...STRATEGIC MANAGEMENT MGMT E -5000 LVMH Case Analysis By Kavya October 6, 2008 External Analysis for LVMH. Environmental analysis (PESTEL): See Exhibit 1 for comparison of PEST factors: Key findings on the analysis were: * The luxury goods industry was very sensitive to the fluctuation of the economy and any economic drift could have a great influence on its sales. * If the economy was depressed its sales growth went down sharply (e.g. SARS attack 2003) and so did the consumer spending for the luxury goods. * Socio cultural challenge for LVMH was to cater to the needs of the different target customers. (Middle class customers to elite group customers). * Although the luxury market seemed to be dull between years 2001-2003 there was a turnaround and the world economy was recovering enormously and LVMH net sales was still better than the average industry performance. * Positive economic climate (periods of relative prosperity with low interest rates and increased consumer spending), tax cut rates along with the optimistic attitude of the firm all favored the growth of LVMH. * There were enormous growth opportunities in new regions such as China, India and Russia. Inspite of the economic downturn, LVMH’s growth was positive and maintained its leadership position in the luxury industry. As the affluent middle class primarily drives the rapid growth of the luxury goods industry, LVMH needs to monitor them more closely and cater to their needs....
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...ANALYSIS3 3.1 Porters 5 Forces (Model of Competition)3 3.2 PESTEL (External Analysis)5 3.3 SWOT6 4.0 KEY FINDINGS OF ANALYSIS/PROBLEM IDENTIFICATION/ KEY STRATEGIC CONCERNS6 4.1 Vertical Integration6 4.2 Diversification7 5.0 POSSIBLE SOLUTIONS & STRATEGIES.8 7.0 CONCLUSION9 8.0 APPENDICES11 Appendix 1: Porters 5 Forces11 Appendix 3: Luxury Goods Group & Brands Top Ten Competitors13 Appendix 4: Industry Map*.14 Appendix 5: Financial Performance14 Appendix 6: PESTLE Analysis15 Appendix 7: SWOT Analysis16 Appendix 8: Evaluating industry Attractiveness and Competitive strength19 Appendix 9: A Nine Cell Industry Attractiveness-Competitive Matrix20 Appendix 10: Cross Business Strategic Fits20 Appendix 11: Evaluating the Strategy of a Diversified Company21 Appendix 12: LVMH's Timeline of Mergers and Acquisitions24 9.0 REFERENCES25 1.0 Executive Summary The aim of this paper is to discuss the key strategic issues that LVMH face and establish some future recommendations that can be implemented in order for LVMH to remain successful in the luxury industry. In order to determine the key strategic issues a number of analysis tools were applied to the case study; they include Porter's 5 forces model, SWOT analysis and PESTEL. It was found that the key strategic issues that LVMH face centred on diversification and vertical integration. A number of strategies have been proposed to offer some recommendations to LVMH, they namely in restructuring their retail sector, considering the concept...
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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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...4.1.3 Market Trends 4.2 Industry Analysis 4.2.1 Industry Participants/Key Players 4.2.2 Main Competitor analysis 5.0 Strategic and Implementation Summary 10 5.1 Marketing Strategy 5.2 Pricing Strategies 5.3 Promotional Strategies 5.4 Distribution Patterns 5.5 Marketing Program 5.6 Sales Strategies 5.7 Sales Forecast 5.8 Sales Program 6.0 Web Plan Summary 13. 6.1 Website Marketing Strategy 6.2 Development requirement Reference 15 1.0 Executive Summary 1.1 Objective This paper will tend to provide a brief introduction of Louis Vuitton, the famous and high price and high reputation luxury brand product originated from France. Later, this paper will further investigate on the information regarding the company’s products and services (product mix) and its marketing analysis and industry analysis in general. The strategies analysis and implementation of the strategies will be demonstrated and website marketing strategies by the company will be discussed as well after the implementation of the strategies plan. Lastly, a brief conclusion will be provided to summarize the entire marketing plan for LVMH. 1.2 Vision and Mission LouisVuittonMoët Hennessy group,LVMH, would represent the most refined qualities of so called "Art de Vivre" in France and around the world. LVMH will have to constantly with the balance and both elegance and creativity in the products. LV’s products together with the cultural values LVMH embodies, mixing old and...
