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An Analysis of Competitive Strategies of LVMH

Table of contents

Contents Pages

1.0 Introduction: 2

2.0 Market Positioning strategies of LVMH : 2

2.1 Porter Five forces analysis of LVMH : 2

2.2 Porter Generic Strategies comparisons: 2

2.3 Resources based view of LVMH: 5

2.4 Core competencies of LVMH: 5

2.5 Dynamic capabilities of LVMH: 5-7

2.6 Organizations’ ambidexterity of LVMH: 7

2.7 Innovation Approach and Strategy: 8

3.0 Internationalisation Process: 9

3.1 Organisational Structure:

4.0 Conclusion: 13

5.0 References:

Appendices 10

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1.0 Introduction:

LVMH is considered the King of the luxury jungle as it is the strongest player in the luxury

industry where fixed cost makes scale supreme; the company continues to dominate in both

brand image and high performance. The brand marketing and strategy, business models of

luxury brands generally differs from the regular consumer goods. The current brand image of

LVMH is not a coincidence but is something which is achieved by following a unique

strategy, which is an essential factor in a sustainable growth of any organization (Nagasawa,

2008). A variety of models, theories and strategies have been developed which firm apply

for market positioning’s such as porter five force model, Porter generic Strategies , Resource

base view of firms ,The dynamic capability Concepts, ambidexterity and various innovation

approaches, organizational structure and internationalization process also plays a significant

importance in attaining a competitive advantage. So, in this report, we will evaluate the

nature of the above mentioned strategic approaches to explore the LVMH’s competitiveness.

2.0 Market Positioning strategies of LVMH:

Market positioning is one of the most important theories to achieve a competitive advantage

as organisation needs to put or “position” itself in the best available place in the external

environment, which can be a specific market or segment of the market (Hooley, 2008). To

identify and analyse the market position of LVMH we will use two models which are Porter’s

five forces and Porter’s generic strategies.

2.1 Porter Five forces analysis of LVMH:

Porter’s five forces is an important analytical tool which is used to analysis the nature and

degree of competition in the industry. To form a strategy to manage these forces, to achieve

competitive advantage, a company must understand how these 5 forces work in the industry

and how are they affecting it (Porter, 1986). Please refer to Appendix A, Table 1 for Porter’s

five forces analyses.

2.2 Porter Generic Strategies comparisons:

According to Porter, an organization has to position itself in the best position in the external

environment by putting itself in a specific market or segment of a market. Porter conducted a

study on various industries and found some generic behaviour with respect to how the

companies do position which he termed generic strategies to achieve competitiveness.

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Porter’s four generic strategies are cost leadership, differentiation, focus- cost leadership;

focus differentiation (Porter, 1980).

Figure-2: Porter generic strategies of Competition

Source: (Porter, 1980)

LVMH is a hybrid generic strategic competitor as it follows differentiation and focused

differentiation market positioning strategy by differentiating and continuously innovating its

products, services and channels by making them unique to fulfil the objective of a company

to be a leader in the luxury market and to continue to transmit elegance and creativity

(Hooley, 2013).

The focused Differentiation strategy is applied to serve the narrow group of the consumers by

securing a niche to outperform competitors. Niche brands can serve the needs of the smaller

audience in emerging markets. LVMH has the highest number of Non- Mega Brands as

compared to its competitors (Duane & Hoskisson, 2012).

If a company offers a unique quality of product and services the customers are willing to pay

the premium price. To achieve differentiation LVMH has strong marketing and social media

presence to educate the potential customers about the USP of the products, controlling the

creativity, manufacturing and design process to achieve high status and sales. It is important

to put control on the retail channels to achieve significant customer service. LMVH has

achieved progress in adapting differentiation strategy in Price, Product, Support, Service,

Delivery, Channel, Quality and Design (Mintzberg, 2003). Please refer appendix B.

Porter argued that the Company can choose one of the four market positioning strategies.

Porter points out that being in two categories at the same time is not a good idea. Porters were

a reasonable argument as everything is to be managed in a proper way and if firms are hybrid

they have a chance of losing their identity where they can get stuck in the middle of the

performance decline for e.g. Aer Lingus, Tesco’s (Porter, 1986).

