2023-07-09 22:05:53
Succession is one of the key features of a family business. In which many family businesses try to pass on the business to their children to take over and continue to manage
In general, descendants who are heirs often have several advantages over executives from outside the family, such as being trained and cultivating experience from a young age. Or having a long relationship with the business, employees, partners and the community. Because it limits the choice of competent executives.
Examples from many family businesses show that Executives from outside the family may be more capable of managing the family business than their biological heirs. One example is a family business. Strauss-Stern-Haas The manufacturer of Levi’s jeans, known all over the world today.
from Loeb to Levi
The founder of the Levi’s jeans business is named Loeb Strauss He was born in 1829 in Bavaria, now part of Germany. Loeb’s parents had two children, but his father had five children from his previous wife.
Loeb’s early life was quite difficult. He grew up in a large family that wasn’t well off. Especially being a Jew in Bavaria at that time was excluded and limited in the occupation of various
When Loeb was 16, his father died, and Loeb immigrated with his mother and two sisters to New York. And upon landing in the United States, Loeb Strauss changed his name. His new name is Levi Strauss
Levi started working with Jonas with Louis Strauss Two other half-brothers already operate a wholesale store called J. Strauss Brothers & Co. in New York.
Golden opportunity from the gold rush
In the 1850s, gold was discovered in California. This caused a gold rush (Gold Rush) where many people migrated to search for gold mining luck.
Fanny Strauss and David Star Levi’s sister and brother-in-law saw this business opportunity. So immigrated to California and opened a store in San Francisco. Later, in 1853, Levi moved with his sister and brother-in-law.
Levi does business as a representative on the west coast of the United States for his brother’s New York wholesale business, with brother-in-law David joining the business. Later, the name of this business was changed to Levi Strauss & Co. This business was later known as Levi’s.
Birth of jeans
The turning point for Levi’s and the world’s clothing industry occurred in 1872 when Levi received a letter from Jacob W. Davis A tailor in Reno, Nevada, a regular customer.
Jacob says he came up with a new, durable way to cut pants using metal pins. This solved the problem of pockets tearing easily when wearing equipment. Jacob wanted to patent and manufacture it, but lacked venture capital. Levi invited Jacob to talk to him in San Francisco. They combined Jacob’s riveting method with Levi’s durable fabric and created the world’s first pair of jeans.
Levi’s jeans quickly became popular among workers, cowboys and soldiers for their durability and pockets for gear. Levi Strauss & Co. communicated the jeans’ durability through the markings on the stitched leather. attached to the edge of the pants waist It was designed in the image of two horses trying to tear their jeans apart. The horse symbol first appeared in 1892, just before Levi’s patent for riveted jeans expired.
In the 1890s, Levi’s also started using three digit numbers to identify jeans, such as the number 501 for jeans with copper studs. which later became the brand’s most famous model.
survive because of grandson-in-law
Levi Strauss had no children. When he died in 1902, he handed over a $6 million business. To four grandsons who are Fanny and David Stern’s children: Jacob, Sigmund, Louis and Abraham But the business under the management of the second-generation heir is not doing well. To the extent that 4 grandchildren almost decided to close the business ever.
But the situation changed when Walter Hass husband Elise Stern Third-generation heir Sigmund’s only daughter came to help the business in 1919 and became president of the company in the next 9 years and Walter also gave Daniel Koshland husband Eleanor Haas His sister also came to help at Levi Strauss & Co.
Daniel became president after Walter in 1955, while Walter remained chairman until 1970, before his death nine years later.
from mine to city
During Walter and Daniel’s tenure, Levi Strauss & Co.’s business not only recovered from its stagnation. but also survived through the Great Depression and World War 2, as well as growing to become a world-class business in the post-war period.
Levi Strauss & Co.’s extremely profitable business after World War II was due to Walter’s decision to shift his wholesale business to focus solely on clothing manufacturing.