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...LVMH: Diversification Strategy into Luxury Goods Strategic Issues By 2002, Moet Hennessy Louis Vuitton was the world's largest luxury products company, enjoying annual sales of 12.2 billion euros. LVMH carries the most prestigious brand names in wine, champagne, fashion, jewelry, and perfume. Upon entrance of this luxury product industry, LVMH was aware that they produced products that nobody needed, but that were desired by millions across the world. This desire in some way fulfills a fantasy, making consumers feel as though they must buy it, or else they will not be in the moment, and thus will be left behind. The LVMH business portfolio began to take shape in 1987 with the merger between Louis Vuitton and Moet Hennessy which was a four billion dollar merger. Over the course of time, LVMH has acquired over 50 luxury brands, such as Donna Karen, Fendi, and Sephora. They called it, "a collection of star brands and rising stars." LVMH found this industry to be timeless and modern, highly profitable, and very rapid growing. Despite all of the above mentioned, LVMH did experience some bumpy times. Some of these times were induced through internal problems, while others were caused by externalities, like Sept. 11. With such a wide range of product offerings, LVMH was on top of the industry in certain aspects, but has room for growth in other areas. One instance in particular nearly caused a division in the company. Hennessy believed the company should focus on wine, spirits...
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...Case 3-4: LVMH: Managing the Multi-Brand Conglomerate 1. LVMH’s diversification represents the group’s strong presence in the luxury goods market as a whole with products from the fashion and leather range, wines and spirits range, watches and jewelry range, perfumes and cosmetics range, and finally the selective retailing range. This strategy aims to claim market share in market segments that are interrelated with the specific customer segment as the common denominator. LVMH is a market leader in some markets and has a decent market share in others and aims to be the leader in the luxury market as a whole where the elite customers can recognize its brands from all of its product ranges and the company plans to build brand loyalty within those customers so that a customer who chooses LVMH for watches for instance, is also inclined to choose an LVMH product for wine and spirits. Diversification also spreads the company’s costs over a number of brands and the revenues as well so that it can always insure good rate of return for investors. 2. For a company like LVMH to compete on a scope that includes champagne, jewelry, fashion, cosmetics, and retailing is logical and even necessary for it to keep a competitive edge because its competitors have implemented the same strategy to fight for market share in the luxury market in all of its segments. The company’s policy aims to build the idea in their customers’ heads that they can always expect the same consistent high-end...
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...true competition in this industry lies not in the technical differences in products offered, but in the perceived extent of luxury status the purchaser will receive upon buying said luxury item. There are several players in the luxury goods arena that have all become household names across the world through their strategic positioning. Currently, Hermes is considered as the “top of the line” luxury goods brand, with Chanel in a close second. Ferragamo is considered to be at the lower-end. For the sake of this case, we will focus on the middle tier, which consists of Prada, Louis Vuitton (LVMH), and Gucci. Firstly, Prada is much smaller relative to many of the big players in this industry, but it has been actively acquiring and growing throughout the last two decades. What started as a high-end luggage company has expanded to a producer of all things luxury for both men and women, from luggage to apparel to accessories. As a result of this expansion, Prada’s sales grew by 25% a year from 1995-1999, with sales approaching $1 billion by 1999. Furthermore, Prada acquired a 9.5% stake in Gucci in the late in the summer of 1998, which they sold six months later to LVMH for a gain of $140 million. In addition to their product expansion and...
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...Term Paper Financial statement analysis report of: LVMH Hand-in date: 25.11.2010 Campus: BI Oslo Examination code and name: GRA 62123 Financial Reporting and Analysis Table of Contents EXECUTIVE SUMMARY 3 MARKET REVIEW: 4 COMPANY REVIEW 5 Management compensation 6 BUSINESS DESCRIPTION 7 Business Risk Analysis 8 FINANCIAL PERFORMANCE 9 Profitability 9 Activity Ratios 12 Financing and Liquidity 13 CASH FLOW ANALYSIS 15 VALUATION 16 CONCLUSION 17 References 19 Appendix 20 EXECUTIVE SUMMARY This paper analyzes LVMH group. Taking the recent developments and prospects in luxury goods industry as a starting point, the first part analyzed and compares LVMH with Hermes International and GUCCI, focusing in particular on performance which is analyzed through their activity, liquidity and financing and profitability position. The next part scrutinizes LVMH’s cash flow statement in order to evaluate its operating activities as well as the ability to cover its investments. The paper will conclude that LVMH presents a good investment alternative considering other companies in the same industry. Second, LVMH have a low risk given its solid financial structure and sufficient liquidity. Sales have grown at an average annual rate of 7.5% over the past five years driven by organic growth and acquisitions. MARKET REVIEW: APPAREL, ACCESSORIES & LUXURY GOODS INDUSTRIES Concetta Lanciaux, ex head...
