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Successful Value Chain Management


Onslaught of Green

Consumers are finding it more and more challenging to differentiate goods and services that are advertised as environmentally friendly. According to a 2010 study by TerraChoice, an independent testing and certification organization, there are 73% more green products on the market today than in 2009.1They also revealed that roughly 95% of green products are being greenwashed to some degree (based on their seven sins of greenwashing).1 While this study focused on home and family products, the purchasing power of greenwashing is evident across many industries. Greenwashing can be defined as the act of misleading consumers regarding the environmental practices of a company or the environmental benefits of a product or service.2 Additionally, Wikipedia defines green washing as a term describing the deceptive use of green PR or green marketing in order to promote the perception that an organization’s policies or products are environmentally friendly.3,4 While most organizations do not outright greenwash, any exaggerated behavior is inappropriate: greenwashing is “an extremely serious matter…it is insidious, eroding consumer trust, contaminating the credibility of all sustainability-related marketing and hence inhibiting progress toward a sustainable economy,” stated in a report by Ogilvy & Mather, a huge advertising firm.5 The Federal Trade Commission does provide guidelines for environmental marketing claims, but these are not enforceable.6,7 It has been the responsibility of corporations to not jump on the green public image bandwagon, spend resources on environmentally sound practices, and inform the public about the truthful environmental impacts of buying and using their products.

Fundamentals

A helpful document for corporations is Ogilvy’s guide on brand management: “From Greenwash to Great: A Practical Guide to Great Green Marketing (without the Greenwash).” The guide presents a framework that speaks to an honest green story starting from inside the company, not from a marketing idea that is created and spun for consumers.8 A company that has started in an honest place is Levi Strauss & Co. The company was founded in San Francisco, California in 1853 and created the very first pair of blue jeans in 1873.9 The Levi’s brand has become one of the most widely recognized brands, positioned as the original and authentic jeans brand. It’s merchandising and marketing seeks to reflect the brand’s core attributes: original, definitive, honest, confident, and youthful. It is obvious the company is proud of its history and heritage: “People have worn our products during the seminal moments of social change over the past 150 years.”10 The company has a long lineage of corporate social responsibility: shorter work weeks were implemented to mitigate the massive lay-offs happening during the Great Depression; factories were racially integrated prior to the Civil Rights Act; was one of the first companies to take action in the fight against HIV/AIDS, as well as remaining committed to the pandemic; established a set of Global Sourcing and Operating Guidelines; and joined the Federal Labor Association (FLA) efforts to improve working conditions around the globe.11,12,13 According to Ogilvy’s brand management guide, environmental improvements and benefits need to be measurable, verified and significant to the product’s real footprint.14 Beyond their corporate social responsibility, Levi’s is considered a pioneer in sustainability, making efforts to minimize their environmental footprint in all levels of their operations.

Life Cycle Analysis

Levi’s is as rigorous with its sustainability practices as it is its business. The parent company Levi Strauss & Co. commissioned a scientific life cycle assessment (LCA) in 2007 of the company’s most popular items. This intensive study assessed the product life cycle in its entirety – “from cotton seed to the landfill” – of the Levi’s 510 jeans, the brand’s best seller.15 Jeans, which are primarily cotton-based fabrics, have a large environmental impact. There are agricultural pressures, large scale and energy intensive production, dying processes and water consumption.16 What was uncovered from the life cycle analysis was quite surprising: “The findings indicated that the greatest opportunities for reducing our carbon footprint, water usage and other environmental impacts exist outside our direct control – in the cotton-growing and consumer-use phases of the life cycle.”17 With uncovering this information, Levi’s established it could not hone in on these two critical phases, dealing with suppliers (cotton production) and consumers, without first making some changes themselves.18

 

Water Conservation

The average pair of jeans uses 42 liters of water in the finishing process.19,20 Levi’s created a system to reduce water usage by an average of 28% and up to 96% for some products compared to traditional jeans.21 The Water<Less line of jeans still allows Levi’s unique look and feel to remain intact: “What’s different about the Water<Less collection is that we’re still using the same materials and techniques to create finishes for our jeans but we’ve substantially reduced water’s role in the equation” said Carl Chiara, Director of Brand Concepts and Special Projects.22 Reducing the number of washing machine cycles  by combining multiple wet cycle processes into a single wet process, incorporating ozone processing into the garment washing, and removing the water from the stone wash were some of the innovative, and perhaps simple, changes used to reduce the overall water usage.23 “Sometimes, the way to achieve a more sustainable design is to rethink a traditional process and find a way to do it better” said Erik Joule, Senior Vice President of Global Merchandising and Design.24 The results were just as effective on the product but much more efficient.

