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By
Harshita Shrivastava (23)Shivani Bhatla (53)
Ankur Arora (111)
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• History of both Companies & maor milestones
• !esour"es# Capabilities &strate$i" ar"hite"ture
• %ynami" ie' of the "ompanies
• Stati" "ien"y*%ynami" "ien"y+,un"tuate-.uilibria
• Basis for Hori/ontal S"ope "hoi"es & mo-els ofCorporate 0ana$ement
• Hori/ontal nte$ration# erti"al nte$ration#Strate$i" utsour"in$ & %iversi4"ation Strate$ies
• Strate$i" rationale for A".uisitions*mer$ers if any
• Corporate Strate$y & Corporate A-vanta$e
• Strate$i" ssues to-ay & your re"ommen-ations
AGENDA
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he 6nite- Colors of Benetton (Benetton)# an talian base- "ompanyfoun-e- in 1785# empathi/e- bri$htly "olore- knit'ear9
urope:s lar$est "lothin$ manufa"turer an- 'orl-:s lar$est "onsumer of'ool in the $arment in-ustry9
,resente- all over the 'orl- spe"i4"ally in 12; "ountries 'ith 7manufa"turin$ fa"tories an- over 5;;; sales outlet all over the 'orl-
$eneratin$ 2 billion uros of retail sales
Available to youn$ an- ol- in "ombine- "olours an- stylish fashion9
Benetton is 'ell establishe- in the 6S an- Cana-a an- $ro'in$ in
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1785 • Born in ,on/ano eneto from the artisan knittin$ 'orkshop of the Benetton siblin$s
1788 • opene- its 4rst ?Benetton:s shop@ in Belluno an- "overe- all talian:s provin"e9
178 • opene- in ,aris #a 4rst step in the international e=pansion outsi-e taly9
1787 • irst line for ki-s
17; •
,ro-u"tion of eans an- velvet trousers# shirts an- +shirts
17D • =ten-e- by Sisley Bran- a--in$ a ne' tar$et to its "onsumer base
177 • irst sponsore- their lo"al ru$by team# A9S9 !u$by reviso
ISTORY & MILESTONES
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17;•
=pan-s sales in the Ameri"as (EF) an- in 172 in Asia (
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Levi:s Strauss & Co9 foun-e- in 153 in San ran"is"o# California + one ofthe 'orl-:s lar$est apparel manufa"turer bran-
Sol- in 11; "ountries in more than 55#;;; retail stores 'orl-'i-e
Mission > o sustain responsible "ommer"ial# su""ess as a $lobalmarketin$ "ompany of bran-e- apparel
Vision: o be a pioneer in the "lothin$ in-ustry 'ith "onstant innovationin -esi$n an- material9 ur pro-u"ts 'ill -e4ne .uality# style an-fun"tion9 e 'ill "loth the 'orl-9
Bran-,ortfolios
INTRODUCTION
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1
3
• A"hieve- monopoly po'er by pro-u"t -iMerentiation & entry barriers# also patent for
blue eans by 6S patent an- tra-emark o"e "alle- ?aist overalls ?
18
• 'o horse bran- leather pat"h 'as use- on 'aist overalls
17;1
• ,ants have t'o ba"k po"kets
17;
2
• Levi Strauss -ies at the a$e of 39 His nephe's inherit the business
172
• he "ompany re$isters the 'or- Levi:s as a tra-emark
1788
• he "ompany airs its 4rst television "ommer"ial
171
• LS&C9 be"omes a publi" "orporation
178
• %o"kers Nhakis are intro-u"e- in the 6nite- States9
1775
• LS&C9 pla"es Eo9 1 amon$ apparel 4rms an- Eo9 18 overall in ortune ma$a/ine
1778
• Levi:s inta$e Clothin$ is intro-u"e- $lobally
2;;;
• LS&C9 intro-u"es Levi:s n$ineere-
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RESOURCES &CAPABILITIESResources:
• Bran- name an- reputation
• nternational presen"e
• 3;; -esi$ners
• 'ns a "ommuni"ation resear"h "enter> abri"a
• 85;; store- 'orl-'i-e in 12; "ountries
C!"i#i$ies:
• n"rease- fo"us on outsour"in$ of manufa"turin$
• %yein$ postponement pro"ess
• ,artnership in hi$h te"h resear"h
• nnovative operations mana$ement te"hni.ues
• Automate- lo$isti"s an- -istribution fa"ilities
• Stron$ "ontra"tual arran$ements 'ith key suppliers aroun- the 'orl-
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RESOURCES &CAPABILITIESResources:
