Levi Strauss and McDonald's Strategies
Businesses flourish provided that there is an efficient and effective strategic planning, implementation and evaluation where consideration of a firm’s internal and external environment provides a framework for improving organizational performance and success. Organizational success and improved performance is usually assessed through the impact such success and improved performance has on various stakeholders of the organization from the shareholders to the surrounding communities. Consideration of the surrounding communities introduces the subject of business ethics where, even though companies are primarily focused in making money, they have to maintain favorable relationships with various stakeholders including neighboring communities (Monga 2007, 179). This paper discusses business strategy, competitive advantage and ethics with regards to Levi Strauss and McDonald's strategies in their respective industries.
Business Success, Strategy, Competitive Advantage and Ethics
Levi Strauss’ strategy involved a transition from a clothing manufacturer to a sales and marketing as well as design company, which led it to a layoff over 15,000 production workers even though they were compensated through various severance and job retraining packages. This decision to outsource the manufacturing activities created a situation where surrounding communities suffered in terms of employees finding it difficult to reach to their previous levels of compensation and benefits in new workplaces. From an ethical perspective, the decision by Levi Strauss led to negative impacts on the surrounding communities considering that various community members were the representatives of the communities’ development. However, Levi Strauss’ strategy to outsource its manufacturing in relation to the negative impacts experienced by various community members can be viewed as passing the moral scrutiny test. Business strategies are considered as ethical if they do not involve actions and behaviors that cross the line from “should do” to “should not do”, that is, from good to bad actions that are injurious to other people, reprehensible or needlessly harmful to the environment (Wyld 2011).
Moreover, the strategy has to permit management to ful?ll its ethical duties to all it’s stakeholders including employees and the surrounding communities in which it operates. In relation to this, the question then becomes whether it is ethical for a company to close the plants employing over 20,000 workers and shift production to low-wage-paying contract manufacturers in foreign countries, which is not ethical, even though it is ethical when applied to the case of Levi Strauss. This is because Levi Strauss endeavored to compensate the affected individuals in light of necessary changes that the business had to embrace. Additionally, the negative effect is minimal as the affected individuals are getting other jobs even though the pay is less, as well as the fact that the company got a chance to fulfill its ethical duties to many of its stakeholders.
McDonald’s Plan to apply the strategy which was focused on “being better not just bigger” through improved restaurant operations, affordable pricing, wide menu variety as well as convenience and expansion of dining opportunities among others (Thompson, Gamble & Strickland III 2011, 55). As such, it is evident that the firm’s strategy is well matched to its industry and competitive conditions, with its present expansion of restaurants around the world and product differentiation in terms of pricing and variety, supported by the recorded positive sales growth. The firm’s strategy seems to be keyed towards establishing competitive advantage in terms of differentiation features as explained in Porter’s model on competitive advantage (Williams et al. 1995, 27-29). For instance, the company is said to extend the traditional dining hours, provision of menu variety and commitment to employee development for provision of superior service. All these elements highlights McDonald’s choice of a differentiation strategy through employee development which will inject more insights into provision of superior service, menu variety and extended dining hours which is convenient for its consumers.
Basically, the various action elements that highlight McDonald’s choice and consistency of a differentiation strategy as its main approach to competitive advantage include provision of menu variety and beverage choices, commitment to employee development for provision of superior service and extension of traditional dining hours. Employee development engenders commitment and determination which can facilitate innovation leading to superior service. Extension of dining hours and provision of menu variety enables the company to cater to and attract a wide consumer base which enables the company to differentiate itself from its competitors. The test of a winning strategy involves whether it is well matched to a firm’s situation, leads to sustainable competitive advantage and boosts the firm’s overall performance (Chaneta 2011, 36).
Considering the aforementioned tests of a winning strategy, McDonald's strategy can be inferred as passing all the tests. It is highlighted by internal employee development and external expansion, sustainable competitive advantage that enabled to succeed in lean economic times and the overall positive growth that boosted the firm’s overall performance. In conclusion, McDonald's strategy can be identified as having a positive result on the company which shows the firm’s commitment to profit and survive despite an adverse business environment. For Levi Strauss strategy, it is evident that the company has passed the moral scrutiny test even though the action of closing businesses that employ over 20,000 workers and shifting production to low-wage-paying contract manufacturers in foreign countries, without caring and acting on what will happen to the involved stakeholders is unethical.