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Submitted by younes on June 14, 2005
Category: Business
Words: 305 | Pages: 2
Views: 641
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LVMH's Diversification
Strategy into Luxury Goods
The problem
After the case and readings the problems of LVMH there are several problems such as the declining demand for luxury goods because it is linked to political events, situation and social trends. (After the attacks of 9/11 an impact on luxury goods has dropped and had automatically an impact on LVMH sales)
Secondly luxury products are easy to counterfeit, some countries such as china, turkey, and other still have to improve their IPR policies
And finally LVMH diversification strategy (Bernard Arnault) is making acquisitions outside the company's sector. In sector where they don't have the "know-how" and don't match the company Image. The current CEO (Arnault Bernard) is also the major shareholder which makes him easier to make decisions on new acquisitions
The swot analysis
Strength:
Name recognition which makes them the largest product marketplace
Their experience during the time
Leading position
Quality provider
Distribution
Public Relation
Weaknesses
Their Diversification
Conflict of interest (fashion vs. wine and spirits)
Forward and backward integration
Luxury goods are easy to imitate. (Perfumes, Louis Vuitton bags
)
Finance problems: net sales decreased by nearly 6% in 2003
Declining shares
Opportunities
Merger and acquisition
Consumer trends
Current increase in wealth
Emerging market
Improvement of way of selling their large product line (distribution channels)
Expansion to other markets
Threats
Change in consumer taste
Economic recession
Competitor in smaller markets
Counterfeit
Recommendation
Focus...
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