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Rahul Dasari

on 23 February 2014

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Transcript of LVMH

Internal Analysis
About LVMH
1573 Wen Jun
1593 Château d’Yquem
PEST Analysis
About LVMH
External & Internal Analysis
Porter's 5 Forces
Value Chain Analysis
Perceptual Map
Rahul Dasari
Arun Siva Sankaran
Nithin Gopalakrishnan
Girishima Johnson

International Strategic Management
Xiong Jie

LVMH Diversification Strategy into Luxury goods
16th Century
18th Century
19th Century
20th Century
21st Century
1729 Ruinart
1743 Moët & Chandon
1765 Hennessy
1772 Veuve Clicquot
1780 Chaumet
1815 Ardbeg
1828 Guerlain
1843 Krug
1846 Loewe
1849 Royal Van Lent
1854 Louis Vuitton
1858 Mercier
1860 TAG Heuer
1870 La Samaritaine
1895 Berluti
2000 e.Luxury
2001 De Beers Diamond Jewellers
2003 Cheval des Andes
2005 10 Cane
1908 Les Echos
1916 Acqua di Parma
1925 Fendi
1936 Dom Pérignon Fred
1945 Celine
1947 Parfums Christian Dior
1952 Givenchy
1957 Parfums Givenchy
1963 Miami Cruiseline

1973 Sephora Domaine Chandon
1976 Cape Mentelle
1977 Newton
1980 Hublot
1985 Cloudy Bay
1987 Parfums Kenzo
1993 Chopin
1995 BeneFit Cosmetics
1996 Belvedere
1998 Numanthia Termes
1999 Terrazas de los Andes
Ref: www.lvmh.com/uploads/assets/Com-fi/Documents/en/Reports/LVMH%20%20-%20Reference%20Document%202008.pdf
LVMH Profitability declining the demand for luxury. The company’s sales growth slowed in late 2001 and early 2002 as the effects of the terrorist attacks and lingering global recession.

Issue :
Consumers are Direct - Individuals who needs Luxury goods. ( Maximum Direct Consumers )
Individuals buyers that buy products through retailing stores. Specific retailers (jeweleries), department stores.

Raw materials suppliers (Eg: Leather)
Porter's Five Forces
Rivalry within the industry:

(-)Acquisition war

(-) Domination of big groups

Threats from new entrants are

(+) Brand image established

(+) High level of knowledge needed

(+) Capital requirement to acquire luxury brands

Power of Buyers :

(+) no impact on premium price

(+) brand loyalty

(+) differentation between products

Threat of Substitutes:

Counterfeit products

Power of suppliers:

(-) rarely for some raw materials

(+) low switching cost

Star brands: highly profitable and rapidly growing.
Company’s growth: diversification into a wild variety of luxury products.
Location: France

CEO’s capability: Arnault assembled nearly 50 luxury brands.
Human resources: training institute, technical expertise, creative designers, well trained craftsmen.

Value Chain Analysis
Inbound logistics :
Focus on quality raw materials

Technical expertise on each business units
High control of quality
High productivity

Marketing & sales:
Marketing in the worldwide,
Customer relationship management (pursue cross-selling opportunities) to create loyalty
Advertising the image of brand to increase desire
Control of retail channels, company-owned retail locations

High level of customer service

Firm infrastructure
Common internal communications system (LVMH pl@net): lowed business to share information through company intranets
Human resource management :
Created its training institute, craftsmanship (craftsmen training and refined for long time)
Hiring very dedicated people who love the brand

Technology Development
LVMH’s broad collection of business (6 business units),
Online information exchange system,
enterprise resource planning system
Cost savings from sharing technological knowledge

E-procurement of office supplies,

Value Chain Analysis (Cont)
Competitive advantage
LVMH’s corporate strategy: diversification into a wild variety of luxury products.
Retail: control of retail channels, use of company-owned retail locations, online information exchange systems.
Human resources: training institute

Core competencies
Corporate strategy
Online information exchange systems
Customer relationship management

Competitive advantage and
Core competencies
Business level strategy :

Corporate level strategy:
6 main business units

Current strategy
Financial Analysis
Revenue is increasing as the profit is declining.

Cost of some business units are higher than their revenue:
Fashion and leather goods
Perfurmes and cosmetics
Selective retailing

Problem : too much acquisitions out of their core competencies

Problem Detection
SWOT or TOWS Analysis
Market development
: Developing existing brands in emerging countries.
Concentrate on emerging countries
: China, India, Latin America
: Use of existing marketing skills to conduct market research to find consumer insights in these countries.
with local retailers.
roduct development
: Focus on developing products through e-commerce.
stores and social media webpage.
The company will follow the
existing organizational culture
: Share knowledge between brands to save costs.
Human resources
: Hire some specialized web designers to create websites.
Strong use of webmarketing tools to enhance profits.

Watch and Jewelry:
Stop contract
manufacturing for third-party brands.
Selective retailing
: Industry is unattractive and the competitive strength is not really high. LVMH can cut some retail in Asia-Pacific region.
Enable LVMH to make
cost savings from weak industries
and to improve the strong industry like fashion and cosmetics
the art and auctions brands

Wine and Spirits
Fashion and Leather goods
Perfume and Cosmetics
Watches and Jewelry
Selective Retailing
Other businesses

Product categories
Luxury Goods
Attractive industry

The most difficult is to establish itself regarding the high level of rivalry within the industry.

Key success factors :

Technical competences (design, manufactures…)

Built a strong brand image

Innovate to follow consumer preferences
Full transcript