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Lvmh

In: Business and Management

Submitted By ilario
Words 1313
Pages 6
Case Study LVMH: Managing A Multi-brand Conglomerate

Team 5:
Ilario Fulvio Giannetti Chen Peng Priyesh Salunke Harjeev Sabherwal Inna Zinina

What does globalization mean to the luxury industry?
Opportunities • Market expansion • Low-cost raw materials, equipment and labor available in the local market • To achieve economies of scale and scope • Increased margins due to pricing policy • New consumer groups available in the local market • Extension of the definition of luxury • To adapt local and new trends for the local market • To source talent globally • Transfer of skills and strengths Threats • Counterfeiting • “Grey” market • Vulnerable to PEST-EL Factors • Successive decrease in brand value • Increased competition • Creation of new competition by sharing know how

Conclusion Although there are significant number of threats to the luxury industry, globalization is unavoidable for continuous growth.

Assessment of LVMH’s diversification
LVMH diversification

25%

8%

5%

4% 18%

60%

35% 38% 18% -2%

Sales

Operating profit

Wines&Spirits Perfumes&Cosmetics Selective Retailing

Fashion&Leather Goods Watches&Jewelry

Assessment of LVMH’s diversification
Strengths
• Share operational resources and competencies' across brands and divisions • Maintaining exclusivity by multiple brands under one division • Strong Balance Sheets help to absorb losses from unprofitable divisions and maintain position • Selective retailing complements other brands by providing easy access to all brands

Weaknesses
• Difficulty to manage various divisions • Different organization structures in countries may cause problems in administration and coordination • Lack of attention and neglecting the smaller brands • 98% of operating profits are generated by 2 major divisions

Conclusion Although diversification helps in leveraging the synergies, it

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