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Levis Internship

Submitted to Mahatma Gandhi University in partial fulfillment of the requirements for the award of
the degree of
Submitted By
Reg.No. 190031000702
Under the guidance of
Faculty Guide
MAY 2020
This is to certify that this report, based on the Summer Internship and Industry Analysis
conducted by SOORYA NARAYANAN K.R, second semester MBA student of our college for 5
weeks starting from 27thAPRIL 2020 at LEVI STRAUSS & Co , is a bonafide record submitted
in partial fulfillment of the requirements for the degree of Master of Business
Administration of Mahatma Gandhi University, Kottayam.
Prof. Ligo Koshy
Faculty Guide
Dr. Sudeep.B. Chandramana
Head of Dept. of Management
Rev. Dr. Cherian J Kottayil
Signature of the External
I hereby declare that this report titled “SUMMER INTERNSHIP AND INDUSTRY ANALYSIS” has been
prepared by me during the academic year 2019 - 2020, under the guidance of Prof. LIGO KOSHY,
Department of Management Studies, MACFAST, Tiruvalla.
I also hereby declare that this project report has not been submitted to any other University or
institute for the award of any degree or diploma.
Place: Tiruvalla
Date: 31.05.2020
“There are times when silence speaks so much more loudly than the words of praise to only as a belittle
a person, whose words do not express, but only put a veneer over true feelings, which are of gratitude
at this point of time”.
First of all, I firmly believe that everything in the world is happening as per the plan and will of the
almighty GOD. I thank him for all the care he showed on me and continue showering his grace and
blessing till the end.
I endow my graceful sense of gratitude and indebtedness to REV. DR. CHERIAN J KOTTAYIL, Principal, of
Mar Athanasios College for Advanced Studies Tiruvalla for providing me permission for taking up my
I bow in gratitude to DR. SUDEEP B CHANDRAMANA, Head of the Department (MBA), for giving me the
opportunity to take up the internship and his prompt inspirations.
I also convey my sincere gratitude to Prof. LIGO KOSHY, my faculty guide for his valuable suggestions,
which were helpful and valuable for me throughout the completion of the internship.
Least but not last, I thank my friends for their help and parents for their sincere prayers and moral
support which helped me in completing this internship.
Fig. No.
Organizational structure
page No.
Lee Jeans
Business process of the Industry
configuration of apparel supply chain
Porter’s Five Forces Model
Pest Analysis
Page No.
Company Profile
Brief History of the Company
Business Process of the Organization–Products
Customers of the Company/Organization–Level of Operations
1.4Competitors of the Company/Organization
CSR Activities
Collaborations & Expansion Plans
An Overview of the Industry
Brief History of the Industry
Business Process of the Industry
Market Demand and Supply– Contribution to GDP– Revenue
Level and Type of Competition– Firms Operating in the Industry
Pricing Strategies in the Industry
Prospects and Challenges in the Industry
Key Drivers of the Industry
Industry Analysis
Porter’s Five Forces Model/ EnvironmentScanning(PEST Analysis)
ObjectiveAssessment– Observations by the
Candidate about the Organization
Specific Learning Outcome
Summary of Findings – Critical Observations by the Candidate about
Industry and Organization
Levi Strauss & Co. is an American clothing company known worldwide for its Levi's brand
of denim jeans. It was founded in May 1853 when German immigrant Levi Strauss moved
from Buttenheim Bavaria, to San Francisco, California to open a west coast branch of his
brothers' New York dry goods business. The company's corporate headquarters is located
in Levi's Plaza in San Francisco.
Levi Strauss started the business at the 90 Sacramento Street address in San Francisco and
then moved the location to 62 Sacramento Street. In 1858, the company was listed as
Strauss, Levi (David Stern & Levis Strauss) importers clothing. 63 & 65 Sacramento St.
(Today, on the current grounds of the 353 Sacramento Street Lobby in the San Francisco
Directory with Strauss serving as its sales manager and his brother-in-law, David Stern, as
its manager. Jacob Davis, a Latvian Jewish immigrant, was a Reno, Nevada tailor who
frequently purchased bolts of cloth made from denim from Levi Strauss & Co.'s wholesale
house. After one of Davis' customers kept purchasing cloth to reinforce torn pants, he had
an idea to use copper rivets to reinforce the points of strain, such as on the pocket corners
and at the base of the button fly. Davis did not have the required money to purchase a
patent, so he wrote to Strauss suggesting that they go into business together. After Levi
accepted Jacob's offer, on May 20, 1873, the two men received U.S. Patent 139,121 from the
United States Patent and Trademark Office. The patented rivet was later incorporated into
the company's jean design and advertisements. Contrary to an advertising campaign
suggesting that Levi Strauss sold his first jeans to gold miners during the California Gold
Rush (which peaked in 1849), the manufacturing of denim
overalls only began in the 1870s. The company created its first pair of Levi's 501 Jeans in
the 1890s.
Modern jeans began to appear in the 1920s, but sales were largely confined to the working
people of the western United States, such as cowboys, lumberjacks, and railroad workers.
Levi's jeans apparently were first introduced to the East during the dude ranch craze of the
1930s, when vacationing Easterners returned home with tales (and usually examples) of
the hard-wearing pants with rivets. Another boost came in World War II when blue jeans
were declared an essential commodity and were sold only to people engaged in defense
Between the 1950s and 1980s, Levi's jeans became popular among a wide range of youth
subcultures, including greasers, mods, rockers, and hippies. Levi's popular shrink-to-fit
501s were sold in a unique sizing arrangement; the indicated size referred to the size of the
jeans prior to shrinking, and the shrinkage was substantial. The company still produces
these unshrunk, uniquely sized jeans, and they are still Levi's number one selling product.
Although popular lore (abetted by company marketing) holds that the original design
remains unaltered, this is not the case: the crotch rivet and waist cinch were removed
during World War II to conform to War Production Board requirements to conserve metal
and was not replaced after the war. Additionally, the back-pocket rivets, which had been
covered in denim since 1937, were removed completely in the 1950s due to complaints
that they scratched furniture.
As the markets become more global and competitive, understanding organizational
behavior can play a significant role in giving companies a competitive advantage. While
providing alternative approaches to improve the overall performance of Levis Jeans, this
report examines the organizational behaviors based on how the company has changed,
focusing on the decrease in revenue. Additionally, the report analyses the organizational
structure, culture, leadership style, and the approach of management in motivating the
Notably, the current situation at the company shows sales have fallen significantly by 20%
in the previous year, and the revenues decreased by 40%. Following the analysis of both
the external and internal environment of the organizations, several findings were evident.
First, the company is losing market share to new, fashionable competitors who appeal to
young customers. Second, it is clear from the 15% sales return the products are not
meeting required quality levels. It is also clear that labor turnover is significantly high,
where less than 50% of the workforce has been employed for over a year. Finally, findings
show that the cost of making a unit of Levis Jeans is 25% higher as compared to our
Organizational Structure
Organizational structure at Levis Jeans can be categorized as hierarchical. The founder,
Brat Levis, is at the top of the hierarchy, where he controls everything from the head office
in Croydon. He retains control over all the areas of the organization’s operations. Under
Levis, there are department managers in each factory who answer directly to the head
office. Their primary goal is to implement the directives of Levis. Under the managers,
some supervisors ensure that there are no delays in productions.
The hierarchical structure of the organization can be one of the primary causes of the
decrease in sales, revenue, and the overall performance of the company. There are various
shortcomings of this approach (Alton, 2017). First, communication flows in one direction
from top to bottom, which interprets stagnation in innovation, and non-existent of
engagement and collaboration. This structure also fails to focus on the employee
experience, reducing the chances of attracting and retaining top talent in the company. This
challenge is clear from the labor turnover in the company. This type of structure also
hinders the fast rate of growth opening doors for competitors and startups to take over
It is necessary for the company to adopt a new structure to overcome these challenges. The
best structure will be a flat-archy. This structure will remove unnecessary levels and
spread power across all the stakeholders of the company. This change will offer better
decision-making, help in retaining employees, and improvement of the products by
promoting new ideas (Alton, 2017).
