Grammar and sentence structures
Levi’s company understand the fundamentals of globalization are vital in order to continue to gain market share and minimize production cost. One of the strategy Levi’s implement was to close six manufactures in the United States and lay off 3,300 workers this was a bold decision for the company to save more than $ 175 millions to $200 million annually. Since, was facing competition from Polo, Tommy, American Apparel, online websites such as Amazon and international competition as well. Because, these companies offer the same quality of jeans at a lower price. Due to the fact, foreign companies and Amazon sellers do not expend much money in labor because their products are been produce overseas where labor is extremely cheap and are close to the raw material. For example, Levi’s most of the expensive are in labor at that time and used to make the company in a disadvantaged against thier competitive. Not even to mention this company used to hold a tremendous debt above 2 billion, but for the last five years “our balance sheets is now an assets (no a liability), with $1.2 billion of liquidity ( Harverd)”. Nevertheless, worker union often times damage American companies for example, “Levi’s has been negotiating for several weeks with its union about a severance package (N, Y)”. Unions can carry extra expensive to companies in the U.S. by their demands, for example generates packages to employees, healthcare and retirement plants force Live’s to reshape their strategies. However, “Levi’s said the decision to close the plants we needed if the company wants to survey in this highly competitive market…this is painful and necessary business decision (N.Y)”. This decision has a huge turnaround for the company success in this competitive world.
Nowadays Levi’s partner with suppliers around the globe to manufacture their Jeans. From cotton mill to manufactures there are more than 530 supplier that work in conjunction with Levi’s to deliver the end product to retails or wholesalers in more than 110 countries. Since, most of the jean are made from cotton, usually cotton is purchase in countries that specialize in cotton. Therefore, X country will transport the raw material to the next facility by air or water to a different country where the jeans are made, and labor is extremely cheap that will maximize the company profits. Therefore, tax laws, employment laws are not heavily regulated as the United States which is a plus for the company. Nevertheless, Levi’s is implementing new technology to reduce labor in the long term by implementing automation and new technology. For example, “integrating computer-aided design system and automation manufactures offers apparel makers more than the obvious saving on labor cost (bloomber)”. This new approach to reduces unsold inventory due to the fact computers (swing robots) are more priceless in the production of jeans. Take 90 second to produce a pair of jeans what usually take 2 hours with high insensitive labor, now are less waste chemical materials and employee’s injuries. The new software allows suppliers and Levis to determinate which jean are sales the most in particular region by implanting consumer data mining.
Since, globalization is more present than ever Live’s sales no longer depend on the United Sates market anymore. Due to the fact technology and the increase of margin markets open a new avenue to target consumer around the globe. Nowadays, “the American accounts for 59% of sales, Europe 24% and Asian, Middle East and Africa 17%… in 2013%, … the American were about 64% Europe 23% and Africa 13%… fiscal 2016 the company report revenue of $4.6 billions (forbes)”. The increase of sales in foreign countries has force Levi’s to come up with new strategies and find innovated ways to attract costumer. For example. The e-commerce site that need to be sophisticated and effective to reach customer shopping experiences. Nevertheless, open stores in Russia, Brazil and Singapore this way Levis has more control on displaying their cloth throughout the store to attract costumer instead of using the department store usually do not display Levi’s cloths in strategy areas to boost sales and often times the department is not organize properly and could face lose on sales. While having control of thier own store and the online websites customize the shopper experience and has increase revenue quarter after quarter. Because, when the American market is not performing well, or consumer confidence is not in the peak the European or Asian market could be outperforming and this way could help minimize the cost while the American market economic get back in trac and consumer confidence increase.
Outsourcing help Levi’s become more competitive in today’s global market. The price of the product that is been produce overseas help increase consumer spending. For example, a person buys jeans at relatively lower price that will help boost the U.S economic since is a service economic nowadays. Also, due to the fact of low production cost overseas, otherwise those jeans will cost more than $100 and consumer will definitely find alternative ways to shop in websites such as Alibaba and the U.S economic will collapse and inflection will rise above 2% which is the target by the Federal Reserve. However, when a Levi’s outsource the manufactures jobs overseas there is a negative effect in the United States economic unemployment increase. Perhaps, are people who no longer able to shop as the way that used to do it. Therefore, there are new modification in consumer spending until find a new job or reshape their skills. Nevertheless, cities also lost taxes that used to earn by the manufactures and the employees, and the cities start making cuts in their services they offer to residents or find alternative ways to save money as well. Next, Levi’s is measure by the tremendous success by increasing globally sales almost five billion. Continues innovating in their products to appeal to different demographic groups around the globe by understanding thier culture. In the recent years has focus on women apparel that was a game changing in the business model and continue bringing new products to the market every season.
