...Exchange Commission (SEC). Public companies also are faced with the added pressure of the market which may cause them to focus more on short-term results rather than long-term growth. The actions of the company's management also become increasingly scrutinized as investors constantly look for rising profits. This may lead management to perform somewhat questionable practices in order to boost earnings. There are also many advantages for a company going public. The financial benefit in the form of raising capital is the most distinct advantage, this capital can be used by the company to fund research and development alongside capital expenditure. Subsequently this may lead to an increase in market share for the company. 2. Bernard Arnault and LVMH acquired a large position in Hermès shares without anyone knowing. How did they do it and how did they avoid the French regulations requiring disclosure of such positions? LVMH had acquired the position under the radar of the Hermes family, company management and analysts by using equity swap....
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...Overall strategy of LVMH LVMH’s website states the following as their missiom statement, “The mission of the LVHM group is to represent the most refined qualities of Western ‘Art de Vivre’ around the world. LVMH must continue to be synonymous with both elegance and creativity.Our products, and the cultural values they embody, blend tradition and innovation, and kindle dream and fantasy. “ In 1987, Racamier agreed to a merger with Moët Hennessy, a company that was much more larger than LV, to form the Moët Hennessy Louis Vuitton group. Bernanrd Arnault, ranked as the fourth richest man in the world ( by Forbes, 2007) , was invited to invest in LVMH by the company’s chairman, Henri Racamier. Investing through a joint venture, Arnault ousted Racamier in 1990 and started to sweep a slew of fashion companies into the LVMH fold. Arnault is the chairman and Chief Executive Officer of Lvhm since 1989. Moët Hennessy-Louis Vuitton (LVHM) ; a world leader in high-quality products, possesses a unique portfolio of over 60 prestigious brands. The Group is active in five differentsectors: -Wines & Spirits -Fashion & Leather Goods -Perfumes & Cosmetics -Watches & Jewlery -Selective retailing First of all, the target audience is comprised of well to do individuals with high disposable incomes. Demographics of this target audience have some variability based on cultural differences in different geographical locations. The target audience is relatively focused...
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...SWOT ANALYSIS 2011 Kathrin Lindler – Zélie - Yohann – Laura - Pauline SWOT ANALYSIS 1) Internal Analysis Strenghts Weaknesses 2) External Analysis Opportunities Threats 3) Sythesis 1) Internal Analysis Strenghts Fame : Since 1854, the luxury brand has grow up every year. This continious developpement result is that Louis Vuitton is now present in 54 countries, 360 shops all around the world, and 11000 employees. The brand opens around 12 hops per year, so we can qualify the leather trader as a really successful brand. Quality : The Quality Chart of Louis Vuitton is one of the most strict of the world. All the products which does not fit exactly with the Chart are destroyed within the workshop. This process guaranties a blameless quality for every products. In this way, they reinforce their image of perfection. Manufacturing : In order to preserve a high quality and a perfect brand image, Louis Vuitton has choosen 3 countries to establish its workshops : France, Spain, and Italy. The reson of this choice is that these countries benefit from an excellent leather quality. Moreover, they are not far from the headquarters which are located in Paris. Having its workshops in European Union contributes to convey an impression of trust. Reptuation : According to “Le Monde Economie 2011” , students from business schools rank LVMH as “the company number one” they wanted to work for. Once more, we can see that they enjoy a noble...
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...Competitive advantage at Louis Vuitton and Gucci Using the VRIO Framework, we can test resources for their ability to contribute to competitive advantage. | Valuable? | Rare? | Costly to imitate? | Organized? | Competitive implications | Notes | Brand | | | | | Sustainable competitive advantage | Crucial –sets one company apart from the other. | Designer | | | | | Sustainable competitive advantage | Crucial to have a well-known designer, with skills and creativity. | Range of brands | | | | | Competitive parity | Not necessarily a competitive advantage. | Licensing and Franchising | | | | | Competitive parity | No clear competitive advantage. | Retail outlets | | | | | Competitive parity | No clear competitive advantage; since all of these brands have strong and well-located stores. | Location | | | | | Competitive parity | Not deliver competitive advantage. | After analyzing the table, we can conclude that only brand and designer are sustainable competitive advantages of the luxury goods companies. According to Prahalad and Hamel, the key resources to achieve competitive advantage are skills and technology, called core competences. For Kay, the most important resources to obtain competitive advantage are the ability to innovate, reputation and architecture. It is clear that all these resources are inherent to these fashion houses. For example, Louis Vuitton’s advantages come from its brand investment and innovation, reputation...
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...a public market? What risks and rewards come from a public listing? Although in its sixth generation of family ownership, a number of the family members wanted to ‘cash-out’ of the business. Ordinarily this would be affected by having other family members buy those shares or interests. But other family members did not either have the capital or interest in buying those interests. The solution was to list 25% of the company’s shares on the public marketplace, therefore accessing a liquid capital market for the firm’s shares. The risk of a public listing is the increasing reporting and transparency (information for customers, suppliers, and competitors), and the fact that any investor can purchase those shares – even LVMH. 2. Bernard Arnault and LVMH acquired a large position in Hermès shares without anyone knowing. How did they do it and how did they avoid the French regulations requiring disclosure of such positions? LVMH had acquired the position under the radar of the Hermès family, company management, and industry analysts, by using equity swap. Equity swaps can be structured so that only their value is tied to the equity instrument; at close-out the contract may be settled in cash, not shares. Using this structure, the swap holder is not required to file with the AMF, since they will never actually own the stock. 3. The Hermès family defended themselves by forming a holding company of their family shares. How will this work and how long do you think it will last...
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