Organizational Culture
At Levis Jeans, one of the dominant business cultures is the power culture. CEO Bert Levis
has absolute control over all departments of the firm’s operations. He is the only one who
determines the company’s strategy, which he communicates to his managers via telephone
and email. Bert Levis feels that he has a complete understanding of the jeans market; hence,
he knows what is needed. Therefore, his departmental managers in each factory have been
given limited authority to act and make decisions on the company’s strategic goals.
A weakness of a power culture is that the competence of the decision maker directly
influences the types of decisions made (Cohan, 2018). Furthermore, the junior managers
may not be entirely on board with Levis’, and this may affect implementation success and
morale of employees.
The best culture that Levis Jeans can adopt is a customer-focused culture. This culture
focuses on taking care of customer needs at affordable prices (Cohan, 2018). Embracing
this culture will motivate employees to develop innovative products and provide
exceptional services that will bring customers back to Levis Jeans. This culture will be
reinforced by having excellent customer care service. It will enable Levis Jeans to compete
favorably with the new fashionable competitors.
The best way that Bert Levis can make these changes to organizational culture without
facing resistance is to convince his employees of the advantages of the changes. The
managers have to show through their actions and behaviors that customer-based culture
will be beneficial to everybody.
Staff Motivation
Levis Jeans uses various strategies to motivate employees. Notably, the company keeps its
staff motivated by offering bonuses linked to output targets. The organization also provides
promotions to supervisors and managers to encourage them to improve the overall
performance in their respective departments.
Although these strategies might be useful, it will be necessary for the company to adopt
new approaches to assist in retaining employees, improving the quality of the products,
and increasing the revenue. First, it will be necessary to introduce a proper appraisal
system in the organization which evaluates the performance of the staff not only in meeting
set output targets but also other values such as leadership skills (Andriotis, 2018). The
performance reports will be used in rewarding employees by offering them recognition
awards and allowing them to share some of their unique ideas which will promote
innovation in the company.
Secondly, it will be necessary for the company to ensure employees are aware of the
company’s mid-term objectives and the overall direction of the company (Andriotis, 2018).
Failing to communicate with the employees makes them feel like simple tools in the
organization and may lead them to do just the assigned task because they do not feel like
part of the vision. Explaining the strategies and the goals of the company and the way to
achieve them may play a significant role in motivating the staff.
Finally, training employees will be a significant motivator (Andriotis, 2018). Failure to
understand their work can be detrimental to staff motivation as they are not offered a clear
career development path. Therefore, it is essential to establish a staff training course and
deploy it across all the factories. These platforms will provide both new and senior
employees the leadership skills necessary to improve the performance of the company and
retain employees because they offer an opportunity to advance their careers.
Leadership Styles
The management and leadership style which the company uses is the authoritarian style of
leadership. This is because Levis is a leader who focuses mostly on efficiency and results.
He makes all the company’s decisions alone, and his departmental managers and other
employees are expected to do as they are told. This type of leadership is only applicable to
companies operating in industries that require substantial compliance. It is also
appropriate in a situation whereby the leader of a small organization is the most
experienced and knowledgeable in the group (Dugan, 2017). Levis Jeans is a major jeans
brand in the U.K. hence, this style of leadership is not appropriate for the company. Levis’
style of leadership has affected the performance of the organization because Levis Jeans is
losing market share to competitors. Clearly, his pulse on the jeans market is not accurate.
Also, this leadership style suppresses innovation and creativity, and employees feel
The best leadership style that Bert Levis can adopt is one of the participative leadership
theories. These theories suggest that the ideal leadership style is that which takes into
account the input of other members (Dugan, 2017). By adopting this participative
approach, Levis will encourage contributions from his departmental managers and other
employees, making them feel relevant; hence, they will be more committed to the
implementation of the discussed strategies. This strategy will, therefore, boost their morale
and productivity. These changes can begin at the managerial level and then trickle down to
the rest of the junior employees.
The company designs and markets jeans, casual wear and related accessories for men,
women and children under the Levi's®, Dockers®, Signature by Levi Strauss & Co. and
Denizen® brands. Levi Strauss And Co's Customers have recorded an increase in their cost
of revenue by 10.86 % in the 1 quarter 2020 year on year, sequentially costs of revenue
grew by 5.66 %, for the same period Levi Strauss And Co recorded revenue increase by 5 %
year on year, sequentially revenue fell by -3.98 %.
Based on the persona developed for the typical Levi’s customer we know they value
comfort and durability over style. These consumers are young, active and highly involved
with social media. Content that appeals to this person is authentic and relatable stories,
where the viewer can easily see themselves in the same situations. Because they value
authenticity in their content, they prefer to see what a product can do, than be simply told.
We suggest the brand launch a 15 second advertisement that could be displayed in social
media as well as a TV commercial. Social media outlets that we would suggest are their
Instagram, Twitter and Facebook. Because the video is short it will be easy for social media
users to watch and quickly understand.
Focused on the persona developed as a Levis customer, the commercial will show what a
day in David’s life looks like. The publicity would be shot from the perspective of the jeans,
to state that it could be anyone. David will be continuously walking through different
environments. The first scene shows David’s dog Scooby picking up the pants from the
floor and bringing them to David, who is still asleep. David wakes up, puts his pants on and
starts walking. The scene slowly transforms into the park. Scooby runs after a squirrel and
David chases after him through the mud and arrives at work. In this scene the utility of the
jeans is proven by showing David interacting (stores open in a pocket, grabs a tool from his
pocket or something like it..) with his pants. David keeps walking until he arrives at a bar,
meets with his friends and leans on a bar stool for 2 seconds. The last scene he gets home
and jumps on the couch comfortably, Scooby jumps on the couch and cuts.
The ad would appeal to any Levis customer. It shows simplicity. The versatility of owning a
pair of Levis is illustrated by having the camera focus upon the same pair of jeans
throughout the various scenes as the character goes about his day. David’s day in the ad is
in no way special, which is important in that the average Levi consumer can easily place
themselves in his perspective. The inclusion of the dog is actually vital to the ad simply
because it further stresses the effort to find a common trait that people can relate to.
Chances are, if the viewer doesn’t actually own a dog, they at least know someone who does
and this goes a long way towards establishing the all important emotional connection with
the potential customer. This ad also speaks to the durability Levis provide, which is
important to customers like David. That is why the ad shows the pants in different
environments to further prove that they are durable. Most notable is the last scene where
David gets home from his long day and sits down to relax in his Levi’s. This emphasizes
how comfortable the jeans are. After a long day most people are ready to change into their
pajamas or sweats to relax, but David finds Levi's so comfortable that he is able to relax in
them. All of these scenes were selected to demonstrate all the needs of Levi's customer
persona, simplicity, durability, versatility and comfort; in a way that is easy to relate to so
all walks of life can see the value of having a pair of Levi’s in their life.
Currently, one of Levi’s biggest advertising promotions is the “Live In Levi’s” campaign. The
fifth installment of this campaign, which began in 2014, was launched at the end of August.
The purpose is to showcase the connection people across countries and cultures have
through music, dance and optimism (LS&CO. Unzipped Staff, 2017). The fifth installment of
this campaign is entitled “Circles” and has a clear message of inclusiveness through
storytelling. The goal of the message is to show that we are all connected. It shows that
despite different cultures and values, people are more alike than they are different. The
campaign has become popular on social media sites like Instagram where customers and
celebrities post pictures of themselves in Levi’s with the “#LiveInLevis” hashtag. Since our
advertisement shows the day in the life of our customer David in his Levi’s, it would fit very
well with the “Live In Levi's” campaign.
Top 3 Levi’s Competitors
1) Wrangler
A top Levi’s competitor, Wrangler is an American producer of jeans and other apparel in
particular works wear. The company is owned by VF Corporation. Wrangler was formed
during the year 1904 and is headquartered in North Carolina, United States.
Wrangler produces great comfort and stylish products at an affordable rate. Their products
are famous for their lasting quality. Their clothes are designed to fit the requirements of
people wearing it. The company has created a platform for innovation and creates a great
idea to develop the best jeans and jackets.
2) Diesel
Diesel is an Italian Fashion company, is a complete lifestyle brand that was formed during
the year 1978 and is headquartered in Breganze, Italy. The company produces and sells
denim and other apparel products, footwear, and accessories. The apparel line of Diesel has
two brands with the name, Diesel, and Diesel Black Gold. They also have a brand for kids
called Diesel Kid.
