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Levi's Case Analysis

Yi Li MGT409-001 Levi’s at Wal-Mart Background/ Problem statement Levi’s is a popular American clothing brand with its specialty at producing different levels of jeans to suit diverse clientele. Levi’s had experience a business blooming from 1950s to early 1990s. However, started from 1996, since the merging of different competitors from low-cost jeans to high end jeans, Levi’s jeans appeared to be a mediocre brand in front of the public. In order to bring declining business back to live and create revenue, Levi’s CEO Marineau started to think about enter a new market to achieve this goal. The strategic issue in this case is whether Levi’s should enter into Wal-Mart’s clothing department in order to retain competitive advantage. SWOT Analysis- Strength: Levi’s provides mass production with different styles, body shapes and price range that can reach to diverse customers. Levi’s has a high brand recognition, awareness and retention compare to its competitors Strong public appearance with intergraded marketing approach Weaknesses: Levi’s is in a dilemma situation in between high-end jeans such as Ralph Lauren and low-cost jeans such as JC Penny’s private brand. Ranging from $30-$50 a pair, Levi’s but did not reach the ideal high end brand image the company wanted to achieve. Company is in deep financial cut from 1996, Levi’s has reduced head count by 33%. Offshoring production did not create a low-cost advantage instead created more debt and burden for the company Opportunities: As mentioned, 2002 will be an “interesting” year which the jeans market was expected to grow 2% to 3%, which give Levi’s a new opportunity to grow and explore new markets. There are other fast growing department and retail stores Levi’s could explore and partner with such as K-mart, Target and so on. Threats: Increasing competition from other brands with same level/ price such A&F and from low cost brand such as Walmart and JC Penny’s private brands. Entering into Walmart or other fast chain retail store can only fulfill short term earning but threaten long- term business goals. Recommendations: Enter into mass merchandise market, which means partnering with Walmart to sell lower brand Levi’s jeans. Meanwhile, create a special stage in Walmart for promotion to attract customers’ attention. Separating the Levi’s high end brand image from mass merchandise brand such as those in Walmart by naming them differently. Start manufacturing domestically in order to create a concept of “Made in USA”. Integration/ Justification: By entering Walmart, Levi’s can have a competitive advantage by selling mass lower cost jeans with high brand recognition from customers. In starting manufacturing back in the US, Levi’s can create the concept of “American made” in order to ensure quality of the jeans and attract more customers. In separating its high end brand image from the low-ends, Levi’s can create competitive advantage in both market to ensure splitting revenue earning and stable market share.