What are the major elements of LVMH’s competitive strategy in the branded luxury products industry?

There are three major elements of LVMH’s competitive strategy. The product portfolio is the first superlative element of the company’s competitive strategy. It is observed that the company offers a wide range of product line to its customers across the globe. It is targeting all demographic areas in the region. For instance, it offers a luxury range of watches, jewelry, designer apparel, and many other luxury items to upper class customers. At the same time, the company also offers the few apparel item ranges to its middle class customers in Asia-Pacific. Growth and business diversification is another element of the competitive strategy of company. Statistics reflect that LVMH has been involved in major industrial activities like acquisition for growth. The company has find this strategy very effective.

According to Bernard Arnault, the CEO of LVHM, the acquisition is a good approach for expanding business, because it helps the company in acquiring expertise at highly economic rate. Meanwhile, the company has also focused on markets of Asia-Pacific for expansion and growth. The financial statistics shows an escalation in the revenue from operating subsidiaries in China. Last but not the least, the reputation of this company also provides a competitive edge. The company has been offering iconic products reflecting traditions since 1593. Therefore, it has captured consumers’ loyalty and attention quite successfully. Therefore, it can also be considered as a strength. Currently, the company is focusing to opening stores in major cities and highly developed commercial areas. Therefore, the high prices are acceptable in the region. The customers are agree to pay premium prices on innovative and luxury items. This competitive strategy is evolving for sure.

How have LVMH’s corporate strategy choices strengthened or weakened its competitive position in the branded luxury products industry?

The LVMH’s corporate strategy directly influences its competitive position in the luxury brand product industry. Before discussing strengths and weaknesses of the company. It is imperative to know current strategic inclinations of LVMH. Currently, the strategic inclination of company is toward leveraging global scale economies because it will help the company to minimize its production cost. It is also focusing on product differentiation and increasing bargaining powers of company. First if we consider the strategy of leveraging economy, it will surely strengthen the position of brand through minimizing the operational and production expenses. Similarly, the product diversification strategy will also be very helpful in strengthening brand position in the global industry. On the other hand, if we consider the strategic inclination toward high bargaining power, then it can upset company. The high bargaining prices often shift the demand of customers therefore, the company can potentially lose its customers that will surely weaken the competitive position in the market. Meanwhile, the fashion is a most dynamic and trendy industry because it depends upon changing tastes and culture. That’s why, it can be concluded that escalation of bargaining power over customer will not work for LVMH.

Is LVMH’s international strategy best characterized as a multi-domestic strategy, global strategy, or transnational strategy?

Obviously, the international strategy can be characterized as global strategy, however, the multi-domestic strategy can also be considered as a global strategy. Unlike international strategy, it deals with domestic and international issues separately. In other words, a multi-domestic strategy is more accurate and rational approach in dealing with different countries. The international strategy often confronts with the issues like cultural differences and language differences, however, this is not the case with muti-domestic strategy. It does not apply a general formula on all countries. Rather, it opts a sophisticated approach in dealing with cultural, social and economic issues of a particular country. The translation strategy is very close to global strategy, because similar to global strategy, it applies the elements of international and localized strategies simultaneously. Although all of these strategies work parallel but there is a difference in all of these strategies in term of scope and functionality. By and large, it can be concluded that LVHM’s international strategy best characterized as multi-domestic strategy.

Does it make good strategic sense for LVMH to compete in all of its current segments? Which of its product lines — Wine and Spirits, Fashion and Leather Goods, Perfumes and Cosmetics, Watches and Jewelry, Selective Retailing, and Other — do you think is/are most important to LVMH’s future growth and profitability? Should one or more of these current segments be discontinued? Why?

I contemplate, it is good for the LVHM to compete in all of its current segments. It is demand of globalization and all multinational firms do so. It will help the company to work splendiferously under global competition with its diverse product line. There we have another reason in to support this approach. The fashion, food and apparel industry is very trendy. The taste of customers always change. Therefore, a factor of uncertainty always goes side by side with the business. If the company focuses on a single product and lose its competitive edge on other product then it will increase risk for itself. Because if taste or trend changes then LVHM can easily lose its competitive edge regarding its sole product. Therefore, it is very unrealistic to say that company should not focus on all segments. On other hand, if we consider the statistics, it can be observed that segment of ‘watches and Jewelry’ has highest growth rate as compare to other segments. However, it is not generating revenue like other segments. The ‘fashion and leather’ goods contribute highest share in total revenue. That’s why, it can be said that ‘watches and Jewelry’ segment is important from growth perspective and ‘fashion and leather good’ are important from the standpoint of profitability.

What strategic issues confront LVMH in 2016? What market or internal circumstances should most concern CEO Bernard Arnault and his company’s senior leadership team?

After analyzing financial and market position of company, it can be said that LVHM is confronting with two major issues. First is its gigantic sizes that has become its enemy. Currently, the business segments and market of organization is too diverse that it is hard to manage. Second issue is the business approach of the company. The existing success of the LVHM is because of its synergy and economic scale of production. However, the dynamic fashion industry and changing tastes of customers can easily wipeout this competitive edge. Therefore, it cannot be presumed that company will continue with the same strategic approach. In dealing with these concerns, the CEO, Bernard Arnault and his company’s senior leadership team should be very concerned with changing behavior of industry. Furthermore, the management can also launch innovative products in the product line because the reputation of LVHM allow it to appear as trend maker.

What recommendations would you make to Arnault to address the strategic issues confronting LVMH in 2016 in order to sustain its impressive growth in revenues and profitability?

Recommendations:

LVHM should renovate its existing retail stores for attracting more customers and in the meantime, it should also focus on global expansion and innovation as key tools for progression.
Statistic shows that share of luxury items is highest in total revenue, therefore, developing and maintaining boutique hotels in exotic locations can also be a good option for targeting upper class consumers.

Calculate the following ratios for Nucor for 2016: (find and use the Nucor annual report: http://www.nucor.com/investor/)