• Levi:s the 4rst bran- to "reate an- patent the 'orl-:s 4rst blue eans
• nternational presen"e
• 5#;;; tra-emark re$istrations
• Suberp !&% "enter in Corlu
• 55;;; stores 'orl-'i-e in 11; "ountries
C!"i#i$ies:
• ast %istribution Eet'ork aroun- the Klobe
• Supplier ,artnership
• Me"tive Competitive ,ri"in$ Strate$y
• Symbol of frontier in-epen-en"e# -emo"rati" i-ealism# so"ial"han$e an- fun
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DYNAMIC VIE%
Resource Endowments
• Brand Name
•Worldwide customers
•Strong Network of Stores
Resource
Commitment• Providing the
latest fashion to
it’s clients• Improving the
informationsstem
Activities
• Increased
focus on
outsourcing
manufacturing• !igh R"#
• Strong
contractual
arrangements
Dee#o!in'C!"i#i$ies
• Lo' "ost sour"in$• 0arket %evelopment• penin$ Ee' Stores
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DYNAMIC VIE%
Resource Endowments
•Brand Name
•$irst %over &dvantage
•Worldwide customers
•Strong Network of Stores
ResourceCo((i$(en
$• ,rovi-in$
hi$h .ualityapparels
• ,ro"essimprovementsto e"onomi/emanufa"turin$
Ac$ii$ies
• Bran-Buil-in$
• Superb !&%• ra-emarkin
$
Dee#o!in'
C!"i#i$ies
• Ba"k'ar- nte$ration• Lo"al "ustomi/ation
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E))ICIENCY*DYNAMICE))ICIENCY+PUNCTUATED
E,UILIBRIA• n the be$innin$# Benetton 'as only a small "ompany that 'aspro-u"in$ s'eaters for lo"al in-epen-ent retailers
• Shortly after the pro-u"tion of knit'ear# follo'e- the pro-u"tion ofshirts an- eans9 n
• the be$innin$ Benetton sol- them un-er -iMerent bran-s
• he be$innin$ of Benetton:s forei$n pro-u"tion "an be tra"e- ba"kto 172
• n 1775 'ith the -e"ision of taly to pe$ the Lira rate of e="han$eBenetton ha- to -elo"ali/e pro-u"tion
• n the be$innin$ of 2;;;# -ue to severe "ompetition Benetton ha-
to in"rease fo"us on outsour"in$ manufa"turin$9 Also it ha- to"han$e the stru"ture an- the number of "olle"tions + Sprin$#Summer# Autumn an- inter
• n 2;;# Benetton:s full pa"ka$e pro-u"tion represente-# in terms ofvolume# 398O
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STATIC E))ICIENCY*DYNAMICE))ICIENCY+PUNCTUATED E,UILIBRIA
• rom the early 178;s throu$h the mi- 17;s# Levi Strauss e=perien"e-si$ni4"ant $ro'th in its business e=perien"e- rapi- e=pansion of itsmanufa"turin$ "apa"ity from 18 plants to more than 83 plants in the6nite- States an- 25 overseas
• By the 177;s# the bran- 'as fa"in$ "ompetition from other bran-s an-"heaper pro-u"ts from overseas# an- be$an a""eleratin$ the pa"e of its6S fa"tory "losures an- its use of oMshore sub"ontra"tin$ a$reements
• he %o"kers bran-# laun"he- in 178 'hi"h is sol- lar$ely throu$h-epartment store "hains# helpe- the "ompany $ro' throu$h the mi-+177;s# as -enim sales be$an to fa-e9
• he "ompany took on multi+billion -ollar -ebt in ebruary 1778
• n 2;;2# Levi Strauss be$an a "lose business "ollaboration 'ith almart#pro-u"in$ a spe"ial line of PSi$natureP eans an- other "lothes fore="lusive sale in almart stores until 2;;8
• By 2;;# Levi Strauss 'as a$ain sai- to be pro4table after -e"linin$ salesin nine of the previous ten years9
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• Eor-i"a in 177
!eason + entry into the sportin$ $oo-s se"tor un-er BenettonSportsystem
• A".uire- various marketin$ "ompanies
•A/imut S9p9A9# Benair S9p9A9# an- Benlo$ S9p9A9!eason Q inte$rate $roup lo$isti"s
• uromer"ato# talyJs lea-in$ superstore "hain
• ierras %el Sur Ar$entino in 1771# be"omin$ the o'ner of 7;;thousan- he"tares of bree-in$ area for sheeps# for a totalpro-u"tion of over 8 million kilos of 'ool
• mportant te=tile an- knittin$ fa"tories throu$h the aliate-"ompany limpias that to-ay o'ns# in several talian provin"es#ten plants supplyin$ the maority of the ra' materials ne"essaryto the Kroup:s "lothin$ -ivision
AC,UISITIONS