This brand is popular among urban youth. Diesel produces apparel that is fashionable and
comfortable. Their products are priced at a feasible rate. This brand has created a fashion
statement that all could budget for it.
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Diesel is an iconic brand of denim that is well-known among youngsters worldwide. The
brand represents an image of old-fashioned denim which is a comfortable wear. Its
advertising strategy is much appreciated where it builds stores around pictures. The
company has its presence in about 80 countries. Over the years it diversified into other
products like watches, sunglasses, footwear, perfumes making it a complete lifestyle brand
and due to which it is a top Levi’s competitor
3) Lee Jeans
Also a top Levi’s competitor, Lee is an American brand of denim that was formed during the
year 1889 and is headquartered in Kansas, United States. Lee is owned by VF Corporation
which is the largest apparel company in the world. This company has rich custom and
innovative designs.
Lee jeans are a stylish brand that carries a sporty look. Their products are sold in about 100
stores worldwide. This brand is known for their innovation over these years and their
product zipper fly jeans are a big hit in the market.
This brand is the first of its types to start advertising through the television channel and
also has a continuous extensive advertising at all times. Lee spends a good amount on the
advertising campaign and for brand awareness among people. This brand is socially
responsible to launch the ‘World Denim Day’. On this day, the brand requests companies
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and employees to wear Lee denim for a small contribution and that money goes for a social
cause. Lee is a very cost-effective and stylish brand and due to this, Lee Jeans is a top Levi’s
A mix of differentiated and mass targeting strategies is used by Levis to satisfy the needs
and wants of the customer groups. Levis position itself as a comfortable and affordable
apparel brand being competitive and at the same time is value for money for customers.
The two other areas of emphasis in Bergh’s plan were achieving “operational excellence,”
which let Levi’s free up cash to reinvest in the business, and importantly, direct-toconsumer sales. These sales, which include those on its website and the retail stores it
owns and runs itself, give the company more control over how its products are presented
than when it sells through wholesale partners, like flailing department stores. They also
offer higher margins, and now account for a third of Levi’s business, up from 21% when
Bergh joined.
Today, Levi’s has grown into a more diversified brand. In fact, last year the performance in
its core business had been “mixed,” it said in its 2017 annual report. Sales of men’s bottoms
fell, mostly because of a dip in its Docker’s brand. But the company still had a strong year,
as other parts of the business picked up the slack. Sales reached $4.9 billion—still well
below the mid-1990s peak, but also well above the slump years.
Bergh’s strategy is simple, but effective. He says that while the turnaround is still in
progress, the company is heading in the right direction. “Levi’s brand is back,” he says, “and
importantly, it’s all being driven by the strategic choices that we’ve made.”
Pricing strategy - These include cost of the product, affordability for the target customer,
demand of the product and uniqueness and innovative features that it offers.Owing to the
brand being an established player, Levi’s has a policy of maintaining standard fixed prices
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all throughout the globe. Price of a pair of Levis jeans is mainly influenced by a number of
factors. These include cost of the product, affordability for the target customer, demand of
the product and uniqueness and innovative features that it offers. In India for example, the
price of a pair of Levi’s jeans varies from about 1299 for the price sensitive customer to as
high as 7000 for a customer looking for luxurious style.
Management strategy - Segmentation, targeting, positioning in the Marketing strategy of
Levis Strauss & Co. – Levis Strauss & Co uses a mix of demographic and geographic
segmentation strategies to make the different types of its offerings available in the market
as per the choice of the customers
1. Worker Well being
In 2011, Levi Strauss & Co. began piloting its commitment to create a more sustainable
supply chain called the Worker Well-being initiative. Through this new approach, the
company partners with its suppliers and local organizations to implement programs
focused on financial empowerment, health and family well-being, and equality.
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The Levi Strauss Foundation believes that people affected by HIV/AIDS deserve to be
treated with dignity and respect, and must have access to critical HIV/AIDS services. Since
1983, Levi Strauss & Co. and the Levi Strauss Foundation have contributed more $60
million in grants to HIV/AIDS organizations in more than 40 countries.
They are engaged in the battle for equal rights at racial, gender, sexual and economic facets.
Marriage Equality- In recent years, the legal battle over marriage equality has come centre
stage, and LS&Co. has continued to join the fight. In 2007,they were the only Californian
business to file an amicus brief with the California Supreme Court in support of same-sex
marriage, outlining the economic advantages of allowing same-sex couples to wed. In
2013, it joined a broad coalition of supporters urging the Supreme Court to overturn the
Defense of Marriage Act (DOMA).
Gender equality: The Company supports the United Nations Women’s Empowerment
Principles, which helps guide actions that advance and empower women in the workplace,
marketplace, and community. They’ve also partnered with Business for Social
Responsibility (BSR) on the HER project, which educates apparel factory workers about
health and access to health services. This factory-based, peer education model has proven
successful and is being expanded to include financial literacy training through HERfinance.
Most recently, they’ve been reducing water use in the apparel industry, a step further by
making water reduction standards and tools, including Water Less innovations, publicly
available to others within and outside industry, and encouraging other denim companies to
use them in their production. By utilizing this technology, they believe the apparel industry
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can save at least 50 billion liters of water by 2020. Goal is to increase the percentage of
products made with Water Less techniques to 80 percent by 2020.
The Company is doing just fine without government intervention. It proves that a company
doesn't need a government to contribute to society. Many of its employees, I searched on
social media sites such as LinkedIn, Instagram, Facebook, with reference to
#levisgivesback, are happy to work with levi’s in uplifting the bitter depths of Society as
well as solving economical mishaps. Though there are no govt laws binding upon it for
sustainability, it still has stood strong in implementing some good deed practices.
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Levis Jeans Global Export Import Data
Found 2059 Levis Jeans Global Export Import Custom Shipment Data with 149 importers &
58 exporters information.
India Export - 6
India Import - 1
CostaRica Import - 990
Peru Import - 324
Bolivia Import - 210
USA Import - 114
Chile Import - 22
Ecuador Import - 20
Pakistan Import - 6
Columbia Import - 5
Collaboration & Expansion plans
The company has continued efforts to diversify its business by expanding its direct-toconsumer presence and its international offering, which, Bergh told analysts on a
conference call discussing fourth-quarter and fiscal-year results, has been “the backbone of
our success.”
“Collaborations continue to generate brand heat, as well as drive traffic in sales, and
looking forward to 2020, you can expect to see Levi's brand come to life with many more
exciting, unexpected and innovative collaborations in the pipeline,” he said. “We continue
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to evolve Levi's consumer experience to create deeper connections with our fans.” In 2019,
Levi’s unveiled several creative collaborations with the likes of Star Wars, Hello Kitty and
Stranger Things. It also worked with Nike to launch an exclusive collection of footwear and
partnered with Google to create an improved version of the Smart Trucker that allows
consumers to control their phone from the comfort of their jacket
“In 2019, these collaborations delivered over 12 billion impressions globally, equating to
roughly $100 million in immediate value,”.
Next-gen retail
On the retail front, with 100 new stores planned in 2020, the company opened six “nextgen” stores across Europe and Asia in 2019 that amplify the Levi’s brand through
redesigned storefronts, tailor shops, updated fitting rooms and more.
“As we exited the year, we launched our largest ever popup in Miami, 45,000 square feet,
which…has been a hotspot this week in the run up to the Super Bowl,” Bergh said. “The
popup showcases the best of our brand and the future of retail, [with] Levi’s premium
products, our largest and most innovative tailor shop, interacting one of the kind
experiences, technical innovations and collaborations with well-known artists such as
Shepard Fairey and Cey Adams.”
Product development
Focusing on product, Bergh said men’s bottoms grew low single digits for Levi’s, while
Dockers men’s bottoms declined. The company’s Top 10 global wholesale customers
collectively grew 2 percent “despite a disrupted U.S. channel” and its Top 5 mature markets
also grew 2 percent, within which the international markets were collectively up 10
percent and the U.S. was down 1 percent for the year, he added.
