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Strategic Appraisal of LV

-Case Report

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................................................................................................................................................................................ 8 Part 2 – Internal Analysis...........15 References..................................................... 4 Economic Factors............................................................................ 7 Degree of Rivalry......................11 Part 4 -----Issues and Challenges.........................................................................................................................................................................Strategic Options for Growth.......................................................................... 7 Buyer Power...................................................Recommendations and Conclusion................................................................................................. 9 Part 3 – Corporate and Business Strategy........ 5 Environmental Factors............... 6 Industry Analysis – Five Forces Model............................................................................................................................................................................................................................. 5 Technological Factors................... 4 Social-Cultural Factors. 7 Supplier Power...........................Contents Introduction and Company Background................................ 8 Threat of Substitutes.......................................13 Part 6-....................................................................................6 Threat of New Entrants.... 16 2 .................................................................................. 6 Legal Factors..................................................................................................................................................................................................................................................................... 4 Political Factors... 12 Part 5-....................................3 Part 1: External Analysis......................................................................................................................................................................................................................................................

books and accessories. Their vision is usually based on the product excellence and make their products innovative and creative with their product designs. sunglasses. Louis Vuitton's division LVMH accounts for more than 20% of the sales in the US while 30% of sales within Europe that incorporates 11% sales within France. Asia is Louis Vuitton's single biggest market that represents above 35 percent of the sales. Louis Vuitton is pioneer in the global based fashion houses and the products are offered through lease departments in high end department stores.Introduction and Company Background The report is about the strategic appraisal of Louis Vuitton which is mainly a French based fashion house and founded by Louis Vuitton in 1854. jewelry. e-commerce website and standalone boutiques. from luxury trunks to shoes. 3 . This particular powerhouse of luxury operates around 3385 stores crosswise over North America. Europe has 33% of its stores. As mentioned earlier. However. The mission of the company is to make a provision of the quality products and to make then available to such a segment of people who can definitely afford to pay for the quality they provide. watches. Europe and Asia which incorporates Japan and China as well. The report will incorporate a brief background of the company as to its core business emulated by the industry it operates in. the products of Louis Vuitton are fashion based that range from leather goods to ready to wear.

directors. America. environmental. Japan emulated by the remaining countries in accordance with their region. Political Factors The market for luxury goods can segregate into Europe. In general. All such factors are analyzed below in detail. owners themselves emulated by the community from which the business draws its resources. suppliers. Asia-Pacific. and legal factors. the countries having significant consumption of the luxury goods have a political environment that is to some extent stable within the most recent years. Subsequently. 4 . 2015). sociocultural. The import duty being high could be found to be a significant reason as to the differences in the prices within different nations. there could be a formation of the grey market within the nations that have significant differences within the price. the travelers from different nations filled gap.They key stakeholders for LV incorporates the customers. economic. employees. However. Part 1: External Analysis The external analysis of the Company will incorporate a PESTEL analysis that incorporates political. the financial turmoil of the government along with the some of the government's measures related to austerity demonstrated a fundamental debilitating demand of such luxury goods for the local individuals (Manlow. Be that as it may. The approach related to import duty within diverse nations is another variable ought to be considered within the industry. technological.

Such a behavior results in a competitive advantage within the luxury brands of Europe. n. on the grounds that they need to buy more products which are exclusive in nature (McCutcheon. Keeping in mind the end goal the eradication of the impact of exchange rate. The world economic condition within the world has been slowly recuperated. The rate of growth will be quite distinctive which being measured with nominal and euro terms.d. and in accordance with the high demand and popularity in the region of Asia Pacific makes a contribution of significant industry revenues and due to this particular reason.d. A recession phase was encountered by the world economic around 2008. clients in diverse nations have distinctive buying behaviors. the locale will have high rate of growth by anticipation within years (McCutcheon.). the measurement of the constant exchange rate ought to be utilized. Presently.Economic Factors The industry's significant firms are located within Europe due to which the exchange rate of Euro will be found to be an industry's essential element. Here the example could be that the customers of some nations are willing and agreeable to move far from regular perceived brand. which decelerated the price increase rate of the product. individuals prefer to travel between distinctive nations.). a large portion of the customers give prominence to the luxury products that are usually Europe based than those made in US and Asia. Social-Cultural Factors In the industry for global luxury goods. Also. Such travelers are found to purchase different luxury goods amid 5 . the market for luxury goods has around steady growth rate of 15% on a nominal basis. Moreover. in light of the expanding pace of globalization. n. Another imperative factor on an economic basis is the economic condition throughout the world.

