Lvmh's Diversification Strategy Into Luxury Goods

5810 Words Apr 20th, 2012 24 Pages
TABLE OF CONTENTS 1.0 EXECUTIVE SUMMARY3 2.0 INTRODUCTION3 2.1 Background to Organization3 3.0 ANALYSIS3 3.1 Porters 5 Forces (Model of Competition)3 3.2 PESTEL (External Analysis)5 3.3 SWOT6 4.0 KEY FINDINGS OF ANALYSIS/PROBLEM IDENTIFICATION/ KEY STRATEGIC CONCERNS6 4.1 Vertical Integration6 4.2 Diversification7 5.0 POSSIBLE SOLUTIONS & STRATEGIES.8 7.0 CONCLUSION9 8.0 APPENDICES11 Appendix 1: Porters 5 Forces11 Appendix 3: Luxury Goods Group & Brands Top Ten Competitors13 Appendix 4: Industry Map*.14 Appendix 5: Financial Performance14 Appendix 6: PESTLE Analysis15 Appendix 7: SWOT Analysis16 Appendix 8: Evaluating industry Attractiveness and Competitive strength19 Appendix 9: A Nine Cell Industry Attractiveness-Competitive …show more content…
2.1 Background to Organization LVMH is an international group of companies that produces and sells luxury goods. It is associated with a number of product lines such as wines, cosmetics, fragrances, fashion, watches, jewellery and retail and with the most prestigious brands in those sectors. Since it conception in 1987, when Louis Vuitton merged with Moet & Chandon champagne and Hennessy cognac, LVMH was conceived to be a star group. It's business strategy was based on acquiring brands based on the premise that the reputation of such brands "would lead to a long-term corporate advantage" (Thompson, Strickland & Gamble 2005, p. C509). The rapid portfolio diversification took off when Bernard Arnault became president of LVMH in 1989. He expanded the company and acquired a number of specialty retail department stores in Paris.
3.0 Analysis 3.1 Porters 5 Forces (Model of Competition) Given the range of luxury sectors that LVMH has diversified into, the analysis is centred on the LUXURY industry where the game is played by few groups. The appendices illustrate the following: Appendix: 1 Porter's 5 forces diagram Appendix: 2 LVMH's sectors and subsequent brands Appendix: 3 Top 10 Competitors Appendix: 4 Industry Map Industry & Competitors The luxury industry operates in a high competitive environment. The need to maintain desirability and uniqueness