Strategic management: Strategic audit of LVMH

Résumé du document

LVMH (Louis Vuitton Moet Hennessy) was created in 1987 by the merger of Moet Hennessy and Louis Vuitton which helped to become the world's leading luxury products. LVMH is a group consists of a set of strong brands and evocative power of famous names in the history of the iconic luxury. They are the world leader in manufacturing and also distribution of luxury goods. LVMH brings together noble professions, with strong traditions and a unique set of internationally established brands. Indeed, in champagne, spirits and leather goods, companies that comprise more than a century, even two hundred years old: the origins of Moet & Chandon back to 1743, those of Veuve Clicquot Ponsardin 1772, those of Hennessy Cognac to 1765 , Johan-Joseph Krug founded his house in 1843, the origins of Yquem and its wines date back to 1593. Louis Vuitton was founded, for his part in 1854.

In the field of perfumes and cosmetics and in the sewing, companies sometimes created more recently, have developed over time their international influence. The origin of Guerlain was in 1829, that of Christian Dior in 1947. Givenchy was founded in 1951 and the launch of his perfumes in 1957. The group has everything today in all trades of luxury: high couture, ready to wear, leather goods, perfumery, cosmetics, jewelry, wines and spirits, selective distribution and the media. With the phenomenon of mass consumption in the 1980s, Bernard Arnault, the founder and CEO of the group took the idea of "democrazing" the luxury through the plurality of activities which made the group on the luxury market of this century. Nowadays, the group has over 50 brands through a policy of aggressive external growth and it is established in more 55 countries.

In addition, its group mission values represent the most refined qualities of Western "Art de Vivre" around the world. On the market, LVMH has focused on five areas of strategic activities such as the Wine and Spirits, Fashion and Leather Goods, Perfumes and Cosmetics, Watches and Jewelry and Selective Retailing. In this file, in first, we are going to realize a strategic management overview (a systemic perspective internal and a systemic perspective external). Secondly, we are going to realize a strategic audit (current company performance, external and internal factors) in order to set up a new strategy for the company and doing an executive planning.

Extraits

[...] Financial : - Good turnover in some market: in 2008, in Asia, about 20% - Turnover: in the first half of 2010 compared with the same period in 2009 - Profit: in the first half of 2010 compared with the same period in 2009 Staff/Stores/Brand: - Employment: employees - Number of stores around the world: - Number of brands: 50 - Number of countries established: 57 Performance by SBU: Wine and Spirit - 40% of the cognac market and 20% to 25% the overall champagne market. - 50% share in premium champagne segment. Fashion and Leather goods - 60% of sales are concentrated in the Asia-pacific region Perfumes and Cosmetics - Sold at 70% to abroad Watches and Jewelry - 26% of the division's sales come from Asia. [...]

[...] External factors Internal factors Potential strategies Priority strategies My wild idea is to develop LVMH on the hotel sector. Indeed, there is more and more leisure tourism and business tourism with the increase of revenue and LVMH leads a diversification strategy of its activities. Also, LVMH wants to differentiate from main competitors which are not established in this sector. So, it could take a competitive advantage and it will reinforce their leader position on the luxury market. Execution planning Establish its first hotel stars) in Dubaï because it's a market with lot of opportunities (good growth, good economy, customers have a good purchasing power, it's an important touristic destination for leisure or business). [...]

[...] For this last point, the group engaged in actions for environmental protection. Indeed, many conferences focus on the theme of the environment, and LVMH has adapted some of its transport networks (routing products in electricity transmission). The group wants to reduce gas emissions and save energy. Economy The luxury market is sensitive at the rate of currency and the fluctuation of raw materials. Also, the economic crisis had an impact on the luxury sector and some countries were in bankruptcy. [...]

[...] The main strategy of LVMH is the globalization. So, the group purchases regularly companies to increase its size and to stay leader on the market. And these acquisitions allow sales increase and of profits. Market Trends Luxury products inspire the others industries and the forgery is the main issue of the brands. The counterfeit strongly increases because today everyone wants luxury products or a copy to be socially estimated. The evolution of people's mind and the evolution of the products which will meet new need like the "green market": biologic products coming from fair trade and respectful of the environment. [...]

[...] Identity of each brands are preserved, with their own strategy, exactly as LVMH. Innovation seems to be indispensable in order to keep legitimacy on the market. Customers The rich consumers who like luxury products and who have high revenues and level of life, living around the world and especially in emergent countries (China) where there a new rich population, and occasional customers, about 200 million around the world. So, LVMH targets consumers who are mostly working women, coming from emerging countries, men who want to take care of themselves, young people who have different styles and wishes than their oldest and finally the increasing number of supra rich people. [...]