“We have several initiatives in place to strengthen performance in the U.S. market,” Bergh
said. “We have the opportunity to expand distribution at wholesale and in direct-toconsumer, and to ‘premiumize’ the marketplace on the back of the strength of our brand by
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offering a broader assortment of our better and best products across both men’s and
women’s in order to offset some of the macro trends we are seeing in wholesale.
“Initiatives in the U.S wholesale channel include gaining share within the largest
department store retailers,” he continued, “through elevated product presentations and
broadening our portfolio, incremental penetration in the premium retailers and selectively
adding distribution and enlarging our footprint in existing specialty and regional retailers.”
Levi’s is also expanding its digital business across pure-play and wholesale dot-com and its
own e-commerce site, while growing its presence with mass-channel partners, like Target.
“We believe these initiatives will support our aspiration to manage the U.S. wholesale
business to flattish over time,” Bergh said. “In our U.S. direct-to-consumer channel, we will
open more mainline doors leveraging the successful model we deployed internationally–
smaller footprint, more profitable, more capital-efficient stores in better locations.”
The company’s total women’s business grew 14 percent in 2019, approaching $1.8 billion,
with four consecutive years of double-digit growth, the CEO noted.
“We are driving trends and leading the category and innovation, demonstrated by the rapid
growth of our women’s fashion fits, including high-rise styles like the ribcage and loosefitting bottoms like our new balloon jean, which are really resonating with the consumer,”
Bergh said. “We also have recently expanded our accessories line and ventured into new
categories in women’s, including body wear.”
The total tops business grew 14 percent in 2019, driven by the success of a wide spectrum
of tops, including T-shirts, fleece, outerwear and trucker jackets. Emerging markets of
India, Russia and Brazil all posted strong double-digit growth, and though modest at 2
percent, mainland China is back to growth,” Bergh said.
China remains a growth priority but Bergh noted how the coronavirus has thrown a
wrench into Levi’s plan for the region.
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“Our plan is to accelerate growth in mainland China in 2020, and December was a very
strong month,” Bergh said. “And then the virus had a significant impact on our business in
January. It is really unfortunate how the outbreak of the recent virus has been impacting
people’s lives, especially during the Chinese New Year. We are taking this seriously and
responsibly with our top priority being our people and our business partners. As a result,
we temporarily closed roughly 50 percent of our fleet and have stopped all employee travel
in and out of China.”
A SWOT analysis is a framework that is used to analyze a company’s competitive
positioning in its business environment. This can be used by Levi Strauss, and will involve
the identification of its internal Strengths (S) and Weaknesses (W) followed by the
identification of the Opportunities (O) and Threats (T) it faces in its extensivelyrnal
business environment.
Levi Strauss is among the leading firms within its industry, and it needs to retain this
position. Levi Strauss is carefully reviewing its SWOT analysis and using it to make
strategic decisions. For a SWOT analysis to be conducted of the firm, an interactive process
needs to be undertaken by coordinating among all the departments of the firm such as
finance, marketing, operations, human resource, logistics, strategic planning, management
information systems etc.
A SWOT matrix is a 2x2 matrix that has the internal strategic factors listed in the first row;
Strengths and Weaknesses. It has the external strategic factors listed in the second row;
Opportunities and Threats. This SWOT strategic framework allows company managers to
easily view all of the company’s strengths, weaknesses, opportunities and threats in one
Strengths of Levi Strauss
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Distribution and Reach: Levi Strauss has a large number of outlets in almost every state,
supported by a strong distribution network that makes sure that its products are available
easily to a large number of customers in a timely manner.
Cost Structure: Levi Strauss’s low cost structure helps it produce at a low cost and sell its
products at a low price, making it affordable for its customers.
Dealer Community: Levi Strauss has a strong relationship with its dealers that not only
provide them with supplies but also focus on promoting the company's products and
Financial Position: Levi Strauss has a strong financial position with consecutive profits in
the past 5 years, along with accumulated profit reserves that can be used to finance future
capital expenditures.
Levi Strauss has a large asset base, which provides it with better solvency.
Return on Capital Expenditure: Levi Strauss has been successfully able to generate positive
returns on the capital expenditure it has incurred on various projects in the past.
Automation: of various stages of production has allowed the more efficient use of resources
and reducing costs. It also allows for consistency in quality of its products and provides the
ability to scale up and scale down production as per the demand in the market.
Skilled Labor force: Levi Strauss has invested extensively in the training of its employees
that has resulted in it employing a large number of skilled and motivated employees.
Levi Strauss has a diversified workforce, with people of many geographical, racial, cultural
and educational backgrounds that help the company by bringing in diverse ideas and
methodologies of doing things.
Levi Strauss has qualified and accredited professionals working under its team.
~ 20 ~
Entering new markets: Levi Strauss’s innovative teams have allowed it to come up with
new products and enter new markets. It has been successful in the past, in most of the
initiatives it has taken in new markets.
Social Media: Levi Strauss has a strong presence on social media with more than millions of
followers on the three most famous social media platforms: Facebook, Twitter and
Instagram. It has high levels of customer engagement on these platforms with low
customer response time.
Website: Levi Strauss has a well-functioning and interactive website that draws a large
number of internet traffic and sales.
Product Portfolio: Levi Strauss has a large product portfolio where it provides products in a
large range of categories. It has a number of unique product offerings that are not provided
by competitors.
The geography and location of Levi Strauss provide it with a cost advantage in serving its
customers, when compared to that with the competition.
Levi Strauss has a well-established IT system that ensures efficiency in its internal and
external operations.
Weaknesses of Levi Strauss
Research and Development: Even though Levi Strauss is spending more than the average
research and development expenditure within the industry, it is spending way less than a
few players within the industry that have had a significant advantage as a result of their
innovative products.
High Day Sales Inventory: The time it takes for products to be purchased and sold are
higher than the industry average, meaning that Levi Strauss builds up on inventory adding
unnecessary costs to the business.
Rented Property: A significant proportion of the property that Levi Strauss owns is rented
rather than purchased. It has to pay large amounts of rent on these adding to its costs.
~ 21 ~
Low current ratio: The current ratio that shows the company’s ability to meet its short
term financial obligations is lower than the industry average. This could mean that the
company could have liquidity problems in the future.
The company has low levels of current assets compared to current liabilities, and this can
create liquidity problems for it in operations.
Cash flow problems: There is a lack of proper financial planning at Levi Strauss regarding
cash flows, leading to certain circumstances where there isn’t enough cash flow as required
leading to unnecessary unplanned borrowing.
Integration: Levi Strauss's current structure and culture have resulted in the failure of
various mergers aimed at vertical integration.
Diversification in the workforce: The workforce at Levi Strauss is concentrated with mostly
local workers, and low amounts of workers from other racial backgrounds. Lack of
diversification makes it difficult for employees from different racial backgrounds to adjust
at the workplace, leading to loss of talent.
Market Research: Levi Strauss has not conducted market research within the market that it
serves since the past 2 years. As a result, it is making decisions based on 2 years old data,
while customer needs may have evolved over time.
High employee turnover rates: Levi Strauss has a higher employee turnover rate compared
to competitors. This means that it has more people leaving the job, and as a result, it is
spending more on training and development as employees keep leaving and joining.
Quality Control: Levi Strauss has a lower budget for its quality control department than
competitors. This leads to lack of consistency and the possibility of damage to quality
across its various outlets.
Lack of legal experience and legal department employees are not highly qualified.
~ 22 ~
A few products have a high market share, while most of the products have a low market
share. This reliance on a few products makes Levi Strauss vulnerable to external threats if
these few products suffer for any reason.
The workload is a high per worker as there are fewer workers than the actual work
required. This puts workers under psychological stress and is likely to be less productive.
Worker morale is low due to company culture and politics that have grown in recent years.
Competition and qualified employees have been leaving the organization in recent years,
which could mean a shortage of good talent for the company in the upcoming years.
The decision making is highly centralized, and decisions by teams need to be approved by
certain officials. This reduces efficiency in operations by making them more time
consuming. It also leads to reduced innovation.
The performance appraisal is not in a systematic manner. People are often not appraised
for their performance. This leads to lower work morale and lack of promotion
opportunities for employees.
