In 1995, women’s jeans were a $2 billion fashion category in the US and growing fast. Levi- Strauss was the market leader, but its traditional dominant position was under heavy attack. Standard Levi’s women’s jeans, sold in 51 size combinations (waist and inseam), had been the industry leading product for decades, but "fashion" was now taking over the category. Market research showed that only 24 percent of women were "fully satisfied" with their purchase of standard jeans at about $50 per pair. "Fashion" in jeans meant more styles, more colors, and better fit. All of these combined to create a level of product line complexity that was a nightmare for manufacturing-oriented, "push based" companies like Strauss. By 1995, Strauss operated 19 Original Levi’s retail stores across the country (2,000 to 3,000 square foot mall stores) to put them in closer touch with the ultimate customers. However, this channel was a very small part of their overall $6 Billion sales, which were still primarily to distributors and/or independent retailers.
Shows Levi’s financial footprint. Strauss was as aggressive as most apparel manufacturers and retailers in investing in process improvements and information technology to improve manufacturing and delivery cycle times and "pull-based" responsiveness to actual buying patterns. However, the overall supply chain from product design to retail sales was still complex, expensive and slow. In spite of substantial improvements in recent years, (including extensive use of "EDI", there was still an eight-month lag, on average, between ordering cotton fabric and selling the final pair of jeans. The industry average lag was still well over twelve months in 1995. The financial footprint for one pair of women’s jeans sold through the normal wholesale channel compared to one pair sold through an Original Levi’s Store summarized in.
Table of Contents
Executive’s summary
1. Introduction
1.1. The Vision
1.2. The Values
1.3. The Mission
1.4. The Products
1.5. Customers
1.6. Current Strategy
2. SWOT analysis
2.1 Strengths
2.2 Weakness
2.3 Opportunities
2.4 Threats
3. Internal Factors Evaluation (IFE)
4. Value Chain Analysis of Levi Strauss
4.1 Primary Activities
4.1.1 Inbound Logistics
4.1.2 Operations
4.1.3 Outbound Logistics
4.1.4 Marketing and Sales
4.1.5 Services
4.2 Secondary Activities
4.2.1 Firm infrastructure
4.2.2 Human resource management
4.2.3 Technology development
4.2.4 Procurement
5. VRIO Analysis
5.1 Value
5.2 Rarity
5.3 Imitability
5.4 Organization
6. EXTERNAL ENVIRONMENT ANALYSIS
6.1 Political
6.3 Social
6.4 Technological
6.5 Environmental
6.6 Legal
6.7 Health and safety laws
7. External Factors Evaluation Matrix (EFE)
8. Porters five view
8.1 The threat of new entrants: HIGH
8.2 Threat of substitution: HIGH
8.3 The bargaining power of customers: HIGH
8.4 The bargaining power of suppliers: MEDIUM
8.5 Industry rivalry: HIGH
9. Competitive Profile Matrix (CPM)
10. SWOT Matrix
11. The Strategic Position and Action Evaluation (SPACE) Matrix
12. BCG Matrix
13. Internal External Matrix:
14. Grand Strategy Matrix:
15. Quantitative Strategic Planning Matrix (QSPM)
16. QSPM suggests that product development has a stronger potential than market development by
17. Financial Analysis
17.1.1 ROE
17.1.2 ROA
17.1.3 ROI
17.1.4 Earnings per Share
17.1.5 Levis Operating Margins
17.2 Efficiency ratio
17.2.1 Assets turnover
17.2.2 Inventory turnover
17.3.1 Current Assets
17.3.2 Current liabilities
17.3.3 Current ratios
18. Recommendation and implementation
19. References
Objectives & Core Themes
The primary objective of this report is to conduct a comprehensive strategic audit of Levi Strauss & Co. to evaluate its market position and identify opportunities for growth. The study investigates how the company can leverage its strong brand heritage and internal capabilities to navigate competitive pressures, fluctuating consumer trends, and the complexities of the global apparel market.
- Strategic evaluation through SWOT, SPACE, and VRIO analytical frameworks.
- Detailed value chain analysis to optimize internal operational processes.
- Market assessment using Porter’s Five Forces and Competitive Profile Matrices.
- Financial performance review to inform future investment and product development strategies.
Excerpt from the Book
4.1.1 Inbound Logistics
It is important to develop strong relationships with suppliers, as their support is necessary to receive, store and distribute the product. Without analyzing the in-bound logistics, Levi Strauss can face various challenges in product development phases. Analysis of in-bound logistics requires a company to focus on every aspect of transformation from raw material to finished product. Some examples of inbound logistics are retrieving raw material, storing the inputs and internally distributing the raw material and components to start production.
