Executive Summary 3
Analysis of Current Situation 3
LVMH, an international group 4
The corporate structure 6
The luxury market 8
Differentiation Strategy 11
Diversification strategy 12
Competitive context 14
Synthesis and perspective 15
The current outstanding performance of Moët Hennessy - LouisVuitton or LVMH in the international marketplace necessitates effective management strategy to maintain its competitive position. Also, the continuous growth in the sales and profits of the Company supported by its existing strengths and competencies needs to be protected from harmful business trends that may affect its constant development. Thus, there is a need to come up with practical andvaluable strategies that will sustain market performance.
Analysis of Current Situation
Considered as world’s leading luxury goods company and home of most expensive and sought after brands, Moët Hennessy - Louis Vuitton or LVMH remarkably established its upscale market position since its was founded in 1987. This French holding company consists of over 60 globally celebratedbrands in five key sectors in which their products and services are categorically grouped namely Wines & Spirits, Fashion & Leather Goods, Perfumes & Cosmetics, Watches & Jewelry, and Selective Retailing. In their recently publicised revenue report for the third quarter (Q3) this year, LVMH continuously develop and sustain its global market position particularly in Europe, US and Asiain terms of financial performance.
Essential to the concept of a luxury product is a degree of scarcity which in turn justifies the high price . Today, LVMH incessantly excel in the chosen field of industry by using its brand development strategy and uninterrupted expansion of its international retail network.
* To maintain the continuous increase in sales and surpass lastyear total revenue.
* To strengthen social responsibility and environmental protection in terms of design and manufacturing of products.
* To uphold the luxurious image of the brand and decrease the cases of counterfeiting.
LVMH, an international group
LVMH Moët Hennessy - Louis Vuitton S.A., is a French holding company and the world's leader in luxury goods. The Group was formedafter mergers between champagne producer Moët & Chandon and Hennessy, a leading manufacturer of cognac. In 1987, they merged with fashion house Louis Vuitton to form the current Group.
Bernard Arnault is Chairman and CEO of LVMH. Through Groupe Arnault, he owns about 48% of LVMH. Today, LVMH has a portfolio of around 60 prestigious brands and sub-companies that are managed by 5 holdings(France, Netherlands, USA, Hong-Kong, Japan).
As of 2008, the Group had a turnover of 16 billion euros with a net income of 4 billion euros. LVMH operates about 2000 stores worldwide. The company has more than 71 000 employees, of which 74% based outside France. It is listed on the Euronext Paris exchange and is a constituent of the CAC 40 index.
The group activity is basically organized in 5Business Groups :
- Wines & Spirits
- Fashion & Leather Goods
- Perfums & Cosmetics
- Watch & Jewelery
- Selective Distribution
The corporate structure
The corporate structure of LVMH is highly divisional. There are a plenty of line of business and the Group chose to organize them by Business Groups, as described in the simplified chart below.
This structure allowsthe daughter companies to be run autonomously : Business Units (Moët, Perfums Christian Dior, TAG Heuer…) coordinate directly and independently the subsidiaries. This type of decentralized organization is motivating and encourages the effectiveness and the reactivity of the employees. The coordination mechanism is the standardization of results or profitability.
Strategies for Success