 

Social Media Implementation

In learning that some of the largest environmental impacts happen after consumers purchase and take the jeans home, Levi’s sought to improve the laundry habits of consumers. In the process it has also successfully increased brand awareness, reception and image. The Watertank thermometer was an initial start, using social media (Facebook) as a means to build engagement, tracking small actions taken by Levi’s fans to change their everyday water use.25 This spread to the Water<Less campaign, known for taking facts about water and presenting them in new and interactive ways. The website promotes storytelling via video, interactive education on water conversation, interactive challenges for consumers to save water, and social media postings to allow consumers to share their own personal impact.

 

Water<Less Initiative

Levi’s has already saved more than 172 million liters of water, but nearly a billion people still lack access to safe water. Additionally, 2.5 billion people do not have a toilet and four million people die each year from preventative waterborne disease.26 Levi’s teamed up with Water.org to drive awareness and actions on the global water crisis. Water.org is a non-profit organization that provides access to safe water and sanitation to communities in Africa, South Asia and Central America. 27 While Levi’s is making strides in the global water crisis, it is encouraging consumers to use water wisely and change how they care for their jeans.

2012 marked the second year in a row that Levi’s and Water.org have partnered up. In honor of World Water Day, the two are continuing to help raise awareness about vital water issues and bring clean drinking water to people around the world by launching a campaign called “Go Water<Less.” 28 In the social media sphere, the interactive campaign encourages people to “Go Water<Less” by taking small actions to experience what life is like for people without clean drinking water and become more conscious of water as a precious resource.Challenges include reducing daily water intake and usage, flushing less, showering less, and decrease dependency on plastic bottles. Along with the challenges are outlets to learn more about that particular challenge as well as how many people have accepted. According to Levi’s, if their Water<Less jeans are washed once a week instead of twice a week, together 858,400,000 liters of water can be saved.29 Each challenge is also worth WaterCredits, a new initiative of Water.org. Individuals receive loans to access water and sanitation as a means to immediately address needs. This deployment of WaterCredits applied to principles of micro-finance in the water sector by Water.org allows people to mitigate traditional credit markets. It is projected that more than 20,000 people will have access to save water within the next two years with Levi’s support.30 “Social Media is one of the easiest and most effective ways to raise awareness and rally more and more people around the cause” said Gary White, Chief Executive Officer and Co-Founder of Water.org. “Using Facebook Connect, the Levi’s Water<Less Challenge provides an engaging opportunity to take concrete action by using less water at home, and simultaneously make a real impact by bringing clean water to those in need around the world.”31

These initiatives do not only create impacts through social media outlets, they also cascade into activities and in-store operations. For World Water Day, people took to the streets of New York City to symbolize the 3.7 mile walk that millions of people in developing countries take each day to collect valuable drinking water.32 A newer sub-campaign was introduced to continue the water conservation message to consumers – “Care Tag for our Planet” – and provides recommendations via tags: wash cold, air-dry, and donate. Washing with cold water and air-drying jeans on a line can reduce the full life cycle climate change of consumers’ jeans by up to 50%. According to Levi’s analysis, 23.8 billion pounds of clothing end up landfills each year. To extend the life of a pair of jeans, the brand is promoting consumers to donate old jeans to Goodwill instead of disposing them.33,34 Through the Water<Less Campaign and respective initiatives, it is empowering others to know they can take small steps in their day-to-day life that in turn go towards making a difference for those in need of clean water and for the planet.

 

Ethical Questioning

The campaign’s title Water<Less intrigued me from first glance. While the initiatives Levi’s has put into action use less water, they are not “waterless.” While the title is a bit aspirational, it at the least begins a dialogue of engagement in terms of sustainable water consumption and the lifecycle of denim. As I have found, the company has compiled large quantities of useful information and resources about its operations. This is even true in their financial statements, preluding with transparency of decisions and improvements. Levi’s, and its parent company, have made changes to their behavior and have also made strides to continue a more sustainable behavior in the consumer-use phase of the lifecycle.  Applying Freeman’s stakeholder theory – thinking in terms the support of each group is vital to the success of the endeavor – I wondered how this behavior was being extended to the forefront of the product: the actual growth and cultivation of the cotton.

