Levis: A study on organizational behaviour

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Levis: A study on organizational behaviour

  1. 1. Levi Strauss & Co. A study of organizational behaviourCopyrights© reserved
  2. 2. Contents1. Introduction:............................................................................................................................. 32. Organizational Structure: ......................................................................................................... 4 2.1 Organizational Chart: ............................................................................................................. 43. Organizational Strategy: ........................................................................................................... 5 3.1 Global Strategy of Levis: ......................................................................................................... 5 3.2 Features of Levi’s Global Matrix Structure............................................................................. 64. 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: ................................................................................................................... 95. Environment: .......................................................................................................................... 10 5.1 Specific Environment: .......................................................................................................... 10 5.2 General Environment: .......................................................................................................... 106. Organizational change:........................................................................................................... 10 6.1 Cultural change .................................................................................................................... 10 6.2 Corporate – level changes .............................................................................................. 117. Innovation at LS&Co.: ............................................................................................................. 118. Employee Motivation: ............................................................................................................ 11 8.1 Awards and Recognition: ..................................................................................................... 11 8.2 Stress Management: ....................................................................................................... 129. Bibliography............................................................................................................................ 13 2
  3. 3. 1. Introduction:Levi Strauss & Co. (LS&Co.) is one of the world’s leading branded apparel companies with salesin 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 childrenunder the Levi’s, Dockers and Signature by Levi Strauss & Co. brands in markets around theworld. LS&Co. also licenses its trademarks in many countries throughout the world for a widearray 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 ofdistribution worldwide. The Company distributes its Levi’s and Dockers products primarilythrough chain retailers and department stores in the United States and primarily throughdepartment stores, specialty retailers and dedicated franchised stores abroad. The distributionof Signature by Levi Strauss & Co. products occurs primarily through mass channel retailers inthe 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 theAmericas, 4,400 in Europe, and 2,300 in Asia Pacific. 3
  4. 4. 2. Organizational Structure:Levi Strauss & Co. is a privately held, family owned company. The Haas family, relatives of LeviStrauss, owns the company. The internal structure of the company is functional.2.1 Organizational Chart: Fig. Internal Organizational Chart of Levi Strauss & Co., USLevi’s has a network structure where core competencies and design are centralized in Americaand strategic alliances for proper distribution are focused overseas (Jones, 2007). This structureand Levi’s organizational flexibility correlates with its transnational operations, which allows thecompany to build business and be profitable.Under its network structure, Levi’s forms a cluster of different partner organizations whoseactions are coordinated by contracts and agreements rather than through a formal hierarchy ofauthority. Agreements with many suppliers, manufacturers, and distributors are necessary asthe organization outsources many of the value creation activities involved in production andmarketing goods and services. 4
  5. 5. 3. Organizational Strategy:3.1 Global Strategy of Levis:Levi Strauss has a transnational strategy by which it seeks to reduce costs and providecustomer-responsiveness. Production facilities are located around the world to take advantageof low cost foreign labour. But the products are tailored to suit the local customers. Forexample, in Asia smaller sized jeans are offered. Special colours are offered in some countriesbased on customers’ choices. Foreign subsidiaries are responsible for marketing. Levi’s transfersknowledge to its subsidiaries. For e.g., marketing knowledge learned on Dockers’ in the U.S. wastransferred to Europe.To implement its transnational strategy, Levi Strauss uses a network structure. Design isperformed in the U.S. and foreign partners produce and distribute products. A partner will bereplaced 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 5
  6. 6. 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 activities4. Organizational Culture:Levi Strauss& Co. has an organic culture. Formal authority is frowned upon. There is a greatemphasis on task accomplishment and team work. The staff has better understanding ofproblems and willingness to solve them.4.1 Values and Vision:Levi Strauss & Co. has a clearly defined value and vision statement on its website. Thecompany’s focus on values also comes from its strong culture and commitment of its leadershiptowards values and ethics. Bob Haas once gave a long interview to the Harvard Business Reviewcalled "Values Make the Company." He delivered a keynote speech on business and ethics to theConference 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 believe4.2 Workplace Diversity:Levis is committed to fostering a culture where diversity and inclusion thrive – a workenvironment that provides every employee with the opportunity to achieve their potential andparticipate fully in building our brands and generating sustained, profitable growth. This is intandem with the transnational strategy of Levis. Levi’s customers, suppliers and business 6
  7. 7. partners span a broad spectrum of ages, ethnicities, cultures and lifestyles. A policy ofunderstanding the commonalities — and respecting the differences is followed.In 2007, Levis hired more than 11500 employees in 35 countries and sold its products in morethan 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 ‘HerProject’.4.2.2 Project Change:Levi Strauss & Co. launches “Project Change,” an initiative to address institutional racism inLS&CO. communities.4.3 Communication:Levis, as a multi cultural organization, developed excellent communication channel between themanagement and the employees. Efficient cross cultural communication guided the employeestowards achieving organizational goals.In 1926, for example, Levi Strauss & Co. was among the first U.S.-based companies to beginadvertising in Spanish, Portuguese and Chinese, reaching out to oft-neglected consumers andwinning new loyal fans4.4 Ethics:The Company maintained strict adherence to ethical standards since its inception. This wasdriven 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 businessaffairs responsibly, with the utmost integrity and in compliance with all applicable laws. It offersguidance to the employees on a host of potential business situations and emphasizes theimportance of making business decisions through the lens of the company’s core values. 7
