Introduction
Levi Strauss and company was established in 1853 by Levi Strauss and produced riveted jeans. Levi Strauss America (LSA) is the largest employing over eighteen thousand staff throughout the Latin States, United States, Canada and Mexico. The company has different marketing brands under its trademark namely: The Slates®, Levis® brand and the Dockers® brand (Downey, 2009).
Does LS&C act in a responsible manner while closing its North America production operations?
Levi Strauss and Company (LS&C) decided to close its North America production operations. The company acted in a responsible and justifiable way. They were RIGHT to close their operations as a result of the challenging productions process; high input costs and low returns from investments. Considering its initial areas of operations, the company enjoyed the relatively lower cost of production until the recession period when its cost of production in the North America increased. To close its production operations in the area had a long-term benefit to the company (Flynn et al., 2011). Before the change of strategy, the company experienced a significant drop in profit drawn from its North America business operations. Analysis of the drop in profit accrued revealed that the high prices of the company’s Levi jeans and failure to pick up on their consumer trends. All these were directly influenced by the high cost of the production process in the North America. Levi’s competitors were making higher profits as a result of their offshore productions strategies which ensured reduced labor costs; thereby, having a competitive advantage over LS&C.
The company was; therefore, right to sustain its business existence while laying off thousands of its workers and closing its operations to relocate its production process to a relatively lower cost of production areas. However, various arguments may be based on Levi’s corporate social responsibility strategy by closing down up to eleven production sites. The community is bound to experience negative impact upon closure of LS&C production operations areas; however, this cannot be compared to when the company collapses. Therefore, it was appropriate for LS&C to move its production operations into cheap labor markets so that it sustains its business operations (Flynn et al., 2011). Moreover, the company acted in the best way to protect its consumers through producing quality jeans while making relatively high profits
LS&C’s transfer of production to lower wage countries
The transfer of LS&C’s production to lower wage countries indeed helps the economy of the United States. The country should expand its operations to other countries in order to increase the customer base and profits. The company should expand its operations and not limit itself. Additionally, through establishing operations in the low-wage countries, the company will be able to reduce the cost of production (Downey, 2009). Initially, the products were being produced in the US and transported to those countries, but the establishment of plants will reduce costs in the long run. It is important to engage in the global market, and this will strengthen the US.
Evaluating the soundness of the strategic shift to marketing and design
Like many companies, Levi Strauss success level fell in 2002, and this was evident in their sales that declined to a low of $4.1 billion. It was a major setback for the company because, in 1996, sales reached their peak at $7.18 billion. The company had to incorporate value addition in its production and therefore change focus to design and marketing. The society is increasingly becoming dynamic. The company needs to be flexible and adopt the changes occurring in the fashion industry hence indulge in the production of the latest designs.
Conclusion
Levis Strauss Company usually hires high-caliber and qualified team players who share in the company’s vision, mission and values. It has, therefore, developed a strong organizational culture that makes it first, fast and the best. Levi Strauss should embrace their innovations in order to impact the economy positively. Therefore, innovation, the foundational global standard, is good for Levi Strauss Company.
Reference
Flynn, B. B., Morita, M., & Machuca, J. (2011). Managing global supply chain relationships: Operations, strategies and practices. Hershey Pa: Business Science Reference.
Downey, L. (2009). Levi Strauss & Co. Charleston, SC: Arcadia Pub.
