LVMH: Managing the Multi-Brand Conglomerate Essay

1. LVMHs variegation represents the gatherings strong movement in the lavishness surface-behaveds merchandise as a unharmed with convergences from the modal value and flog range, wines and spirits range, watches and jewelry range, perfumes and cosmetics range, and fin in ally the selective retailing range. This strategy aims to claim grocery store sh atomic number 18 in commercialize sh bes that be interrelated with the specific node segment as the common denominator. LVMH is a grocery leader in beneficial marts and has a decent market sh atomic number 18 in others and aims to be the leader in the luxury market as a whole where the elect clients gouge recognize its posts from all of its harvest-home ranges and the participation plans to build instigator loyalty within those guests so that a customer who gets LVMH for watches for instance, is likewise inc rakehelld to choose an LVMH product for wine and spirits. Diversification also spreads the friendship s costs everywhere a number of tick offs and the revenues as closely so that it pot eer project good rate of return for investors.2. For a beau monde like LVMH to compete on a scope that overwhelms champagne, jewelry, fashion, cosmetics, and retailing is legitimate and even necessary for it to keep a militant edge because its competitors have executeed the identical strategy to fight for market sh be in the luxury market in all of its segments. The companys policy aims to build the idea in their customers heads that they fuel unendingly reside the same unchanging high-end feature when choosing any grade that is owned or associated by LVMH and since elite customers, or simply customers tanging for whatever products for luxury living, usually want to vesture high look jewelry to curb their high tone of voice fashion split up or even enjoy the utilisation of high quality spirits, they can always have the trademark image of LVMH in their heads because they expe ct that the quality of the jewelry or the wine will match the quality of the fashion wear they are wearing.3. LVMH adds order to its different businesses by passing fine-tune the know-how that made its original products timeless to the brands that are relatively virginer so that quality is agreeable by dint ofout its different brands. The company does this through human resources departments that havean eye for talents for pattern as well as the aright the great unwashed to learn the companys policies and to implement them so that the functioning of the group remains consistent. The look upon chain for LVMH begins with buying raw materials for them to create their product, which of course, they have gained expertise and leadership even in about segments. In operations, handled extensively in France and Spain, they extend to to compete for cost leadership. contiguous comes logistics, which is in the first place sea routes and they strive to have their products delivered in timely fashion so they can meet customer acquires which sometimes exceeds give knowing that creating high-end luxury products is time consuming.Next is market, where they always depend on their brands diachronic qualities to promote themselves to already-loyal customers and to raw(a)er customers seeking luxury goods. Finally, in service, human resources can always mark off the best retail outlet partnerships and good sales and after-sales services. 4. In general, LVMH have their value chain synergized whether purchasing, operations, engine room, sales and marketing, distri exclusivelyion, and services but since their multi-brand strategy is highly alter (this is over due to the belief of retentivity the independent indistinguishability of the brand and its inventive process), but technology can be best synergized in this sense only to keep in line quality and oversee the imaginative process while at the same time secure the creative processes remain independent a nd well-backed.5. LVMHs union competency begins in its product and service quality which is history timeless and is already infiltrated the luxury market as a whole every as a market leader or a strong competitor for market leadership. This alone gives the brands a strong agonistic vantage and attractiveness. Another core competency is innovation. LVMHs brands and smart brand scholarship strategy has seen it house some very(prenominal) important fashion labels that are historically known for innovation (Luis Vuitton, Givenchy, Tag Heuer etc) as well as hiring some of the closely world-renown designers (example Marc Jacobs).With this in customers minds, they can always expect innovation from the companys already established brands as well as their newly acquired or marketed brands. LVMH organizes training and acquisitions discipline seminars that ensure they always remain competitive and leaders in innovation, creativeness, and luxury appeal. Their controlled disseminationne t kneads, extensive marketing activity, and their presence in all the luxury markets also gives the company as a whole a competitive edge.6. LVMH has victimised its core competence in its various diversification moves and strategicalal acquisitions in a very commonsense and logical manner. The diversification moves have remained consistent with the companys image because it has change only into markets and products which the company viewed as luxury in the eyes of the customer. The company has becoming knowledge of the market and they know customer tastes and behavior and it also uses the breathing cornerstone to promote their modify products.The same can be said about the strategic acquisitions as they usually acquire a brand based on its gibe with LVMHs existing product lines or if that is not the case, they whitethorn acquire a brand for a certain mark or asset they think they requirement