Was the expansion into multiple brands and businesses justified?
LVMH has business in all of the products such as, leather goods, fragrances/cosmetics, wines and spirits, specialty retailing, and auctions. One thing that got LVMH successful was the brand power that they made popular in every segment, which was helpful by using the name to sell more and attract more customers towards different products. The name itself will give benefit for the company if they want to sell different brands and expand their business.
HCMH was ranked number one in champagne and cognac, fashion and leather goods, and number three in watches and jewelry and perfumes and cosmetics. Again, this advantage got them to be on top of the line and justify them having developing different products. Their products are high on prices for luxury products, which would make them get the “rich” customers from every nation. They did not focus only on one nation but they tried to make it the best in all nations. LVMH controlled more than 50 luxury brands through the product lines and managed them by using vertical integration strategy that sold their products through small stores through out the world like Sephora and DFS Galleria.
LVMH was world leader in the wine and spirits business. They had tangible synergy for their products such as watches and jewelry that was a great plus because they used their expertise from their retail distributions and centralize their movement. This by itself proves that having different businesses is justified for LVMH to use any resources they have through out the world. Being the leader in most of the products got LVMH a competitive advantage over others and expanding the business would be a great idea for them.
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