Levis Case Study

LEVI STRAUSS & COMPANY CASE STUDY

Cevdet KIZIL

Master of Science in Organizational Leadership Program

1- Knowing that its managers are willing to trade off some economic efficiency in order to operate according to their collective view of what is “ethical”, would you buy shares of stock in this company? Why or why not?

First of all, I think we are experiencing a paradox in this situation. Because, the company is trading off economic efficiency in order to operate, but it’s a well known fact that economic efficiency is one of the factors which affects the price of stocks. On the other hand, let’s say the company did set economic efficiency as a priority and decided to close some of its plants. This will mean laying off several employees. Thus, the current condition really makes is tough to judge. However, I would still buy shares of stock in this company. Because, company reputation, image and responsibility are also effective factors. Furthermore, I believe that Levi Strauss & Company’s ethical view will help them to win in the long-run. They may experience losses and they may not make profits in a short period, but I think that company’s ethical view will also affect their stock price, profitability and brand in the long run. For example, Margery Kraus, President and CEO of APCO Worldwide also justify my opinions with her words “Play by your own rules and ethics. In the long run it will pay off”. As a result, because of all these reasons, I would buy shares of stock in Levi Strauss & Company.

2- Managers of Levi Strauss believe that they run an ethical company, but some critics view their liberal employment and benefits policies as immoral. These critics object to the policies because they’re inconsistent with the critics’ religious views. Analyze the pros and cons of an organizational culture that includes socially liberal employment policies that are viewed by some members of society (including potential employees and potential customers) as immoral.

It’s true that owning an organizational culture that includes socially liberal employment policies has some advantages and disadvantages. Despite the fact that liberal employment policies make it less risky and costly for companies to hire employees as well as bringing them flexibility in reassigning jobs, we should also have a look at the other side of the coin. The reason is that, liberal employment policies also cause high rates of unemployment and poverty. In other words, an organizational culture that includes socially liberal employment policies has some pros such as creating an attractive atmosphere for investment, fostering competition, attracting highly motivated employees and enabling outsourcing, but it also has some cons such as harming young employees, women, migrants and elderly people as well as leaving many jobless. As a result, members of society who view an organizational culture immoral which adopts social liberal employment policies may hesitate to apply and work in those organizations mentioned. Similarly, the potential customers can revert back. So, the companies can end up with having an undesirable image in the eyes of stakeholders. However, for some other part of the society and stakeholders, things can be much more different.

3- Suppose you are looking for a new job. You have two offers for similar positions – one at Nike and one at Levi Strauss. Both organizations have indicated that they would like you to work for a year in one of their offshore production plants somewhere in southeast Asia. The two salary offers are very similar, and in both companies you would be eligible for an annual bonus. The bonus would be based largely on the productivity of the production plant where you will be located. Which offer would you accept? Explain why. First of all, we should compare the two companies before giving our final decision. Levi Strauss is very sensitive about ethics, because they value honest, accurate and responsible advertising, they emphasize the importance of diversity and they are not discriminative in terms of hiring and promotion. Moreover, they are careful about workplace safety and privacy and they present many training and development opportunities. Wage and salary distribution are also fair. Furthermore, they show respect to the environment and they support donations. In the case of Nike, they are also ethics oriented in some issues. For instance, Nike’s eco-friendly shoe Nike Considered which is easy to recycle should be remembered in this context. In addition to this, it must be recalled that Nike has provided jobs in many parts of the World such as South Asia and that was very influential in terms of lowering the unemployment rate. On the other hand, Nike also has a negative reputation for years for being unethical. For example, Nike was criticized a lot for using child labor overseas. Plus, some still argue that Nike athletic shoes are over expensive and the company makes excessive profits by ignoring the economics of consumers. Consequently, I would accept the offer of Levi Strauss because they have a more superior history of ethics compared to Nike and the current scenario is still better for Levi Strauss in my opinion.
4- In recent years, Levi’s has not performed well financially. Sales began declining in 1996, and since then the company has closed more than 50 plants worldwide. Employment has gone from a peak of 37,000 employees to fewer than 10,000. There is no longer any jean production in North America. Do you think the company was living up to its vision when it laid off so many workers and contracted work to suppliers in 50 countries outside the United States?

My opinion on this issue is that Levi’s had no alternatives left other than laying off so many workers and contracting work to suppliers in 50 countries outside the United States. I don’t think they had a better choice, so they were required to make this move. What could they do when sales were going down and financial situation was getting weaker and weaker? If they did not take these actions, I do not believe that even these 10,000 employees could continue to work. At least, they did choose downsizing instead of accepting bankruptcy and did keep some jobs which could keep them alive against merciless competitors.

References :

American Univeristy. (2000). “TED Case Studies – Nike: Nike Shoes and Child Labor in Pakistan”. The Website of American University, Trade & Environment Database. http://www.american.edu/TED/nike.htm Anderson, S. & Cavanagh, J. (2004). “America’s Boom Industry: Outsourcing”.
The Website of Albion Monitor. http://www.albionmonitor.com/outsource/index.html CEO. (2006). “Emerging Markets: Strategies for Success – APCO: Return on Reputation (ROR)”. The Website of CEO (Chief Executive Officer). http://www.the-chiefexecutive.com/projects/emerging-markets/ Jackson, S.E. & Schuler, Randall S. (2005). “Levi Strauss & Company Case Study”.
Managing Human Resources Through Strategic Partnerships. 9th Edition. pp.75.

References: : American Univeristy. (2000). “TED Case Studies – Nike: Nike Shoes and Child Labor in Pakistan”. The Website of American University, Trade & Environment Database. http://www.american.edu/TED/nike.htm Anderson, S. & Cavanagh, J. (2004). “America’s Boom Industry: Outsourcing”. The Website of Albion Monitor. http://www.albionmonitor.com/outsource/index.html CEO. (2006). “Emerging Markets: Strategies for Success – APCO: Return on Reputation (ROR)”. The Website of CEO (Chief Executive Officer). http://www.the-chiefexecutive.com/projects/emerging-markets/ Jackson, S.E. & Schuler, Randall S. (2005). “Levi Strauss & Company Case Study”. Managing Human Resources Through Strategic Partnerships. 9th Edition. pp.75.