‘’ Represent the most refined qualities of Western Art de Vivre around the world.’’ This is one of the beautiful statements that have helped Louis Vuitton Moet Henessy (LVMH Group) to become the world's largest luxury goods corporation. The Groups portfolio consists of 60 different prestigious brands with more than 200 stores worldwide. In this report, LVMH’s distinctive competencies and the leading strategies will be analyzed in relation to its current internal and external factors. The research draws attention to the fact that the corporation’s success is driven by its efficient strategic management of its internal and external environments. LVMH’s strength lies in its brand innovation and diversification strategy, which reduces the exposure to be influenced by particular external factors. Their essential positioning through mergers and acquisitions and the efficient human resource management also contribute to the corporation’s success in the market. However, further investigations reveal that LVMH operates in the global market and this indicates that external environmental factors should also be taken into account. Some examples are, the changes in the global economic environments, changes of the major consumer market, competition from other luxury brands or imitators, and the risk of brand damage based on consumers’ perception. Since all these risk factors are both directly and indirectly related to the success of LVMH, this report will show strengths, opportunities and recommend some solutions to overcome the current risks. Recommendations discussed include:
! to continue to distinguish themselves from other luxury brands, and by continuing to acknowledge that their products are desires and not necessities; ! to have better relations with their customers, to increase customer loyalty, but also to get into the minds of the consumer to give the consumer what they desire, all the while staying ahead of the competition; ! to assign researchers to each specific business unit; ! to develop e-commerce but not lose exclusivity; ! to decrease costs by rearranging the production process without influence on the quality of products produced; ! to decrease production time; ! to continue improvement of profitability by further diversification of business; 2
Table of Contents
Strategies in Action
Introduction and History
Creating the world leader in the luxury goods segment Moet Hennessy and Louis Vuitton merged in 1987 founding the exclusive LVMH group including more than 60 companies.1 History and tradition create a certain standing in the luxury goods market and are one of the main factors resulting in the valuable brand image. Therefore, one of the biggest challenges for the French conglomerate is to inherit the different backgrounds and create an umbrella of perfection and quality with multiple brands, which are operating in line promoting the frequent qualities of Western “Art de Vivre” around the globe. Considering this issue, it is clear how important it is, for the various brands, to honor traditions and to constantly redefine themselves to meet the changing demands of the particular customers. Looking at the histories of Moet et Chandon and Louis Vuitton will further give an impression. The French winery and famous champagne house Moet et Chandon was found in 1743 by Claude Moet, The company’s products soon became popular amongst aristocrats and noble men and the company started to export its products around the globe. The vintage champagne Dom Perignon was the first prestige cuvee introduced in the 1920s and became a true success story. In 1971 Moet et Chandon merged with the world famous Jas Hennessy& Co creating Moet – Hennessy. The merger allowed both...