1. Levi Strauss & Co
Session 6

2. The Situation
Should LS&Co continue sourcing and purchasing fabric in China
Should the company make direct investments in marketing and manufacturing venues in China

3. Background LS&Co traced its roots to 1850s
Early success producing and selling canvas trousers to miners during the gold rush
Strong brand identity-synomous with jeans
Company went public in 1971
Experienced a difficult times in ‘80s
Executed a LBO in the 1985, by 1993, 95% of shares were owned by the descendants and certain non-family members

4. Backround (Cont’d)
In the ’90s-Shifted from being a just a manufacturer to a marketer
Jeans epitomized much of American cultures: freedom, originality, youthfulness

5. Internal Context Marketed its clothes in more than 60 countries
Production and distribution in more than 20 countries
Enjoyed a market cap of $5.5B in 1993
Strong international sales in the ‘80s and early ‘90s
Market leader in every country where LS&Co jeans were sold

6. Internal Context (Cont’d)
By 1993-Shifted from companied owned manufacturing to about a half of its production outsourced and offshored
Faced significant criticism for closing U.S. plants and offshoring and outsourcing
With changing customer tastes-sought to speed the introduction of new products and shorten the customer service supply chain

7. Internal Context Faced increased scrutiny from employees and customers
Was the company doing the right thing?

8. External Context
Trade Issues were source of significant concern in America
Trade friction with Japan was at its most serious point ever
Media and unions were increasingly raising concerns about working conditions in Asia

9. Core Values Core values- How we do things around here
Values were use to align the firm’s strategy, people, and resources
Focused on creating a culture that employees and customers could be proud of
Wanted employees to bring their whole self
Responsible “commercial success”
Moved to principles-based code of ethics and statement of social responsibility

10. Core Values (cont’d) Adopted the “principled reasoning approach”
Define the problem
Agree on the principles to be satisfied
High-impact and high influence stakeholders
Brainstorm possible solutions
Test the consequences
Develop an ethical process for implementation
Linked compensation to the new way of doing things

11. The Saipan Incident
What was it?
What was the impact?

12. Business Partner Engagement
What?
Why?

13. The China Situation Opportunity Challenges Human Rights
Intellectual Property
MFN
Engage or Withdraw?