d. Environmental Factors The worldwide industry for luxury products can have a negative effect or influence to environmental viewpoint if the factors of manufacturing have poor abilities related to the control of pollution (McCutcheon. Such a method can offer organizations some assistance to be able to reach more potential clients living in regions that don't have physical stores of the brands. The industry for the luxury goods ought to notice to conform the basic demand between the tourists and local people in the region of Europe. The advancement of the technology additionally offers some assistance to the industry to efficiently manufacture products. In accordance with the automotive machine introduction.the trips. it diminished specialization level of the employees partly and expanded efficiency and productivity. Technological Factors Since the online method of shopping became more widely popular. the automation enhancement and improvement likewise can weaken the brand appeal.d. the vast majority of luxury organizations developed their shops online to make a provision of the convenient and reliable customer experiences. A few organizations likewise demolish as opposed to marking down their product in excess with a specific end goal to keep the value of the product.). n. the tourists from China contributed more than 33% of the European sales. on the grounds that the absolute segments of the customer by and large need products which are artisans produce (McCutcheon.). On the other hand. n. Moreover. which may recycle pressure and cause 6 .

A large portion of the organizations have a history of over 100 years and that the brands of such organizations rely on their tradition and legacy. Indeed. For instance. yet the case did not make a provision of the adequate information to the environmental viewpoint. Industry Analysis – Five Forces Model The five forces model will incorporate the degree of rivalry. the customers would value the products by the brands they mainly prefer. and threat of substitutes. however it is mainly confined by law. the requirement within the French law is that one organization ought to detail out its purchase related activity to the other organization on the off chance that it holds an ownership of more than 5%. supplier power. In the event that the organization utilizes different approaches to go around the law. Legal Factors Acquisition is one of imperative strategy to develop the size of organizations along with profitability. if a new company wants to step within the industry. the threat of new entrants is generally very low. it may confront the issues of lawsuit later on. In this specific industry.additional waste. 7 . buyer power. there would be a need to invest a significant amount of initial capital and that it would be entirely hard for the organization to develop a significant reputation within a short time period throughout the world. threat of new entrants. This will make an analysis of the industry as below: Threat of New Entrants In this particular industry.

There are mainly three segments of customers within the industry that incorporate 8 . Moreover. be that as it may. Due to this particular fact. Buyer Power In the industry for luxury goods. contending with the qualified facilities of the manufacturing throughout the world (Raymundo and Moon. The facilities of manufacturing in distinctive nations have diverse material and labor costs that can prove to be a significant factor restricting the power of suppliers. Degree of Rivalry Within the industry of personal luxury goods. suppliers ought to fulfill the requirement of significant quality of the parts of components and in addition to this. They initialize their business in European zones and have basically a long history. it is concentrated. 2014).Supplier Power The supplier power is extremely low since they are decentralized relatively and more than this. the level of buyer power is low to moderate. the degree of rivalry is found to be moderate. they all make a provision of the services and products that are exclusive and hence. A large portion of organizations have some characteristics that are particularly common. These organizations don't need contend over price. 2014). Numerous organizations only source the component parts and have their own particular facilities related to in house manufacturing. within the industry. the industry has some of the large players and therefore. there are only few significant luxury companies that dominate the fashion industry. they have a significant overlap of the category of the products. reputable due to their bands and that they have served throughout the world a little quantity of wealthiest customers (Raymundo and Moon.

