External & Global Environment of Louis Vuitton in Japan Case Study Analysis

Topics: LVMH, Luxury good, Gucci Pages: 12 (1282 words) Published: June 22, 2014


Unit 4 External & Global Environment of Louis Vuitton in Japan Case Study Analysis Kaplan University
School of Business
MT460 Management Policy and Strategy
Author:
Professor: Ernest Norris
Date: June 9, 2014

External & Global Environment of Louis Vuitton in Japan
Introduction
This case study is on the external and global environment of Louis Vuitton (LV) in Japan. For many years, Japan has been Louis Vuitton’s most profitable market but the economic crisis has had a negative effect on sales; sales have declined in the past few years. According to Tokyo Fashion News in November of 2008, LV has “seen more than a 5% decline in sales in Japan so far this year” (para. 3). They attribute the decline to one of two things, the decline in the Japanese economy or that LV has fallen out of favor with the Japanese people. Synopsis of the Situation

With a decline in the economy, Louis Vuitton has been forced to open stores that offer a lower priced collection. The Japanese economy can no longer support the high-end collector name brands that it used to but Japan is in love with LV. “Based on sales figures and brand image indicators, we have compiled Asia’s Top Ten. It confirms what every luxe-loving Asian already knows: There is nothing to beat the charms of Louis Vuitton and Rolex” (Chadha, R. & Husband, Paul, 2006, para. 5). Key Issues

The number one key issue would be the decline in the economy. The second key issue is that the Japanese are looking for a good deal, good value to product. The third key issue is the number of competitors in the Japanese markets that offer luxury products. Define the Problem

In 2008, the economy in Japan and all over the world took a nosedive; people were worried about making ends meet and severely cut down on buying luxury items. People started looking for products that offer a better value for their yen and became more cost conscious of what they were buying. There is serious competition in Japan for the luxury market. Among the competitors are Rolex, Cartier, Gucci, Chanel, and Prada to name a few (Table 1.1). Alternative Solutions

One alternative solution would be to create a less expensive product and market it to a larger segment of the market. A second solution would be to improve the quality of their product and continue to market as a luxury item. A third solution would be to offer a middle of the line product available online that would draw the customers away from the other luxury item companies that would not require a storefront. Selected Solution to the Problem

The selected solution to the problem would be to offer a middle of the line product available exclusively online. By offering the products online the company would not be require to have a physical store for customers to come into. This would cut costs dramatically; there would not be the overhead of operating a store, paying employees, or paying the costs of running a store. This would also offer customers the convenience of shopping from home. Implementation

Implementation of this plan could be tricky. The company needs to make sure they have the capacity to handle a large volume of internet orders and they need the inventory on hand so they could ship items in a timely manner. Probably a million small details will need to be dealt with so the company needs to do some brainstorming with employees and management as to what problems may arise at implementation. Being prepared for any unforeseen problems would be very important before implementation, do not wait until problems arise to brainstorm solutions. By making sure they are prepared for orders, word-of-mouth advertising could be a huge advantage. Secondly, the company would have to make up a great advertisement campaign targeting the middle-class and the products that would be available. Recommendations

Louis Vuitton should start a marketing campaign focusing on the middle class in Japan...

References: Louis Vuitton Japan Lowering Prices. (2008, November 29). Tokyo Fashion News RSS.
Retrieved June 9, 2014, from http://tokyofashion.com/louis-vuitton-japan-
lowering-prices/
Chadha, R., & Husband, P. (2006, January 1). The Cult of the Luxury Brand: Inside
Asia 's Love Affair With Luxury
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