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Porter’s five forces and generic strategies prove that luxury good industry is a unique sector

with global capabilities and as LVMH being an old player using differentiation in product

lines is able to achieve a strategic position in the industry. The high entry barriers and low

exit barriers bring high returns for the industry and LVMH continues to excel from its rivals

(Jeantel, 2012). Further analysis will reveal the company’s core competencies and dynamic

capabilities.

2.3 Resources Based View of LVMH

Barney (1991) argues that competitive advantage can be achieved from collective and

effective use of various resources of a company that competitors cannot imitate. Edith

Penrose In ‘ Theory of the growth of the firms’ states that Firms are composed of various

tangible, intangible resources and human capabilities, which need to be identified and

developed to foster the growth , for diversification purpose or for value creation purposes

(RUGMAN & VERBEKE, 2002). Refer to appendix C, Table 1 and 2 and 3, and Appendix

D.

2.4 Core competencies of LVMH:

The main core competencies of LVMH are potential leadership, unique and quality product,

distribution channels, communication and price. LVMH maintains innovation and the

creativity by retaining the best talent and top designers in the industry. The company has

design skills and talent, and each design unit is independent and run by its own creative

designer. LVMH has manufacturing efficiency as it maintains and controls the cost and helps

in efficient management of the brands that people believe are better that the competitors.

LVMH creates value for the customers, though the products are expensive. Customers look at

the products as if they are buying into a dream. (Duane & Hoskisson, 2012).

The above core competencies help LVMH to raise the operating margins and are critical in

the firm’s use of focussed differentiation strategy. However the core competencies are not

fully utilised as the company emphasis on creative freedom but this freedom is only enjoyed

by star brands and less focus is given to the small brands, as a consequence there are chances

that creative talent leaves, but the Firm is well equipped with crises management when it

comes to retaining talent. Refer to Appendix E, Table 1, 2 and 3.

2.5 Dynamic capabilities of LVMH:

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In a fast changing environment, dynamic capability of an organization is to combine,

construct, and reconfigure its external and internal competences (David J. Teece, 997). This

approach emphasize on the dynamic nature of resource improvement and regeneration. The

dynamic capabilities are mainly focused on three key activities such as learning, re-integrate

existing assets, acquire and integrate new asset which also create innovation (Teece, 2009).

Table 1: LVMH has various management processes in place to maintain brands capability:-

Strategic and Financial Figure out the position of each brand and where it fits.

Shifting cash from one brand to another to foster development.

Talent Management Worldwide managing talent in various businesses.

Creativity and Culture Managing 65+ brands presence in different cultures and

countries.

Each brand keep safe its own culture and uniqueness.

Creativity an essential element in company’s growth.

Adaptability and

Responsiveness

Adapting with the latest trends, demands and constant changing

fashion industry.

Diversification Ensuring high level of diversification in the brand portfolios.

Source: Adapted from: (LVMH in 2011: Sustaining Leadership in the Global Luxury Goods

Industry, 2011)

The company has a philosophy of Innovation, creativity, and the nurturing of creative talents

is practiced in all of its businesses. Firm hires best talent in the industry with diverse

backgrounds and these new hires are given job training. For e.g. Company appoints a new

board of directors in 2014, in 2012, LV came up with a new collection of bags by Japanese

artist Yayoi Kusama. Intercompany seminars happen on the regular basis which develops

communication and leadership skills and perfect management skills, for e.g. LVMH’s Global

Leadership program. Employees are also given opportunities for transfer to the global

headquarters (Duane & Hoskisson, 2012).

The company also have conducted mergers and acquisitions to expand its brand portfolio to

reduce risk, and to acquire a new profitable business with an aim to increase cash flow, and to

maintain the diversity. Till date group have acquired 70 Luxury brands (Sehl & Goldberg,

2012). LVMH has evolved in the past one decade; brands grew from 24 to 63. The Company

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is now becoming more selective in acquisitions as it experienced tough financial situation due

to recent high price purchases. Refer to Appendix F

The core businesses of LVMH like fashion, leather goods, watches and jewellery have the

highest attractiveness and competitiveness (Research, 2009). LVMH has the two strong

categories which are Leather goods and premium wines and spirits, which brings the

company around 80% of the net operating profit. Leather goods and handbags will continue

to be the primary category in the luxury market as handbags act as ‘image anchors’ to the

women and this brings a unique opportunity to the brands to differentiate their products from

the competitors, and this brand does with the change in logo, shape and size, texture, style

and metal components, where LVMH is successful (Nagasawa, 2008).

