Levi Strauss Case Study

Case Study 2 -  Levi Strauss

Abiola Akintola

Monroe College

MG615 Managing in the Global Environment

DR. D. Tennyson

Case Study 2 -  Levi Strauss

Social responsibility and ethical behavior has become a major source of concern in the fashion industry, especially in view of tragic events that happened in Bangladesh. Multi-National Companies (MNC) are called upon to take responsibility of workers welfare in their global firm’s supply chain, questions are asked if these MNC’s published code of conduct and inspection practices are genuine and yet claim no knowledge of the happenings in those factories (Deresky, 2017, p.43).

Levi Strauss in 2014, offered a new financial incentive through the International Finance Corporation (IFC) to their suppliers to enable and motivate them to meet up with the environmental, labor and safety standards. This incentive promises to lower their interest rate on working capital as they upgrade their factories and meet up and abide by with the environmental, labor and safety standards (Deresky, 2017, p.70).

Case Question 2.10

Due to company looking for low labor cost, there is often pressure on the suppliers to cut corners on safety which was one of the major causes of the Bangladesh 2012 and 2013 incidents. Most of the multinational companies outsource their business to Bangladesh because of the low wages of about $37 a month, furthermore very few textile workers in Bangladesh is unionized which does not encourage the welfare of the workers or the state of the environment they work in (Deresky, 2017, p.43).

The efforts by Levi Strauss can greatly motivate textile industries like Bangladesh to improve their safety and workers welfare; in other to the access the incentives offered, they have to show an improved standard in the safety measures and strategy put in place as the incentive is tied to them adhering to the labor and environmental laws. By doing so interest rates on working capital is reduced to help their business grow and help them complete work orders on time, improved safety standards will save workers from unhealthy working conditions and labor malpractices.

On the other hand, the suppliers need to fully understand the motive behind the incentive, otherwise the approach would be a failure, as they might not trust the MNC and may find ways to cut corners again to access the benefits. The bunch of the work falls on Levi Strauss and the IFC to make sure the process works by constantly monitoring the suppliers (Deresky, 2017, p.70).

Case Question 2.11

Stakeholders to be considered are the consumers, Levi Strauss, the IFC and suppliers; the suppliers are concerned about how the clothes they buy are made, they want to be assured that the workers are well treated, and this can translate to more sales for the multinational companies if their consumers see or perceive they are doing all they can in improving the labor and safety standards of their manufacturers.

In addition, this process will help boost Levi Strauss ethical credential while strengthening the relationship between the them and their suppliers by enhancing the financial aspect of business for the suppliers and in turn improve production cycle for the multinational company.

The suppliers have access to lower working capital and an additional discount of up to 50 basis point on their interest rate when they improve the labor and other safety standards (Deresky, 2017, p.70), this is a great motivation to help the process work smoothly as the benefits will improve their business and reduce their cost.