Levi Strauss & Company has been around for
nearly 150 years. Well known for its Dockers and
501 jeans, the firm has also been recognized for its
commitment to social values. Indeed, when Levi
Strauss first issued stock to the public in 1971, it took the unusual
step of warning potential investors that the company’s
dedication to social activism was so deep that it might compromise
Levi Strauss’ words and actions continually reflect this
strong devotion to social causes. In 1987, CEO Bob Haas developed
the company’s Mission and Aspiration Statement,
which highlighted an emphasis on diversity, teamwork, and integrity.
A few years later, the company created a 10-day
course for employees that focused on ethical decision making.
As one of the course developers put it: “It was about asking,
‘How do I find meaning in the workplace?’ It was about seeing
that work is noble, that we’re more than getting pants out
on its business decisions. For example, it withdrew its investments
in China to protest human rights violations. This action
contrasted sharply with those of most other companies, which
continued making investments in China in order to enhance
Levi Strauss has received considerable praise and numerous
awards for its vision, and until recently, the company was able
to practice social activism while maintaining strong profitability.
However, the company’s profitability has fallen recently,
causing many to argue that it must rethink its vision if it is to
survive. In the face of huge losses, it is not surprising that tension
has arisen between the conflicting goals of social activism
and profitability. Peter Jacobi, who recently retired as president
of Levi Strauss, summarized this tension when he was quoted in
a recent Fortune magazine article:
an end in themselves. You have some people who say, “Our
objective is to be the most enlightened work environment in
the world.” And then you have others that say, “Our objective
is to make a lot of money.” The value-based [socially
oriented] people look at the commercial folks as heathens;
the commercial people look at the values people as wusses
getting in the way.
not be solely or even predominantly attributed to its social activism.
The company has been slow to respond to fashion trends
and to changing distribution system technology. Despite large
investments, the company is still way behind its competitors in
managing inventory and getting product to market.
company still has a very strong brand name, and it still continues
to generate a lot of cash. For example, in 1998, the company generated
cash flow of $1.1 billion, more than either Gap or Nike.
One factor that makes Levi Strauss unique is its ownership
structure. The Haas family has long controlled the company.
Moreover, after completing a leveraged buyout in 1996, the
company is once again privately held. As part of the buyout
agreement, investors who wanted to maintain their ownership
stake had to grant complete power for 15 years to four family
members led by Bob Haas.
This ownership structure has enabled
Levi Strauss to pursue its social objectives without facing the
types of pressure that a more shareholder-oriented company
would face. Arguably, however, the lack of external pressure
helps explain why the company has been so slow to adapt to
changing technology and market conditions.