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...LVMH Group Phase 2 Aaron Ward-Quick BMGT495 Section 6981 Miriam Redcay UMUC Dec 7 2010 The retail environment is always a very volatile market and therefore is subject to the whims of the economy. The luxury retail market can be especially volatile because it usually depends on the spending of discretionary funds. The numerous companies which make up the LVMH, conglomerate are all luxury brands and all face this issue. Realizing this situation the LVMH, conglomerate has to plan to a degree to work around this issue and be successful. The success of any strategy in regards to business deals with the scanning of both internal and external environment to evaluate which factors most greatly affect the business. Companies should also examine their management styles from development to execution in order to develop proper planning strategy. As we know companies employ these strategies to gain advantages or protect their place in their specific market. LVMH is no different in this manor, as policy and actions show which goals they have and which strategies are to be put into place to implement them. We are going to examine some possible issues and strategies and the justification for those strategies in the near future for this company. The LVMH Group is one of the dominant forces in the Luxury Brand industries. Considering where LVMH is in consideration to the other brands in the Luxury Market the only real issue for the company lays in their end goal. The end goal which can...
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...SEGi UNIVERSITY COLLEGE FACULTY OF BUSINESS AND ACCOUNTING UNIVERSITY OF SUNDERLAND UGB-202: Introduction to strategic management Course Work TITLE: Company profile COURSE NAME: BA (HONS) BUSINESS MANAGEMENT INTAKE: 14th FEBRUARY 2011 SEMESTER1 Level 2(February TO May 2012) MODULE LEADER’S NAME: LECTURER NAME: Ms. Malathi NAME: Oumoul Khairy Barry 109115296/1 Company profile: As it was required in class I’ve chosen a firm in the clothing or textile manufacturing according to the UK standard, which is Louis Vuitton or Moet Hennessy Louis Vuitton SA (LVHM). Louis Vuitton is a division of holding company, founded in 1854 by Louis Vuitton its self. The label is based in Paris, France. The key people in the company are Jordi constans (Chairman and CEO), Marc Jacobs (Art Director), and Antoine Arnault (Director of communication). The company is well known for its LV monogram, which is featured on most of its products. They are famous in producing luxury goods (ready-to-wear, shoes, watches, jewelry, accessories, sunglasses, and books), LV is a retailer industry. By 1989 Louis Vuitton came to operate 130 stores worldwide, the largest and most successful LV store is located in Paris (Champs Elysees). The most famous products of the manufacture are their bags and wallet, which attract mostly women. As for any firm Louis Vuitton has many competitor but the strongest...
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...1. Executive Summary Louis Vuitton Moet Henessy (LVMH) is one of the most demanded European leading corporations for luxury products. The corporation owns 60 different prestigious sub-divisional brands with more than 200 stores worldwide. In the current report, the LVMH’s distinctive major core competencies and the leading strategies will be analyzed in relation to its current external risk factors. The corporation’s sustainability is driven by its efficient strategic management of its internal and external environments. LVMH’s strength lies in its multi-divisional brand strategy which reduces the vulnerability to be influenced by particular external risk factors. The prominent positioning through mergers and acquisitions and the efficient human resource management also contribute to the corporation’s success in the market. However, as LVMH operates in the global market, external environmental factors should also be taken into account. These are, the changes of the global economic environments, structural changes of the major consumer market, and the risk of brand damage based on consumers’ perception. Since all these risk factors are both directly and indirectly related to the profit generation process of LVMH, this report will recommend some solutions to overcome the current risks, for example, focusing on its high profit products lines while it revise its low profit product lines. 2. Company background Since there have been dramatic growth of the emerging...
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...Introduction LVMH Moët Hennessy–Louis Vuitton SA, better known as LVMH (or the "Company"), is a French multinational group, which owns more than 60 prestigious brands around the globe. The group has its headquarters in Paris, and it is chaired by Bernard Arnault. The LVMH group was founded in 1987 as a result of the merger between Moët Hennessy and Louis Vuitton, which served to create the world leader in luxury goods. LVMH inherited a long history, and brings together noble professions, with deeply rooted traditions and a unique combination of internationally renowned brands. The activity of LVMH is mainly focused in luxury industry and its spectrum of products is divided into five generic fields (and their most recognised respective brands): * Wines & Spirits: Veuve Clicquot, Krug, Château d’Yquem, Château Cheval Blanc, Belvedere, Glenmorangie, Newton Vineyards and Numanthia Termes; * Fashion & Leather Goods: Louis Vuitton, Fendi, Donna Karan New York, Céline, Loewe, Givenchy, Kenzo, Thomas Pink, Berluti, Pucci; * Perfumes & Cosmetics: Parfums Christian Dior, Guerlain, Parfums Givenchy, Make Up For Ever, Benefit Cosmetics, Fresh and Acqua di Parma; * Watches & Jewellery: Bulgari, TAG Heuer, Zenith, Hublot, Chaumet and Fred; * Selective Retailing: DFS Galleria, Sephora, Le Bon Marché, Ile de Beauté and Ole Henriksen; Due to its brand development strategy, and the expansion of its international retail network (more than 3,000 stores...