LVMH champagne division ‘Moet et Chandon’ is the Industry leader in champagne and is

the world’s finest champagne priced above the existing wines as it is been perfected by the

technique of double- fermenting (Research, 2009).

LV maintains fine leather in their products by using technological innovation to ensure the

zero- defect policy. According to Mr. Carcelle CEO and president, LV is focused on

geographical expansion in the emerging markets while maintaining the brand exclusiveness.

LVMH should build new competencies by using new materials and customer expectations

with who they have traditionally worked with. LV has tried to keep their innovation sustained

throughout time But they can face counterfeiting hence anti-counterfeiting procedures are

required. Recently Google joined LVMH to fight counterfeit issues online (Bhavana, et al.,

2008). Refer Appendix G

2.6 Organizations’ ambidexterity of LVMH:

Organization should have both Blue and Red Ocean Strategies and the concept of balancing

the two is termed as ambidexterity. Organisation should exploit their existing strategy (Red

Ocean) as well as should explore the new strategy (Blue Ocean). Such kinds of organization

are unique as they practice both incremental and disruptive practice to achieve

competitiveness (O'Reilly, 2013).

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In the case, when the luxury market is in Red ocean then the innovation of LVMH in its

products has brought it in Blue ocean. Though, in the market such type of luxury products are

available but the unique feature of LVMH products has shaken the market as the special

feature has been continuously added (Matthew, 2010).

LMVH has gained an opportunity to be a first- mover in Blue Ocean by pioneering the cost,

quality and innovation. The company has the superior strategy to charge a premier price for

its superior product differentiation. For LVMH, it follows differentiation strategy to enhance

profit and market share in luxury segment but other brands such as PPR also follows the same

strategy to dominate the market (Tran, 2007). LVMH should keep its price high else other

rivals can enhance the red ocean competition for LVMH (O’Gorman, 2008).

LVMH has very well balanced Red and Blue Ocean strategy to compete in the existing

market. LVMH continues to exploits old (Red ocean) strategy (Barlett & Ghoshal, 1989)and

enter into Blue ocean because it is risky to make changes to old strategies as it creates

structural disturbances, and if the organization fails to gain success in a new Blue Ocean

strategy then the firm might not compete again in the existing market (Mauborgne, 2015). So,

the organization needs to keep its innovation continue to compete over its rival. Refer to

Appendix H

2.7 Innovation Approach and Strategy

As a long term vision of LVMH, it believes in innovation by acquiring the successful brands

and in this process, the firm acquires the key attributes of the already prospering brand which

builds a heritage of the acquired brand and stimulates creativity and excellence. For e.g.:- The

acquisition of Sephora the France leading chain of fragrance and cosmetic store. In 2002, LV

expanded its network through seven new shops and four new global stores which totaled to

around total network of 40 global stores. To acquire retail units to spread the luxury value

and innovation to the product as well as to the purchase and post-sale process is the idea of

CEO Bernard Arnault (Afuah, 2009).

Innovation is the pillar of the LVMH Business model and when the innovation is about to

reach its limit or maturity level, LVMH comes up with a new innovation to enrich the

experience beyond the maximum and in order to go beyond incremental innovation the

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LVMH research try to understand the emerging aspirations in various areas to discover new

growth patterns and blend tradition and modernity to create products. Involving ethnographic

approach with In process capitalization and its methods open a further way to investigation

and research to serve the customers better. Refer Appendix for Product and Process

Innovation. LVMH has a portfolio of 60 brands with different patents and product lines,

identity and positioning which are present worldwide (Afuah, 2009).

