Levi Strauss & Co.

A study of organizational behaviour

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Contents
1. Introduction:............................................................................................................................. 3
2. Organizational Structure: ......................................................................................................... 4
2.1 Organizational Chart: ............................................................................................................. 4
3. Organizational Strategy: ........................................................................................................... 5
3.1 Global Strategy of Levis: ......................................................................................................... 5
3.2 Features of Levi’s Global Matrix Structure............................................................................. 6
4. Organizational Culture: ............................................................................................................ 6
4.1 Values and Vision: ............................................................................................................. 6
4.2 Workplace Diversity:......................................................................................................... 6
4.2.1 Her Project: ............................................................................................................... 7
4.2.2 Project Change: ......................................................................................................... 7
4.3 Communication: ............................................................................................................... 7
4.4 Ethics:................................................................................................................................ 7
4.4.1 Worldwide Code of Business Conduct: ........................................................................... 7
4.4.2 Global Anti-Bribery and Anti-Corruption Policy .............................................................. 8
4.4.3 Business Partner Terms of Engagement: ........................................................................ 8
4.4.4 Country Specific Guidelines:............................................................................................ 9
4.5 CSR Activities: ................................................................................................................... 9
5. Environment: .......................................................................................................................... 10
5.1 Specific Environment: .......................................................................................................... 10
5.2 General Environment: .......................................................................................................... 10
6. Organizational change:........................................................................................................... 10
6.1 Cultural change .................................................................................................................... 10
6.2 Corporate – level changes .............................................................................................. 11
7. Innovation at LS&Co.: ............................................................................................................. 11
8. Employee Motivation: ............................................................................................................ 11
8.1 Awards and Recognition: ..................................................................................................... 11
8.2 Stress Management: ....................................................................................................... 12
9. Bibliography............................................................................................................................ 13

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1. Introduction:
Levi Strauss & Co. (LS&Co.) is one of the world’s leading branded apparel companies with sales
in more than 110 countries. The Company designs and markets jeans and jeans-related pants,
casual and dress pants, tops, jackets and related accessories for men, women and children
under the Levi’s, Dockers and Signature by Levi Strauss & Co. brands in markets around the
world. LS&Co. also licenses its trademarks in many countries throughout the world for a wide
array of products, including accessories, pants, tops, footwear, home and many other products.

LS&Co. products are sold in more than 60,000 retail locations through multiple channels of
distribution worldwide. The Company distributes its Levi’s and Dockers products primarily
through chain retailers and department stores in the United States and primarily through
department stores, specialty retailers and dedicated franchised stores abroad. The distribution
of Signature by Levi Strauss & Co. products occurs primarily through mass channel retailers in
the United States and mass and other value-oriented retailers and franchised stores abroad.

The Company employs approximately 11,400 people, 4,700 of whom are located in the
Americas, 4,400 in Europe, and 2,300 in Asia Pacific.

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2. Organizational Structure:
Levi Strauss & Co. is a privately held, family owned company. The Haas family, relatives of Levi
Strauss, owns the company. The internal structure of the company is functional.

2.1 Organizational Chart:

Fig. Internal Organizational Chart of Levi Strauss & Co., US

Levi’s has a network structure where core competencies and design are centralized in America
and strategic alliances for proper distribution are focused overseas (Jones, 2007). This structure
and Levi’s organizational flexibility correlates with its transnational operations, which allows the
company to build business and be profitable.

Under its network structure, Levi’s forms a cluster of different partner organizations whose
actions are coordinated by contracts and agreements rather than through a formal hierarchy of
authority. Agreements with many suppliers, manufacturers, and distributors are necessary as
the organization outsources many of the value creation activities involved in production and
marketing goods and services.

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3. Organizational Strategy:

3.1 Global Strategy of Levis:

Levi Strauss has a transnational strategy by which it seeks to reduce costs and provide
customer-responsiveness. Production facilities are located around the world to take advantage
of low cost foreign labour. But the products are tailored to suit the local customers. For
example, in Asia smaller sized jeans are offered. Special colours are offered in some countries
based on customers’ choices. Foreign subsidiaries are responsible for marketing. Levi’s transfers
knowledge to its subsidiaries. For e.g., marketing knowledge learned on Dockers’ in the U.S. was
transferred to Europe.