Stakeholder Theory

Corporations are understood to be run primarily in the interest of stockholders in the firm. While firms do have an obligation to stockholders financially, stakeholder theory brings into context who else also needs to be included in the conversation. Stakeholders, according to Freeman, are those who have a stake or claim in the firm: they are vital to the survival and success of the corporation. These stakeholders can have a direct impact on the future direction of the firm in which they have a stake. While the group or individual can affect the corporation, it can also be affected by it.35 Levi’s openly expresses its stakeholder viewpoint: “Integrity means doing right by our employees, brands, company and society as a whole. Ethical conduct and social responsibility characterize our way of doing business.”36

Cotton Sourcing

Levi’s has been transforming their value chain into being more sustainable. Sustainability and environmentalism are shown as much more than added benefits, these are now brand features. The brand is able to hone in on its product design and manufacturing improvements: aligning awareness with a tangible result of the amount of water saved and aid consumers in rethinking how they shop and consume.37 The value proposition comes full circle with Levi’s addressing the cotton and fabric production. From the lifecycle analysis, Levi’s learned almost half of the water used in a full life cycle of jeans is from the initial phase where farmers are growing cotton in the fields. Levi’s teamed up with the Better Cotton Initiative (founded in 2005), opening communication between farmers, NGOs and other companies to improve cotton sustainability.38 Levi’s works with them to teach cotton farmers (in places such as India and Brazil) steps to work towards water conservation, lowering pesticide use as well as child-labor practices.39,40,41  Additionally, Levi’s encourages mills to reduce their water, chemical and energy use; this tackles the second phase of the life cycle where fiber is turned into fabric.42 While only 5% of cotton was grown using sustainable methods for their Water<Less products in one season, Levi’s has a hefty goal of increasing this to 20% by 2015. Of those jeans marketed as being less water-intensive, they sold faster than regular Levi’s similarly priced.43 This allows Levi’s to continue to be cautious of its bottom line. From a stakeholder theory standpoint, it is clear Levi’s identified there are “broader issues at stake than just the economics of business” and were able to intertwine ethics and business into its operations.44

Receptiveness

The engagement into the cause campaign went beyond the transaction and built value into the user experience. This behavior attributes directly to Levi’s being an ethical manufacturer. 45 This has led the parent company to receive various awards regarding their corporate social responsibility and sustainability. Two recent examples are Treehugger Best of Green Awards – Best Jeans: Levi’s® Water<Less® and GoodGuide Apparel Rankings – Levi’s: Number One in Jeans Category (both recognitions from 2011).46 Levi’s promoted their socially responsible image using social media. I was curious to see how the engagement of consumers, a key stakeholder, enhanced the brand’s image. Through the social media campaign, Levi’s generated four times as much buzz around its socially responsible image in response to Water<Less brand products. Brand attributes of normal products were still discussed in relation to charitable goals, showing successful alignment of charitable efforts with consumers’ overall awareness of the brand.47

 

Differentiation

What makes Levi’s succeed more so than others in the industry? They have sustainability embedded into core decision-making while most companies just repackage themselves with a greener appearance.  With the growing public awareness of social sustainability issues, there is little known about what drives firms to emphasize social criteria in their supplier management practices and what the benefits are.48 The concept of person-organization fit suggests “it is beneficial for the firm to match employee social values and expectations by shaping supplier selection policies accordingly.”49 I feel that the shared values of those higher up in the organization and middle-level managers need to align in order to build a great global organization. Levi Strauss and Co., and therefore the Levi’s brand, has been able to accomplish this.

