Introduction of LVMH Luxury goods company

 LVMH is the world leading fashion and luxury product selling company. LVMH is headquartered in Paris. As a world-famous company of luxury product company offer product lines such as leather and fashion products, wine and spirit products, furniture, and watches (Paperdue.com). LVMH confronted some strategic issues in 2016 but overall operations are done successfully right from the very beginning. In this paper main focus is to study strategies and leadership system of LVMH Company to find out the weaknesses and strengths of LVMH in selected segments.

Strategies of LVMH Luxury goods company

1)      Competitive strategy of LVMH Luxury goods company

             In the highly competitive environment survival becomes difficult for companies unless they have strong competitive strategies to deal with a competitive environment. LVMH is a famous name in the fashion industry. LVMH is all surrounded by the highly competitive environment big names such as channels, Versace, Tiffany, and Gucci (Bloomberg). Considering the competitive situation LVMH has developed its competitive advantage.

              Key elements of LVMH competitive strategy are craftsmanship, product quality, image building, risk tolerance, and innovation. All these different kinds of pieces fit with each other and create a big picture of the overall image of the LVMH brand (Business). Arnault focused on the operational synergies including speeches by management and fashion designers (brand ambassadors), special corporate announcements, and advertisements with the purpose to enhance the corporate image of the company in the selected segment.  

             Competitive strategy of LVMH is not static in fact it is evolving with the passage of time. New additions in product portfolio, joint venture, diversification by acquisition, and changes in the competitive market are the key factors because of which competitive strategy is evolving.

2)      Corporate Strategy of LVMH Luxury goods company

              Corporate level management of the LVMH is responsible to develop the corporate level strategy that influence all level of organizational operations including financing operations, marketing operation, production-related operations, and supply chain related operations. In short corporate level managers are the leaders of the organization who are followed at each level of the organization (Baker and Hart). Corporate strategy choices strengthened or weakened its competitive position in the overall fashion and luxury product industry.

              The corporate level strategy of geographical expansion supported organization to make competitive position strong in the market. Diversified sources of revenue, distribution strategy, and brand portfolio are also authorized by the corporate management that support LVMH in ensuring strong competitive position (Fifield). Furthermore, debt-burden because of the investment (wide range of investment) are the weaknesses of corporate-level strategy that caused a negative impact on overall organizational image and position in the competitive market.

3)      International Strategy of LVMH Luxury goods company 

               LVMH is working in the international market from last many years. According to the knowledge learned from the marketing and business management courses, international strategies of a company can be best characterized as global strategy, transnational strategy, and multi-domestic strategies (Luo and Bhattacharya). LVMH international strategies are capable to meet this requirement. Basically, the international strategy introduced by the corporate level management of the LVMH is the mixture of multi-domestic strategy and global strategy.

              LVMH produce products for different types of customers as it operates in different geographical regions that have different cultures, traditions, and customer needs. Considering the differences LVMH produces products according to the requirement of that specific market. In light of this difference, five product sectors are decentralized or subdivided as distribution and production (Mallapragada, Chandukala and Liu). For instance watches, handbags, and perfumes are global products that follow global strategy. While wine and alcohol-related products are not global products. Each country or state has its own laws and rules for the production or distribution of these products therefore, the company follows the multi-domestic strategy here.

4)      Strategic Sense for segmentation of LVMH Luxury goods company

             Companies select segments according to the product line and competitive strength. Analysis of the LVMH market indicates that the company should not try to compete in all of its current segments. In fact, the company needs to focus on the segments that are currently at the maturity or growth stages (Sen and Bhattacharya). Somehow, it does not mean that the company should ignore the remaining segments. In fact, the company should focus on the return on investment and potential of growth. Long term vision can carry out positive and most beneficial results.

            From all the products lines including cosmetics, watches, jewelry, fashion and leather products, wine and spirits, perfumes, selective retailing, and other, the most important product line is fashion and leather products. Leather and fashion product line is generated about 60% of the total sales revenue for LVMH Company (Mallapragada, Chandukala and Liu). These products are world widely appreciated. Therefore, growth trend and profitability of fashion and leather products is relatively higher than the other product lines of the company. Considering the difference between growing and declining products company should discontinue the other products lines as revenue generated by other products is not enough to meet even breakeven point.       

5)       Strategic issues confront of LVMH Luxury goods company

            LVMH confronted strategic issues in 2016 because of the uneven online merchandise selection. 70 LVMH brand portfolios were about different types of products including fashion-related products, handbags, and wines (Baker and Hart). The inconsistent online strategy of Louis Vuitton was the major reason that made great strides in the selected competitive segment. The company faced conflicts in the market but tackled wisely.

        CEO Bernard Arnoult and Leadership of the LVMH Company need to focus on the internal and market circumstances to remain competitive and strong in the market. They need to focus on the fake products introduced in the market with their brand name to avoid negative possible impact on their brand image (Mallapragada, Chandukala and Liu).

           Furthermore, they can provide information to their customer through which their customers will become able to identify the real products and services of LVMH Company. Moreover, they should also give attention to their product quality (Baker and Hart). Continuous improvement in the product quality and new innovative features will not only help out the company in the building positive image but also make it difficult for other companies to copy their products or introduce the fake products (Mallapragada, Chandukala and Liu).        

6. Recommendation of LVMH Luxury goods company

          LVMH faced confronted strategic issue in 2016 that is not under discussions. Of course, leadership and CEO (Arnault) need to take some decisions to ensure sustainability and to promote impressive growth and profitability. According to the situation, the first recommendation is to diversify strategy and ensure not stagnation of brand image. While the second recommendation is to study market demographics in detail because taking decisions and focus online e-commerce trend to secure online market along with the physical market for their fashion-related products.

Ratio Analysis of LVMH Luxury goods company

Conclusion on LVMH Luxury goods company

             LVMH is working successfully in the international market because of the efficient strategies developed by the corporate level management of the company. Corporate management introduced marketing strategies, competitive strategies, product portfolio management strategies, international strategies, online merchandising strategies, and other corporate level strategies. Even company is working successfully but still, there is a need to focus on some areas such as geographical expansion and demographics of the selected markets to promote profitability and revenue expansion.