Levi Strauss and Company is probably one of the most recognizable American brands which are well known all over the world. Obviously, it is a great success for the company with a great history that dates back to more than a century ago. Apparently, it is particularly important that a company that specializes in the production of clothes is so popular and recognized worldwide, especially nowadays when the US companies are associated with progressive and advanced technologies, creation of sophisticated and highly technological products, with the implementation of then-recent technological and scientific achievements.
Moreover, nowadays the competition from new markets, especially from developing countries, is constantly growing and the Levi Strauss and Company production face more obstacles on its way to both traditional and new markets. Nonetheless, the company is still competitive and remains among the leaders of the industry. Naturally, it is very important to discuss the history and the experience of the company to better understand the reasons for its success and its strength in the national as well as international market. In this respect, it worth to dwell upon not only the history of the company that is naturally very important but also it is necessary to discuss the current position of the company, its strategy, and basic objectives, products, etc. in order to more or less clearly define its perspectives in the future development of the market.
History of Levi Strauss and Company
Speaking of the Levi Strauss and Company, it is necessary to point out that since the day of its foundation the company specialized in the production of clothes. However, it became trendy and started to grow rapidly when its basic product, jeans, had started to be manufactured. In fact, the history of the creation of jeans is the history of the company as the recognizable international brand.
It should be pointed out that there were two individuals who played probably the most important role in the development of the company, they were the founder of the company Levis Strauss and one of its customers Jacob Davies, who later started to closely cooperate with the company. In this respect, it is first necessary to say a few words about the founder of the company Levi Strauss. He was born in Germany, notably Bavaria and arrived in the US in 1850 in San Francisco during the California’s gold rush. Like many other immigrants, he had a dream to become rich. Despite the fact that he did not find gold in California, he became rich and prosperous due to the product that substituted gold for him, jeans.
However, before Levi Strauss and Company had started to produce jeans, there were years when the company simply produced products that, as its founder hoped, were needed in the local market. Initially, he planned to manufacture and sell tents and covers for the Forty-niners that seemed to be quite perspective for the California market in the epoch of the gold, when the region was merely overcrowded by thousands of those who hoped to strike rich.
Unfortunately, the initial plan of the founder of Levi Strauss and Company to gain a strong position in the local market with tents and wagon covers failed. Nonetheless, Levi Strauss did not give up, and he changed his production line that indicates at his extremely flexible strategy and planning because he managed to refuse from the production of goods, which were not demanded in the local market. Instead, he started the production of particularly durable pants that, unlike tents and wagon covers, were much more popular in the local market. In such a situation, the materials he planned to use for different purposes, notably stout canvas, were beneficial in the production of durable tents.
The first years of the production of these pants revealed the fact that this product was particularly popular among the local population, especially miners who got used to buying them since it was the most suitable clothing items for their close to the ground line of work. The new product of the Levi Strauss and Company turned to be extremely popular, and the sales grew rapidly so that the company could hardly produce enough durable pants to supply the increased demand.
At the same time, it should be pointed out that durable pants produced by Levi Strauss and Company were not as durable as one would like to have. It was necessary to constantly mend these pants that were not very convenient for customers. In such a situation Jacob Davies invention turned to be very helpful and practically revolutionized the production of durable pants not only in the local market but the larger terms, if not to say worldwide. In fact, what he suggested was rather simple but it is necessary to briefly dwell upon the process of invention and its implementation because it is very important for better understanding of Levi Strauss and Company basic principles and strategic management.
So, it should be said that Jacob Davies was just one of Levi Strauss and Company’s customers. To put it more precisely he was a tailor who often purchased bolts of cloth from Levi Strauss and Company wholesale house. One of his customers kept buying fabric to reinforce ‘durable’ pants that were often tearing. In such a situation Jacob Davies turned to be a talented tailor who managed to find out the solution to this problem and make durable pants more durable. To put it more precisely, on profound reflections, he came to the idea that it was possible to use copper rivets to reinforce the points of strains, such as on the pocket corners and at the base of the button fly in traditional durable pants produced by Levi Strauss and Company.
Naturally, one may wonder why Jacob Tailor failed to implement his invention in his products and became rich without Levi Strauss and Company assistance. In this respect, it is necessary to point out that he had very limited resources to finance such a project because he simply did not have money to purchase the patent. In such a situation, he naturally suggested to his main supplier Levi Strauss and Company to participate in the project and invest money in this invention. Taking into the consideration the perspectives of the new technology of production of durable pants, Levi Strauss and Company could not fail to reject Jacob Davies’ suggestion. As soon as Levi Strauss accepted Jacob Davies offer, on May 20, 1874, they received the patent #139,121 from the United States Patent and Trademark Office and started the production of a new type of durable pants, which became recognizable worldwide as blue jeans manufactured by Levi Strauss and Company.
Apparently, it was a significant breakthrough in the production of durable pants that made Levi Strauss and Company one of the main leaders in the industry. At the same time, this fact revealed the efficiency of the company’s strategic management because it managed to forecast the perspective of the implementation of Jacob Davies’ innovation and invest money in the project which could change the production dramatically and which eventually brought the company to the probably the greatest success in its history. Also, the cooperation of Levi Strauss and Company with Jacob Davies indicate at its readiness to implement innovations that nowadays is one of the key conditions of the commercial success of any company.