                The importance of value chain management is being increasingly emphasized. A corporate sustainability agency, Two Tomorrows, performs an annual value rating of companies. Through their 2011 findings, they noticed trends such as: innovation is the cutting edge of sustainability, leaders consider the whole value chain, leaders are addressing the sticky issues, and having a clear direction with business incentives is key.50 The shared values implemented through initiatives at Levi’s allow me to check off all these boxes. According to the research, “this sort of value chain management where companies help their suppliers to form a new level of partnership might be a new breed of stakeholder engagement.”51 Levi’s demonstrates the impact of water conservation through the entire life cycle of jeans: its suppliers, its own manufacturing processes, and its consumers. The company has built meaningful partnerships to the cause of water consumption through video, social sharing, their interactive website, and other community-focused elements.52 Levi’s has communicated it will continue to act as a responsible brand: to spend resources on environmentally sound practices and inform the public about the truthful environmental impacts of buying and using their products – “Not only is a major consumer brand using its platform to support the work of a worthy nonprofit partner, but the company is simultaneously demonstrating how the industry can lead the way in solving a social problem that affects 1 billion people. This is what it looks like to absorb social responsibility into corporate DNA” – no greenwashing necessary.53

_________________________________________________________

[1] Kate. “The 2010 Sins of Greenwashing study is here!”TerraChoice (part of the UL Global Network). Blog: November 8, 2010. <http://blog.terrachoice.com/2010/11/08/the-2010-sins-of-greenwashing-study-is-here/>

[2] “Marketer’s Guide.” 2009. TerraChoice Group Inc. <http://sinsofgreenwashing.org/solutions/marketers-guide/>

[3] “Greenwashing.” Wikipedia: The Free Encyclopedia. Last Modified April 5, 2012. <http://en.wikipedia.org/wiki/Greenwashing>

[4] “How do I know a fabric is ‘green’?” O Ecotextiles Blog July 13, 2011. Wordpres.com. <http://oecotextiles.wordpress.com/tag/terrachoice-environmental-marketing-inc/>

[5] Winston, Andrew. “Avoiding Greenwash and Its Dangers” Harvard Busines Review: HBR Blog Network. April 15, 2010. <http://blogs.hbr.org/winston/2010/04/avoiding-greenwash-and-its-dan.html>

[6] Wikipedia.

[7] “New ‘Green’ Ad Claim Regulations Coming Next Year.” Green Clean Certified. 2012. <http://www.greencleancertified.com/green-cleaning-health/green-watch/FTC-Reviews-Guidelines-for-Green-Claims/>

[8] Winston.

[9] Levi Strauss & Co. Form 10-k for the Annual Report 2009. Pg 1-26

<http://www.levistrauss.com/sites/default/files/librarydocument/2010/6/lvisf2009arc.pdf>

[10] Levi Strauss & Co. 10-k.

[11] “Levi Strauss & Co. Joins Fair Labor Association.” PRNewswire, NY, July 20. <http://www.prnewswire.com/news-releases/levi-strauss–co-joins-fair-labor-association-73632052.html>

[12] Levi Strauss & Co. 10-k.

[13]Marati, Jessica. “Behind the Label: Levi Strauss E-Valuate Program.” Ecosalon: Fashion News & Culture February 8, 2012. <http://ecosalon.com/behind-the-label-levis-waterless-collection/>

[14] Winston.

[15] “Life Cycle of a Jean.” Levi Strauss & Co. <http://www.levistrauss.com/sustainability/product/life-cycle-jean>

[16] Murray, James. “Using less water with Levi’s latest jeans.” businessGreen:Sustainable thinking. Jun 20, 2011. <http://www.businessgreen.com/bg/review/2079960/water-levis-water-jeans>

[17] Levi Strauss & Co. 10-k.

[18] “Levi’s Water.” Vegan Shoes. Nov. 6, 2010. <http://www.vegan-shoes.com/2010/11/levis-water/ >

[19] Vegan Shoes.

[20] Boris, Cynthia. “Inspiration Alley: Levi, L.L. Bean and Angry Birds.” Marketing Pilgrim. March 23, 2012. <http://www.marketingpilgrim.com/2012/03/inspiration-alley-levi-l-l-bean-and-angry-birds.html>

[21] “Levi’s Water<Less Campaign: Water.org and Levi’s® Launch Water<LESS™ Campaign in Honor of World Water Day.” Water.org. March 22, 2012. <http://water.org/post/levis-waterless-campaign/>

[22] Vegan Shoes.

[23] Vegan Shoes.