however they additionally have lower commitment to the growth of the industry as compared to the other customer segments. Such customers are found to be within the group that is categorized as price insensitive while expecting products that have high price which cannot be found affordable by most of the people (Solomon. Subsequently. By and large. the industry for the worldwide luxury goods has still a high potential of growth within the future. the revenues of the organizations won't be influenced significantly by a one region or a country. 2010). Organizations ought to additionally be cautious about expanding effective production and retain the brand's heritage value. watches. accessible and absolute. The customers being accessible might buy products that have relatively lower price. In spite of the fact that the products. perfumes. Threat of Substitutes There is absolutely no direct substitution for the luxury goods. for example. However. The absolute and aspirational segments value the quality of the products than the price of products.aspirational. the price can be controlled within the industry and that a high level of annual growth can be retained. Apart from this. They look for products that are impeccable and have a high net worth. the aspirational and absolute won't prefer such substitutions. The industry for luxury goods is an industry with high potential growth opportunities and minimal 9 . jewelry. The significant thing is to keep the parity of development between distinctive nations. the market for the luxury goods is globally based. the other segment named as accessible segment is found to be price conscious yet they willfully purchase products with high price due to their quality which is comfortable in nature. cosmetics that are found to have substitutions with lower price.

guarantee of the lifetime repair along with the knowledge of potential customer segments. the intangible resources would include the knowledge or idea as to how the leather can be processed emulated by the skills in the manufacturing of luxury and leather goods. Part 2 – Internal Analysis The internal analysis can be explained in three steps. two main groups can be witnessed. However. The first will be the value chain analysis of Louis Vuitton emulated by the Competency framework and lastly. licensed stores. They are named as Tangible. This mainly depends on the unique capabilities that a company has. This would also incorporate creative and design talent. The LV resources can be explained as to what they mainly have and hence. It is a true fact that a company needs to have a competitive advantage over the competitors within the industry. the VRIN framework.external risk. 10 . whole distribution control. machines. trucks. tools for the processing of leathers. While looking at the value chain model of Louis Vuitton. Such companies have a great authority over price control and therefore. possibility of the VIP membership. which incorporates testing robots. they have the capability to grow in a sustainable manner. They are generally needed for the survival of the company on a long term basis. it can be easily distinguished. factories or buildings. distributors. e-commerce website. leather farms and customers. yachts or apartments. There are just couple of extensive players in this particular industry and they serve to the most affluent individuals throughout the world.

Within such strategic capabilities. The VRIN framework is detailed out below: Value: LV is a valuable brand as it makes a provision of value to the customers and along with this. This incorporates distinctive capabilities which are generally required for the competitive advantage and threshold capabilities which are needed in order to fulfill the basic requirements needed within a particular market (Vuitton bags the affluent customers. strategic capabilities can be attained that are found to be vital components for the survival on a long term basis along with the company's competitive advantage. While associating the competencies and resources. 2005).Their capabilities include the control over the process of manufacturing the products that Louis Vuitton make and such control make sure that the products are manufactured as per the acceptable standards. For identifying the competitive advantage. which acquaints with the idea of strategic capabilities. With the involvement of the machines into the production. the brand makes a contribution of high profits for the company. a VRIN framework is identified. 2005). A company has a dire need for the capability to recreate and renew the strategic capabilities with a specific end goal to address the issues of an evolving situation. They also implement a program for the employee training and also make an adoption of the reorganizing of the manufacturing line. they have the capability to enhance the production efficiency (Vuitton bags the affluent customers. 11 . there can be a recognition of the two particular types. They also have a strong control over the distribution and that everything is mainly provided and delivered at an exact time and appropriate place and situation.