Opportunities of Levi Strauss
Internet: there has been an increase in the number of internet users all over the world. This
means that there is an opportunity for Levi Strauss to expand their presence online; by
using the internet to interact with its customers.
E-commerce: There has been a new trend and a growth in sales of the e-commerce
industry. This means that a lot of people are now making purchases online. Levi Strauss can
earn revenue by opening online stores and making sales through these.
Social Media: there has been an increase in the number of social media users worldwide.
The three social media platforms; Facebook, Twitter and Instagram, have shown the
greatest number of increase in monthly active users. Levi Strauss can use social media to
promote its products, interact with customers and collect feedback from them.
~ 23 ~
Technological developments: technology comes with numerous benefits among many
departments. Operations can be automated to reduce costs. Technology enables better data
to be collected on customers and improves on marketing efforts.
There has been an increase in average household income along with an increase in
consumer spending following the recession. This will result in growth in Levi Strauss’s
target market with new customers that can be attracted towards the business.
Population: the population has been growing and is expected to grow at a positive rate for
the upcoming years. This is beneficial for Levi Strauss as there will be an increase in the
number of potential customers that it can target.
Inflation: The inflation rate has been low and is expected to remain low in the next two
years. This is an opportunity for Levi Strauss as its cost of inputs would remain low for the
next two years.
Interest rate: Lower interest rates than compared to previous years provide an opportunity
for Levi Strauss to undergo expansion projects that are financed with loans at a cheaper
interest rate.
Green government drive: this provides an opportunity for Levi Strauss for the sale of Levi
Strauss's products to federal and state government contractors.
Threats of Levi Strauss
● Technological developments by competitors; New technological developments by a
few competitors within the industry pose a threat to Levi Strauss as customers
attracted to this new technology can be lost to competitors, decreasing Levi
Strauss’s overall market share.
● Suppliers: The bargaining power of suppliers has increased over the years with the
decrease in the number of suppliers. This means that the costs of inputs could
increase for Levi Strauss.
~ 24 ~
New entrants: there have been numerous players that have entered the market and
are gaining market share by gaining existing companies’ market share. This is a
threat to Levi Strauss as it can lose its customers to these new entrants.
Increasing competition: there has been an increase in competition within the
industry putting downward pressure on prices. This could lead to reduced revenue
for Levi Strauss if it adjusts to the price changes or loss of market share if it doesn’t.
Exchange Rate: the exchange rate keeps fluctuating and this affects a company like
Levi Strauss that has sales internationally, while its suppliers are local.
Political uncertainties in the country prove to be a barrier in business; hindering
performance at times and making the business incur unnecessary costs.
The fluctuating interest rates in the country do not provide a stable financial and
economic environment.
Consumer tastes are changing, and this puts pressure on companies to constantly
change their products to meet the needs of these customers.
Regulations on international trade keep changing, and this requires compliance by
companies if they are to operate globally.
Substitute products available are also increasing, which is a threat collectively for
the whole industry as consumption of current products decreases.
The rise in prices of fuel has increased in the input costs for Levi Strauss. These
costs have also increased as other industries that provide inputs for this company
also have suffered from increasing fuel prices, thereby charging more.
Increased promotions by competitors have been a threat for Levi Strauss. On most
media, there is more clutter than ever, and customers are bombarded with multiple
messages. This reduces the effectiveness of promotional messages by Levi Strauss.
~ 25 ~
The study of the history of clothing and textiles traces the development, use, and
availability of clothing and textiles over human history. Clothing and textiles reflect the
materials and technologies available in different civilizations at different times. The variety
and distribution of clothing and textiles within a society reveal social customs and culture.
The wearing of clothing is exclusively a human characteristic and is a feature of most
human societies, man and woman began wearing clothes after the last Ice Age.
Anthropologists believe that animal skins and vegetation were adapted into coverings as
protection from cold, heat and rain, especially as humans migrated to new climates.
Textiles can be felt or spun fibers made into yarn and subsequently netted, looped, knit or
woven to make fabrics, which appeared in the Middle East during the late Stone Age. From
the ancient times to the present day, methods of textile production have continually
evolved, and the choices of textiles available have influenced how people carried their
possessions, clothed themselves, and decorated their surroundings.
Sources available for the study of clothing and textiles include material remains discovered
via archaeology; representation of textiles and their manufacture in art; and documents
concerning the manufacture, acquisition, use, and trade of fabrics, tools, and finished
garments. Scholarship of textile history, especially its earlier stages, is part of material
culture studies.
~ 26 ~
The processes involved in apparel manufacturing are – Design/Sketch, Sampling, Costing,
Production Planning, Maker Making, Fabric Spreading, Cutting, Sewing, Stitching, Thread
Trimmed, Washing, Finishing, Ironing, Packing, Folding, Other Processes, Final Inspection,
and Dispatch.
The fashion industry has seen significant transformation in the recent past. The rise of
globalization trend in the last few decades redefined the production strategy where
outsourcing is prevalent among many top brands. In order to remain competitive, many
~ 27 ~
corporations feel they must send some of their jobs offshore because their competitors
have already done so (Shelton & Wachter, 2005). Price combat among the brands urges for
offshore production, on the other hand, product variety and quick replenishment
complicates the manufacturing and distribution, because fashion industry is predominantly
dealing with the products which are characterized by short product life cycles, volatile and
unpredictable demand, tremendous product variety, long and inflexible supply processes,
and a complex supply chain (Sen, 2008). Moreover, the evolution of fast fashion brought
new consumer groups and also enhanced the consumption by the existing groups. The
consumer taste has changed over time, and the tendency is to have more varieties in a
short period. Since the 1980s, a typical life cycle for fashion apparel has had four stages:
introduction and adoption by fashion leaders; growth and increase in public acceptance;
mass conformity (maturation); and finally the decline and obsolescence of fashion
(Bhardwaj & Fairhurst, 2010). The impact of the change is multidimensional, and its
influence on the business is big. The supply chain is lingered and span is widened because
of outsource potential from many sources.
The global apparel market is projected to grow in value from 1.3 trillion U.S. dollars in
2015 to about 1.5 trillion dollars in 2020, showing that the demand for clothing and shoes
is on the rise across the world. The regional distribution of the demand share of apparel is
expected to stay mostly consistent in that period, although the Asia Pacific region had the
highest level of growth at four percent. The three world regions with the largest apparel
markets are the 28 member states of the European Union, the United States, and China, in
descending order. In 2017, the apparel category with the highest level of global market
growth was sportswear at 6.8 percent.
There are four main product categories for the apparel and footwear market: womenswear,
menswear, sportswear, and childrenswear. Womenswear was the bestselling apparel
category in the world as of 2017, with sales of about 643 billion U.S. dollars. The United
States alone generated 115 billion U.S. dollars in womenswear sales, and about 86 billion
dollars in menswear sales. Another important category with a high level of growth is the
sports apparel market, which was valued at about 155.2 billion in 2018. There is also a
~ 28 ~
thriving market for pre-owned or second-hand clothing through vintage stores, thrift
stores, or consignment stores. This apparel resale market value increased from 20 billion
U.S. dollars to 24 billion dollars between 2017 and 2018. Denim, a classic staple of a casual
wardrobe, is only getting more popular across every type of clothing item.
Although there are countless apparel retailers across the world, both big and small, the
biggest companies control the majority of the market. As of 2017, the three top selling
apparel and footwear retailers were TJX Companies, Inditex, and H&M. In terms of casual
apparel, The Gap, Inc. was the top selling retailer, with sales of about 16.5 billion U.S.
dollars. Luxury clothing, on the other hand, was led in sales by LVMH Moet Hennessy Louis
Vuitton S.E., an enormous French luxury goods conglomerate. In terms of individual
brands, some of the most valuable brands in the world include Nike, H&M, Zara, Adidas,
and Hermes.
~ 29 ~
Definition of supply chain management as developed and used by The Global Supply Chain
Forum (3): Supply Chain Management is the integration of key business processes from
end user to original suppliers that provides products, services, and information that add
value for customers and other stakeholders.
The above definition is reflected in the configuration of a typical apparel supply, shown in
fig-2. As evident, the entire apparel supply chain consists of every organization starting
from initial fibre supplier to consumer purchasing apparel products for final consumption.