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AC,UISITIONS
• Kreat estern Karment Co9 (KK)# a Cana-ian "lothin$
manufa"turer9 !eason + e=pan- the 4rmJs "lothin$ line by
a--in$ ne' fashions an- mo-els# in"lu-in$ stone+'ashe- eans
• CCC (Custom Clothin$ e"hnolo$y Corp9)# the soft'are"ompany that "reate- the te"hnolo$y for "ustom+4t blue eans
for 'omen in 17759 !eason + value+"hain+analysis an-
improvement
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DIVERSI)ICATION
•
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• penin$ of ri$inal 6CB stores
• Bou$ht interest in Kalli ilati
• Consoli-ate- interests in four suppliers of 'oolen an- "otton materials
• ?.uasi+verti"al inte$ration@
• Controlle- the 'hole value "hain from retailin$ to "lothin$ an- te=tile
manufa"turin$
• %e"i-e- pri"e pai- an- the $eneral terms of supply
• Sub"ontra"tors
o Lon$+term relationships base- on "ooperation an- trust
o !ene' an- in"rease the or-ers at every season
o A-vise about ne' ma"hines that 'ere most pro4table
o 4nan"ial assistan"e throu$h its leasin$ an- fa"torin$ "ompany9
VERTICAL INTEGRATION
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VERTICAL INTEGRATION
• penin$ of ri$inal Levi:s stores
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he Benetton su""ess has been ine=tri"ably linke- 'ith the -iMerent
types of innovation that ha- been -evelope- from the Kroup9 ,re"isely#-istin$uish itself by>•,ro-u"t innovation•,ro"ess innovation•r$ani/ational innovation
•PRODUCT INNOVATIONn the seventies Benetton: "ompetitive a-vanta$e 'as $roun-e- onpro-u"t innovations base- on the use of bri$ht "olours9 !i$ht from thebe$innin$# Benetton oMere- a ne' pro-u"t "hara"teri/e- by bri$ht"olors an- tar$ete- to youn$ people
ORPORATE ADVANTAGE
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•PROCESS INNOVATIONn 178D Benetton intro-u"e- the postponement te"hni.ue
that basi"allyreverse- the tra-itional -ye+4rst+knit+after mo-e into knit+4rst+-ye+after9
Spin or pur"haseyarn
%ye yarn
inish yarn
0anufa"ture$arments parts
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•ORGANISATION INNOVATION
• %istribution Strate$y• Communi"ation &
A-vertisin$• Iuasi+verti"al
inte$ration• %ual supply "hain
ORPORATE ADVANTAGE
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• ruly $lobal oneKlobal
• Same $arments are sol- throu$hout the 'orl-uniformity
•
supporte- heavily 'ith print me-ia usin$i-enti"al a-vertisements 'orl-'i-e,romotion
• Benetton "ontribute- to the "reation ofthe "asual style# tar$ete- at thebe$innin$ for youn$ people# but shortlyafter sprea- to other a$e $roups9
Se$mentation* tar$et
• Benetton a"hieve- the pro"ess of
hori/ontal inte$rationnte$ration
• he strate$y of total look 'as "omplete-'ith the intro-u"tion of pro-u"ts su"h asshoes# spe"ta"les# perfumes# 'at"hesan-# most re"ently# e'ellery9
%iversi4"ation
•a".uisitions# as in the "ase of?Cal/aturi4"io -i arese@ in 17#an- throu$h pro-u"tion li"en"es in
perfumes# spe"ta"les an-'at"hes9
0&A
CORPORATE
STRATEGY
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• o "ontain this risk# the Kroup maintains a strate$i" fo"us on pro-u"tionan- or$ani/ational e"ien"y poli"ies relate- to the pro"ess ofpro-u"tion -e"entrali/ation# "ompletion of pro-u"tion "y"les inoverseas units# an- or$ani/ational "ost re-u"tion9
Competitive pressure
• in"rease their investmentSales net'ork:s buy+in
• su"h as China an- n-ia# in"lu-in$ throu$ha$reements 'ith lar$e+s"ale retailers for the openin$of ?stores in stores@ in lar$e -epartment stores in thelar$est "ities
Ability to -evelop thebusiness in emer$in$
markets
• inRuen"e-# amon$st other thin$s# by businessoutlook# interest rates# ta=ation# lo"al e"onomi"
"on-itions# un"ertainty
Chan$es in "ustomerspen-in$ habits
• mo-erately "han$e their marketin$ strate$y an- itsreRe"tion in a-vertisin$ ima$es