As soon as Levi Strauss and Company started to produce blue jeans its popularity and, consequently, profitability got started to grow rapidly. However, it should be pointed out that the production of jeans, as it is perceived nowadays, had not been started in a day. Initially, the company started the production of denim overalls in the 1870s, while modern jeans began to appear only in 1920s. Nonetheless, it did not prevent the Levi Strauss and Company from growth and dominant position in the market.
Naturally, gradually new competitors of the company appeared in the market but Levi Strauss and Company had already gained a significant share of American and world market of jeans. Nonetheless, the 1990s were characterized by growing competition on the part of other brands, especially from developing countries, which could offer cheaper products of a relatively high quality.
The current situation and products
Obviously, the growing competition from the part of other brands creates certain problems for the further progress of Levi Strauss and Company in its attempts to gain new markets and increase its share in the markets where the company currently operates.
Nonetheless, to better understand the real position of the company in the market, it is necessary to dwell upon the current situation and company’s achievements.
First of all, it should be said that nowadays the company operates worldwide and it not simply sells its products in different countries but also develops local production there. It means that the company tends to the localization of the production in order to make its products more accessible for customers in different countries of the world and, consequently, the company receives a possibility to increase its competitiveness due to the use of cheaper labour force, for instance, that naturally decrease the final price of Levi Strauss and Company products.
In fact, it should be said that currently, the company operates in more than 110 countries of the world. Moreover, nowadays Levi Strauss and Company is the world’s number one producer of brand-name clothes. However, it is necessary to underline that the company enlarged its production. To put it more precisely, nowadays Levi Strauss and Company currently sells not only jeans, its historically basic product, but also the company sells sportswear and recently it has entered the market of men’s and women’s underwear and loungewear. It means that the company successfully attempts to adapt to new conditions in the market that indicates that its historical flexibility is sustained.
On the other hand, the diversification of the production is a natural result of a gradual decline of jeans production by Levi Strauss and Company because the company lost touch with the latest trends in recent years that naturally decreased the popularity of Levi’s jeans despite the popularity of its brand. The situation is deteriorated by rather a high price, especially compared to its competitors from developing countries.
In response to new challenges from the part of the competitors and certain lack of demand, or, to put it more precisely, the decrease of it, on Levi Strauss and Company’s jeans, the company had to change. In this respect, the historical experience of implementation of innovation turned to be very helpful because currently, the company attempts to cope with its problems using innovations, improvement, and diversification of its production. In fact, in recent years the company has transformed significantly, and it offers wrinkle-free and stain-resistant fabrics, which are used in the production of some of its Levi’s and Dockers slacks.
In such a way, the company evolves and is still rather flexible that permits it to remain successful and be the leader in the market. Probably, it is a typical feature of Strauss’ family because nowadays the company is headed by relatives of Levi Strauss, the Haas family. It means that traditions are kept that makes the company’s brand particularly reliable and popular among customers. It is strategically important in the contemporary world because the brand is extremely important for the company’s commercial success, constituting a part of a company’s value.
Not surprisingly that Levi Strauss and Company remains commercially successful and still tends to grow. For instance, in 2005 the year sales growth constituted 1.3% and was over $4,125 million, while its net income was $155.9 million, i.e., 413.2% of the growth of the year net income. Furthermore, it should be pointed out that the number of employees is also growing. To put it more precisely, in the 2005 year employee growth constituted 8.9% that is slightly optimistic trend indicating at the further perspectives of the company’s growth since it invests in its employees and new products that naturally keeps its current position rather strong.
Mission and strategy of Levi Strauss and Company
Naturally, neither past nor the current success of Levi Strauss and Company could be possible without successful strategic planning and management. It is obvious that the situation in the market is constantly changing and the company has to take into considerations these changes to sustain its positions.
In this respect, it worth to note that one of the main goals of Levi Strauss and Company is keeping progressing and gaining a larger share of the market worldwide. Practically it means that the company attempts to develop worldwide often using the localization of production. It is done rather successful because the company’s brand is recognized worldwide that makes its penetration in new markets much easier compared to its competitors from developing countries, which are often practically unknown for local customers. It is also very important to underline that the company pays a lot of attention to its employees and local communities where it operates or sells its products.
For instance, the company is particularly concerned about social issues related to its employees and the communities they live in. In fact one of the primary objectives of Levi Strauss and Company is to build up cooperation between all chains that are involved in the process of production and consumption of company’s products, from employees to consumers, to improve corporate citizenship worldwide.
Naturally, such strategic goals need proper and effective strategies for their achievements. In this respect, it worth to note that the general strategy of Levi Strauss and Company is based on four main principles, which are as follows: empathy, originality, integrity, and courage. Obviously, the historical development of the company indicates the fact that all of these principles have been successfully applied to the company’s work.
Obviously, the strategic principles of Levi Strauss and Company are very important because they provide the company with a possibility to be a leader in the industry. It is evident that it is necessary to be original enough to attract the attention of customers to its products and courageous to implement innovations, while empathy and integrity are needed for efficient work of the company’s employees who feel protected and united under Levi Strauss and Company’s brand.
Thus, taking into account all above mentioned, it is possible to conclude that Levis Strauss and Company, being a leading company in its segment of the market worldwide, has a long history and good perspectives in the future. It is the result of a successful strategic management based on the efficient principles, which provide the company with stability, ability to implement innovations, sustain progress, develop positive customer experience, and even to keep growing and gain new markets. As a result, it is possible to estimate that the company, founded by Levi Strauss would remain a sample of a successful company that keeps its traditions and achieves positive results due to effective strategic management.
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