LEVI STRAUSS & COMPANY CASE STUDY

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					                     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.

				
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