To implement its transnational strategy, Levi Strauss uses a network structure. Design is
performed in the U.S. and foreign partners produce and distribute products. A partner will be
replaced if it doesn’t meet Levi’s standards.

Levi Strauss Levi Strauss Levi Strauss

Americas Europe, Mid East, Asia Pacific
(LSA) San Africa (LSEMA) Division (APD)
Francisco Brussels Singapore

Levi’s

Dockers

Signature Levi
Strauss & Co.

Denizen

= Individual Business Unit

Fig. Global Matrix Structure of Levi’s Transnational Strategy

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3.2 Features of Levi’s Global Matrix Structure
 Lowers global cost structures
 Differentiates activities through superior innovation and responsiveness to global
customers
 Managers at the regional or country level control local operations
 Company’s corporate product groups are grouped by world region
 Decentralizes control to overseas managers
 Corporate managers exert centralized control to coordinate company’s global
activities

4. Organizational Culture:
Levi Strauss& Co. has an organic culture. Formal authority is frowned upon. There is a great
emphasis on task accomplishment and team work. The staff has better understanding of
problems and willingness to solve them.

4.1 Values and Vision:

Levi Strauss & Co. has a clearly defined value and vision statement on its website. The
company’s focus on values also comes from its strong culture and commitment of its leadership
towards values and ethics. Bob Haas once gave a long interview to the Harvard Business Review
called "Values Make the Company." He delivered a keynote speech on business and ethics to the
Conference Board.

The following are the guiding principles that set the standards for its employees’ behaviour:

 Empathy — walking in other people’s shoes

 Originality — being authentic and innovative
 Integrity — doing the right thing
 Courage — standing up for what we believe

4.2 Workplace Diversity:

Levis is committed to fostering a culture where diversity and inclusion thrive – a work
environment that provides every employee with the opportunity to achieve their potential and
participate fully in building our brands and generating sustained, profitable growth. This is in
tandem with the transnational strategy of Levis. Levi’s customers, suppliers and business

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partners span a broad spectrum of ages, ethnicities, cultures and lifestyles. A policy of
understanding the commonalities — and respecting the differences is followed.

In 2007, Levis hired more than 11500 employees in 35 countries and sold its products in more
than 110 countries. This diversity also promotes innovation within the organization.

Some of the projects aimed at promoting workplace diversity are:

4.2.1 Her Project:

Levi Strauss & Co. supports women apparel workers in developing countries through the ‘Her
Project’.

4.2.2 Project Change:

Levi Strauss & Co. launches “Project Change,” an initiative to address institutional racism in
LS&CO. communities.

4.3 Communication:
Levis, as a multi cultural organization, developed excellent communication channel between the
management and the employees. Efficient cross cultural communication guided the employees
towards achieving organizational goals.

In 1926, for example, Levi Strauss & Co. was among the first U.S.-based companies to begin
advertising in Spanish, Portuguese and Chinese, reaching out to oft-neglected consumers and
winning new loyal fans

4.4 Ethics:
The Company maintained strict adherence to ethical standards since its inception. This was
driven by a strong company culture, leadership and values.

4.4.1 Worldwide Code of Business Conduct:

LS&Co.’s Worldwide Code of Business Conduct is directed at managing the company’s business
affairs responsibly, with the utmost integrity and in compliance with all applicable laws. It offers
guidance to the employees on a host of potential business situations and emphasizes the
importance of making business decisions through the lens of the company’s core values.

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4.4.2 Global Anti-Bribery and Anti-Corruption Policy

The Global Anti-Bribery and Anti-Corruption Policy provides additional, specific guidance on two
critical sections of the Worldwide Code of Business Conduct — Compliance with Laws, Rules and
Regulations and Government Officials. Recognizing that anti-bribery and anti-corruption laws
vary by jurisdiction and are not always easy to understand, the Global Anti-Bribery and Anti-
Corruption Policy is designed to help LS&Co. employees worldwide to identify and avoid
situations that may potentially violate ethics laws.

Compliance with the Worldwide Code of Business Conduct and the Global Anti-Bribery and Anti-
Corruption Policy is mandatory for everyone at LS&Co. worldwide — from the back room to the
board room.