e. Implacability: This particular brand LV is not easy to imitate as it is based on quality and heritage and it is not well known as to what can make a contribution to the brand success. 12 . Only some companies are based on quality and heritage but there is no company which contains the exact perception of the brand in accordance with the quality craftsmanship. Customers that are not that much loyal to the brand would definitely prefer to purchase from different brands within the industry of luxury goods. In accordance with the framework of VRIN model. In the meantime the quality of the goods of LV is particularly identified with their image emulated by the product quality for which they don't compromised. the brand is found to be rare. Non sustainability: The brand of LV is found to be at a substitution risk. it is obvious that the strategic capabilities of Louis Vuitton satisfies each of the four criteria within the framework of VRIN to a great extent. when LV introduces new products within their effective range that exists already. quality craftsmanship. Such imperative strategic capabilities are interrelated. All the three attributes of VRIN are found to be cornerstones for the success of LV. The brand of LV dis primarily based on history and heritage due to the fact that they have qualify craftsmanship. Therefore. they do it gradually to guarantee the product quality while satisfying the desires of the customers and particularly that it satisfies what their brand is known for i.Rarity: From the attributes of LV.

This develops a significant link between customers and product development personnel which places the experts of the brand within the control center for their specific products (When art meets fashion. It mainly deals with the luxurious fashion based products that range from wines. They merged with LVMH in 1987. Along with this. They focus usually on the 13 . jewelry.Part 3 – Corporate and Business Strategy The business level strategy incorporates Generic and Functional Strategies. In accordance with the generic strategy. As per the functional strategies. LV mainly focus on differentiation within the manufacturing and product design. stable financial health and have qualified materials. They have substantial resources that can react to the dynamics of the competitiveness of the luxury industry. Their have their own manufacturing equipment and distribution centers. This indicates that all of the products that are produced by LV can only be bought through the verified stores of LV. The materials are of a premium quality for all of the products. the have an efficient and quick production of the products. LV utilize the operational method to manufacture and distribute the products. Their Corporate level strategy significant includes global strategy. 2014). Their brand image is reputable. They make a provision of the high quality products that appeal to a narrow customer segment. Their global product structure deals with different aspects and products of the business segregate. leather products and spirits. Such high quality with high price appeals a narrow customer segment as mentioned earlier and this is generally know as the narrow market scope strategy. They have also adopted vertical integration that allows them to have a control on their products directly.

2014). Their corporate level strategy is associated with LVMH which is a parent company. absence of media for its establishment and awareness and lack of open stores. Apart from this.uniqueness and quality of the products. It does not incorporate a unique organizational structure and that the group members have their own organizational structure.e. The control measures are employed for meeting the organizational goals and that one control within that incorporate website and specific outlets. They had to face the challenges to make a recognition of the potential target markets. Along with this. accessories and other luggage which imitate the look of LV. it does not incorporate authenticate street resellers. This indicates that the culture within the organization targets class and quality. Part 4 -----Issues and Challenges The issues and challenges of Louis Vuitton include both internal and external challenges. This incorporates the expansion of Louis Vuitton in India or generally the marketing of this particular brand in low to moderate income nations. their establishment in Asia (When art meets fashion. 14 . They have been going through some of the significant challenges that is associated with international marketing i. But it has definitely faced and still has to face the marketing challenges in order to remain reputable and within a top notch position within the industry. it has generally a significant competitive advantage. it also has to file a trade complaint within US in order to seek for the imports of US from China for the handbags. In accordance with their distribution network.

Fendi and Dolce and Gabbana. For the purpose of this. 2015). Louis Vuitton should consider the new product line of sunglasses which got developed in 2005 to the new segment of the market. More than this. This is detailed out below: Ans-off matrix is significant tool for marketing which basically determines a direction for the marketing team to plan for the current and non current products within the new and existing markets. This would particularly develop the authenticity of their product symbol and status which would be developed through the personalization and customization. Such brands are targeted to men and women but the fact 15 . they can solidify the brand exclusivity and enhance sales while increasing the advertisements that could target the painting and hot stamping services. It can be said that LV is already competing for the counterfeit market which damages the brand equity. The market is found to be saturated with designers like Dior. Since this product is found to be evolving as a symbol of trendy status. The second quadrant is the market development. advertising through the vehicles like Vogue magazines could be the best approach. The first quadrant for the Ans-off matrix is market penetration. It incorporates the taking of a current product and making an entry to the new market.Part 5-. Ans-off matrix will be analyzed. Their approach could be through the depicting of the appealing and attractive models along with customized and personalized handbags for the purpose of creating their label within the target market regarding their services (David.Strategic Options for Growth For strategic options for growth.