Summary of Chapters
1. Introduction: Provides a historical overview of Levi Strauss & Co., documenting its origins, growth phases, and evolution into a global brand.
2. SWOT analysis: Outlines the internal strengths and weaknesses alongside external opportunities and threats influencing the company's performance.
3. Internal Factors Evaluation (IFE): Presents a weighted evaluation of the company's internal strategic factors, resulting in a performance score.
4. Value Chain Analysis of Levi Strauss: Examines the primary and support activities of the firm to identify areas for competitive advantage in the delivery process.
5. VRIO Analysis: Assesses the company's resources based on Value, Rarity, Imitability, and Organization to determine long-term sustainability.
6. EXTERNAL ENVIRONMENT ANALYSIS: Investigates macro-environmental factors including political, economic, social, technological, legal, and environmental influences.
7. External Factors Evaluation Matrix (EFE): Quantifies the company's response to external market opportunities and threats.
8. Porters five view: Analyzes the industry's competitive landscape, focusing on bargaining power, rivalry, and barriers to entry.
9. Competitive Profile Matrix (CPM): Compares Levi Strauss against key competitors such as Diesel and Lee Jeans based on critical success factors.
10. SWOT Matrix: Synthesizes the SWOT analysis to develop specific SO, WO, ST, and WT strategies.
11. The Strategic Position and Action Evaluation (SPACE) Matrix: Maps the internal and external strategic positions to determine the appropriate strategic quadrant.
12. BCG Matrix: Categorizes the company's product portfolio based on market growth and relative market share.
13. Internal External Matrix: Integrates IFE and EFE scores to classify the company's growth strategy.
14. Grand Strategy Matrix: Visualizes the company's strategic position relative to market growth and competitive standing.
15. Quantitative Strategic Planning Matrix (QSPM): Uses quantitative data to compare the attractiveness of alternative strategic paths.
16. QSPM suggests that product development has a stronger potential than market development by: Explains why product development is the prioritized strategy for future expansion.
17. Financial Analysis: Evaluates the financial health of the firm through profitability ratios, efficiency metrics, and liquidity assessments.
18. Recommendation and implementation: Offers actionable strategic recommendations for future growth and operational success.
19. References: Lists the academic and industry sources cited in the analysis.
Keywords
Strategic Audit, Levi Strauss, SWOT Analysis, Value Chain, VRIO, Competitive Advantage, Brand Management, Market Development, Product Development, Denim Industry, Apparel Manufacturing, Financial Ratio, Supply Chain, Consumer Behavior, QSPM
Frequently Asked Questions
What is the primary focus of this strategic audit report?
This report focuses on performing a detailed strategic assessment of Levi Strauss & Co. using various management frameworks to analyze the company's past performance and future potential.
What are the core thematic areas covered in the analysis?
The analysis covers internal operations, supply chain efficiency, brand heritage, external environmental factors, and competitive landscape positioning.
What is the ultimate goal of the research?
The goal is to determine the best strategic direction for the company, specifically identifying whether product development or market development offers higher growth potential.
Which scientific methods were employed to analyze the company?
The research utilizes established tools including SWOT, VRIO, Porter's Five Forces, SPACE Matrix, BCG Matrix, Internal-External Matrix, and the Quantitative Strategic Planning Matrix (QSPM).
What aspects are addressed in the main body of the document?
The main body treats the company's value chain, macro-environmental analysis, competitive profiling against peers like Diesel and Lee, and a comprehensive financial health assessment.
Which keywords best characterize this work?
The work is characterized by terms such as strategic audit, brand management, competitive advantage, value chain analysis, and growth strategies within the denim apparel sector.
Why does the report emphasize the joint venture with CCTC?
The joint venture with the Custom Clothing Technology Corporation is recommended to acquire technological expertise in mass customization, which is seen as crucial for improving customer satisfaction and fitting unique body shapes.
How does the report categorize Levi Strauss in the BCG Matrix?
Levi Strauss is positioned as a 'Star' due to its strong market growth and high relative market share compared to its primary competitors.
What does the SPACE Matrix reveal about Levi's strategy?
The SPACE Matrix places Levi Strauss in the first quadrant, indicating that the company is well-positioned to pursue aggressive strategies like product and market development.
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- Dr. Khaled Bekhet (Autor:in), 2019, Strategic Management. Levis Case Analysis, München, GRIN Verlag, https://www.grin.com/document/918261
