Final Case Exam: Louis Vuitton
Submitted by
Daniel Ansah
103183107
Submitted to
Professor Tony Mao
University of Windsor
04-75-498-30
Saturday August, 14, 2014
TABLE OF CONTENTS
I. KEY ISSUE 1
II. EXTERNAL ANALYSIS 1
Industry 1 Key Success Factors 1
PESTEL 1
PESTEL Summary 2
Porter’s Five Forces 2
Porter’s Five Forces Summary 3
III. INTERNAL ANALYSIS 3
Louis Vuitton’s Strategy 3
VRINE 3
VRINE Summary 4
Financial Analysis 4 IV. CONCLUSION 5
Decision Criteria 5 Alternatives 5 Decision Matrix 6
Recommendations 6 Implementation 6 Short Term (0.5 – 1 year) 6 Long Term (1 – 5 + years) 7
Contingency Plan 7
KEY ISSUE
In recent years, Louis Vuitton’s actions have caused the company to sacrifice one or more of
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Regardless of the financial tool or metric used, the industry is growing steady all around the world. With the largest gains in the last few years in China but who are still behind North America and Europe in total market share in the global industry. Consumers in the lowest personal income bracket (accessible) of the three customer segments (absolute, aspirational and accessible) are recovering from the 2008 economic rescission. This factor is predicted to grow the industry in the next couple of years as these consumers re-enter the market. The top two segments are fairly immune to economic recessions because of their large personal wealth. This allows them to take a financial hit while still maintaining a lifestyle they are accustom to.
Sociocultural: Luxury goods by their very definition are not a necessity but in the top two customer segments (absolute and aspirational), to a lesser extend the accessible segment, they are deemed to be necessary. As a result, the sales of the goods of the industry remained fairly steady during the recession mainly due to those two segments. Consumers in different markets react differently to changes in the industry and that needs to be accounted for, when making decisions regarding production methods and pricing. For example, in China consumers are more brand conscious and as such when logo brands become less exclusive there was a shift in buying habits from the absolute and aspirational segments. As
This report has been created with the intent to analyze the athletic apparel industry with a specific focus on Lululemon Athletica, Inc., further refered to as Lululemon. In this report you will find that the strengths and weaknesses of Lululemon’s current strategies and future goals are analyzed and compared to that of its closest competitors. In conclusion to the analysis, recommendations have been made to potentially guide Lululemon Athletica, Inc. in a positive direction in regards to its future endeavors. The following
Louis Vuitton “was established in France in 1854 by Louis Vuitton and became known as one of the oldest French luxury fashion houses” in the industry (Pearce & Robinson, 2013, p. 14-2). The firm’s products range from high quality “leather goods, handbags, trunks, shoes, watches, jewelry, and accessories”; manufactured by highly skilled and expensive laborers in France (Forbes.com, 2016). In addition, Louis Vuitton market their products “in 50 countries with more than 460 shops and generates more than €7-billion ($9.5-billion U.S.) in annual sales” (Wendlandt, 2013).
Another challenge for Louis Vuitton is the market and brand dilution as it has already entered and successfully fit in the Japanese market. The products have already maintained the “acceptable” group, and the company has become to feel difficult to increase the revenue. The figure provided in the case showed that nearly half of the Japanese have Louis Vuitton-monogrammed items by the time of 2007. This seemed to make LV prevalent but not luxury any more. To maintain its brand image, it is
The consumption of luxury goods in China is mounting sharply. Not only those born to elite families, but also many common people are greedy for luxury brands (China, a Booming
Economic: Being a non-necessity, luxury brand, companies took a hit during the economic downturn. Between 2006 and 2010, poor economic conditions created a .6% decline in industry sales. When customers have less discretionary income to spend, they are less likely to spend money on luxury products.
This analysis examines the economic strategy of Vera Bradley. I took a closer look at the strategic moves of this Luxury goods manufacture. The owners going from making colorful patterned duffel bags and suitcases, has now become a household brand. Their decisions to differentiate ultimately shaped the growth of their business. With a declining fiscal year, Vera Bradley decided to implement a new strategy that will be sure to revamp growth. To further explore the challenges that continue to occur throughout this case, I analyze those challenges and suggest tools and techniques that would help improve the economic strategy of Vera Bradley.
For most fashion retailers, what is the best corporate strategy to follow based on the content of this report? Why?
An increasing economic interdependence of national economies across the world experiences a rapid cross-border movement of goods, service, technology and capital. Luxury goods industry, serve as one of the most competitive industry, emerging and developing rapidly all the time. To a great extent, globalization promotes the development of luxury goods industry significantly in spite of the big shock hit by several times of economic crisis.
The cause of the Great Recession created challenges for the high end of the fashion industry within the luxury goods industry. Some of the items include fancy clothing, handbags, jewelry, perfumes, and watches. The total luxury goods industry sales fell by 20% in 2009 (Parks, 2016). This is when Porter’s Five Forces come into play when understanding where power lies in a business situation (Team, 1996).
• Down Trend Economy: As a luxury product sales could slump significantly if the economy takes a down turn.
At the time of the case the brand was healthy but it was at a vulnerable point. There had been economic downfall, so the industry as a whole was suffering but Eileen Fisher was stronger than its competitors. Economic factors forced customers to go to discount brands and shy away from department stores, therefore not only was Eileen Fisher losing customers its competitors were as well. Compared
Economic factors- If the economy is strong, people spend more money on luxury items. If unemployment rates are high, less people will be spending money on unnecessary items like luxury handbags and accessories.
This behavior brings competitive advantages to the European luxury brands. Moreover, customers in different countries have different purchase behaviors. For instance, some countries’ customers are willing to move away from common recognized brand, because they want to purchase more exclusive products. Furthermore, because of the increasing speed of globalization, people are more likely willing to travel between different countries. These travelers will buy luxury good during their trips. In fact, Chinese tourists contributed over one third of sales in Europe. The luxury goods industry should notice to adjust the actual demand between local people and tourists in Europe
The overall sales of luxury goods in the year 2009 is expected to be more than US$150 billion and Asia contributes 10% to it. The concept of luxury is now not confined to only to Europe and US, the Asian subcontinent contributes majorly to it, with India and China as the newly emerging markets. Professor James Twitchell (2002) comments on the democratization of luxury and the changing consumer psychology These new customers for luxury are younger than clients of the old luxe used to be, they are far more numerous, they make their money far sooner, and they are far more flexible in financing and fickle in choice. They do not
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.