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London Metropolitan University

Bachelor of Business Administration Top-up


Cover Sheet
STUDENT LMU ID NUMBER 1 6 0 3 5 1 3 1
MODULE CODE MN6005
DEADLINE 20/08/17
MODULE TITLE STRATEGY CHOICES & IMPACT
ASSIGNMENT NUMBER LEVIS CASE STUDY
TUTOR'S NAME DR. PRASAD NEELAWALA
TEACHING BUILDING KANDY BRANCH
STUDENT NAME SUDEESHA BANDARA
STUDENT DECLARATION ''I declare that the work submitted is my own"

Signature of the student: Date Submitted: 20/08/17


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ACKNOWLEDGEMENT

I am obliged to thank ESOFT Kandy for the ability to improve my skills by conducting this
assignment.

This research could not have materialized without encouragement and advice from Dr. Prasad
Neelawala Lecturer and supervisor of this assignment. I would like to on express my gratitude
to Dr. Prasad Neelawala for his valuable assistance without which I would not have been able
to complete this assignment.
LIST OF TABLES

No. Title Page

1 Introduction 03
2 Levis Case Study Analysis 04

3 Recommendation 08

4 Reference 08
1. Introduction

Levi's Strauss and company was established in 1873, Levi's jeans are the original, authentic jeans. They
are the most successful, widely recognized and often imitated clothing products clothing product in the
history of apparel. Over successive generations, Levi's jeans have captured the attention, imagination
and loyalty of diverse individuals. As the inventor of the category, the Levi's brand continues to define
jean wear with the widest range of products available, from quintessential class such as the famous
Levi's 501 Original jean, to favorite fits and styles.

7.1 billion dollar sales in 1996, company was bigger than Nike. In 2003, Levis revenues had bell-
bottomed out to 4.2 billion dollars. Levis design team was late to key trends, like colored denim for
women and more tailored jeans for men. Once in the top quintile of the Fortune 500, Levi dropped off
the list in 2012.

Main purpose of this report is to analyze the Levis Strauss Case study by applying appropriate

strategy models like PESTEL analysis, Porters five force model. Finally the report summarizes Levis
Strategic position using SWOT analysis and made recommendation for the future direction of the
company using Ansoff Matrix analysis.
2. Levis Case Study Analysis

1. PESTEL Analysis

Stable political stance in USA

Overseas market opportunities


Political
Undisputed founder and family-owned business

Low market in other countries

High prices for Levis products

Economic Retail market reduce

Sales in denim are dropping

Research funding for HIV/AIDS

Founder a philanthropist; scholarships and donation


Social
Mission of profits through initiatives

Eureka labs to try new prototypes

Technological Silicon Valley innovation

Sustainable pocket tee to tech-advanced womens denim

Environmental Metallic finish lights up when hit with fluorescent light denims

Medical benefits to employees

Legal Labor laws

According to the above PESTEL, 161 years old company Strauss enhance the opportunity of
overseas market. Earlier CEO, Robert Bob Haas had spearheaded the COC, for o overseas
suppliers. It made to become the first fortune 500 CEO by extending the medical benefits for
their domestic partners.
Fast-fashion retailers made cheaper jeans which directly hit for the Levis market. Revenue with
$7.1 billion in 1996 sales, the company used to be bigger than Nike. By 2003, Levis revenues
had bell-bottomed out to $4.2 billion.
According to the analysis the marketing strategy should be more towards their financial
structure, which they might turn developing accordingly.

2. Porters Five Force Analysis

Barriers of entry

Product Differentiation

Threats of new entrants - high Brand Equity

Customer Loyalty

Price of substitutes

Threats of substitutes - high Substitute and varied products

Strong distribution channels

Bargaining power of suppliers - low Source materials on own rather globally

Price sensitivity

Bargaining power of buyers - high Substitute products

Low switching cost

Competition advantage

Industry rivals - high Advertising expenses

Wide range of products

The threats of new entrants is a similar factor in apparel, which it give more varieties and ranges that
enhance the retailers more opinions. The same time the lower rivals such as Lee & Wrangler began
nibbling away at market share and consumers defected to cheaper jeans sold by fast fashion retailers
like Zara and H&M.
Euro-monitor International data explains Levis has 12.5% slice of the US denim trade down from14.4% in
2004. Globally its share has fallen from 7.2% to 5.3% while Lee & Wrangler owned VF Corp is at its heels
and Tommy & Kelvin brands is rapidly increasing starting from 2010.