Each organization comprises various functional domains, as manufacturing, planning,
marketing etc. as shown in the fig-2. Effective supply chain manages flow of demand and
supply, which are moving in the opposite direction to each other, in an efficient way at
every node of the supply chain. Depending on types of demand and supply, the apparel
supply chain can be categorized principally into three kinds: Push, Pull and Synchronous.
Fashion industry market share:
4 percent
Fashion industry market value:
406 billion dollars
327 million
Labor force: 161.0 million
Unemployment rate: 3.8%
GDP per capita (PPS):
62,500 US dollars
Average annual wages in fashion range from 26,440 dollars, for textile bleaching and
dyeing machine operators, to 84,600 dollars for marketing and sales managers in fashion.
About 79 percent of all US employees in fashion work for apparel retailers. The average
annual wage at such companies is 26,650 dollars.
The global apparel market is projected to grow in value from 1.3 trillion U.S. dollars in
2015 to about 1.5 trillion dollars in 2020, showing that the demand for clothing and shoes
is on the rise across the world.
~ 30 ~
According to new research, the industry has grown 21% over the past three years. When
compared to the luxury market, which saw mediocre growth in 2016, it's clear that fast
fashion retailers are growing in favour. ... The McKinsey Global Fashion Index forecasts
overall fashion industry growth of 3.5 to 4.5% in 2019.
Profit margins for retail clothes are generally within a range of 4 percent to 13 percent
according to industry analysts. ... When all costs are considered, the profit the clothing
company actually earns is much lower, and in order to stay in business, clothing retailers
need to sell a high volume of merchandise.
Strong growth in the global fashion market is predicted for 2019 by McKinsey and
Company. It forecasts growth between 3.5% and 4.5%, slightly below 2018 levels, which
are expected to range between 4% to 5% for the $2.5 trillion global fashion industry in
Growth of International business of the apparel industry has been crushed and curbed by
the fierce competition in the market. Competition of the price wars, low costing, and
regional advantage of labor, customer's services, gray market, adoption of new fashion
trends, best logistics and transportation system has made customers choosier in selecting
the product. Availability of substitute brands has shaken the buyers' long-lasting
customer's base. Substitute brands are offering competitive prices, same/improved quality,
and customer service and replacement warranty.
It has diverted the mind of customers by changing their buying patterns, expenditure and
habits. In spite of the recession, customers are becoming more demanding towards new
fashion trends and styles. Customers are looking for up-to-date fashion goods with
additional services, quality fabric, hand feel and stitching. But their budget remains the
same for fashionable goods.
~ 31 ~
In this highly competitive fashionable world snatching a small pie for new Brands is a risky
preposition. Achieving market share without extraordinary style detailing, fabric, design,
and silhouette is next to impossible.
Here are the factors which are very much concerned for considering competition,
● Price wars between rivals
● Offering heavy discounts or clearance sale by the direct competitors'.
● Offering best customer services by the competitors (availability of new/ up-to-date
fashionable products)
● Changing fashion trends, style detailing and patterns
● Introducing new fabrics, designs, unbeatable prices and accessories
● Obtaining certifications by the factories for obtaining orders (Oekotex, ISO)
Here there are few points to be considered to hold back in the market. Shall help the
organization to pierce the competition.
● Always look into the strengths of the organization. Keep on working to strengthen
this quality. E.g. Brand is recognized by their best fabric quality, hand feel, washes,
stitching quality etc. So always keep on researching to embody the existing
● Always practice SWOT analysis to know the health of the organization. (A diagnosis)
● Keep on negotiating prices with clothing suppliers, accessory suppliers considering
past relationships.
● Keep on watching market trends, fashion cycle, consumers' habits and budget.
~ 32 ~
● Doing Inventory management considering the demand of the product. (Demand for
clothing, new fashion trends will be higher during festivals -Christmas, New Year,
Diwali and Eid)
1. Inditex — Zara, Massimo Dutti, Pull & Bear
2. Nike
~ 33 ~
3. LVMH — Louis Vuitton, Givenchy, Dior, Marc Jacobs
~ 34 ~
The apparel industry consists of designers, manufacturers, distributors and retailers
dealing in clothing and fashion accessories targeted at different consumer segments. Its
many niches are mostly saturated, creating a fierce price competition among some brands
and an equally fierce brand-image competition among others. Apparel companies can
employ a number of pricing strategies to differentiate their brand and gain competitive
advantages in the marketplace. Understanding these pricing options can help you develop
the ideal pricing strategy for your own clothing business.
Budget Pricing Strategy
Many consumers seek low prices when shopping for apparel. Serving this segment can
yield significant sales volume at the expense of lower per-unit profitability. Customers in
this segment are willing to sacrifice quality for affordability and are less likely to be loyal to
specific brands. A bundled pricing strategy can work well here. When multiple bundled
products are sold together at a single low price, it can convey a sense of additional cost
efficiency for budget shoppers. Focus on cost control for this pricing strategy to continually
push prices lower over time. Rely on economies of scale, driven by the relatively high
volume of low-profit pricing strategies, to squeeze out small per-unit profits.
Luxury Pricing Strategy
In the luxury tier of the market, consumers' price sensitivity often is more closely
correlated with a brand's image rather than inherent product quality or market value.
Apparel products are closely tied with self-expression and social status in consumers'
minds, so consumers in this segment are often more concerned with the social image of
their apparel than its durability of the quality of materials. This strategy focuses on
marketing and brand positioning as a main driver of price structure. Do not be afraid to
push prices well above your costs in this segment, taking care to keep your prices just as
high as competitors. It may seem counter-intuitive, but lowering prices in this segment
actually can detract from a luxury brand's image.
Value Pricing Strategy
~ 35 ~
The value pricing strategy sits somewhere between the budget and luxury segments. The
key to value pricing is to strike a balance between cost and quality. Value shoppers are not
willing to sacrifice quality for extremely low prices, but they also are not willing to pay
more than apparel is worth simply for a popular brand logo. Consumers in this segment
look for clothing and accessories that will last several years or more, making the durability
of materials a prime concern. These consumers prefer leather and wool over polyester and
plastic, for example. Use basic market pricing techniques to set prices for this strategy -- do
not work too hard to push prices low, and do not over-inflate prices for brand equity.
Rather, source high-quality materials and apply a standard markup to each product, staying
within the general price range of similar apparel products.
Price Promotions as a Sales Tool
Price promotions can be an effective means of increasing sales and customer loyalty for any
pricing strategy in this industry. Back-to-school discounts, holiday sales events and offseason discounts all can be effective at moving more apparel off the shelves. Use customer
loyalty programs, seasonal sales, off-season discounts, back-to-school promotions and
coupons online and in printed circulars to bring new customers in the door and give
existing customers a reason to spend more in your store.
prospects and challenges in the industry
Over the last three decades, the apparel industry has achieved phenomenal growth due to
policy support from the government, dynamism of the private sector entrepreneurs and
extremely hardworking workers. Now the number of RMG units is more than 5,000 and
export earnings have reached $22 billion with more than one hundred countries using
'made in Bangladesh' knit garments and woven products.
A McKinsey survey also tells us that the potential for the garment industry is promising.
McKinsey forecasted export-value growth of 7-9 percent annually within the next ten years,
so the market will double by 2015 and nearly triple by 2020.
~ 36 ~
There are several external factors that have been playing an important role in facilitating
the growth of the sector. One of these crucial factors is gradual reduction in China's bulk
production due to labour shortages and higher wages, which also contribute to a decline in
its appeal in the apparel realm. Moreover, China is now interested in manufacturing
products that require greater skills, better technology and more investment in advanced
According to a survey conducted by McKinsey in 2001, 86 percent of the chief purchasing
officers in leading apparel companies in Europe and the US planned to decrease levels of
sourcing in China over the next five years because of declining profit margins and capacity
constraints, and their next preferred sourcing destination is Bangladesh. They viewed
Bangladesh as the next hot spot for sourcing in the RMG market. So Bangladesh is expected
to gain much from the changed scenario in the global apparel market.
Another key prospect for growth of our garment industry lies in the size of the global
apparel market, which is gradually growing bigger. According to a recent report, the global
apparel market will cross the $2 trillion mark by 2025 from the current value of $1.1
trillion. So there is a great opportunity for us to further penetrate the global apparel market
and boost our export earnings.
