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Essay / Research Paper Abstract
In 2003 Levi Strauss closed down the last of the North American factories. This 4 page paper explains how this decision was made and the economic basis of that decision making use of the law of diminishing marginal productivity. The bibliography cites 3 sources.
Page Count:
4 pages (~225 words per page)
File: TS14_TElevidm.rtf
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Unformatted sample text from the term paper:
and has the need to develop cost effective way so f operating. The founder of the company Levi Strauss was an immigrant to the United States who arrived in the
United States in 1847, involved in a dry goods business he, along with Jacob Davis gains a patent for the riveting of mens trousers in 1873 (Levi Strauss, 2003). With
this there was an immediate benefit of differentiation, with a way of adding value to a produce created that realised more than it cost. However, differentiation is no longer sufficient,
this also has to be accompanied by profits and increased value for shareholders. The clothing industry has become increasingly competitive and as such the prices that can be charged have
dropped, as is common when supply exceeds demand or the supply increases. The ability of many suppliers to drop their prices has been aided by moving production to areas where
there are lower production costs and as such margins have been maintained. The plant closures in North America has placed Levis in
the spotlight to explain their actions (PR Week, 2003). The last five plants that have been closed produced only 5% of the companies output, and is putting 1,980 people
out of work (PR Week, 2003). The basis of this decision has been one of economics. The cost of producing goods in
the US is far greater. Whilst there were some advantages, such as being closer to one of the markets and being seen as an American company, these were not benefits
that translated into added value. Instead, rising costs and increased competition bring prices down had seen more production shift abroad where there were greater margins. This pattern has been to
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