Bergh had his team respond by introducing the denim bar in the heart of most stores which helps
their customers figure what fit, style and fabric which will wash down well. When money rolls in 2013,
Levi was able to experienced double digit sales growth due to this bar concept in 2013.

Power of supplier increases by demanding more value and limiting the quality and without intend to
bear it from industry. Levi is on track to cut nearly 20% of its nonretail and nonmanufacturing
employees, roughly 800 positions. The company is also targeting its cumbersome supply chain.
participants From shopping bags to fabrics, Levi has long sourced most of its products regionally rather
than get a better price with a global buy. Bergh is in a plan to reduce its global vendors.

Among American men, Levis most important customers, there is a trend to greater formality at work.
They are wearing tapered trousers to the office rather than 501s. There is another more menacing trend
athleisure wearing gym kit as every time attire. Its main practitioners are women who would just as
soon lounge around in yoga pants as in jeans. Barclays estimates the domestic athletic apparel market
which is yoga pants and Lycra tops will increase from $70Bn to $100Bn by 2020. The bargaining power
of buyers will increases still Levis is not warm-up towards the developed market comparing to others.

Rivalry is getting high, among the apparel industry day by day compared to the recent past years.

Back in 2009 a team of consultants Levi had brought in had recommended that management grow
revenue by no less than 8% year, akin to some of the apparel companys largest competitors. Levi
quickly opened 400 new retail outlets and increased employee head count to 16,200 in 2010 and in the
same time expenses shot up by 15%.

Denim market overall that continues on its plodding course. In 2013, U. S denim sales were up just 2.6%
to 19.1 billion dollars and Euro-monitor predicts that annual growth will slow to as little as 1.2% by
2017. As said by Macys president Denim has been in a downward spiral but there is a growth to be
had in China & India. By analyzing above trends the competition is very high and Levi is putting all its
chips on the main board which is pricey by local standards.
3. SWOT Analysis

Strengths Weaknesses

Strong brand name and influence Focuses too much on brand protection.
Expertise and experience in the denim Limited business growth
industry. Complacency in coming up with innovative
Focus on things other than profits- designs for customers.
captioned profits through principles. Delays in trends such as coloured denims
Levis Strauss company has a visionary With 16200 employees, the company incurs
CEO high expenses in paying wages.
Denim bars

Opportunities Threats

The casual wear market is growing fast. Fast changing consumer tastes.
Internationalization into emerging markets Increasing competition from low end
Use of technology to create a tech- substitutes
advanced womens denim that fit Very close competition for market share
depending on body shape. with rivals targeting the same high end
Acceptability of western wears customer base.
Acceptability of western wears

According to Euro-monitor data even though Levi has downward trend in jeans, still Levis competes
having more market share rather than VF corps. The brand name with reputed customer base, high
quality and duration exist in the apparel field are the key strengths of Levis.

H&M, Zara, Kelvin and Tommy were market leaders the new entrance to the apparel, but they started to
drop down from 2000. Earlier the competition was relatively low in the jean market and also availability
of substitutes were low.
Levi executives, accustomed to a monopoly on the denim market, hardly noticed when young
fashionistas began trading in their Levis for cooler jeans. Today the company has a 12.5% slice of the
U.S. denim trade, down from 14.4% in 2004 while intent of focusing having branded materials.

The price ranges and varieties of products were able to capture Levis market authority.

4. Ansoff Matrix Analysis

Market Penetration Product Development

Increase repeat purchase New product introduction


Loyalty schemes Brand development
Existing Pricing strategies Differentiation in the products
market

New market Market Development Diversification

New product for a new customer


Demographic base, depending to their lifestyle
Pricing Strategy
Advertisements with concern

3. Recomendations
Levis should look further to enter into Asian countries such as China, Japan and India which have more
completion competing to Europe. The promotion campaign should be more according to technological
and innovative product verities for the next generation. This will have an impact for the customers to
have Levis, rather than historic trend.

According to ansoff matrix its recommended that Levis can use market development along with product
diversification in order to regain its status in the denim industry.

4. References

Levi Strauss: An international marketing investigation, Demetris Vrontis et al. (2004)