to gain more competitive advantage which may be used either in the newly acquire d brand or their existing brands. It is also important to step that newly acquired businesses have greatly contributed to the companys revenues over the recent days and shareholders have, as well, benefited from the diversification strategy of LVMH.7. LVMH manages its alter empire by implementing a decentralized management strategy to manage its some diverse brands. Most of them enjoy a great deal of autonomy because in the fashion business, which depends on creativity and innovation, the creative people must be devoted freedom for their work to survive a hit and not a miss. supply ensure quality control and monetary backing for newly acquired brands that have near future potential. LVMH manages a very change product portfolio with star brands in the fashion and leather goods and to some extent the watches and jewelry brands.They have cash cows in the wine and spirits brands and in selective retailing. They have however question attach in the perfumes and cosmetics lines. The cash cows look to remain that way and not become poor dogs due to the timelessness of LVMHs products in history and their portfolio of star products are diversify and positioned in the market in a way that capitalizes on the attentions growth. As antecedently mentioned, LVMH manages people with a human resources department that organizes skill developing seminars as well as inter-product seminars to strengthen thebrands school of thought in its people and to motivate them to work always in that manner.8. As previously noted, LVMH has a strength in its synergies due to its existing al-Qaeda regardless of its diversified brands, newly-acquired brands, and global presence where it is normal to habitus synergies in the value chain in order to have consistent quality and timely delivery of products as well as maintaining the same level of worth in sales, marketing, and after sales services. Their selective retailing of course, is the main reason for delays in case of un evaluate high demands and in high costs, but since it does not return its core competency in delivering always high quality luxury products.9. some(a) synergies that can be identified and exploited by LVMH imply coincide technology across all its diverse businesses including e-commerce and to implement technology developments into some of its brands which have considerable been run in a handed-down way. Operations are normally coincideping due to the nature of luxury goods and this can be further exploited to include wine and spirits product lines to include better synergy in marketing and sales for this product line. Luxury products are normally sold in resembling markets therefore they can always demand a premium price since they cigarette premium customers and this will always be to the companys advantage and it should not back down from this pricing policy. This product placement and premium price it demands makes it prospering for LVMHs different diverse businesses to overlap and cross-sell its diverse luxury brands.10. Bernard Arnaults diversified strategy and his acquisitions under LVMH have been, in general, reproductive and this is evident from the fact the new acquisitions are contributing significantly to the revenues of the company and the growth is sustained in existing markets and is positive in new markets. It is normal, when implementing much(prenominal) a strategy, that some strategic moves may not always be fruitful but the company can hold to pull the plug on brands that are not performing as expected due to the large diversification in all departments that the company enjoys and the existinginfrastructure and operations chain which wont be harmed in this case.The companys image is still regarded by the customer as it was historically and the elite customer can still relate to its sweetened acquisitions and above all the shareholders are commodious with the financials of the company so, all in all, as long the management is remains pe remptory the creative processes and the company satisfies its strong creative people, the strategy looks to be sustained.11. LVMH is recommended to continue adding to its already impressive product portfolio by keeping sight on appealing brands that fits its brand image. However, luxury businesses that are not core to its image should be divested from such as the mass retailing and media businesses and it should focus on its core product lines.Also, management should be patient with brands that are initially underperforming because over time, they may build their own written report and become hot sellers and this move is in line with the companys philosophy of timelessness. LVMH should also have back-up options in creativity in the form of protg designers in the case of head designers leaving or disagreeing with management policies because at the end of the day, in the luxury business it is the combination of modern design as well as high quality that affects the bottom line sale s and revenue.12. SWOT AnalysisStrengths versatile and powerful product portfolio in the luxury market historical significance of the brand image Strong distribution impart and strong relations with retailers due to the brands cultivate Consistency in launching new products and acquiring new businesses High-end quality controlWeaknesses Selective retailing business enigmatical with underperforming returns Competitiveness within its own brands weakens some of them against competitorsOpportunities Entering new markets and expanding into new countries marketing and advertising more aggressively flagellum External economic impacts (price deflation, decrease in consumer purchasing power) Imitator brands and seamy knock-off products Focusing on one brand and neglecting other brands with big potential