3.0 Internationalization Process

In the luxury market, LVMH has gained the opportunity to be first- mover in Blue Ocean to

be pioneering the cost in the luxury products. It has the most diverse international process in

all the operations. Company is not limiting itself, as a result, they are Introducing new

products, mergers and acquisitions, entering in emerging markets for e.g. geographical

expansion to China and other Asian countries also helps the organization to enter into Blue

ocean due to unique features (Roy, 2014)Refer to Appendix

The core businesses of LVMH like fashion, leather goods, watches and jewellery have the

highest industrial attractiveness and competitive Strength and being a first mover the

company has increased the barriers to entry by capturing key assets in target markets as a

market entry strategy. Market selection plays a major role as the company focus on the

market where the demand for the luxury product is increasing so they look for customers

preferences in different regions. However the market of LVMH is limited to the specific

companies with strong economies like japan from where company generates 20% of its

profits and the second biggest market is US but as the revenue got reduced during the time of

crises from the major market and such issue it was the only luxury company to survive recent

financial crises as per the reports. LVMH keeps the reputation of its origin as well as adapt

the products to the local needs of the people by keeping tight and lose control over SBU’s

(Research, 2009).

Local First or Global First

A study conducted by Rugman and Girod, 2003 on 49 retail MNE’s from which the only

LVMH was found out to be global retail MNE (Schröder, 2014). LVMH is a company with

the global strategic vision which provides broadly distributed products which brings lots of

benefits to the group as it does so with the lower level of investment in R&D and cheaper

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transaction costs with greater control. Core operations of LVMH are concentrated in their

home market but still they have a global presence and broad access to the markets. LVMH as

a global offeror has an advantage of arbitrage, more expansion and market opportunities

where the company pre - analyse the risks before making an entry in a new market. The main

disadvantage which, being global brings to the firm is of a distance which can damage the

capabilities and the image of the brand and there is less possibility of being emergent

(Dewhurst & Heywood, 2012).

Reducing the operational risk is the brands motivation to apply horizontal integration which

helps in generating economies of scope and reducing operation cost. By this integration

company is able to sell more products worldwide and share resources. LVMH has a strategy

of MnA to increase its market power As acquiring another brand is more expensive than

setting a new brand but the advantages and long term benefits derived are more as existing

brand has its own identity and novelty (LVMH, 2014).

Product Strategy of LVMH at maturity stage brings style improvement. Refer appendix C for

the LVMH position on the life cycle. According to their place strategy, LVMH has a passion

of shaping each store into a unique architectural design. As per the pricing strategy they use

premium price and market skimming pricing strategy to reach the market segment which is

willing to pay for a unique product. The company keeps high prices, never cut down the

prices and allows no bargaining (Nagasawa, 2008).

LVMH follows network internationalization process as the brand continues to expand in the

promising geographical markets and is getting selective in choosing multi – brand retail

network. The company has a powerful international distribution network of the brand and the

network of local managers at group level leads this approach by abiding by LVMH code of

conduct. The product portfolio and the distribution network wrapped in the commitment of

the brand to its customers in major markets and new markets are the strength of the group. It

can be argued that there is much to be globalised other than just the sales operations, as the

company doesn’t globalize its manufacturing activities (LVMH in 2011: Sustaining

Leadership in the Global Luxury Goods Industry, 2011).

4.1 Bartlett and Goshala’s internationalisation configurations

According to Bartlett and Ghoshal, there are two strategic drivers. They are local

responsiveness and global co-ordination (Barlett & Ghoshal, 1989). LVMH has global

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operations as well as it has its offices in different regions. The Firm applies the combination

of multinational and global as it provides better inner control and responsiveness. LVMH

provides local responsiveness in product lines like wine and spirits as per the local

regulations and to adjust with the environment. In contrary, some product lines need more

integration rather than local responsiveness like fashion and leather products, because the

worldwide need for the kind of fashion and leather goods is almost same (Nagasawa, 2008).

Transnational structure depends on networking of worldwide branches to unite capacity and

territory structure. This methodology has helped firms to exploit assets in the nearby

environment to perform operations. Assume, if LVMH moves its assembling unit to Asian

nations to access to cheap labour and embraces this framework then there might be a

possibility of creating lower quality items and harm to the brand character. However, the

purpose of LVMH is to provide quality extravagance items and the brand image plays a

foremost part in accomplishing high edges. Consequently, a transnational network structure is

not helpful on account of LVMH to attain worldwide economies of scale and in the meantime

to keep up high calibre and status, however, the group has an agreement to move towards

applying this structure in future (henleybusinessreview, 2013). Appendix

Organizational Structure

LVMH’s global product business model places brand experts at the helm and that is useful in

maintaining the strong link between the customers and product development expert. Different

products are managed separately hence the company is successful in keeping pace with

global trends which help in innovation. Each company is free to adapt to the marketing and

retail strategies suited to the need and demand. LVMH provides autonomous management to

each brand and employee which enhance the creativity and the results in providing

adaptability management in different regions (henleybusinessreview, 2013).