Despite the epic growth of our industry and its bright prospects, challenges are still there.
However, we always believe that challenges can be turned into opportunities if they are
addressed with steely determination and pragmatic steps and such instances are galore in
our history.
One of the biggest challenges currently facing our garment industry is to make our factories
safer and ensure better working conditions for millions of garment workers. The Tazreen
fire and Rana Plaza collapse have brought the issue of workplace safety to the fore. The
accidents have caused a paradigm shift within the industry. Following the unfortunate
incidents a number of initiatives have been taken to improve building and fire safety in the
~ 37 ~
Platforms such as Alliance, Accord and National Plan of Action have been formed and all are
working sincerely to make every factory safer and compliant. Moreover, the factories which
were established in an unplanned way and housed in converted and shared buildings have
started relocating to purposely-built buildings. Moreover, an initiative has been taken to set
up an industrial park to relocate the non-compliant garment factories.
A total of 67 inspectors have already been appointed who will monitor workplace safety at
garment factories and recruitment of more inspectors is in the process.
However, ensuring workplace safety at all garment factories is a gigantic task and will take
time to accomplish it. But we believe the government of Bangladesh with the support of
global brands and international development partners, will be able to ensure the safety of
the industry and maintain the momentum of socio-economic development in the country.
Another challenge for our RMG industry is to ensure workers' rights. The government of
Bangladesh has amended the Labour Law 2006 in July 2013 making it more favourable for
ensuring workers' rights, including the right to freedom of association and collective
The legal requirements for trade union formation are more flexible now. The number of
trade unions at the garment factories has increased significantly in recent times. Besides,
the government promptly takes steps to investigate any complaint of violation of labour
The huge expansion of the garment industry has reinforced the need for development of
infrastructure, which is quite a big challenge for us. Ensuring energy and power supply to
the industry has also appeared as a major challenge.
Skilled workforce is a prerequisite for the development of an industry.
But unfortunately we have a shortage of skilled workforce, especially at mid-management
level, as we do not have sufficient number of vocational institutes and textile universities
though our industry has started its journey in the early 1980s.
~ 38 ~
Personalization, price reduction, sustainability, reorganization of the store network and full
commitment to Rfid are some of the drivers of the fashion business, which is in the middle
of an uncertainty scenario marked by political and economic uncertainty.
US and China scare the world
March 22, 2018 will be marked on the calendar as the beginning of one of the great battles
of international trade in history: trade war between China and the United States, for which
an agreement is still being sought today.
This is just another element of uncertainty for a sector as highly globalized as fashion. In six
out of ten reports of the 2018 fiscal year of the industry giants’, explicit reference is made
to the uncertainty in which the global economic scenario is plunged and the difficulty in
making short and medium term growth forecasts.
Oxygen to stay in the game: fashion refinances
Uncertainty. Promotions. Consumption slowdown. Ecommerce boom. These and other
elements have impacted on the evolution of the profitability of the world’s largest retailers.
About 32% of fashion giants dropped their sales in 2018 and 22%, their profit.
This fact has resulted in a significant number of companies having to talk with banks to
analyze their liabilities. 19% of the giants of the fashion industry have refinanced their debt
in the last year and four out of ten companies have activated a cost reduction plan.
Buy or close: earning share against the competitor
Concentration, this is one of the trends that mark the evolution of the fashion business,
marked by a scenario of weak growth, transformation of the model or processes of
digitalization. Fashion is increasingly moving towards a game of giants.
~ 39 ~
Mergers and acquisitions have been protagonists of numerous headlines in the last year. Of
the hundred groups analyzed, 41% of the companies in the sector have bought a stake of
another company in 2018.
~ 40 ~
Porter’s Five Forces Model
Buyer Power
The first important force is the bargaining ability of buyers, who can choose to push down
prices, not buy products, or switch retailers. In the case of the fashion industry, buyer
power is a relatively large force. While clothes shoppers are typically individuals with little
to none direct bargaining power (as compared to huge companies, buying in bulk, who
might be the main clients in other industries), they have many alternative locations to shop
for apparel and little incentive to stay with one particular company, giving them plenty of
indirect bargaining power.
Supplier Power
~ 41 ~
In the fashion retail industry, supplier power is a relatively small and insignificant force.
Most apparel companies source their products from third world manufacturers who
receive just fractions of the profit. Suppliers have little control over the fashion industry as,
unfortunately; they are dispensable and can always be swapped out. As a result, input
prices for this industry are relatively low and will stay there until the global development
gap closes up significantly.
Competitive Rivalry
The fashion industry is an interesting one when it comes to analyzing through the intensity
of competitive rivalry. There are large numbers of retailers who sell very similar products,
but there’s also the concept of brands, which allow some companies to sell apparel for
ridiculous rates. Nowadays there is little innovation in this space, so the market is quickly
becoming saturated with very similar products [2]. In this sense, the fashion industry is a
very difficult one to get into, and is almost becoming a ‘race to the bottom’ — not good
news for retailers!
Threat of New Entries
As mentioned previously, there is little that is unique to bring to the table in this industry,
so this force is also somewhat small. However, new entries might find unique ways to
popularize their own products (which might not even be particularly special), and as such
build novel brands — perhaps through clever use of social media. The fashion industry in
its current state is ‘high risk, high reward’ for new entrants — it’s not too difficult to get a
foot in the door and copy others, but will the markets care for those products?
Threat of Substitution
Fortunately for those in the fashion retail industry, there is little to substitute clothes with.
This force is almost negligible — all ‘substitution’ in the fashion industry is really just
To sum up, the fashion industry seems difficult to successfully dive into, and bleak for
companies already within this space. This Five Forces analysis has shown that while there
~ 42 ~
are few threats and little supplier bargaining power, it is not good that the market is
effectively nearing saturation. Buyers have large amounts of indirect power to bargain with
— i.e. plenty of choice — and lots of competitors make it hard to sustain a place in the
PEST Analysis
Political Factors
A number of legal and political environmental factors affect businesses in the clothing
industry. The industry has repeatedly been affected by issues such as workers' rights and
child labor laws. Union workers in clothing manufacturing plants may picket their
employers, especially if their wages or medical benefits are less favorable than workers in
comparable industries. Workers picketing their clothing employers impacts production.
~ 43 ~
This can cause delays for retailers in getting spring or fall fashions on time. Activists who
are not employed by the companies may also picket retailers who purchase clothing from
countries known for violating child labor laws. This negative publicity may impact small
clothing retailers' sales and profits. Also, a trade embargo against another company's
imports would force clothing wholesalers to find different suppliers.
Economic Factors
Economic factors can have both positive and negative impacts on the clothing industry.
During economic boom periods, people have more disposable income. Hence, they may buy
more clothing, increasing sales for clothing manufacturers, wholesalers and retailers.
However, recessions have the opposite effect. Sales for these various clothing entities may
be significantly lower. Consequently, retailers may be stuck with large amounts of
inventory. And they may have to sell the clothing at substantially reduced prices. Clothing
manufacturers and retailers may also need to sell lower-priced clothing brands to compete
with more generic brands. Consumers often shop for cheaper brands when they have less
disposable income.
Consumer micro environmental factors include cultures, norms, lifestyle, demographics
and population changes. These factors affect the clothing industry in different ways. For
example, a small clothing manufacturer needs to create styles that appeal to those of
different cultures, especially if those cultural groups represent large enough segments of its
market. Contrarily, clothing manufacturers, wholesalers and retailers avoid creating too
many clothing items that fall outside the norms of society, such as styles worn 100 years
ago. An aging population may increase the demand for larger jeans and pants sizes, such as
relaxed or loose-fitting styles. Generally, many people become more sedentary when they
get into their 40s and 50s.Consumers' waistlines expand so they need larger sizes and more
room for comfort.
Technological Factors
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Technological micro environmental factors affecting the clothing industry include
availability of resources, demand and production. For example, the scarcity of certain
materials, such as leather, may force retail and wholesale clothing companies to sell more
faux or substitute leather products. Retailers may increase the prices of cotton clothing if
they encounter shortages of this raw material, as they must pay their manufacturers more.
