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LVMH: Strategic Integration and Expanding Brand Dominance in Asia. We will suggest our recommendations on strategic sectors and we will explain why LVMH has to focus on Asian market to guarantee its future growth.

Extracts from this document...

Introduction

DE TERNAY Anastasia Master 2 CPEI MORAR Crina XIA Xiaou ZERMANI Sihem LVMH: Strategic Integration and Expanding Brand Dominance in Asia 1 Table of contents INTRODUCTION.....................................................................................3 I. LVMH and its environment .......................................................................3 A. The luxury market and it segmentation..........................................................3 1. Analysis of the luxury market: " The luxury-goods industry "..........................3 2. Segmentation......................................................................................4 B. LVMH presentation....................................................................................5 1. General presentation.............................................................................5 2. The Geographic Position in Sales..............................................................6 C. LVMH analysis........................................................................................6 1. Company SWOT..............................................................................7 2. SWOT per sector..............................................................................9 3. Key Success Factors for LVMH............................................................13 4. Competitors...................................................................................14 II. LVMH strategic integration....................................................................15 A.The logic of métiers.................................................................................15 B.Optimization of synergies.........................................................................18 III. Marketing program: how to double profits within 5 years........................20 A. General recommendations on strategic sectors.............................................20 B. The Asian market............................................ ....................................21 1. Challenges and opportunities........................................................................21 2. Recommendations in the process of expansion in Asia...........................................22 Introduction LVMH, the world leader on the market of luxury products Group was created in 1987 and results from the merger of Louis Vuitton (an upscale luggage company) and Moët Hennessy ( producer of champagne and cognac). Since its creation LVMH has made changes to its structure and in 1997 LVMH started creating business branches around the different métiers of the Group by combining apparently disparate businesses and synergies between the sectors. By changing its corporate structure LVMH greatly improved its sales and profit, which strengthened LVMH 'dominance in the world luxury goods industry relative to its large competitors. LVMH has successfully conquered European and US markets, and is determined to capture the growing Asian market: the size of whose population and the income of whose middle-class are synonymous with a market share that LVMH intends to capture. After a brief analysis of the luxury-goods industry and its segmentation, we will present the company. After that we will expound the LVMH strategic integration: how LVMH could optimize its corporate structure and thereby satisfy its constant desire to generate profit? At the end of our presentation we will suggest our recommendations on strategic sectors and we will explain why LVMH has to focus on Asian market to guarantee its future growth? ...read more.

Middle

The strategy of the conglomerate was to buy luxury brands in different sectors. It was a great success; in 15 years LVMH acquired the most valuable portfolio of luxury brands in the world. Although, the more LVMH added new brands and activities to its portfolio the more complex they became. The structure was centralized during 10 years and after that it needed to adopt the way of decentralization. This is the path they begin to follow in 1997 in order to be more transparent and to benefit from synergies and values enabled by the size of the conglomerate. Thereby, LVMH had the idea of combining disparate businesses under the logic of métiers. It consisted in grouping luxury good brands in five different houses (institutionalized structures). We can say that the reorganization of the Group was necessary. We can see below the different houses and what brands belong to the Group: Simplified chart not including other activities LVMH Wines and Spirits Fashion group Perfumes and Cosmetics Watches and Jewelry Selective Retailing Hennessy Louis Vuitton Parfums C. Dior Tag Heuer Sephora Moët Chandon Loewe Parfums Givenchy Montres C. Dior DFS Dom Perignon Celine Guerlain Zenith Miami Cruiseline Mercier Berluti Parfums Kenzo Ebel Le Bon Marché Ruinar Kenzo Acqua Di Parma Chaumet La Samaritaine Veuve Cliquot Givenchy Make up Forever Fred Paris Canard-Duchene Christian Lacroix Fresh Omas Krug Marc Jacobs Benefit DeBeers LV Chandon Estates Thomas Pink Bliss Chateau d'Yquem Pucci Hine Donna Karan Fendi We will continue now our analysis with the presentation of the different houses and their structures. * The Perfume and Cosmetic branch: This is the first integrated branch and it was created in 1997. In this sector the Group owns prestigious brands like Parfums Christian Dior or Guerlain or Givenchy and it is the third in the world in this sector. These three brands centralized their R and D teams. They also centralized purchases of supplies, production and distribution. ...read more.

Conclusion

So the strategy will be in this direction. The "new" Asian woman is a great opportunity because, as we have already said, she pays more attention to her image. Yet the Asian woman is different than the western one. The beauty is understood differently; for example they like the flashy make-up and the white skin. So the main investment must be done in the R&D and in this way they will adapt the product to the local demand. Investments must be done of course in advertising campaigns too. Christian Dior has already won the market, so they must develop especially the brands which have a special French resonance like Parfums Givenchy, Guerlain and Parfums Kenzo. * Watches and Jewellery The TAG Heuer brand must continue the strategy used till now but also to develop its network stores. The "improvement" must be the motivation word. The Group must bet and be more creative in the brand of Christian Dior, and to introduce the new ones: Fred Paris, Chaumet, Fred, Oman and DeBeers LV jewellery. So, the creativity is compulsory in this sector and it must be more dynamic. It is important not to stop launching new products and the commercial part must be strengthened. * Selective retailing The retailing division had no profit for the last three years. Yet we mustn't give up to this sector because until 2001 they brought profit; so we have to bring them at the same rhythm of growth they had before 2000 when the division contributed with 28% of the company's sales. In this perspective our recommendation will target two directions: - development of the network especially for Sephora, Le Bon Marché and La Samaritaine - investments in the employees' training part , to create in this way a new customer approach and new services included in the sale process (for example the seller should know how to give make-up advice to the Asian customer). 1 http://fashionrules.com/wp-content/uploads/2009/03/lvmh.gif ?? ?? ?? ?? 1 ...read more.

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