Levi's "Personal Pair" Jeans (A) case study discusses the implementation of the custom-fitted jeans offering of Levi Strauss which changed the traditional value chain for clothing manufacturing and retailing.
William Lawler; John K. Shank; Lawrence Carr
Harvard Business Review (BAB020-PDF-ENG)
December 01, 1998
Case questions answered:
- What is Levi’s strategy?
- Where is Levi’s on spectrums of differentiation and cost leadership?
- What are the other important elements of Levi’s strategy? Would these change under CCTC’s proposal?
- How is Levi’s able to differentiate?
- Which source(s) of differentiation is relevant?
- Which of Levi’s capabilities/resources are most important for maintaining a differentiation advantage?
- Evaluate the external environment and its strategic implications at two levels:
o Broader industry: apparel manufacturers
o Specific industry: jeans manufacturers
- How attractive is its industry what are the key industry forces and success factors?
- Do any major manufactures of jeans (with substantial market share) have broader product offerings (e.g. jeans < 50% of total revenue)
- Should Levi widen their offerings (if so to where) based on the analysis of its competitors (both those who are focused and diversified)
- What does the value chain look like for Levi’s with & without the CCTC offer?
- How else could Levi’s adjust its participation in the value chain?
- Evaluate potential outcomes – Do Levi’s resources/capabilities support implementing CCTC’s offer; what are the strategic and financial upside and downside and how certain are the outcomes
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Case answers for Levi's "Personal Pair" Jeans (A)
Levi’s “Personal Pair” Jeans (A) Case Study
Levi’s employs a differentiation strategy to gain a competitive advantage over its competitors. The company has established a brand of products that are unique and authentic, and buyers are willing to spend more in order to purchase their products. (Barney & Hesterly PC 2-7). Differentiation is a competitive strategy according to Michael Porter.
Levi’s, while differentiating its products, still offered a better price than other premium providers capitalizing on the brand and advertising to make sales instead of engaging in price wars (Tanwar 14). They are the best price provider segment incorporating a hybrid of both cost leadership and differentiation strategies.
With increasing competition, it needs to create valuable features to differentiate its products from those of competitors (Barney & Hesterly PC 2-8). They also have to apply technology in the innovation of these features in order to reduce costs and perhaps increase their profit made from sales.
CCTC’s proposal offers the technology necessary for this change. They were capable of mass customization which would enable Levi’s to compete favorably with other companies that produced products large scale and could sell at a low cost.
Levi’s under this proposal would be able to customize jeans to suit the individual customer’s taste and preference for fitting jeans. Originally it had just established itself through its marketing as a reliable brand for quality jeans and other material clothing.
In table 5.2 captured in Strategic Management and Competitive Advantage, the following are relevant sources of differentiation: product mix, product features, product customization, product complexity, links with other firms, links between functions, timing, location, and the company’s reputation.
In Levi’s case, they managed to differentiate themselves by customizing the product and creating a brand reputation of satisfying specific customer needs.
In order to maintain a sustainable competitive advantage through differentiation, Levi’s management had to outsource the customizing function to CCTC which would then translate customers’ specifications into a mass production model easy to implement.
Both CCTC and Levi’s will incur costs to implement this change but being shared they would be relatively cheaper. This technology plus their strategically located stores and skilled well-motivated labor will be very important in ensuring that competitive advantage is maintained.
The external environment of an organization affects influences the forces that influence a company’s competitive advantage. A change in labor laws, for example, would affect jeans manufacturers who use exploitative labor practices to reduce costs of production.
As manufacturers organizations also have to be socially conscious and should not be seen to employ exploitative strategies. Growth in information and technology has affected all industries including apparel manufacturers.
The increasing use of internet-based technology has made it…