P H A M H O A N G

H I E N, M B A, P G. ( C S U )

CASE FOR ANALYSISLevi Strausss Goes Global This case demonstrates how a company can pursue a transnational strategy. LeviStrauss has located production facilities around the globe and customizes its productsto local tastes. Foreign subsidiaries are responsible for marketing. It is also transferringknowledge abroad. To implement its strategy, Levis established a network structure.Design is performed in the U.S. and foreign partners produce and distribute products.1. What global strategy is Levi Strauss pursuing? Is it effective?Levi Strauss is pursuing a transnational strategy. Levis is seeking to both reduce costsand provide customer responsiveness. Production facilities are located around the worldto take advantage of low cost foreign labor. However, Levis wants to tailor its jeans tolocal customers; foreign subsidiaries are responsible for marketing. For example, Asiamay offer more smaller size jeans. Other countries desire various colors. Moreover,Levis transfers knowledge to its subsidiaries. For example, marketing knowledgelearned on Deckers in the U.S. was transferred to Europe.2. What structure does Levi Strauss use to implement its strategy?To implement its transnational strategy, Levi Strauss uses a network structure. Designis performed in the U.S. and foreign partners produce and distribute products. A partnerwill be replaced if it doesnt meet Levis standards website : http://www.scribd.com/doc/13754467/CHAPTER-8-ORGANIZATIONAL-DESIGNAND-STRATEGY-IN-A-CHANGING-GLOBAL-ENVIRONMENT The Networked Global Organization No international structure is ideal and some have challenged the wisdom of even looking for one. They have recommended attention to new processes that would, in a given structure, help to develop new perspectives and attitudes that reflect and respond to the complex, opposing demands of global integration and local responsiveness.23 The question thus changes from which structural alternative is best to how the different perspectives of various corporate entities can better be taken into account when making decisions. In structural terms, nothing may change. As a matter of fact, Philips has not changed its basic matrix structure, yet major changes have occurred in internal relations.24 The basic change was from a decentralized federation model to a networked global organization, the effects of which are depicted in Figure 21.8. The term glocal has been coined to describe this approach.25 Companies that have adopted the approach have incorporated the following three dimensions into their organizations: (1) the development and communication of a clear corporate vision, (2) the effective management of human resource tools to broaden individual perspectives and develop identification with corporate goals, and (3) the integration of individual thinking and activities into the broad corporate agenda.26 The first dimension relates to a clear and consistent long-term corporate mission that guides individuals wherever they work in the organization. Examples of this are Johnson & Johnson's corporate credo of customer focus and NEC's C&C (computers and communications). The second relates both to the development of global managers who can find opportunities in spite of environmental challenges as well as creating a global perspective among country managers. The last dimension relates to the development of a cooperative mind-set among country organizations to ensure effective implementation of global strategies. Managers may believe that global strategies are intrusions on their operations if they do not have an understanding of the corporate vision, if they have not contributed to the global corporate agenda, or if they are not given direct responsibility for its imple(P706.JPG)

mentation. Defensive, territorial attitudes can lead to the emergence of the "not-invented-here" syndrome, that is, country organizations objecting to or rejecting an otherwise sound strategy. The network avoids the problems of effort duplication, inefficiency and resistance to ideas developed elsewhere by giving subsidiaries the latitude, encouragement, and tools to pursue local business development within the framework of the global strategy. Headquarters considers each unit a source of ideas, skills, capabilities, and knowledge that can be utilized for the benefit of the entire organization. This means that subsidiaries must be upgraded from mere implementers and adaptors to contributors and partners in the development and execution of worldwide strategies. Efficient plants may be converted into international production centers, innovative R&D units converted into centers of excellence (and thus role models), and leading subsidiary groups given the leadership role in developing new strategies for the entire corporation. At Ford Motor Company, development of a specific car or component is centralized in whichever Ford technical center worldwide has the greatest expertise in that product. One tool for implementing this approach is international teams of managers who meet regularly to develop strategy. While final direction may come from headquarters, it has been informed of local conditions, and implementation of the strategy is enhanced since local-country managers were involved in its development. The approach has worked even in cases involving seemingly impossible market differences. Both Procter & Gamble and Henkel have successfully introduced pan-European brands for which strategy was developed by European teams. These teams consisted of country managers and staff personnel to smooth eventual implementation and to avoid unnecessarily long and disruptive discussions about the fit of a new product to individual markets. The term network also implies two-way communications between headquarters and subsidiaries and between subsidiaries themselves. While this communication can take the form of newsletters or regular and periodic meetings of appropriate personnel, new technologies are allowing businesses to link far-flung entities and eliminate the traditional barriers of time and distance. Intranets integrate a company's information assets into a single accessible system using Internet-based technologies such as e-mail, news groups, and the World Wide Web. In effect, the formation of virtual teams becomes a reality. For example, employees at Levi Strauss & Co. can join an electronic discussion group with colleagues around the world, watch the latest Levi's commercials, or comment on latest business programs or plans.27 The benefits of Intranet are (1) increased productivity in that there is no longer a time lag between an idea and the information needed to assess and implement it; (2) enhanced knowledge capital, which is constantly updated and upgraded; (3) facilitated teamwork enabling on-line communication at insignificant expense; and (4) incorporation of best practice at a moment's notice by allowing managers and functionalarea personnel to make to-the-minute decisions anywhere in the world. As can be seen from the discussion, the networked approach is not a structural adaptation hut a procedural one, calling for a change in management mentality. It requires adjustment mainly in the coordination and control functions of the firm. And while there is still considerable disagreement as to which of the approaches work, some measures have been shown to correlate with success as seen in Global Perspective 21.2. Of the many initiatives developed to enhance the workings of a networked global organization, such as cross-border task forces and establishment of centers of excellence, the most significant was the use of electronic networking capabilities.28