The Company’s Ethics and Compliance Reporting allows the employees worldwide to report
ethics concerns anonymously, and company policies strictly prohibit retaliation against anyone
for raising or helping to address any issue related to the Worldwide Code of Business Conduct or
the Global Anti-Bribery and Anti-Corruption Policy.

4.4.3 Business Partner Terms of Engagement:

Levi Strauss & Co. selects business partners that follow workplace standards and practices
consistent with its policies. In addition to meeting acceptable general ethical standards,
complying with all legal requirements and sharing Levi Strauss's commitment to the
environment and community involvement, the business partners must adhere to the following
employment guidelines

 Wages and benefits: business partners must comply with any applicable law and
the prevailing manufacturing and finishing industry practices.
 Working hours: partners must respect local legal limits on working hours. Employees
should also have at least one day off per week.
 Child labour: use of child labour is not permissible in any of the facilities of the
business partner. Workers must not be below 15 years of age or below the
compulsory school age
 Disciplinary practices: Levi Strauss will not use business partners who use
corporal punishment or other forms of physical or mental coercion.

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  Prison/forced labor: no prison or forced labor is to be used by business partners
nor will Levi Strauss use or buy materials from companies using prison or forced
labor.
 Freedom of association: the rights of workers to join unions and to bargain
collectively must be respected.
 Discrimination: while respecting cultural differences, Levi Strauss believes workers
should be employed on the basis of their ability to do their job
 Health and safety: Levi Strauss undertakes to use business partners who provide a
safe and healthy working environment and, where appropriate residential facilities

In the 1990s, Levi-Strauss & Company found that some of its contractors in Bangladesh were
using child labor consisting of children under 14 years old in its factories. One option they had
was to demand that their contractors fire those children immediately. Yet, when they looked at
the situation more closely, they found that it was common for young children to be employed in
factories, and in many cases these children were the sole breadwinners in the family. Firing
these children would have caused significant hardship for the families and could have pushed
the children into more dangerous working conditions. Therefore, Levi-Strauss reached an
agreement to send the children back to school while continuing to receive their wages partly
from the contractor companies and partly from Levi-Strauss. The school expenses were met by
Levi-Strauss and the children were promised work when they were older.

4.4.4 Country Specific Guidelines:

Levi Strauss decided to cease its engagement in China in the early 1990s, largely on human
rights grounds. Country assessment is done based on such considerations as: human rights,
health and safety of workers, working conditions, legal system and political, economic and social
environment.

4.5 CSR Activities:

Levis has been pro-active in its CSR initiatives. The Levi Strauss Foundation was formed in 1952
to coordinate the company’s charitable giving.

The Child Care Fund was created in 1991 to help LS&CO. plant employees with child care.
Levi’s “Women Breaking the Mold” ad broke new ground in American advertising by dismantling
stereotypes about women. In 1994, The Council on Economic Priorities selected LS&CO. to

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receive the “America’s Corporate Conscience Award for International Commitment.” The
Council on Economic Priorities ranks LS&CO. number one out of 320 companies in a corporate
social responsibility survey. LS&CO. receives an “A” rating in the categories of Charitable Giving,
Disclosure, Family Benefits, Minority Advancement, Women’s Advancement and Workplace
Issues.
LS&CO. is one of the first companies to develop comprehensive HIV and AIDS education and
health services for employees and their families. The company would become a global business
leader in the fight against HIV/AIDS.

5. Environment:

5.1 Specific Environment:

The specific environment of Levi Strauss & Co. would comprise- customers, suppliers,
distributors, government, union and competitors. Of these, the customers, foreign partners and
competitors had more impact on the company. With changing customer trends in the 1990s and
Levi’s inability to respond appropriately led to plummeting sales. Also in the same period, the
long-term relationships of Levi's with the likes of May Company and Federated became shackles.
Competitors like Ralph Lauren, Calvin Klein, Tommy Hilfiger, Lee, Wrangler, Arizona, and Canyon
River Blues were eating on Levi’s market share and ultimately forced Levi’s to rework its
strategy.

