qwertyuiopasdfghjklzxcvbnmqwertyui
opasdfghjklzxcvbnmqwertyuiopasdfgh
jklzxcvbnmqwertyuiopasdfghjklzxcvb
nmasdfghjklzxcvbnmqwertyuiopasdfg
hjklzxcvbnmqwertyuiopasdfghjklzxcv
bnmqwertyuiopasdfghjklzxcvbnmqwe
rtyuiopasdfghjklzxcvbnmqwertyuiopa
sdfghjklzxcvbnmqwertyuiopasdfghjklz
xcvbnmqwertyuiopasdfghjklzxcvbnmq
wertyuiopasdfghjklzxcvbnmqwertyuio
pasdfghjklzxcvbnmqwertyuiopasdfghj
klzxcvbnmqwertyuiopasdfghjklzxcvbn
mrtyuiopasdfghjklzxcvbnmqwertyuio
pasdfghjklzxcvbnmqwertyuiopasdfghj
klzxcvbnmqwertyuiopasdfghjklzxcvbn
mqwertyuiopasdfghjklzxcvbnmqwerty
uiopasdfghjklzxcvbnmqwertyuiopasdf
I. Time Context
This paper is tabled in the time of 2005
The focal point of this paper is viewed in the eyes of the
father of the LVMH Empire, Arnault.
III. Statement of the problem
By what means would the LVMH synergize their product
lines to sustain the thrust of its growth?
IV. SWOT Analysis
Strength Implication
Strong Brand Name
Long term Experience
Leading position in their industry
Premium quality reputation
The company is known worldwide LVMHs prestige brand focus is a key foundation of the groups strategy. It has the leadership in luxury product market "Strong Brand Name For LVMH" is an easily defendable qualitative factor, so competing institutions will have a difficult time overcoming it.
Weaknesses Implication
Single Market Target
Diversification
Conflict of interest within company (fashion vs. wine and spirits)
Forward and backward integration
Declining shares
Though the company targets towards high income earners, this leaves the rest of the market untapped where more sales could be made The luxury goods are very sensitive to the fluctuation of economy; any economic wave could influence its sales. LVMHs business largely depends on the economic situation of the buyer and broad acquisition makes no sense and could bring burden.
Opportunities Implication
Merger and acquisition
New consumer trends
New buying potential in Emerging markets
Improvement of way of selling their large product line
Product Extension
Celebrities
The company has been acquiring new emerging star brands which enable them to update themselves with the new trend. This also leads to producing new products to offer their growing customers all over the world. Celebrities have a major influence with what the latest trends are in clothing style. Many celebrities are seen wearing or using high end luxury items. Celebrities can be used as marketing tools to promote the companys latest products.
Threats Implication
Change of trends and consumer taste
Economic Recession
Competitor in smaller markets
Competition ( The strongest one is Gucci)
Fake Products
Harms on the companys reputation due to high quality falsification problems in coping with the recent economic downturn. A lingering global recession contributed to a worldwide decline in the purchase of luxury goods plus there are many fake imitators out there that take away from selling their own products to consumers.
V. Alternative Courses of Action (ACA)
1. Expand globally through acquiring potential star
brands and redefining low profit product line.
2. Product exchange innovation through E-commerce
and M-commerce.
V. Discussion and Analysis
ACA 1
LVMH includes a portfolio of 60 brands among the most known
Mot et Chandon, Hennessy and Louis Vuitton, TAG Heuer, Fendi, Marc
Jacobs, Guerlain, Kenzo and Givenchy. Bernard Arnault the CEO and
Chairman of the Board driven by strong managerial attitude have
accomplished a successful integration of the LVHMs portfolio, making the
company a unique conglomerate and the world's biggest luxury group.
LVMH brand success is achieved by strong management and know-how
in their industry. Bernard Arnault believes that a star brand must be
Respect for brand autonomy and a distinctive identity is a fundamental
tenet of LVMHs management philosophy.
The rationale of LVMHs creation through merger is to build the
luxury empire and create the largest conglomerate of luxury brands in the
world. This process entails the redefinition of a bunch of small and
fragmented industries into coherent and growing sector, which put into a
good position to dominate the markets. Arnault believed that the action
should be taken quickly when the few star brands are still available
before others realize it.
Tradition and vision lie with the brand, that the brand generates the
energy and motivation. Thus, the independence of individual brands has
been guaranteed during the pursuit of cross-brand synergy within LVMH
Group.
LVMH reflected the brand-centric culture. The headquarters flexibly
review each brands business plan on a case by case basis and are very
involved in deciding and assigning financial resources towards the
implementation of the strategic plans.
Strategic integration was established by formal dynamic and was
gradually institutionalized. It started with the integration of the Perfume
and Cosmetics branch, and then created the Fashion group and the
Watches and Jewelry branch. All the Wine and Spirits branch were
integrated. The Selective retails arm maintained decentralized.
By integration, LVMH aims to profit more from the synergies and
growth opportunities, and also take full advantage of the leadership
position. The centralized R&D team, purchases of supplies and the
merged critical services such as legal support improved the efficiency.
The new brand and the start-ups must gain the legitimacy to gain
access to distributers according to the strategy. Moreover, the niche
brands that take advantage of being a part of LVMH Empire did better.
Overall, the corporate strategy and the brand-centric strategies
succeeded by the improved efficiency, reduced cost and increased
revenue. The existed star brands had more resources and funds to
develop their business globally, whilst the small and new brands increased
portfolio and competition ability by taking advantage of LVMHs size and
capabilities in the face of a market consolidation.
The real synergies among the brands and the endeavor had mixed
results, but most of them were positive including reduced cost, specialized
functions, more dominated positions etc.
For LVMH to maintain its creativity in the luxury and fashion
business within its increasingly complex and cumbersome corporate
apparatus it must maintain the independence of the brands, flexibly adjust
the strategies based on the elements such as economy environment,
competition situation, the changing status of trend-setting etc., and never
stop pursuing excellence, maintain the brand aura and the desirability.
ACA 2
LVMH going online is one good strategy to boost its growth and at
the same time advertise its diverse products offerings to a wide range of
consumers.
The boom of the dot com era opened a lot of opportunities to
diverse business and institutions. LVMH can take this opportunity to make
its product line be known at a global scale. Investing in Information
Technology can also be LVMHs new lead against its competitors.
Through the creation of its website, LVMH can showcase its
product lines. It has to conceive a catchy website design and layout that
matches its brand image and luxury. Apart from aesthetics, it has to be
stable, dynamic, easy to navigate, and will be able to withstand the
demands of the payment process whilst ensuring safety and protection
against online theft.
Moreover, LVMH can also look into mobile commerce. Since it
caters high profile consumers who are mostly adept to the latest
technological and fashion advancement, mobile commerce can be a hit as
well. It has to develop application for mobile devices such as new product
offerings and LVMH news updates to its consumers. It also has to enable
its website to mobile compliant.
Focusing IT can present new business opportunities and LVMH
must adapt to the changing environment and consumer trend.
However, IT venture can entail huge amount of money for the
company. LVMH would be spending a lot for its website development and
maintenance, as well as for its M-commerce venture.
In addition, security is another issue that it needs to consider since
websites and online payments are most likely to be attacked by hackers.
VI. Recommendation
LVMH would be triumphant with ACA 1 (Expand
globally through acquiring potential star brands and
redefining low profit product line) in its course to address
the issues of expansion and leveraging its profit through
product line synergy.
VII. Action Plan