Table of contents
Introduction to LVMH
Porter 5 Forces Model
Louis Vuitton Moet Hennessy, a luxury goods provider is looking to expand their brand dominance in Asia. In order to expand successfully LVMH must evaluate challenges that may arise and get in the way of their successful expansion. In the Asian market, LVMH must deal with political and cultural uncertainties, the threat of counterfeit products, and the increased cost of products in Asia compared to France. LVMH should use their core competencies and limit their weaknesses to overcome the challenges that face the company in Asia.
To face their first challenge of political and cultural uncertainties, the company can hire local designers to develop Asian inspired products. They could also embed the European way of living into the Asian lifestyle. To entice the growing “new money” of the Asian market, the company can use celebrity brand endorsements, cheaper product lines and consistent global pricing. The challenge of eliminating counterfeit products can be combated by creating a unique shopping experience and shutting down large counterfeit operations.
LVMH can overcome the political and cultural uncertainties they face by hiring local artists such as Murakami Takashi to design goods that are targeted to the different Asian markets. To entice the growing “new money” of the Asian market to pay full price; LVMH can focus on celebrity brand endorsements such as using Yao Ming to market their products in Asia. To combat the counterfeit operations, LVMH can spend wisely to shut down large operations in the Asian Market. Introduction to LVMH and the Market
Louis Vuitton Moёt Hennessey- “A unique portfolio of prestigious brands.”[i] The LVMH Group came into being in 1987 with the merger of Moet- Hennessy and Louis Vuitton. LVMH is a luxury goods provider with over 1500 stores in 60 different countries employing 56,000 people all over the world. LVMH has 50 sub companies offering products in five different category lines: Wines & Spirits, Fashion & Leather, Watches & Jewelry, Perfumes & Cosmetics and Selective Retailing. “The group has nurtured the best of its brands’ unique expertise and powerful identities to become the world leader in luxury, a position it intends to maintain thanks to a strategy of sustained growth.”[ii] LVMH plans on expanding in Asia with their core values at the forefront of their growth strategy. LVMH has some obstacles that they must overcome in order to make this expansion successful including political and cultural uncertainties, the threat of counterfeit products, and the increase cost of products in Asia compared to France.
Louis Vuitton Moёt Hennessy (LVMH) is the world’s leading luxury products group. They have mastered this market in Europe and the United States as well as some parts of Asia. As a company, LVMH must decide if it is strategically smart to focus its efforts on Asia in positioning itself for future growth. In making this decision, they are faced with three main challenges.
First, LVMH must be willing to take on the political and cultural uncertainties that arise in Asia. Upon entering the market they were met by some activist groups and assumed special consumption taxes on their goods. Asian consumers were also worried about the shortage of designs, models, and colors available to the contrasting cultures of the continent. Other uncertainties LVMH could be traced to the Asian economic crisis of the late 90’s and the tourism dip due to the outbreak of SARS and the chicken flu. Lastly, cultural and religious differences prohibit the consumption of wines and spirits in some Muslim cities.
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