Mis44284 - Lvmh Case Study

Brandon Skinner

MIS 44284-001-201910

LVMH Case Study

1. A.)         LVMH is a multinational conglomerate known for it’s high end luxury goods. The first element of LVMH’s competitive strategy is their large product portfolio. The company offers a wide range of products such as wine and spirits, fashion and leather goods, perfumes and cosmetics, watches and jewelry, selective retailing and others. Due to their wide product offering they are able to target many different markets around the globe. Another element of the companies competitive strategy is their brand image. The company has built a strong brand image by paying attention to the fine detailing in all that they do. They are able to utilize this attention to details, as well as focus on innovation and creativity to create a superior brand image. One more competitive strategy that LVMH utilizes is their continue growth and business diversification. The company has continued to look for ways to grow their brand and gain advantages from their acquisition for growth.

B.)         The different pieces have proven to fit together very well for LVMH. They have done this because through their brand image they are able to have them all work together for great success. However each piece can also work and function independently as well. This lets LVMH focus on continuing their growth and letting the different piece fit in how they will best.

C.)        The strategy for LVMH can be considered to still be evolving however also remaining similar. The company has continued to grow and evolve in their product offerings and innovations. With their on going addition of new products they continue to diversify their portfolio. This is however something that they have been known to do for quite some time.

1. LVMH’s corporate strategy choices have a direct influence on the companies competitive position in the branded luxury products industry. One of their current corporate strategies is leveraging global scales of economies. This specific corporate strategy helps strengthen the companies competitive position. It does this by lowering the overall operational and production expenses. This gives the company options to lower costs to gain competitive position or bring in more profit to continue to innovate or expand which also would strengthen their competitive position. Another corporate strategy that effects the companies competitive position is their global expansion strategy. This strategy has given the company a way to establish themselves in new potential markets. There is a corporate strategy that weakens LVMH competitive position as well. Their corporate strategy on high bargaining power can cause issue with their individual product lines. This in turn could lead to issues with that product and a loss of customers, which would weaken their competitive position.

1. LVMH’s international strategy could be considered either multi-domestic or global strategy. The reason it could be considered global is because the company operates globally. There are certain products that they sell like watches, perfumes, and clothing that generally consistent globally. Their production and distribution of these products are not concerned with local difference. The reason the strategy could be considered multi-domestic is due to the fact that there are portions of the business like wine and spirits that are regulated locally. LVMH have a unique strategy for each sector, and five product sectors are decentralized into the sub categories: production and distribution. The multi-domestic strategy also better deals with different languages and culture difference between regions better.

1. A.)        LVMH has built their company by offering a large portfolio of different products. Seeing that the company has been operating shown overall growth it does make sense that they compete in all the different segments. Operating in multiple segments lowers risk if a single segment starts to lose its competitive position. If that were to happen the company could utilize their other segments to make up for or help push that failing segment back into it’s competitive position. A lot of the segments LVMH operates in like fashion, food, and appeal are based on consistently changing trends. Since these segments can change more than others there is an increased risk in these segments. So, having the other segments lowers the overall risk the company faces.

B.)        Looking at the different segments that LVMH operates in there are two segments that are most important to growth and profitability. The segment of watches and jewelry have shown the highest recent growth compared to the other segments. Due to this increase growth this is the most important for continued growth. The segment of fashion and leather have consistently shown the highest total revenue for the company. This segment is the most important for profitability of the company.

C.)        The only segment of the company that has shown consistent negative revenue is the one label under other activities. Since this is the only segment that has had a negative revenue I see no point for the company to immediately be discontinued. If any of the segments began to show a steep decline or the overall market seemed to be declining it would make sense to discontinue that segment.