Louis Vuitton Chain Value Analysis

Topics: LVMH, Louis Vuitton, Luxury good Pages: 7 (4763 words) Published: October 8, 2014

Table of Contents
TOC \o "1-3" \h \z \u INTRODUCTION PAGEREF _Toc400385288 \h 2INBOUND LOGISTICS PAGEREF _Toc400385289 \h 3OPERATIONS PAGEREF _Toc400385290 \h 3OUTBOUND LOGISTICS PAGEREF _Toc400385291 \h 4MARKETING AND SALES PAGEREF _Toc400385292 \h 4SERVICES PAGEREF _Toc400385293 \h 5Summary of strengths and weakness’ PAGEREF _Toc400385294 \h 5LVMH – Firm infrastructure PAGEREF _Toc400385295 \h 7COMPETITIVE ADVANTAGE PAGEREF _Toc400385296 \h 7STRATEGIC CAPABILITIES PAGEREF _Toc400385297 \h 8Upstream and Downstream PAGEREF _Toc400385298 \h 10Questions for Business Law PAGEREF _Toc400385299 \h 12 Louis Vuitton

INTRODUCTIONThe Louis Vuitton company was originally founded in 1854 by Louis Vuitton Malletier in Paris as a company producing trunks. Even in those early beginnings they were able to create their own name by coming up with unique and new design and innovation in materials. This made its position even among aristocracy, what really strengthened the business. In 1892 his son, Georges Vuitton, inherited the company, focused on innovation, brought the firm into handbag business and LV started global expansion. However the Second World War brought end to this expansion and at the end the profitability and revenues were very low. Of this reason Renée Vuitton chose to bring in her son-in-law, Henri Racamier, the clever businessman, who put the company back to its feet. He started opening company-owned stores, pushed for rapid global expansion and stared acquiring another high-quality products companies. He also made an agreement with Moet Hennessy company and created Moet Hennessy Louis Vuitton group, but because of many disagreements about how to run the company, Racamier brought in a property developer Bernad Arnault to support his position. But rather than doing this, Arnault quickly acquired 45 percent of stakes in LVMH. After 18-month battle for control of LVMH control of LV slipped away from Vuitton family and Arnault became the CEO. LVMH was a competitor in the global personal luxury goods industry and included products such as perfumes, cosmetics, shoes, clothes, leather goods – handbags and accessories and hard luxury goods – jewelry and watches. The largest markets for luxury goods were in Europe and the United States, however the highest growth rate was in China. Customers were divided into three segments: absolute – individuals of high and ultra-high net worth, aspirational – top 10 per cent of income earners, and accessible – target customers for lower prices. Major growth role of the company was played by acquisitions, majority was in companies that produced high quality products, such as Givenchy or Sephora. After taking control of LVMH, Arnault brought in Wves Carcelle as CEO and under the partnership with Marc Jacobs LV flourished. The core of the company was in collection of leather product, but production included also a wide range of luxury fashion goods for women and men. Primary focus was on Absolute and Aspirational customer segments. INBOUND LOGISTICSEvery company consists of a collection of activities connected to every aspect of creating, designing, producing, delivering and selling its product. All of those activities can be represented by using the value chain by Michael Porter, which displays the total value and consists of value activities and margin. Value activities can be divided into two broad types, primary activities and support activities, and those are subdivided into generic categories. By comparing the value chains of competitors the company can evaluate its competitive advantage. We are now going to analyze the company Louis Vuitton by using this example. The first of the primary activities is called the inbound logistics and consists of activities involving receiving, storing and disseminating inputs to the products. Louis Vuitton controls all of the activities concerning production and so it does in sourcing materials. Their effort to keep the standards and quality high...
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