5.2 General Environment:

The General environment includes demographic and cultural forces, international forces,
political forces, technological forces, environmental and economic forces. Demographic forces,
technological forces and international forces have had a more direct bearing on Levi’s. With an
increasing youth population and lack of innovation/new products, Levi’s felt the need to
restructure its processes. It was when Levi’s was changing its strategy, that it started using
technology heavily. Levi’s started using CAD (Computer Aided Designing) and IT in a big way.
Also in the 1990s Levi’s quit the Chinese market due to concerns of human rights violation.

6. Organizational change:

6.1 Cultural change

Culture change is difficult and time consuming because "culture" is rooted in the collective
history of an organization, and because so much of it is below the surface of awareness.

In 1985, a group of minority and women managers requested a meeting with the CEO,
complaining of discrimination. The CEO convened a three-day facilitated retreat at which white,
male managers engaged in intense discussions with minority and female managers. These

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discussions revealed that there were, indeed, hidden attitudes in the organization that were in
conflict with its espoused values.

Since that time, Levi-Strauss has worked hard to generate cultural change. The company
developed an "Aspiration Statement" including desired beliefs, attitudes, and behaviour. The
statement specifies the company’s commitment to communication, ethical management
practices, employee empowerment, and recognition for those who contribute to the mission of
the company.

Employees at all levels also participate in training sessions on leadership, diversity, and ethics.
Employee evaluations are based partially on how well they support the "Aspiration Statement."

6.2 Corporate – level changes

In the late 1990s, LS&Co. was accused of losing touch with customers and lost significant market
share to competition. In 1999, the company hired Phil Marineau, installing as its President and
CEO a non family member for the second time in its history. Through innovative ideas like Levi
Strauss Signature, he managed to ameliorate the situation. Under him, LS&Co., once known for
its “Made in USA” association, closed the last of its US manufacturing plants and shifted
production entirely overseas.

7. Innovation at LS&Co.:
Levi Strauss encourages intrapreneurship. Intrapreneurship is about applying the values of an
entrepreneur—learning, innovation, initiative, empowerment, ownership— to the task of
running a leading-edge corporation.

As Bob Haas, Levi Strauss CEO, says, “We are not doing this because it makes us feel good,
although it does. … We are doing this because we believe in the interconnection between
liberating the talents of our people and business success.”

Innovation started on both customer side and process side. The Original Spin mass-
customization process is built around a computer-aided design (CAD) system linked with
marketing and logistics databases. On the retail front, Levi’s is investing in large stores to display
the entire jeans collection. The company also keeps experimenting with store formats. For
instance, it has just launched a new format (600-800 sq ft) which focuses only on jeans wear. It
changes the look and feel of the stores in India every three to five years to keep it more
contemporary.

8. Employee Motivation:

8.1 Awards and Recognition:

To keep the employees motivated, LS&Co. has a proper appraisal system in place.

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Excellence Award:
The Excellence Award is given annually to recognize “best in class” employees in each of our
three regions. The award is given to employees and employee teams who help to further our
company’s vision while contributing to our strategic and annual operating plans.

Worldwide Koshland Award:

At Levi Strauss & Company, based in San Francisco, employees nominate one another for the
company’s Koshland Award for showing initiative, taking risks, generating cost-saving measures,
coming up with creative ideas for promoting products at the retail level—anything that gives the
company a competitive edge. Winners receive the plaque at the annual awards ceremony and a
cash prize.

8.2 Stress Management:

Levi Strauss & Co. has an ongoing stress management program in which 1500 employees have
participated in an all day seminar. Relaxation techniques and self-motivation procedures are
taught. Examination of life goals, identification of harmful personality traits and behaviour
modification techniques are a part of the program.

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9. Bibliography
 Organizational Theory, Design, And Change, 5/E - Gareth R Jones, Mary Mathew
 The Business of changing the World - Marc Benioff, Carlye Adler
 Article from Fortune magazine April 12, 1999: “How Levi's Trashed a Great American
Brand”
 http://www.levistrauss.com/
 ‘The Ten Ironies of Motivation’ article by Bob Nelson
http://www.gov.ns.ca/psc/pdf/employeeCentre/recognition/toolkit/step1/Ten_Ironies_
of_Motivation.pdf
 ‘Innovations give Levi's the right fit’ article in Business Standard
http://www.business-standard.com/india/news/innovations-give-levisright-fit/380548/

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