Lvmh: Hand Crafted Diversification

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Case Study
July 23, 2012
BUS J-401

LVMH: Hand Crafted Diversification

Corporate Strategy
2011 LVMH Revenue by Business Group
2011 LVMH Revenue by Business Group
Source: 2011 LVMH Annual Report
Source: 2011 LVMH Annual Report
Moët Hennessy - Louis Vuitton S.A, better known as LVMH, has developed an interesting corporation composed of numerous subsidiaries. Its corporate strategy is focused on diversification, primarily in the luxury goods sector. (Gamble) Their famous brands include Louis Vuitton handbags, TAG Heurer watches, and Sephora cosmetic stores. LVMH’s primary business group consists of Fashion and Leather Goods, and is presently responsible for about 36% of their revenue. (2011 LVMH Annual Report). Other business groups include Wine and Spirits, Perfumes and Cosmetics, Watches and Jewelry, and Selective Retailing. LVMH uses these business groups not only to provide value to its shareholders, but to also expand its initiative of developing quality, luxurious products and services. Portfolio of Businesses

LVMH participates in numerous industries, and therefore each industry has a different level of attractiveness. The Wine and Spirit industry for instance is highly competitive and has only allowed LVMH to have an 8% revenue growth from 2010 to 2011. (2011 LVMH Annual Report) On the contrary, the Watches and Jewelry industry, which has less competition, allowed LVMH to have a 98% revenue increase in this business group. (2011 LVMH Annual Report) LVMH breaks down its revenue growth into two categories, recurring and organic revenue. Recurring revenue is revenue that is from repeat customers, and is responsible for the largest percentage of growth for LVMH. However it is important to note that while the organic revenue growth percentage is less, that revenue makes up about 75% of LVMH’s total revenue. (2011 LVMH Annual Report) Synergy Amongst its Brands

While LVMH maintains each brand individually with its own corporate structure, there are...
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