[24] Water.org: World Water Day

[25] Brenninkmeyer, Roger. “Levi’s Watertank – engagement builds value.” Branding For Good. <http://www.brandingforgood.org/2011/03/levis-watertank-engagement-builds-value/>

[26] “Teaming up to Make a Difference.” Water.org. <http://water.org/landing/levis-waterday/>

[27] Water.org

[28] Water.org

[29] “GO WATER<LESS.” Levi’s brand website. <http://store.levi.com/waterless/ >

[30] Water.org: World Water Day

[31] Water.org: World Water Day

[32] “Levi’s Waterless.” M ss ng p eces. Behance, Inc. <http://www.behance.net/gallery/LEVIS-WATERLESS/908943>

[33] Ecosalon.

[34] “Life Cycle of a Jean.”

[35] Freeman, Edward. “Stakeholder Theory of the Modern Corporation.” General Issues in Business   Ethics: 38-49. Print.

[36] “Values & Vision.” Levi Strauss & Co. website. <http://www.levistrauss.com/about/values-vision>

[37] Kate_NFG. “Do Your Jeans Save The World?” Network for Good Blog. June, 22, 2011. <http://www.thenetworkforgood.org/t5/Companies-For-Good/Do-Your-Jeans-Save-The-World/ba-p/2517>

[38] “Life Cycle of a Jean.”

[39] “Life Cycle of a Jean.”

[40] Vijayaraghavan, Akhila. “Levi’s to Reduce its Water Footprint With Better Cotton Initiative.” TriplePundit: people, planet, profit. Nov. 7, 2011. <http://www.triplepundit.com/2011/11/levis-outlines-plans-reduce-water-footprint-better-cotton-initiative/>

[41] Network for Good Blog.

[42] “Life Cycle of a Jean.”

[43] Vijayaraghavan.

[44] Freeman.

[45] Brenninkmeyer.

[46] “Recognition.” Levi Strauss & Co. website. <http://www.levistrauss.com/about/recognition>

[47] Bulman, Leonie. “Levi’s show how to promote a socially responsible image using social media.” Wave: social media news from wavematrix. May 17, 2011. <http://wave.wavemetrix.com/content/levi-s-show-how-promote-socially-responsible-image-using-social-media-00765>

[48] M. Ehrgott, F. et al., Social Sustainability in Selecting Emerging Economy Suppliers. Journal of Business Ethics (2011) 98:99-199.

[49] Ehrgott.

[50] Vijayaraghavan, Akhila. “Leading Sustainability Consultancy Emphasizes the Importance of Value Chain Management.” Triple Pundit: people, planet, profit. Oct. 30, 2011. <http://www.triplepundit.com/2011/10/tomorrows-value-ratings/>

[51] Vijayaraghavan. “VCM.”

[52] Network for Good Blog.

[53] Network for the Good Blog.

_________________________________________________________________

Works Cited:

Boris, Cynthia. “Inspiration Alley: Levi, L.L. Bean and Angry Birds.” Marketing Pilgrim. March 23, 2012.                 <http://www.marketingpilgrim.com/2012/03/inspiration-alley-levi-l-l-bean-and-angry-birds.html>

Brenninkmeyer, Roger. “Levi’s Watertank – engagement builds value.” Branding For Good.                 <http://www.brandingforgood.org/2011/03/levis-watertank-engagement-builds-value/>

Bulman, Leonie. “Levi’s show how to promote a socially responsible image using social media.” Wave:   social media news from wavematrix. May 17, 2011. <http://wave.wavemetrix.com/content/levi-s-           show-how-promote-socially-responsible-image-using-social-media-00765>

Freeman, Edward. “Stakeholder Theory of the Modern Corporation.” General Issues in Business  

Ethics: 38-49. Print.

“Greenwashing.” Wikipedia: The Free Encyclopedia. Last Modified April 5, 2012. <http://en.wikipedia.org/wiki/Greenwashing>

“GO WATER<LESS.” Levi’s brand website. <http://store.levi.com/waterless/ >

“How do I know a fabric is ‘green’?” O Ecotextiles Blog July 13, 2011. Wordpres.com.                 <http://oecotextiles.wordpress.com/tag/terrachoice-environmental-marketing-inc/>

Kate_NFG. “Do Your Jeans Save The World?” Network for Good Blog. June, 22, 2011.                 <http://www.thenetworkforgood.org/t5/Companies-For-Good/Do-Your-Jeans-Save-The-World/ba-               p/2517>

