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Louis Vuitton -- Case Study
To formulate a plan for the expansion of the brand into the international market. The planning and execution of strategies that would help on long-term commitment of support in the international market, depending upon different parts of the world.
The formulation of strategies and plans in cases of economic down times and interference of government policies.
Assess the performance of the company by taking into consideration the consumer trends, relevant fashion of time, the scope and demands of every international market.
To evaluate an effective model of communication and monitoring in order to analyze the trends of the existing markets that includes domestic market, variety and innovations of the products of the company.
Internal Analysis: Brand Recognition
The parent company, Moet Hennessy Louis Vuitton is one of the most famous, renowned and old fashion and apparel house. The company and the brand was founded about 150 years ago, and since then has been one of the top line fashion house of the entire world. The brand can easily be recognized by its customers, and those who wish to be its customer, since most of the products have the monogram canvas of the logo of the brand. It is considered to be fashion statement by the elite class. The rich are observed to carry the bags, and other products of Louis Vuitton as a status symbol. The brand is available for its customers in most of the large and famous shopping centers of the world. However, there are many markets in which the brand has not yet entered. One of the best things about this brand is that it also produces custom made products for some of its elite customers. The value of Louis Vuitton is further enhanced by the fact that a huge fraction of its clientele is formed by international celebrities. The global presence and outstandingly high brand recall makes it even more valuable.
Louis Vuitton is not a rare brand in the sense that there are many other brands that are doing a good job in the same segments as Louis Vuitton. The luxury products by Louis Vuitton range from Wines and Spirits, to perfumes, to watches and to handbags. On the other hand, there are many other brands in the world that are producing all the products that have been mentioned above. However, the difference between Louis Vuitton and the other brand is that the former has been in the industry for longer than any other brand and is known to produce high quality products.
Inimitable and Non-Substitute
Even though the copies of handbags and other products of Louis Vuitton are seen floating around in many parts of the world, but the clientele of Louis Vuitton is aware of the original worth and appearance of the brand. Therefore, even in the presence of imitation and copies of the products, for the real and actual customers of the brand it is inimitable. The world class quality of bags and other products that is seen with the original products cannot be substituted for any kind of copy throughout the world. Apart from that, company also reserves the copy rights, and therefore not every retailer or store keeper has the license to sale the products by Louis Vuitton.
LVMH (Louis Vuitton Moet Hennessy) was founded in the year 1987, when Louis Vuitton and Moet Hennessy were merged. The parent companies are almost 150 years old by now. The merger resulted in the launch of many more products that neither of the parent companies was producing before. The brand is now popularly known as Louis Vuitton. Initially, the company was only producing fashion products, but then also turned towards luggage bags, belts, shoes, and many other accessories. By providing its customers with premium quality products that are both excellent in quality and style, Louis Vuitton won over a huge clientele. It was initially founded in Paris, but then because of the increase in demand it started to expand into the international market. The brand is further being exploited because of the range of products, as well as the ever increasing quality.
The headquarters of Louis Vuitton Moet Hennessy are located in Paris, the capital of France. This is where the company originated after two major companies were merged. The brand produces outstanding quality products and the clientele is found all over the world. It is considered to be the brand of the elite, and rich people use it as a status symbol. The products of LVMH can be found in all the large shopping hubs of the world. The premium quality of the brand has made it possible for the regular customers to switch to another brand, and for them LVMH cannot be substituted for another brand, and for them it cannot be imitated.
Internal Financial Analysis
By the end of the year 2010, the only primary shareholder in Louis Vuitton Moet Hennessy was considered to be Groupe Arnault. The aforementioned is the known as the family holding company of Bernard Arnault. The control of this particular group was seen to be 47.64% of stock of LVMH. It is important to note here that Groupe Arnault holds 42.36% of the stock through Christian Dior S.A., meanwhile 5.28% is held directly. As for the voting rights, 59.01% of these are given to them through Dior and 4.65 directly. Moreover, another 2.43% of the total shares of the brand were labeled as treasury stock, while the remainder was considered to be free floating. The drinks division of the brand, which accounts to about 66%, is held by Louis Vuitton Moet Hennessy; meanwhile the 34% of it is held by Diageo. As for the same year, the revenue earned by LVMH for about 20.32 billion Euros, and the profit made from this revenue totaled up to 3.032 billion Euros, which was more than all of the other competitor companies and brands.
External Analysis: Porters Five Forces
Degree of Rivalry
There are numerous world famous fashion houses that have now come into competition with Louis Vuitton, with the latter being the oldest in the industry. Keeping in consideration the demands of the customers, and the ever changing trends of the market, these companies and brands are producing their products according to that. Another important aspect of rivalry that needs to be addressed here is that LVHM cannot be afforded by everyone; however the other brands offer the same fashion products in a relatively cheaper price range. The brand and the company are faced with a great deal of competition. It is important to note here that there are two main competitors of LVMH in the international market, which can be considered to be arch rivals of LVHM are Richemont and PPR. Some of the famous brands of the latter include Gucci, Yves Saint-Lauren, Volcom, Puma and Brioni. As for Richemont, the famous brands are Cartier, Mont Blanc, and Official Panerai. As of the statistics for the year 2010, it is revealed that the revenue as well as the profit earned by LVMH was greater than both of its archrivals.
Threat of New Entrants
LVMH does not have much to worry about the new entrants into the market. It will be safe to say that the threat of new entrants to Louis Vuitton is rather quite low. One of the main reasons behind is that the company has a long history of serving its customers. Both the parent companies have enjoyed good reputation among its customers and in the international market. Since it is one of the oldest fashion brands, it is not possible for a new brand to come and take over it. Another important factor that contributes to the low threat of new entries is that the customers of Louis Vuitton are extremely loyal to the brand. As it has been mentioned above, elite customers get their products tailored by the brand, and some of the world famous and international celebrities have become loyal customers of the brand. It takes hundreds of years for a company to change the loyalties of the customers, and therefore Louis Vuitton has nothing to fear. Apart from that, if a company has to take over a brand as famous as Louis Vuitton, it will have to put in a huge investment, which does not seem very likely in the current economic scenario of the world.
When talking about LVMH, it will not be wrong to say that the power of the supplier is also quite low. There are many contractors and subcontractors of the brand and the company; however all of them are required to abide by the guidelines that have been set by the company and the brand. It is important to note here that the rules and the environment set by the brand are actually quite strict. In most of the cases, the supplier has been acquired by LVHM outright. There are many suppliers for the company, but distributor is only one…[continue]
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