FEASIBILITY ANALYSIS FOR EXPORTING LEVIS TO CANADA
This paper will reflect the business decisions necessary for establishing a business designed to export Levi's clothing into Canada.
Levi-Strauss & Co. is the world's largest clothing manufacturer with 26,000 employees worldwide and annual sales in the 5 to 7 billion-dollar range. However, in 1997, top management began a belt-tightening campaign designed to shave $80 million in overhead, primarily through a reduction of hourly laborers("Jeans giant. . .", 1997, 13).
Although the company promised cuts across the board, in fact, most of the cuts took place in the American sector where employee hourly costs were considerably higher than the costs in the overseas markets. Recently, many of those job cuts took place in Canada, reflecting what some people call the declining popularity of the Levis image in that nation.
This has resulted in the reduction of North American market share from 30 percent in 1990 to 14% today. As Hoover's Analysis explains, "To undo the financial damage, LS&CO. has moved to close 29 US, Canadian, and European plants" (Hoover's Capsule Data, 1999).
Naturally, before embarking on this venture, it was necessary to determine if a sufficient source of supply could be found to provide the needed Levi's products to export. According to the research uncovered concerning the clothing distribution market in Canada, there is a strong channelization structure in place where sports clothing is distributed through Canadian-based wholesalers, who generally import the clothing from the manufacturers and then sell it at markup to the retailer.
To avoid this process, LS & CO began manufacturing in Canada in the 1950's and maintained a solid distribution system of its own, one which is currently in the process of being dismantled.
Therefore, it would seem, logically, that there is a potential for new venues of channelization. There are some mar...