Kate. “The 2010 Sins of Greenwashing study is here!”TerraChoice (part of the UL Global Network). Blog: November    8, 2010. <http://blog.terrachoice.com/2010/11/08/the-2010-sins-of-greenwashing-study-is-here/>

Levi Strauss & Co. Form 10-k for the Annual Report 2009. Pg 1-26

<http://www.levistrauss.com/sites/default/files/librarydocument/2010/6/lvisf2009arc.pdf>

“Levi Strauss & Co. Joins Fair Labor Association.” PRNewswire, NY, July 20.           <http://www.prnewswire.com/news-releases/levi-strauss–co-joins-fair-labor-association-  73632052.html>

“Levi’s Water<Less Campaign: Water.org and Levi’s® Launch Water<LESS™ Campaign in Honor of World Water         Day.” Water.org. March 22, 2012. <http://water.org/post/levis-waterless-campaign/>

“Levi’s Waterless.” M ss ng p eces. Behance, Inc. <http://www.behance.net/gallery/LEVIS-WATERLESS/908943>

“Levi’s Water.” Vegan Shoes. Nov. 6, 2010. <http://www.vegan-shoes.com/2010/11/levis-water/ >

“Life Cycle of a Jean.” Levi Strauss & Co. <http://www.levistrauss.com/sustainability/product/life-cycle-jean>

Marati, Jessica. “Behind the Label: Levi Strauss E-Valuate Program.” Ecosalon: Fashion News & Culture   February 8, 2012. <http://ecosalon.com/behind-the-label-levis-waterless-collection/>

“Marketer’s Guide.” 2009. TerraChoice Group Inc. <http://sinsofgreenwashing.org/solutions/marketers- guide/>

M. Ehrgott, F. et al., Social Sustainability in Selecting Emerging Economy Suppliers. Journal of Business   Ethics (2011) 98:99-199.

Murray, James. “Using less water with Levi’s latest jeans.” businessGreen: Sustainable thinking. Jun 20, 2011.                 <http://www.businessgreen.com/bg/review/2079960/water-levis-water-jeans>

“New ‘Green’ Ad Claim Regulations Coming Next Year.” Green Clean Certified. 2012.           <http://www.greencleancertified.com/green-cleaning-health/green-watch/FTC-Reviews-Guidelines-for-        Green-Claims/>

“Recognition.” Levi Strauss & Co. website. <http://www.levistrauss.com/about/recognition>

“Teaming up to Make a Difference.” Water.org. <http://water.org/landing/levis-waterday/>

“Values & Vision.” Levi Strauss & Co. website. <http://www.levistrauss.com/about/values-vision>

Vijayaraghavan, Akhila. “Leading Sustainability Consultancy Emphasizes the Importance of Value Chain                 Management.” Triple Pundit: people, planet, profit. Oct. 30, 2011.                 <http://www.triplepundit.com/2011/10/tomorrows-value-ratings/>

Vijayaraghavan, Akhila. “Levi’s to Reduce its Water Footprint With Better Cotton Initiative.” TriplePundit:             people, planet, profit. Nov. 7, 2011.<http://www.triplepundit.com/2011/11/levis-outlines-plans-            reduce-water-footprint-better-cotton-initiative/>

Winston, Andrew. “Avoiding Greenwash and Its Dangers” Harvard Busines Review: HBR Blog Network.                 April 15, 2010. <http://blogs.hbr.org/winston/2010/04/avoiding-greenwash-and-its-dan.html>

About Danielle Marquette

I'm a senior management major at Bucknell University. I took last semester off to work as a marketing co-op for a Johnson&Johnson consumer beauty brand. I'm from Douglassville, Pennsylvania. I have 3 younger brothers and 6 step-sisters. I could live on strawberries and pineapples.

Discussion

2 thoughts on “Successful Value Chain Management

  1. That is an impressive display of integrating stakeholder management. Where do they do all the “treating” of jeans? In overseas manufacturing? I was just curious from the video. It looked more like a lab than an actual production facility.

    Posted by Jordi | April 25, 2012, 4:14 pm
  2. How does Two Tomorrows get its info to asses firms, I wonder?

    Posted by Jordi | April 25, 2012, 4:18 pm

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