Now there is another great company call American Apparel that used to be one of the favor stores by the youth and Wall Street best stocks to own with annual sales revenue of $660. This copany has 200 stores in more than 20 countries by believing in brick mortal shopping experience, but everything changes in the rise of online shopping and increase of competition. However, American Apparel lost their mojo and the love from Wall Street as well by selling American Apparel stock as low as $0.112. This is force the business to file for bankruptcy and change their strategy in order to continue with their daily operations. However, bankruptcy could not even save American Apparel from the ashes. Therefore “on Thursday a bankruptcy court in Delaware approve an $88 million sale of the brand intellectual property and manufacture equipment to Gildan will pay additional $15 million to acquire American Apparel’s purchase orders and inventory… given the buyer all the tools needs to launch a new clothing line from the ruins of the now defunct brand (atlantic )”. However, Gildan did not buy any of the 110-retail store in the country, because they understand the important of online shopping and the mortal brick is the past .One of the main driving on the early success of American Apparel was the marking blended feel good altruistic mission by making thing in America.
First of all, there are many factors involve in the decline of American Apparel. This is company decided to have their own manufactures in the U.S. The labor is extremely high to produce the products solely in one country. This force the company to sale their product at a higher price which definitely consumer will not pay higher price for a tag that is made in U.S, when there is other brand with same product but a lower price. As the result consumer tastes shift to “ Zara … focus on selling designers like high end looking cloths that are inexpensive…(Atlanctic)” This company just cannot afford to compete again Zara, Levi’s or other major retail in the industry where most of the products are made overseas. Therefore, these companies have advance in cashflow to invest heavily in the marketing to attract more costumer in the store or online shopping. There always finding new ways to find new trends in the fashion industry while the lack of cash in America Apparel is notable and has lost thier creativity and costumer as well. As a matter of fact, the down turn economic of the United States in 2007 and 2008 make thing worst for America Apparel. When American people reduce their shopping expending drastically, the biggest loser was American Apparel because cannot afford to offers discount to attract costumer to their store. The only way for them was to raise their debt in order to stay in business.
Secondly, this company is been very controversial in the public eye and investors and costumers lost thier trust into the company which was a major setback. The CEO is having many lawsuits against him regarding sexual harassment and hiring immigrants in Los Angeles factories which employees were under pay by the law. The company force the CEO to quite by the order of board of directors. Perhaps “the behavior led the company to incur nearly $10 million in litigation cost through September 2014 (Los Angeles time)”. For example, there were incident when the CEO call employees by such X name making fun of them or humiliating in public. Of course, this news was not well received in the public eye as well in wall street where most of the investor salle their stocks making the company have tremendous financial instability. Thirdly, American Apparel never embrace new ways of shopping such as online. Nowadays companies cannot longer rely on foot traffic any more as more people are adapting to shop online American Appear used to believe in the brick mortal which totally failed to invest in technology and expend to new market to target different demographic group. In today world, American Apparel failed to work closely with supply chain around the globe to minimize cost production. As competition continue increasing as the rise of emerging market its impossible to compete with low labor overseas and be profitable at the same time. Also, the lack of bring new products to the market was a major setback for this company since nowadays is vital to continue introducing new products every season.
In conclusion, both of this two companies used to be profitable, but one decides to take a different path and embrace new change in their business model that will definitely become a very successful company in today’s world. It’s extremely important to establish well supply chain around the world to better produce the products at a lower cost and reach different markets globally. Since, Levi’s excel in the 21 century no longer depend on one market such as the United States has become a multinational company. While, American Apparel fail to embrace technology and outsource their manufacture sector lead the company to the ruins. Nevertheless, in this digital age is very important for CEO to behave ethically in order to succeed as the case of American Apparel their CEO cost to the company millions of dollars of lawsuits and the end bankruptcy by their poor decisions. This research add value to any person who understand that globalization is more present than ever in order to stay in business most of the corporation on one way or the other need to outsources part of their business to save labor cost. Nevertheless, always innovating in the decision on making jeans and the adapting to market changes as quickly as possible to stay completive and gain market share.
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