Lvmh Strategic Analysis

1631 Words Jun 19th, 2005 7 Pages
Challenge statement:
"Despite worldwide softness in the sale of luxury goods, LVMH has cemented its position as the world 's largest and most profitable player in the category. To stay there it must keep its customers loyal and its brand strong and find new markets worldwide" (Hazlett C. 2004). That is why in its mission they state to represent the most refined qualities of Western " art de vivre" all around the world. Their objective is to be the leader in the luxury market, continuing to transmit elegance and creativity. This poses some major challenges, the main one is to keep being the leader in the luxury market through a sustainable growth. The main problem to achieve it is the high dependency on three main countries, France, Japan
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 Some of luxury products are easy to copy
There are a lot of forgery products available in Europe that are mainly produced in China. It is an important problem as it is really easy to buy those forgery products in the street, at a cheaper price.

 Little strategic fits between businesses like radio stations and its luxury products
There may be a problem in terms of strategic fits between the related and unrelated businesses LVMH is involved in. The diversification strategy may be seen as dangerous for the strategy coherence.

 Distribution network
They own their distribution network however focusing on selective retailing take time and money but it does not take part of their core competences. The problem is that they may not be expert in the area and make wrong strategic choices.

 They have only one retailing system.
The unique retailing system may be a threat if it not adapted for all their products: it may be different to retail wine and cosmetics.

 The target is very large , that is why they have to keep classical models and an innovative and fashion line to satisfy the whole target.

Alternatives
1) To expand the current existing brands geographically.
2) Alliances with new creators
3) Acquisitions of luxury companies in foreign countries

ANALYSIS OF THE ALTERNATIVES

1. To expand the exiting brands geographically
This strategy aims at entering new countries in order to
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