Growth Strategies Case Study

LVMH in 2006 : Managing Fashionable Growth

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Abstract:

LVMH - Moët Hennessy - Louis Vuitton S.A. (LVMH), the world’s leading luxury goods conglomerate, was the parent to around 50 prestigious brands with international retail network of more than 1,700 stores. LVMH posted a profit of €1668 million with revenues of €13,910 million in 2005. Led by a dynamic leader Bernard Arnault, LVMH developed competency in building not just recognizable brands but “Star Brands”. LVMH’s philosophy of extraordinary quality and staying at top position in any area it chose to operate earned it the title of the leader of the luxury goods industry.

The clientele to which LVMH catered to were very elite and rich, who could afford to buy the highly priced LVMH products. With increasing incomes, the number of people falling in the category of elite increased rapidly, expanding the market for LVMH. Being a luxury goods company it was vulnerable to the economic changes affecting the demand of luxury goods like the 1997, Asian crisis and 2001, attack of twin tower in the US, which was a major market for LVMH.

The nature of business in which LVMH operated demanded high level of creativity and innovation at a faster pace. LVMH managed its various brands in close association with its designers. With competitors like Gucci, Richemont, with financial muscle and battalion of talented designers, LVMH had to be audacious and expeditious in its endeavors to retain its luxury leadership.

The case covers the global luxury goods industry, the competitive landscape for LVMH, the establishment and growth of LVMH empire and its business groups. The case analyzes the business model followed by LVMH and its core competency of building Star Brands. The strategies followed by LVMH for growth is discussed including the issues of Talent management, developing and achieving skill set for designers and counterfeiting.

Pedagogical Objectives:

• To understand the dynamics of the global luxury goods industry
• To understand the core competencies of LVMH in creating ‘Star Brands’
• To discuss the growth and competitive strategies of the industry leader, LVMH
• To discuss future challenges and strategies for the global luxury good giant.

Keywords : LVMH (Louis Vuitton Moet Hennessy); Richemont; Guccio Gucci; Pinault-Printemps-Redoute (PPR); Growth Strategies Case Study; Fashion accessories; Luxury goods in Asia; Luxury goods in Europe; Cosmetics; jewellery; Product line extension; Positioning; Multi branding strategy; Growth strategy; Innovation; Branding strategy; Business models; Entering international markets; Star brand; Consumer goods; France; Strategy implementation; Managing the global conglomerate; Decentralized organisation; Mergers and acquisitions; Synergy; organic growth; competition; Brand Portfolio management; Leadership; Creativity

Contents : 
Introduction
The World of Luxury
Target Group Wealth Profile
Competitive Landscape
Financial Highlights of the Group (PPR)
Moét Hennessy - Louis Vuitton
Hennessy and Mo?t et Chandon
Establishing LVMH Empire
LVMH Business Groups