The introduction of new clothing styles by a competitor can shift demand away from older
fashions. Hence, a small clothing manufacturer may need to discontinue certain clothing
lines and produce new ones that meet the needs of consumers. Moreover, clothing
companies may add more advanced equipment in their plants like robots, which may force
companies to fire some workers.
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Levi Strauss & Co. says our corporate values are the foundation of our company and define
who we are. They underlie how we compete in the marketplace and how we behave, our
values are fundamental to our success. .”Levi Strauss & Co. has four major core values.
Empathy – walking in people’s shoes: Levis will always pay attention to all people around
the world. They respond and listen to the demands of their consumers, workers as well as
Originality – innovative and authentic: The pioneering spirit that started in 1873 with the
first pair of blue jeans still spreads through all facets of their business. Through practices
and innovative products, Levis cracks the mold.
Integrity – doing the right thing: When doing business Levis sets social responsibility and
Ethical conduct on the top. That means Levis pays attention to do right things by their
society, brands, company and employees.
Courage – standing up for what they believe: Levis always accepts all conventional wisdom
and practices. Levis wishes to become greater.
Levi’s is continuing its diversification strategy, with plans to expand its accessories line and
explore new women’s categories.
As part of its multi-pronged approach, the company is focusing on its initiatives to expand
its wholesale distribution in order to gain share within the largest department store
retailers, said Chip Bergh, president and CEO. Efforts include elevating its product
presentations, broadening its portfolio, making incremental penetration within premium
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retailers, and growing its footprint and distribution in existing specialty and regional
The apparel company is expanding its digital business across pure-play, wholesale dot-com
and its own e-commerce site, while mounting its presence with its mass-channel partners.
“We believe these initiatives will support our aspiration to manage the U.S. wholesale
business to flatten over time,” Bergh said in a recent earnings call.
It will also continue to grow its market share in women’s denim, where it currently
occupies the No. 2 spot in the U.S., he said.
“Our total women’s business grew 14% in 2019, approaching $1.8 billion in four years in a
row of double-digit growth,” he said, noting that the company has seen rapid growth of
such women’s fashion fits as its ribcage high-rise styles and loose-fitting balloon jeans.
Levi’s is also differentiating its business by expanding its accessories line and exploring
new women’s categories, such as body wear, which Bergh described as a natural brand
extension that will provide a long runway for growth in the women’s category.
It will continue to expand its direct-to-consumer strategy as well by opening more doors
with smaller footprints in the United States, with a handful of test stores planned for this
The calendar was not in Levi’s favor this fourth quarter, the company noted in its earnings
statement, as it failed to incorporate Black Friday and the accompanying bump in sales. As
a result, net revenue dropped 2%, to $1.57 billion, with adverse effects also experienced by
political unrest in Hong Kong and the company’s acquisition of a distributor in South
When it adjusts for this unfavorable dating, however, Levi’s saw Q4 net revenue grow 3%,
driven by its expanding DTC presence and international growth.
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The overall product trends driving the jeans category are a continuation of the same theme
the company has seen for the last year or so, “which is a macro trend of casualization and
the evolving impact of street wear and streetwear influence,” Bergh said.
Levi’s Signature and Denizen value brands, meanwhile, which represent about 7% of the
company’s total business, grew mid-single digits in 2019.
Although the company intended to accelerate growth in China, these plans are expected to
take a hit with the Corona virus outbreak. The company has closed 50% of its fleet there,
Bergh said, and put a halt to all employee travel in and out of China.
“While this will put a damper on our growth in China in the near-term, we are continuing to
execute on our strategies there,” he said, noting that mainland China is just 3% of the
company’s business.
Harmit Singh, executive VP and CFO, said the company “hit the ground running” for its
fiscal 2020 and was pleased with its global holiday results, with global revenue growing
Mid-single digits. He noted that the company was intentionally less promotional during the
holiday season.
The study of the organization gave me an exposure to the day to day activities of the
organization in a good sense. Good relationships exist between various teams/groups
/divisions in the organization underline the spirit and help to achieve the firm goal.
The research has given me to find better correlation and production technologies are used
here and that is the only thing for the success in this field. The study conducted at Levi
Strauss & Co, enabled me to get hands-on experience of the overall functioning of the
company and to translate academic knowledge into practical experience.
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The company provides good working conditions for their employees. All departments
coordinate their work for the success of the organization. The company also provides
sufficient working conditions and also training programs according to their requirements.
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Summary of Findings – Critical Observations by the Candidate about
industry and organization
Finding regarding the company, industry are;
The Clothing industry is at a critical point. Fashion brands, retailers, designers and
suppliers alike are facing new pressures as they constantly race to churn out the next
fashion must have, at faster rates and lower prices. The number of garments produced
annually has doubled since 2000 and exceeded 100 billion for the first time in 2014. With
this rapid rise in production and consumption comes a staggering increase in waste and we
are witnessing unprecedented rates of disposal and wastage. However, external conditions,
such increased competition for resources, spike in costs of raw materials and tightening of
legislations, are forcing fashion companies to review their operations to adopt more
sustainably-minded and curricular approaches to fashion as they prepare for the future. In
addition many more retailers and emerging designers more frequently collaborate for
change. Meanwhile, the consumer is becoming increasingly aware and sensitive to the
negative environmental impact of the more widely-understood negative environmental
impacts caused by the fashion industry and by consumers’ high consumption. Below are
resources that demonstrate some of the fashion industry’s pressing issues in terms of
environmental impact, consumption, production and waste. Also highlighted are the
positive potential that designers and consumers have to drive positive change.
1. . Age has no significant impact on choosing brands of jeans by customers
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2. .Occupation of a customer has no significant impact on choosing brand of jeans by
3. Income of a customer has a significant impact on choosing brands of jeans by
4. Price of jeans has a significant impact on choosing brands of jeans by customers.
5. Price of jeans has a significant impact on the quality perception about the brand of
jeans by customers.
6. There is a strong correlation between annual family income and brand preferences
of respondents.
Levis should more aggressively tap the youth segment, which lies in the age group between
18-25. The reason for the same is Levis was ranked first in terms of the overall brand
image. Hence, Levis has a scope to reach the top position and encase through increase in
sales. Since most customers buy twice a year (i.e. every 6months) or occasionally, and they
are not affected by the promotions, Levis should aggressively advertise coupled with
effective sales promotions for improving customer recall and Brand. It was also found from
the survey that the colour range is low. This also limits preference towards Levis as a
brand. This area should be properly looked after by making available hosts of colours. After
sales service which is becoming the most critical success factor seems to be not given due
importance. .Proper after sales service can provide a competitive edge through efficient
customer relationship management. Levis is perceived as a premium brand in India. Hence,
an economy product range can also tap the unexplored middle class range. Since Levis
jeans are majorly available in departmental stores and factory outlets, reaching the
customer and availing him with consumer’s chemises difficult. India having a large middle
class customer group still being not exploited can be reached through making Levis jeans
available at local Retail Outlets.
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 Cleary, David Powers. Great American Brands. New York: Fairchild Publications,
1981. pp. 211-216. Describes the history and reasons for success behind various
American brand names, including Levis
 Hambleton, Ronald. The Branding of America: from Levi Strauss to Chrysler, from
Westinghouse to Gillette, the forgotten fathers of America's best-known brand
names. Dublin, NH: Yankee Books, 1987. pp. 21-25. The history of the founders of
major American companies, including Levi Strauss
 Josephy, Alvin M. "Those Pants that Levi Gave Us." American West, July/August
1985, pp. 30-37.
 Kramer, William M. and Norton B. Stern. "Levi Strauss: The Man Behind the Myth."
Western States Jewish History. April 1987.
 Quinn, Carin C. "The Jeaning of America--and the World." American Heritage,
April/May 1978, pp. 14-21. A brief history in text and photos
 Robbins, Peggy. "Levi Strauss." American History Illustrated. August 1971, pp. 3335.
 Roth, Art. "The Levi's Story." American Heritage. Fall 1952, pp. 49-51.
 Weidt, Maryann N. Mr. Blue Jeans: A Story about Levi Strauss. Minneapolis, MN:
Carolrhoda Books, Inc, 1990. Juvenile historical fiction
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