  8. 8. 4.4.2 Global Anti-Bribery and Anti-Corruption PolicyThe Global Anti-Bribery and Anti-Corruption Policy provides additional, specific guidance on twocritical sections of the Worldwide Code of Business Conduct — Compliance with Laws, Rules andRegulations and Government Officials. Recognizing that anti-bribery and anti-corruption lawsvary 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 avoidsituations 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 theboard room.The Company’s Ethics and Compliance Reporting allows the employees worldwide to reportethics concerns anonymously, and company policies strictly prohibit retaliation against anyonefor raising or helping to address any issue related to the Worldwide Code of Business Conduct orthe 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 practicesconsistent with its policies. In addition to meeting acceptable general ethical standards,complying with all legal requirements and sharing Levi Strausss commitment to theenvironment and community involvement, the business partners must adhere to the followingemployment 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. 8
  9. 9.  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 facilitiesIn the 1990s, Levi-Strauss & Company found that some of its contractors in Bangladesh wereusing child labor consisting of children under 14 years old in its factories. One option they hadwas to demand that their contractors fire those children immediately. Yet, when they looked atthe situation more closely, they found that it was common for young children to be employed infactories, and in many cases these children were the sole breadwinners in the family. Firingthese children would have caused significant hardship for the families and could have pushedthe children into more dangerous working conditions. Therefore, Levi-Strauss reached anagreement to send the children back to school while continuing to receive their wages partlyfrom the contractor companies and partly from Levi-Strauss. The school expenses were met byLevi-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 humanrights 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 socialenvironment.4.5 CSR Activities:Levis has been pro-active in its CSR initiatives. The Levi Strauss Foundation was formed in 1952to 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 dismantlingstereotypes about women. In 1994, The Council on Economic Priorities selected LS&CO. to 9
  10. 10. receive the “America’s Corporate Conscience Award for International Commitment.” TheCouncil on Economic Priorities ranks LS&CO. number one out of 320 companies in a corporatesocial responsibility survey. LS&CO. receives an “A” rating in the categories of Charitable Giving,Disclosure, Family Benefits, Minority Advancement, Women’s Advancement and WorkplaceIssues.LS&CO. is one of the first companies to develop comprehensive HIV and AIDS education andhealth services for employees and their families. The company would become a global businessleader 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 andcompetitors had more impact on the company. With changing customer trends in the 1990s andLevi’s inability to respond appropriately led to plummeting sales. Also in the same period, thelong-term relationships of Levis with the likes of May Company and Federated became shackles.Competitors like Ralph Lauren, Calvin Klein, Tommy Hilfiger, Lee, Wrangler, Arizona, and CanyonRiver Blues were eating on Levi’s market share and ultimately forced Levi’s to rework itsstrategy.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 anincreasing youth population and lack of innovation/new products, Levi’s felt the need torestructure its processes. It was when Levi’s was changing its strategy, that it started usingtechnology 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 changeCulture change is difficult and time consuming because "culture" is rooted in the collectivehistory 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 10
  11. 11. discussions revealed that there were, indeed, hidden attitudes in the organization that were inconflict with its espoused values.Since that time, Levi-Strauss has worked hard to generate cultural change. The companydeveloped an "Aspiration Statement" including desired beliefs, attitudes, and behaviour. Thestatement specifies the company’s commitment to communication, ethical managementpractices, employee empowerment, and recognition for those who contribute to the mission ofthe 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 changesIn the late 1990s, LS&Co. was accused of losing touch with customers and lost significant marketshare to competition. In 1999, the company hired Phil Marineau, installing as its President andCEO a non family member for the second time in its history. Through innovative ideas like LeviStrauss Signature, he managed to ameliorate the situation. Under him, LS&Co., once known forits “Made in USA” association, closed the last of its US manufacturing plants and shiftedproduction entirely overseas.7. Innovation at LS&Co.:Levi Strauss encourages intrapreneurship. Intrapreneurship is about applying the values of anentrepreneur—learning, innovation, initiative, empowerment, ownership— to the task ofrunning 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 betweenliberating 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 withmarketing and logistics databases. On the retail front, Levi’s is investing in large stores to displaythe entire jeans collection. The company also keeps experimenting with store formats. Forinstance, it has just launched a new format (600-800 sq ft) which focuses only on jeans wear. Itchanges the look and feel of the stores in India every three to five years to keep it morecontemporary.8. Employee Motivation:8.1 Awards and Recognition:To keep the employees motivated, LS&Co. has a proper appraisal system in place. 11
  12. 12. Excellence Award:The Excellence Award is given annually to recognize “best in class” employees in each of ourthree regions. The award is given to employees and employee teams who help to further ourcompany’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 thecompany’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 thecompany a competitive edge. Winners receive the plaque at the annual awards ceremony and acash prize.8.2 Stress Management:Levi Strauss & Co. has an ongoing stress management program in which 1500 employees haveparticipated in an all day seminar. Relaxation techniques and self-motivation procedures aretaught. Examination of life goals, identification of harmful personality traits and behaviourmodification techniques are a part of the program. 12
  13. 13. 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 Levis 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 Levis the right fit’ article in Business Standard http://www.business-standard.com/india/news/innovations-give-levisright-fit/380548/ 13

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