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................................. 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 5.
CSR Activities: .................................................................. .................................................................................................... ................................................. ............... 9
Environment: ............................................................... ................................................................................................. ........................................................... ......................... 10 5.1 Specific Environment: ................................................................ ................................................................................................... .......................................... ....... 10 5.2 General Environment: ..................................................... ...................................................................................... ..................................................... .................... 10
6.
Organizational change: ................................................ .................................................................................. ........................................................... ......................... 10 6.1 Cultural change ............................................................... ................................................................................................ ..................................................... .................... 10 6.2
Corporate – Corporate – level changes ............................................................... .............................................................................................. ............................... 11
7.
Innovation at LS&Co.: ....................................... ......................................................................... .................................................................... .................................... .. 11
8.
Employee Motivation: ........................................................................ .......................................................................................................... .................................... .. 11 8.1 Awards and Recognition: ................................................................................. ..................................................................................................... .................... 11 8.2
9.
Stress Management: .................................................. ................................................................................... ..................................................... .................... 12
Bibliography............................................................................................. ............................................................................................................................ ............................... 13
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1. Introduction: Levi Strauss & Co. (LS&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 under the Levi’s, 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 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, 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’ 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)
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 principles that set the standards for its employees’ behaviour: 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 6
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 c ompany’s core values. values.
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4.4.2 Global Anti-Briber Global Anti-Bribery y and Anti-Corruption 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 AntiCorruption 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 AntiCorruption Policy is mandatory for everyone at LS&Co. worldwide — from the back room to the board room. The Company’s Company’s Ethics and Compliance Reporting 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. 8
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 o f 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 9
LS&CO. to
receive the “America’s Corporate Conscience Award for International Commitment.” The 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 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 t rends 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 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 10
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, empowerment, and recognition for those who contribute t o 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 company hired Phil Marineau, Marineau, installing as its President President and CEO a non family member member for the second time in its history. 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 encourages intrapreneurship. intrapreneurship. Intrapreneurship is about applying applying the values of an entrepreneur— entrepreneur—learning, innovation, initiative, empowerment, ownership— 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 masscustomization 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 s tores 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 cost-saving measures, coming up with creative ideas for promoting products at the retail level— 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, 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 “ How Levi's Trashed a Great American Brand” Brand”
http://www.levistrauss.com/
‘The Ten Ironies of Motivation’ Motivation’ article by Bob Nelson http://www.gov.ns.ca/psc/pdf/employeeC http://www.gov.ns.ca/ps c/pdf/employeeCentre/recognition/toolkit/step1 entre/recognition/toolkit/step1/Ten_Ironies_ /Ten_Ironies_ of_Motivation.pdf
‘Innovations give Levi's the right fit’ fit’ article in Business Standard http://www.business-standard.com/india/news/innov http://www.business-stand ard.com/india/news/innovations-give-levisright-fit/380 ations-give-levisright-fit/380548/ 548/
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