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Transcript of LVMH
1573 Wen Jun
1593 Château d’Yquem
External & Internal Analysis
Porter's 5 Forces
Value Chain Analysis
MOËT HENNESSY LOUIS VUITTON
Arun Siva Sankaran
International Strategic Management
LVMH Diversification Strategy into Luxury goods
1743 Moët & Chandon
1772 Veuve Clicquot
1849 Royal Van Lent
1854 Louis Vuitton
1860 TAG Heuer
1870 La Samaritaine
2001 De Beers Diamond Jewellers
2003 Cheval des Andes
2005 10 Cane
1908 Les Echos
1916 Acqua di Parma
1936 Dom Pérignon Fred
1947 Parfums Christian Dior
1957 Parfums Givenchy
1963 Miami Cruiseline
1973 Sephora Domaine Chandon
1976 Cape Mentelle
1985 Cloudy Bay
1987 Parfums Kenzo
1995 BeneFit Cosmetics
1998 Numanthia Termes
1999 Terrazas de los Andes
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.
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:
(-) 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:
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.
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
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
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
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)
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
Online information exchange systems
Customer relationship management
Competitive advantage and
Business level strategy :
Corporate level strategy:
6 main business units
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
Problem : too much acquisitions out of their core competencies
SWOT or TOWS Analysis
: 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.
: 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.
: Hire some specialized web designers to create websites.
Strong use of webmarketing tools to enhance profits.
Watch and Jewelry:
manufacturing for third-party brands.
: 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
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