Adopting synergy approach among the companies has created strength for different branches

and subsidiaries. LVMH has a decentralized model and allows different branches to share

the departmental units which helped every company to benefit from LVMH’s resources and

created value by adding parental skills. This result in more independence and autonomy to

the unit as well as maintains the portfolio, visibility, transparency and expertise development,

scalability and have life cycle benefits. LVMH apply their knowledge of the fashion industry

and continues expanding. Knowledge sharing between the parent and subsidiary continues

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(Hoskisson, et al., 2012). It uses horizontal integration for building a brand portfolio and the

vertical integration strategy in manufacturing to put more control on production and value

chain rather than outsourcing to the suppliers. The integration strategy of LVMH in its

production and value chain is unique and this is also one of the reasons of the organization

has achieved differentiation (Hooley, 2013).

The model of LVMH doesn’t exist without the defects; the model conveys excess and

duplication to the expense and effort, which increases operational cost when products

classifications are overseen independently. It will require some more investment for the

LVMH to meet the criteria for the worldwide organizational structure to comprehend the

nearby and universal market well. As the way of each local market and segment varies,

matrix structure can be suitable for adjusting item and worldwide area technique to penetrate

the business in every district and to develop the creativity of each brand, and to exploit

creation, manufacturing and distribution. However, in the long haul, it will be extreme for the

firm to incorporate recently procured brands in the present structure (henleybusinessreview,

2013).

Conclusion

From the above discussion, it can be concluded that LVMH has the best strategy for market

positioning and it is able to manage porter’s five forces better. Secondly, the generic

strategies analysis shows that LVMH follows differentiation strategies in an effective manner

than its competitors by utilising this strategy company is trying to stick to the full price,

Hiring Experts, Expanding in different markets, Controlling various operations and

Inventory. LVMH has high resources capabilities (Physical, Financial, Intellectual and

Human) to achieve competitiveness. LVMH has focussed on the core competencies of

Product, Distribution and Communication that the customers are ready to pay the premium

price. According to corporate level strategy, LVMH focuses on corporate value and culture to

bring creative design and quality to the products. However in Future, we can see a challenge

in how to deploy various brands strategically and it can result in brand war and competition at

the corporate level.

LVMH’s international strategy is to enter a foreign market is by conducting merger or

acquisition of traditional brands which also helps in bringing innovative ideas to the firm.

Besides these strategies, innovation of product and process, and entrepreneurship plays a

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significant role in driving growth. Moreover, the dynamic capabilities comparisons have

successfully combined and integrated its resources to effectively achieve competitive

advantages. Moreover, the Red and Blue Ocean strategy analysis also has proved that LVMH

has a possible future to lead the luxury industry. Firms have direct control over the internal

environment and each firm has its own strategic leader who makes the choices about the

resource and capability required by the firm.

Louis Vuitton is the only star brand of the group which brought 60% of the annual growth

and analyst critic that this can bring potential risk to the group as LV has a chance of losing

appeal to the customers one day. However based on the analysis, some percentage of the

revenue is been utilized in uplifting other smaller brands which can grow like LV in future.

There are many opportunities present for LVMH to acquire new businesses in the

international market in different product lines and to give creative freedom to the small

brands in the group rather than only on the star brands.

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Appendix A

Table 1: Porter’s 5 Forces Analyses

Barriers to Entry : High

Barriers to Exit : Low to

moderate

In Luxury goods industry, four barriers of industry are present :-

1)economies of scale

2)differentiation

3)unrecoverable expenses

4)unique factors

Other Factors: - total capital requirements, patents, and learning curves ,

niche and sustained brand loyalty within their target market, sophisticated

research and development and marketing, Management commitments are

relatively high

Assets can be sold to competitors

no fixed costs of exit

contractual commitment is relative to the company

1)Industry rivalry: Low

Barriers to Entry: High

The competition is on the realised quality, extravagance, Royalty,

Stylishness and intangible image of the products instead of the price,

Differentiation and growth rate high.