Criti"ism a$ainst the"ompany
• "reate the fun-s for vi"tims of -omesti" violen"e -onate money to A%Sor$ani/ations# $ive a'ay "lothes to the thir- 'orl- "ountries# be"ome a
sponsor for "hil-ren 'ith -isabilities# even maybe "reate s"holarships for$ifte- but poor stu-ents et"
0aorly aMe"te- by
"ontroversial a-s
UES +- RECOMMENDATIONS
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,ro-u"t innovation
AMor-ability
Iuality in the pro-u"t
n"reasin$ -eman-
A-aptability 'ith "han$in$ timesLea-er in so"ial 'ork
oun-e- employee "ommitment pro$ram an- re-tab foun-ation
ORPORATE ADVANTAGE
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•n 173;# Levis survive- the $reat -epression•Consumer -eman- shifte- from -urability to fashion•Levis 'as issue- to employees in -efense in-ustry -urin$ orl- ar•Capture- -iMerent se$ments "apturin$ -iMerent -eman-s
•n 2;;2# Levis 'as rate- for no9 1 bran- for bran- a'areness &bran- retention•,romote- fre.uently musi" an- theatri"al pro-u"tions•A-s stresse- on youthfulness• o maintain revenue# intro-u"e- Levi:s Strauss si$nature eans•0a-e 5O of sales throu$h "hain & -epartmental stores
•Levi Strauss & Co9 unveile- its PKlobal Sour"in$ & peratin$Kui-elines#P establishin$ a "o-e of "on-u"t for all "ontra"tors 'homanufa"ture or 4nish LeviJs pro-u"ts# as 'ell as a "o-e for sele"tin$"ountries in 'hi"h to -o business•n 2;;2# ma-e a$reement 'ith al+0art
CORPORATE
STRATEGY
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•irst of all the Levi:s pro-u"ts are "onsi-ere- as the most -urablepro-u"t9 herefore that area is se"ure-9 But the areas 'hi"h levi:s la"ksare "omfort ability an- ine=pensiveness9•mprove sales an- rea"h their most valuable tar$et market# Levi shoul-sell eans -ire"tly to teena$ers9 Sin"e Levi ha- "ontra"tual -isa$reements'ith al+0art an- other ?bi$ bo=@ stores# the "ompany shoul- seekalternative routes
•or Levi# the "ompany shoul- rebran- their eans an- "reate a ne' store'ith an invitin$ atmosphere for people of all a$es# spe"i4"ally teena$ers•Levi "oul- "reate an online presen"e in so"ial me-ia plus an i,hone orAn-roi- base- $ame 'hi"h 'oul- allo' people to -o'nloa- a freeappli"ation 'hi"h 'oul- allo' "ustomers to "ustomi/e an- pur"hase eansan- oMer an intera"tive $ame
•Another threat "an be sta$nation of i-eas 'hi"h nee-s to be improve- by"onstant innovation• Lo'er -o'n its pri"es to some e=tent the sales volume "oul- bein"rease- to a very lar$e e=tent• Levi:s pays its ma=imum attention to the men:s 'ear9 Althou$h the'omen se"tion an- ki-:s se"tions are present but they are not full 4llin$
the re.uirements mu"hh ki-: i hi h i i h l- b i i
•irst of all the Levi:s pro-u"ts are "onsi-ere- as the most -urablepro-u"t9 herefore that area is se"ure-9 But the areas 'hi"h levi:s la"ks
are "omfort ability an- ine=pensiveness9•mprove sales an- rea"h their most valuable tar$et market# Levi shoul-sell eans -ire"tly to teena$ers9 Sin"e Levi ha- "ontra"tual -isa$reements'ith al+0art an- other ?bi$ bo=@ stores# the "ompany shoul- seekalternative routes•or Levi# the "ompany shoul- rebran- their eans an- "reate a ne' store'ith an invitin$ atmosphere for people of all a$es# spe"i4"ally teena$ers•Levi "oul- "reate an online presen"e in so"ial me-ia plus an i,hone orAn-roi- base- $ame 'hi"h 'oul- allo' people to -o'nloa- a freeappli"ation 'hi"h 'oul- allo' "ustomers to "ustomi/e an- pur"hase eansan- oMer an intera"tive $ame
•Another threat "an be sta$nation of i-eas 'hi"h nee-s to be improve- by"onstant innovation• Lo'er -o'n its pri"es to some e=tent the sales volume "oul- bein"rease- to a very lar$e e=tent• Levi:s pays its ma=imum attention to the men:s 'ear9 Althou$h the'omen se"tion an- ki-:s se"tions are present but they are not full 4llin$
the re.uirements mu"h•he ki-:s se"tion 'hi"h is ust in start shoul- be $iven attention to
ECOMMENDATIONS