Levi’s Porter’s 5 Five Forces (2021)


Levis Company Overview:


Levi’s is a clothing company that was founded in 1853. It is one of the oldest and most popular clothing companies in the United States. The company has a long history of producing high-quality jeans and other clothing items. Levis also has a strong international presence, with stores located in dozens of different countries. In recent years, Levis has faced increased competition from other clothing companies. This has led to a decline in market share for the company. However, Levis remains a major player in the global clothing market.


Levi’s Competitive Rivalry:



The increasing number of competitors in the jeans industry is a major hindrance to Levi’s competitive position for two reasons. Firstly, there are many brands that manufacture and sell jeans that have emerged as strong contenders for market share. For example, Uniqlo has experienced a lot of success selling high-quality jeans at an affordable price point since its launch in 1984. Secondly, the rise of e-commerce has allowed many brands to launch online and sell directly to consumers without involving distributors or retailers. Brands such as ASOS and Revolve clothing have built strong businesses by selling their own products via their own websites.



Levi’s Bargaining Power of Suppliers:



The company’s suppliers have a moderate amount of bargaining power. This is because Levis is a well-known and popular brand, and most suppliers are likely to want to do business with the company. However, suppliers also have other options, such as working with competing brands. As a result, Levis cannot exert too much pressure on its suppliers.


Levi’s Bargaining Power of Buyers:



The company’s buyers have a high amount of bargaining power. This is because there are many different brands that sell jeans, and buyers can easily switch to a competing brand if they are unhappy with Levis’ products or prices. Additionally, buyers can often find good deals on jeans from online retailers. 


Levi’s Threat of New Entrants:



The threat of new entrants is low in the jeans industry, given that there are high barriers to entry. As mentioned earlier, the company has over 10 verticals with each vertical having its own manufacturing unit with state-of-the-art machinery. It takes many years to build a strong brand image and gain market share within Levi’s. The jeans industry also requires large production units to generate high-profit margins, imposing financial hurdles for potential entrants. The reliance on distribution networks also restricts the entry of many players in the jeans industry.



Levi’s Threat of Substitutes:




The threat of substitutes is high in the jeans industry. Consumers can easily purchase jeans from a variety of different brands, making it difficult for Levi’s to maintain market share. The trend of “athleisure” has also led to an increase in demand for leisurewear, such as joggers and sweatpants, which are considered substitutes for jeans.


Levi’s Porter’s 5 Forces Conclusion:



The jeans industry is a competitive business environment with high levels of competition from several brands and manufacturers, including Levi Strauss & Co themselves. In addition to this, the growth of e-commerce has allowed many players to sell directly to customers without involving distributors or retailers thus increasing customer bargaining power. This makes the industry’s environment very difficult to compete in and poses a major challenge for Levi Strauss & Co as an incumbent player. However, despite this, the company currently seems well placed to continue growing its business and maintaining its global leadership position for several years.



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