This change is a life and death risk for the company. Because the profit from the wholesale business at that time accounted for up to 75% of the total profit of the company. In addition, Walter also aims to expand the market to new customer groups, especially selling jeans to the new generation.
when the picture James Dean Famous Hollywood stars wore t-shirts, leather jackets and Levi’s 501 jeans in the movie. Rebel Without a Cause Released to the public in 1955, Levi’s jeans have become a fully integrated part of urban life. And as American culture spread around the world in the second half of the 20th century, so too did the business grow around the world.
market
In the family, Walter Haas had three children: Walter Haas Jr., Peter Haas and Rhoda Haas Goldman
The eldest son, Walter Jr., is the fourth generation heir to the business. He joined the family business in 1936 and took over as CEO from Daniel Koshland in 1958. For the next 18 years, Walter Jr., along with his younger brother Peter, expanded the business internationally. and led the company to raise funds by listing on the stock exchange in 1971
After Walter Jr. stepped down as CEO. Robert Haas His eldest son took over the business. He is the fifth generation heir to the family business. Strauss-Stern-Haas But the business started to suffer because it was too complicated. Many people make decisions As a result, the company’s profit continued to decline.
out of market
In 1984, Robert decided to borrow $1.7 billion. Let’s buy stock of Levi Strauss & Co. and take the company off the stock market. But the company’s problems are still unresolved. Throughout the 1980s and 1990s, sales remained low. especially as industry competition intensifies.
At first, Robert was reluctant to move production to lower cost countries like his competitors. Because he didn’t want to close factories and lay off workers in the United States, Robert eventually had to. The company gradually shut down factories in the 1990s and shut down the production of Levi’s jeans in the United States. when the last factory in San Antonio, Texas, closed in 2003.
Despite Levi’s poor performance, the company borrowed billions of dollars in 1996 to buy back stock from employees and family members once again. Eventually, almost all of the company’s shares were once again in the hands of Levi Strauss’ heirs.
Enter the market (again)
The financial decline continued into the 2000s until the company finally decided to hire. Chip Bergh A professional from outside the family with nearly 30 years of experience at Procter & Gamble came to the rescue in 2011.
For the first time in over 100 years, Levi Strauss & Co. is not under family management.
Bergh is the CEO who has transformed the business to improve its performance. Growing sales and profits Debt was reduced to just one-sixth of what it was before he took over. Bergh eventually brought Levi Strauss & Co. to the New York Stock Exchange for a second time in 2019.
The reason for bringing the company to trade in the market this time is to increase flexibility in asset management. And diversify the risk to family members who have shares in the company. which these family members number more than 200 people
Chip Bergh for Harvard Business Review
Family business that is a public company
One key factor in Bergh’s successful transformation of Levi’s was that Levi Strauss & Co. was not a publicly traded company.
Bergh said he could come up with a long-term business plan without trying to change his strategy in response to stock analysts’ earnings expectations.
Foresight or Longtermism is something that Bergh still maintains. Even though the company has returned to be listed on the stock exchange again. He was able to do this because the Haas family now holds more than 75% of Levi Strauss & Co.’s shares and voting rights, thus retaining control over the company.
When talent is more important than blood
Walter Haas, Daniel Koshland and Chip Bergh are the men who have revitalized and transformed Levi’s for more than 170 years. Jacob Stern’s in-law, while Daniel is Walter’s brother-in-law and Chip Bergh is an outsider with no family connection whatsoever.
Experience from family business Strauss-Stern-Haas this shows Executives from outside the family may manage the family business better than their descendants, despite many other advantages.
Limiting the choice of business heirs to only among the heirs of that family. This also limits the options of those who have the ability to run a family business.
Reference
“The Story of Levi Strauss” www.levistrauss.com/2013/03/14/the-story-of-levi-strauss
“LEVI STRAUSS: How the Haas Family Revived Its 169-Year-Old Business” cmgpartners.ca
“Levi Strauss: From Family Business to American Icon” www.tharawat-magazine.com/sustain
“Levi Strauss” www.referenceforbusiness.com/businesses
“Haas to Keep Hand on Levi’s / Last of Family to Run Jeansmaker to Stay Active in S.F. Firm” www.sfgate.com/business/article
“Why the Heck Does 165-Year-Old Levi Want to Be Public Again?” www.wsj.com/articles
“As Jeans Giant Levi Strauss Prepares To Go Public, New Billionaire Emerges” www.forbes.com/sites/willyakowicz
truewestmagazine.com/article
blog.myntra.com
timesofindia.indiatimes.com/life-style/fashion/buzz
en.wikipedia.org/wiki/Jacob_W._Davis
haassr.org/our-identity/historylegacy
www.standard.co.uk/culture/film
www.sfgate.com/business/article
www.referenceforbusiness.com
news.lafayette.edu
wwd.com/fashion-news/sportswear
1688942523
#Levis #family #business #children #closed #grandchildren #outsiders #manage #heirs