /bsi/pdf?vid=28&hid=16&sid=5494ce93-2f54-46bd-9c27-14e11e107676%40sessionmgr2 :/web.ebscohost /bsi/pdf?vid=28&hid=16&sid

35、=5494ce93-2f54-46bd-9c27-14e11e107676%40sessionmgr2 Another increasing factor is the economies of scale. Since the apparel industry is comprised of very large manufacturers and retailers it increases the economies of scale since the larger manufacturers and retailers are able to cross continents and

36、 build grand brand loyalty and image, thus adding value to its apparel. Included in the apparel industry are manufacturers and retailers as a result of technological advances. Many manufacturers of apparel harness the power of the internet which also creates an avenue for the manufacturer to double

37、as a retailer, bypassing the distributor. Sole proprietors and smaller entrants have a tougher time entering the apparel industry because the large players have authority and are able to bid down its costs from suppliers. Since the apparel industry is mature, the early firms have benefited from the

38、learning curve. The greatest advantage the mature firms have is the ability to patent designs, logos, and locations of features. The advantage to patent early ideas helps apparel firms protect product differentiation. Mature firms also benefit from learning curve advantages “associated with any busi

39、ness function, from purchasing raw materials to distribution and service. Barney, J., Hesterly, W. (2021). Strategic Management and Competitive Advantage (2nd ed.). New Jersey: Prentice Hall, pp.122. One advantage that mature firms benefit from is key relationships with suppliers and people within i

40、n the apparel industry.Since apparel is highly dependent on fashion, managerial know-how is an advantage for early firms and a disadvantage for late firms. The mature firms have key employees that can forecast trends and can add great value to the company. This type of managerial know-how includes “

41、information that it has taken years, sometimes decades, for a firm to accumulate. The cost of managerial know-how and experience in a trend based industry “can act as a barrier to entry. Data monitor. Retrieved March 25, 2021, HYPERLINK :/web.ebscohost /bsi/pdf?vid=28&hid=16&sid=5494ce93-2f54-46bd-9

42、c27-14e11e107676%40sessionmgr2 :/web.ebscohost /bsi/pdf?vid=28&hid=16&sid=5494ce93-2f54-46bd-9c27-14e11e107676%40sessionmgr2 A barrier that a potential entrant faces is government policy and organized bodies. Aside from government policies, the World Trade Organization (WTO) creates a barrier of ent

43、ry in the apparel industry, since the majority of labor production is performed overseas. The WTO creates a barrier of entry by setting “regulations, standards, testing, and certification procedures. World Trade Organization. Retrieved March 26, 2021, HYPERLINK :/ /english/thewto_e/whatis_e/t

44、if_e/agrm4_e.htm#TRS :/ /english/thewto_e/whatis_e/tif_e/agrm4_e.htm#TRS Threat of RivalryIn the apparel industry, rivalry is moderate to high. The apparel industry is comprised of several main rivals of equal size. When consumers establish brand loyalty, it is typically the designer (specifi

45、c brand or line of apparel) rather than the retailer. Data monitor. Retrieved March 25, 2021, HYPERLINK :/web.ebscohost /bsi/pdf?vid=28&hid=16&sid=5494ce93-2f54-46bd-9c27-14e11e107676%40sessionmgr2 :/web.ebscohost /bsi/pdf?vid=28&hid=16&sid=5494ce93-2f54-46bd-9c27-14e11e107676%40sessionmgr2 This sho

46、ws that the small number of large apparel firms that compete on a grand scale show signs of rivalry. When rival firms threaten existing firms it reduces their economic profits. Examples of rivalry among existing apparel firms are “frequent price cutting, “intense advertising campaigns, and “frequent

47、 introductions of new products. Barney, J., Hesterly, W. (2021). Strategic Management and Competitive Advantage (2nd ed.). New Jersey: Prentice Hall, pp.46. Often times in the apparel industry, celebrities and models are used to influence customers to purchase products. According to Data Monitor, th

48、e apparel industry is a slow growth industry. When there is a slow growth industry “rivalry tends to be high. Barney, J., Hesterly, W. (2021). Strategic Management and Competitive Advantage (2nd ed.). New Jersey: Prentice Hall, pp.46. In 2005 and 2006, the United States apparel industry grew 2.3% an

49、d 2.4% respectively. Data monitor. Retrieved March 25, 2021, HYPERLINK :/web.ebscohost /bsi/pdf?vid=28&hid=16&sid=5494ce93-2f54-46bd-9c27-14e11e107676%40sessionmgr2 :/web.ebscohost /bsi/pdf?vid=28&hid=16&sid=5494ce93-2f54-46bd-9c27-14e11e107676%40sessionmgr2 The compound annual growth rate (CAGR) is

50、 similar to that of the United States apparel industry rates at 1.9% for 2002-2006. The United States is similar to that of competing apparel industries fore example Europe, 1.2% and Asia-Pacific, 4.4%. Data monitor. Retrieved March 25, 2021, HYPERLINK :/web.ebscohost /bsi/pdf?vid=28&hid=16&sid=5494

51、ce93-2f54-46bd-9c27-14e11e107676%40sessionmgr2 :/web.ebscohost /bsi/pdf?vid=28&hid=16&sid=5494ce93-2f54-46bd-9c27-14e11e107676%40sessionmgr2 Since the apparel industry is slow growth, “firms seeking to increase their sales must acquire market share from established competitors. Barney, J., Hesterly,

52、 W. (2021). Strategic Management and Competitive Advantage (2nd ed.). New Jersey: Prentice Hall, pp.46. The apparel industry is mainly comprised of large apparel groups that have intense rivalry against each other. The reason for the large-scaled rivalry is related to the previously mentioned consol

53、idations that must take place to gain market share in a slow growth industry. An example of a consolidated apparel group is the VF Corporation. As a result of a mature apparel industry, there is a lack of drastically new innovative products such as a jackets or pants. This creates rivalry when firms

54、 are unable to differentiate their products in the industry. Barney, J., Hesterly, W. (2021). Strategic Management and Competitive Advantage (2nd ed.). New Jersey: Prentice Hall, pp.46. The products have been accepted by societies and preferences have been created given the customers reasons. Theref

55、ore, jackets, pants, and other standardized products lack product differentiation. Once a customer accepts that a jacket typically has two outside pockets and one inside pocket, it becomes standardized, thus leaving the apparel industry to be creative with fashion, cost-based measures, and marketing

56、 campaigns for example. The apparel industry is highly competitive and has large-scaled competitors that are global and publicly traded. When the firms are large they have a high production capacity. According to Barney and Hesterly, “rivalry tends to be high when production capacity is added in lar

57、ge increments therefore, the ability for an apparel firm to be of high production capacity creates economies of scale. Barney, J., Hesterly, W. (2021). Strategic Management and Competitive Advantage (2nd ed.). New Jersey: Prentice Hall, pp.47.Threat of SubstitutesEssentially there is no substitute f

58、or apparel or clothing. However, there are substitutes for garments. Examples of substitutes for garments would be a short instead of a pant given the relativity of the situation, similar price point, and comfort. The short would “meet approximately the same customer needs, but do so in different wa

59、ys. Barney, J., Hesterly, W. (2021). Strategic Management and Competitive Advantage (2nd ed.). New Jersey: Prentice Hall, pp.47. In some cases the short would not satisfy the pants characteristics if the climate was cold, but if the customers needs were to have pockets, it would satisfy them. Anothe

60、r form of a substitute of apparel is consumer preference. Not every customer is the same; some might prefer pants in the summer over shorts. Customers also might substitute brand for their preference such as fit, color, design, and price point. As long as the approximate needs of the customer are me