Presence of best talent in the industry and top notch designers like Marc

Jacobs for Louis Vuitton.

Barriers to entry are kept high in order to continuously sustain and

enhance the brand image, maintaining the perception of the customers and

to respond to the needs of them (Alqararah, 2014).

2)Threat of new entrants:

Relatively High

New luxury product brands like Prada, Hermes etc.

The new brands are successful in the market and can be acquired by the

competitors and if they remain nuclear they can bring threat and risk.

As the barriers to entry are high so the new brands won’t be able to attain

customer loyalty which LVMH has attained throughout its lifetime

continuously for its product services and quality as customers always

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have preference to go for established name and perception (Jeantel, 2012).

3)Bargaining power of

buyer: Low

Market Size in respect to targeted customers is small. Main focus in on

the high class of the society, people with high income.

LVMH has two types of customers

1) High Net worth customers who are quite loyal and are growing

2) Middle market customers who are more volatile and change the

preferences.

3) vertical integration

The problem for the company is to deal with the trade – off in weather to

satisfy high new worth customers or middle market customers (Alqararah,

2014).

4)Bargaining Power of

Suppliers: Low

LVMH deal directly with the suppliers in low price to keep the product

quality high.

Follows supplier consignment method which has helped in reducing the

loss and risk increase the economies of scale.

LVMH acquires main suppliers, recent take-over of leather supplier Les

Tanneries Roux, it not only helps company to lower down the bargaining

power and also help company to save storage space cost and delivery of

the quality products supplied is promised (Jeantel, 2012).

5)Threat of Substitutes:

Relatively High

Other luxury brands like Prada and main competitors like Kering.

There exist various counterfeit issues as LVMH has to focus on core

competency, products and services uniqueness, retaining employee to

create better supply chain and distribution to the final customers (Jeantel,

2012).

Source: Adapted from (Alqararah, 2014), (Jeantel, 2012), (Bruce & Hines, 2007)

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Appendix B: LVMH Differentiation Strategies

Source: Adapted from (Gerawal, et al., 2014)

Appendix C: Life Cycle Position of LVMH

Source: Adapted from (Alqararah, 2014)

Appendix D: Tangible and intangible resource base of LVMH

Table 1: Tangible Resources

Financial Resources LVMH has large financial capabilities, profit comes from various brands.

Funds helped in developing and expanding in different regions, MnA’s, Fund

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Reallocation.

Revenue of $30.6 billion and Net Profit of $5.6 Billion reported in 2014.

Organisational

Resources

Effective Planning and Control on Production, Advertising, Distribution, Sales

and Manufacturing process.

Best fashion magazines, such as Vogue, Vanity Fair, and Elle to advertise their

products, Social Media.

Collaborated with famous supermodels, actresses and singers

Physical Resources Numerous plants in France, Spain and Italy, Supply chain co-ordination

High Tech Machinery and Equipment’s.

70 Houses, 3700 Stores, 120,000 Employees.

New Outlets in Ho Chi Minh City, Vietnam; Phnom Penh, Cambodia;

Yekaterinburg, Russia; Macao; and Abu Dhabi, Presence in Asia.

Various own offices, Industrial Buildings, Wineries, Production and

Manufacturing centres, Public Relation Centres, Distilleries, in France,

California, Argentina, Australia, Brazil, New Zealand, and Spain, linked to the

main brand. Approximately 773,000 square meters of property in France and

137,000 square meters outside of France.

Technological

Resources

Advanced E-commerce, Own Websites

Artistic Creativity and Innovation

Trademarks, Patents like LVMH Recherche

Vuitton's test laboratory

Computer Program to Identify the flaws In the leather

Ensure the durability of the bags by using a robot

machine that tests bags for fading by shooting ultraviolet rays at the bag

machine that opens and closes a zipper 5,000 times, a mechanized mannequin

hand

Table 2: Intangible Resources

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Intangible Resources Recognised and well known designers

High experience and capabilities craftsmen and other employees

High managerial skills and know-how.

LVMH recherché: innovation capabilities and scientific expertise.

Brand image, goodwill and reputation.

Creative team and management team of acquired brand is preserved.

Knowledge is shared between the parent and the subsidiary and in the case of

newly acquired the culture of the company is maintained.