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...LVMH: King of the Luxury Jungle SEPTEMBER 2009 Profit from temporary W&S woes to bag the stock at discount prices LVMH is the strongest player in the luxury goods industry, a giant in an industry where fixed costs make scale paramount; the only "two-legged" balanced player, leading with mega-brands in both Leather Goods and Wines & Spirits; enjoying stable group EBIT margins as a consequence Champagne consumer demand weakness, de-stocking and oversupply in 2010 are well understood; W&S concerns have depressed the stock close to 20-year trough multiples and in the same range of smaller and more volatile hard luxury players and other peers; an opportunity in our view On top of LVMH's unrivaled industry position, markets seem to under-appreciate cost-saving opportunities, brand-portfolio rationalization, higher FCF from lower W&S inventory investment, above-average mega-brands' results or support from first-mover EM inroads In a medium-term growth environment, LVMH has the chance to be a key consolidator in the luxury goods industry: a mega-merger with CFR would be a strategic master stroke, placing it ahead of any M&A counter move by competitors SEE DISCLOSURE APPENDIX OF THIS REPORT FOR IMPORTANT DISCLOSURES AND ANALYST CERTIFICATIONS LVMH: KING OF THE LUXURY JUNGLE 1 Portfolio Manager's Summary We have few doubts about the opportunity of investing in LVMH for the medium to long term. We expect "winners will continue to win" in the luxury industry...
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...discuss the key strategic issues that LVMH faced in Japan and established some future recommendations that can be implemented in order for LVMH to remain successful in the luxury industry. In order to determine the key strategic issues a number of analysis tools were applied to the case study; they include Porter's 5 forces model and SWOT analysis. Louis Vuitton Moet Hennessy, a luxury goods provider is looking to expand their brand dominance in Japan. In the Japanese, LVMH has to deal with economical and cultural uncertainties, the threat of counterfeit products and the relatively high competition, and finally changing tastes of Japanese consumers. LVMH should use their core competencies and limit their weaknesses to overcome the challenges that face the company in Japan. To face their first challenge of economical and cultural, as well as changing tastes uncertainties, the company can hire new designers to develop Asian inspired products. They could also embed the European way of living into the Asian lifestyle. The challenge of eliminating counterfeit products can be combated by creating a unique shopping experience for LV’s customers, and shutting down large counterfeit operations, by cooperating with Chinese and Korean Government Agencies in reducing counterfeit products. Table of Contents Introduction 4 Weak economy 5 Changing taste 7 Competitors 8 Competition – Porter’s 5 forces analysis 10 Consumer behavior analysis 12 Recommendation...
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...Gucci Group N.V. Case Brief Group: Synergy BI4242 Global Strategic Management Section 404 Submitted to A. Pattana Boonchoo November 25, 2005 Mission: The mission of the company is to be a successfully managed multi-brand group in the fashion industry, producing luxury products that will be enjoyed by affluent, style-conscious consumers. Internal analysis: Performances: After the new CEO get on the stage, the company starts increase its revenue. Now the company use acquisition strategy to growth. And now they already acquire 2 companies YSL and Sergio Rossi. Current strategies: At the corporate level, the company operates in two directions, which is vertical and horizontal. Horizontally, the company purchased companies in the same industry such as YSL Beaute, Sergio Rossi and YSL couture. This acquisition not only broadens the product lines the company carries; it also provides the company with more specific targets with each of its brands. Vertically, the company has integrated both forward and backwards. It established partnering relationships with some of its suppliers and also tried to gain more control over its DOS (directly operated stores). In integrating vertically, the company is able to more control the entire value adding process, thus able to provide the most value to its customers. Also, they will be able to control costs and the overall image of the brand. Although there are a lot of positive reasons for integration, the company still has to...
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