e. There is a major amount of the households that can find the LV products affordable and hence. Moreover. Some of the popular brands for children like Juicy Couture and Diesel cannot be considered as a luxury products for the defined target market and LV can have a competitive advantage for this. the product development incorporates the development of a new product within the current market. This can include a development of the products for children. the SFA framework can be detailed out below: 16 . In accordance with the product development. Positioning this for men as a luxury eye-wear would be considered generally profitable. the strategic choices made above should be evaluated in accordance SFA framework to explore if such options can be adopted by LV.is that eye-wear is generally prominent to the women. It is a well known fact that the Dior brand is owned by LVMH that has a great increase in the fragrance business market share and Louis Vuitton can adopt for the capitalization of this particular market and develop a line of flagrance related products which would target both men and women that would purchase the current luxury accessories and apparel (Raymundo and Moon. 2014). LV can definitely retain a great market share within the industry for children’s apparel. The third quadrant i. LV has already launched a significant quality of children shoes. They can attain a significant profit from this. The last quadrant will incorporate diversification which means the introduction of a new product to the new target market.

This would further indicate that LV would be capable enough to have this particular product within the only zone that they don’t have any current product. Feasibility: The product development will prove to be determinant in accordance with the ability to provide innovative and quality products and hence the financial strengths would get to be stronger. With the launching of the above mentioned new product. it will definitely allow LV to generate significant revenues due to their increasing demand. Their production line will incorporate a new product. Acceptability: The Company’s stakeholders would accept the strategy since they are well aware of the fact that with the venturing into this specific product would let the company’s revenues to enhance and be competitive within the industry.Suitability: The strategy is found to be quite appropriate since the product establishment would result in having a product in almost each and every group of the industry for luxury goods. This can further lead to the foundation of new 17 . The brand image and recognition can be enhanced through the product development.Recommendations and Conclusion From the above analysis. They can enhance their firm as one of the pioneers within the industry. the company LV has a strategic benefit to enhance profits and revenues. it can be said that the product development implementation can be chosen as the best one. it would mean that they need to invest a lot in R&D and hence. Their production capabilities can also be expanded. They can gain a lot from their investment in research and development. From the above illustrations. Part 6-.

there is a significant and general expense risk. 18 . There would be substantial costs for the research and development (Manlow. there are some of the threats and risks for this. They had seek for a new expertise for the development of the perfume with high quality grade. This can incorporate an increase in expenses without any success assurance. 2015). Ultimately. However.manufacturing facilities for the product production.

(2015).d.163-173. Experiential luxury shopping at the Louis Vuitton Flagship in Paris: Dramas of identity. 11(2). pp. Louis Vuitton and Marc Jacobs. J. Designs. J. Paris: Schiaparelli. 63(2). Please adjust word count from 3150 to 3500 words (excluded references) 3. Solomon. Learning from Louis Vuitton. It should not have any page number on this.175-195. Raymundo. Journal of Investigative Cosmetology. Critical Studies in Fashion & Beauty. McCutcheon. SSRN Electronic Journal. 21(7). pp. A Study on Color Sensibility Image: Focus on Louis Vuitton Advertisements from 2003 to 2009. pp.). V. pp. Manlow.5-7. pp. J. (2015).23-40.References David. 5(1). Clothing Cultures. and Moon. 3(1). Strategic Direction. 19 . Journal of Architectural Education. When art meets fashion. (2005). Prada. (2010). pp. 4. Word count of introduction and company background is expression as lecturer advises to me that “don’t too long”. 30(2). Comment 1. Parody and Artistic Expression A Comparative Perspective of Plesner v Louis Vuitton. (n. New York. 2. C. (2014). Please spell check and check the grammar check Please fill in the table of content. S. (2014).67-70. Strategic Direction. Vuitton bags the affluent customers.5-7.