Source: Adapted (Bruce & Hines, 2007), (Jeantel, 2012)

Table 3: Human Capabilities:

Four HR processes

performed in the

organization :-

Selection of matching people to the requirement of job

Performance Appraisals

Rewards: real importance of pay and compensation in achieving results

Development of skilled individuals

Learning and

development in

LVMH

LVMH's is committed to provide training and development for all staff

Staff are equipped with appropriate skills, experience and support required

to provide high quality care and services

Make sure that the processes are in place for employees to achieve their

potential and that individual contributions are valued and recognized.

Ensure that staff undertake training as required by their role and training

needs are identified at an individual, team and organizational level

Making sure of the high quality training and development is

commissioned.

Effective learning and development processes and systems are in places

that are accessible and clear.

Develop first class leaders and managers within the Provider and

Commissioning arms of the LVMH

Develop a Quality Assurance framework for Learning and Development

Continuous consultation with the staff and higher mgmt.

Timely Evaluation of feedback

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Appendix I: Financial Assets

Appendix E: VRIN Framwork Brand, Innovation and Quality

Table 1:

VRIN – Brand

Value: The brand is valuable.

Value to the consumers.

The brand contributes highly to the company’s profit.

Rarity: The brand is rare.

No other company possesses same brand perception of quality and

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craftsmanship.

Inimitability: The brand is difficult to imitate.

The brand is based on a tradition of heritage and quality craftsmanship.

It is hard to know exactly what contributes to the success of the brand.

Non-substitutability: LV’s brand is at risk from substitution.

Brand can be substituted to some extent by less loyal customers.

Table 2:

VRIN – Innovation and savoir-faire

Value: innovativeness and savoir-faire.

created value to the company.

The brand contributes highly to the company’s profit.

Rarity: companies do innovate and adapt to the environment, but not in the way that LV

did it.

Inimitability: Ability to adapt to environmental circumstances is hard to imitate.

LV has managed to innovate in a way that adapts to the environmental trends.

Non-substitutability: Innovativeness and savoir-faire is difficult to substitute. No other such

substitutes providing the same output.

Table 3:

VRIN - Quality

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Value: Quality of LV’s product does create value for the consumers as well as for the

company.

Rarity: Quality of LV’s products is rare, very selective about the raw materials, pick out

their suppliers carefully.

Inimitability: LV’s products go through rough testing to ensure the quality and durability.

Lifelong guarantee on the products, co-workers expertice and experience in

crafting the products.

Non-

substitutability:

Quality of LV’s product is not at risk of being substituted, no direct substitute for

quality.

Adapted from (Gerawal, et al., 2014)

Appendix F: Parameters taken into consideration before performing an Acquisition

Source: Adapted from (Alqararah, 2014)

Appendix G: Comparison Between the principles of general marketing and LVMH principles

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Source: Adapted from (Nagasawa, 2008)

Appendix H: Exploring and Exploiting Nature of LVMH

Adapted from (Penker, 2012)

Appendix : Product and Process Innovation

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Product Innovation LVMH Recherche Founded in 1981, Appx 250

researchers, new research and development center -

Hélios.

Research Areas: Biology, Chemist, Pharma, physicists.

Latest scientific discoveries create innovative cosmetics.

Collaborative study with major research centers and

universities.

Expertise of the researchers Know- How applied in future

development.

Discovery of new ingredients, and testing and evaluation

methods of various cosmetic products.

French label Christian Dior generated interest in its One

Essential skin care line through its Beauty Chronicles

campaign that highlighted the product line’s Nobel Prize

winning ingredient (McCarthy, 2013).

Process Innovation Innovative creativity of the designers, hiring the best

talent.

Giving complete independence to designer by

decentralization.

Each brand is run by its own designer.

Picking the best talent, training them and maintain them.

Thorough testing of all the products in comparison to the

competitors.

Adapted from : (Sudarsanam, 2003), (Alqararah, 2014), (Afuah, 2009), (Bruce & Hines, 2007)

Appendix J: Bartlett and Ghoshal’s International Strategy Configurations

23

Source: Adapted from (Alqararah, 2014)

Appendix K: Comparison of LVMH strategies with Competitors

Source: Adapted from (Alqararah, 2014)

24

Appendix L: Value Chain Analysis of LVMH

Source: Adapted from (Guan, 2012)

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