Report on Change Management at Levis

by David Thompson February 23, 2016
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Question

Instructions:

You are to select an appropriate organisation that you have access to. This will most likely

be the organization that you currently work for. The organization may be a private, a public

or a voluntary organization. You may want to focus on a unit, sub division or even a

department within the organization, particularly if the organization is very large or operates

on an international or global scale. You may disguise the real identity of the organization by using a

fictitious name if you prefer.

You will need access to at least one key informant and access to some level of company

documentation (for example, annual reports, web site, publicity material or other materials, if

they are available to you).

Company: (Levi’s)

You are required to do the following only:

1) An identification of the key problem(s) / inefficiencies facing the organisation

or the opportunities or activities with good scope for improvement.

2) An identification of the underlying source(s) of the problem(s) and any cause

and effect relationships between the problems identified.

3) Based on the diagnosis you have made, identify the approach needed to

address the inefficiencies / problems you have identified (Economic, OD or a combination of

both) and justify your choice. Identify specific intervention(s) address the problems you have

identified and explain why you believe the intervention(s) you have selected are appropriate.

Suggested Length: (1000)

Presentation Format: The assignment must be typed and follow a general report format.

Please include a bibliography of any references and literature sources used.

Solution

1. Identification of Key Problemsin Levis

Levis Strauss & Co. is world’s leading branded apparel company spanning more than 110 nations. But although being highly successful brands in the fashion industry it has undergone declining share prices and does not even meet the demands of the external environment(Levi Strauss & Co, 2013). The Leadership at Levis seems to be ineffective and the varied approaches which are being used for resolving the issues are proving futile , highly capital intensive moreover they are not producing any fruitful results. Thus the company needs to embark upon radical strategic changes for being profitable in the sector. Thus through this report we will analyse the strengths and weaknesses of Levis as opposed to its organisationalstructure, providing the organisation with required steps for bringing about change, thus creating a modern, innovative as well as learning company which can survive successfully in future.

Some of the Major Issues which have been identified in Levis Strauss & Co. are(Desouza, 2007):

  • CorporateStructure as well as control systems which are inappropriate.
  • Obsoletes / Narrowing product lines
  • Increasingmanufacturing costs
  • Ineffective supply chain management system
  • Poor Skills for marketing
  • Bad financial management
  • Improper Organisational Development Plan
  • No Organisational motivation
  • Lack of proper operational reporting criterion
  • Lost corporate direction
  • Bad communication/ change control process
  • Ineffective HR policy

2. Identification of UnderlyingSources of the Problems

There are varied ranges of issues which have been emerging at Levis ranging from structural to behavioural problems. As can be seen in Levis the leadership behaviour is incapable of creating a bright future for the company through a varied pursuit of opportunities made available in the merging environment for the company(McElhany, 2009).

The corporate structure of the company is such that Robert Haas the CEO of the company is being held accountable to no one, except for his uncle , and his cousins(2). There is no board of directors to whom they can report or verify the results which are beingpublished. Another issue is that of highly narrowed down product line due to which the company has started losing market share as they are not launching new products as per external environment’s demands. Due to lack of effective marketing and promotional planning and processes itsadvertising campaigns have proven to be failure and the in-store presentations have turned out to be embarrassing(Business Success Review (BSR), 2012). The manufacturing costs have increased so much that even a budget of $850 million proves insufficient and such huge amount had to be budgeted for bringing change in manufacturing cycle which is already turned redundant. Thus Levis has totally failed inconsistently re-engineering itself to be lucrative in the current markets.

Retailers being unawareof change at Levis are getting the receipt of productsdelayed and it is difficult for them to sell such a product which lacks in-store marketing. Poor supply china management results in late delivery of products which results in badcustomer relationship management and quality management. Lack of clear decisions- making as Robert Haas takes views from everyone even the factory workers, this slows down the decision-making process and eventually the main aim gets lost. Lack of financial control mechanisms leaves unmonitored expenditure of money and there is not set budget for organisational development(Howard, 1990). There is no indication of any innovation plan ororganisationaldevelopment plan and there is lack of organisational motivation. When Levis tried making changes in supply chain and organisational structure, the change management processes were not being followed. One other issue found in Levis is inbreeding which is caused because of lack of fresh ideas. Reengineering changes at Levis scared the staff as they thought they will lose their job.

All these issues can impact Levis as loss of its market share, due to changing customerpreferences, loss of retailers due to higher costs, poor sales and bad supply china management. Risingmanufacturing costs and the reengineering costs will result in increased costs for customers to pay, thus turning Levis products expensive for the target consumers(Henry & Mayle, 2004).

HR and organizational strategy assignment help 647*182

3. Approach forAddressing Inefficiencies / Problems

In order to address these insufficiencies Levis needsto look for radical change transformation strategy which should be a combination of  both economic and organisational development strategies which have been highlighted below:

3.1 Economic Strategies

These strategies strive to bring about economic value for the company through result-driven and top-down actions. These strategies help in improvingshareholder returns.

3.2 Organisational development (OD) Strategies

OD strategies focus on the capability creation which is needed for achieving sustainable competitiveadvantage as well as higher performance.

Change Organisational Design: Levis needs to implement an Organisation structure which is Organic by using the programme approach, where the decision making is decentralised and flexible according to the changing external demands and it also encourages higher utilisation of human resources. The programme management approach if adopted will manageportfolios of the projects and improve cross-functionality between the specific budgets and promote innovativeness regularly to improve projects(Clements & Gido, 2009). This will in turn maximise the stakeholder’sbenefits within the organisations value chain.

Shaping Organisational Programme: Levis needs to adopt the policy for managing the company with the help of process as well as project portfolio programmes within a limited budget. This way using programme management tool will help in enhanced organisational benefits which will be the outcome of aligned business and corporate units of Levis along with its operational strategies(Steyn, Schmikl, & van Dyk, 2010).

Leadership Change: The leadership at Levis is ineffective so it needs to be replaced with a leader who has the characteristics of transformational leader and who can recognise the needof strategy which is based upon programmemanagement principles which can be set up within a specified budget(Steyn & Schmikl, 2009). The new CEO should be such who can lead the change from the top and can create an excellent executive team.

Developing OrganisationalMotivation: The employee should be motivated through extrinsic motivation like financial incentives as well as intrinsic motivation. This will improve commitment level amongst the employees(Budhwar & Aryee, 2011).

Appointing Industry Experts: Using external agents or consultants will help in analysing the problems as well as they will prescribe the solutions. They will act as facilitators which will assist managers in identifying the existing problems in Levis and take their own decisions(Budhwar & Khatri, 2001).

 

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