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MKTG 1170 ASSESSMENT 1 SEMESTER 1, 2017 - LARA CATTERALL S3529419

EXECUTIVE SUMMARY

Louis Vuitton Moet Hennessy (LVMH) is the largest multinational corporation within the Luxury

Fashion Industry. It was founded in 1987 with the merger of Moet Hennessy and Louis Vuitton, the

worlds leaders in premium luggage, champagne and cognac. Since then, they have developed a broad

portfolio of 70 smaller companies, referred to as houses or maisons. consisting of both heritage and

contemporary brands with a product mix spanning across all five major industry sectors. As a whole,

LVMH operates 3,948 stores across 70 countries, employing 134,476 people (Appendix 5), with

headquarters in Paris, France.

Despite having such a dominant presence with in the Luxury Industry, there are many external macro-

environmental factors that have a huge impact on LVMHs ability to generate profits and maintain their

competitive advantage. Some of these key factors include; the political and economic uncertainty and

social unrest surrounding the recent global government elections, Brexit decision, terrorism and Global

Financial Crisis, the changing retail landscape as a result of innovative technologies and the modern

consumer, the growing concern for environmental sustainability and CSR initiative, and the global

saturation of counterfeits diluting brand integrity and market share as a result of insufficient regulation

and legislation. Similarly, industry attractiveness factors impacting LVMHs ability to achieve desired

operational results include; the inability for suppliers and consumers to adjust prices resulting in stable

operating margins, the high levels of competition, moderate threat of new entrants and increased

substitution from affordable luxury retailers restricting expansion and growth in market share.

LVMH must consider these factors when in order to determine key current and future opportunities for

growth and potential threats to their operations.


LVMHs portfolio analysis highlights their main strengths and weaknesses across the product divisions

and reflects appropriate future corporate strategy recommendations in response. LVMHs Fashion and

Leather Goods operations are their most lucrative, attributing to 34% of total company revenue in 2016,

however, achieved a low growth rate of only 2% due to high competition, indicating that they should

invest in strategies to protect and strengthen this current position whilst increasing profitability through

selective expansions and acquisitions. Their Selective Retailing and Other Activities is their second

highest revenue source and achieved the most growth overall by monopolizing gaps in the market across

different industries, indicating that LVMH should continue to rapidly invest in these Blue Ocean

growth strategies in order to maintain their strength and further increase their market share.

LVMH remain market leaders in their Wine and Spirits division by maintaining their high operating

margins and should continue to increase profitability through increasing productivity in this sector.

Their Perfume and Cosmetics division has achieved an ideal position within its sector, indicating that

LVMH should continue to manage their current strengths whilst utilising the mass market growth

strategy to invest in low risk expansions in order to increase their future revenue and market share. As

the weakest division in the portfolio, Watches and Jewellery has low profitability due to increase in

more affordable luxury watches from competitors, therefore LVMH should continue to reduce costs and

divest its operations.

Whilst there are many variables impacting the global luxury fashion industry, LVMH is a very

successful multinational conglomerate with strong competitive advantage and industry positioning,

having managed to expand and maintain their leadership through vigorous planning and implementation

of various successful corporate strategies.


TABLE OF CONTENTS

1.0 INTRODUCTION 1

1.1 Strategic Timeline 1

1.2 Brands, Markets and Products 1

1.3 Geographical Scope 2

2.O ANALYSIS 3

2.1 Macro Environment Analysis (PESTEL) 3

2.1.1 Political 3

2.1.2 Economic 3

2.1.3 Social 4

2.1.4 Technological 4

2.1.5 Ecological 5

2.1.6 Legal 5

2.2 Industry Attractiveness (Porters 5 Forces) 5

2.2.1 Supplier Power; Low 5

2.2.2 Buyer Power; Low - Moderate 6

2.2.3 Competitive Rivalry; High 6

2.2.4 Threat of Substitution; Moderate 6

2.2.5 Threat of New Entry; Moderate 7

2.3 TOWS Analysis - LVMH 7

2.3.1 Threats 8

2.3.2 Opportunities 9

2.3.2 Weaknesses 10

2.3.1 Strengths 10

2.4 Portfolio Analysis 11

2.4.1 Fashion and Leather Goods 11


2.4.2 Selective Retailing and Other Activities 12

2.4.3 Wines and Sprits 12

2.4.4 Perfumes and Cosmetics 12

2.4.5 Watches and Jewellery 12

3.0 RECOMMENDATIONS 13

3.1 Portfolio Analysis Outcomes and Recommendations 13

3.1.1 Fashion and Leather Goods 13

3.1.2 Selective Retailing and Other Activities 13

2.4.3 Wines and Sprits 14

2.4.4 Perfumes and Cosmetics 14

2.4.5 Watches and Jewellery 14

3.2 Ansoffs Growth Matrix Strategies 14

3.2.1 Market Penetration Strategies 15

3.2.2 Product Development Strategies 15

3.2.3 Market Development Strategies 15

3.2.4 Diversification Strategies 16

REFERENCES 17

APPENDIX 18 - 23

Word Count; 3,352