Organizational Dynamics

LVMH SWOT Analysis

LVMH Moët Hennessy Louis Vuitton, commonly known as LVMH, is a French holding multinational corporation and conglomerate specializing in luxury goods,

Strengths:

· MARKETING

1. Strong association to quality – LVMH products have always been the benchmark in quality and design for hand luggage. The strong association with quality is LVMH's biggest strength.

2. Top celebrity endorsement – LVMH has always been powered by the biggest names in show business who have endorsed the brand and carried it in public appearances. Some of their top endorsers include Scarlett Johansson, Uma Thurman, Angelina Jolie and Muhammad Ali.

3. Multi-brand strategy –

4. Brand Recognition – The Louis Vuitton monogram is high on recognition and thus people prefer to carry LV monogrammed luggage since it is an association with status and class in society. In the same may the Moet and Hennessy Logos are very easily identified.

· HRM

1. Strong human resource management – LVMH has today, more than 61,000 employees, 69% of whom are based outside France, share the Group's values. It is successfully headed by Chairman Bernard Arnault who has successfully integrated various famous

2. Attracts top talent – The design team in Louis Vuitton has comprised of top designers of the world. Some of the names include Helmut Lang, Virgil Abloh, Azzedine Alaïa, Sybilla, Manolo Blahnik, Vivienne Westwood, Isaac Mizrahi, Stephen Sprouse, and Romeo Gigli

3. Wide Network – Louis Vuitton alone has around 1, 21,289 employees globally making it one of the world’s top employers in companies dealing with luxury goods. The company sells its products through their own chain of stores, high-end retail chains, and their website. The brand is sold in more than 50 countries across 460 outlets.

· OPERATIONS & SUPPLY CHAIN

1. Strict quality control

2. Broad product portfolio

3. Improving financials – its revenues are more than Euros 15 billion and profits more than Euro 3 billion reflecting strong financials and solid operational performance.

· INFORMATION TECHNOLOGY

1. Multi-brand strategy

2. Advanced production techniques

Weaknesses:

· MARKETING

1. Lack of sensitivity to foreign cultures – Louis Vuitton is French in styling and design and the brand is much closer towards accepting other designs and is also not sensitive to trends in foreign countries.

· HRM

· OPERATIONS & SUPPLY CHAIN

1. Excessive centralization – Louis Vuitton is known to be a tough employer and their focus on exclusivity makes them patent or copyright most of their designs and they rely on centralized decision making which brings down morale.

2. Rigidity – It has become a big organization having sales of more than Eur 15 billion which has led to red tapism and rigidity. Thus it has to continuously reenergize the organization.

3. Less invested in Jewelry than competitors

4. Exorbitant prices – LVMH owns several luxury brands. They all charge extremely high prices. This makes it impossible for the masses to purchase an LV bag or a bottle of Moet champagne and thus the company targets a niche market.

· INFORMATION TECHNOLOGY

Opportunities:

· MARKETING

1. Growing market potential – The global market for luxury goods is estimated at around 42 billion dollars with a growth rate of 4 percent per annum. This could be a huge opportunity for luxury merchandise companies.

2. Rise in capita per income – Most countries across the world have seen a significant increase in the per capita income with the result that disposable income is indicating a sharp increase as well. This is expected to create a surge in demand for non-essential items and luxury goods.

3. Demographics and societal trends – LVMH is a powerhouse globally. But the following factors of much importance in order to gain even more market share

-population size and distribution

-age distribution

– education levels

– income levels

-ethnic origins

– religious affiliations

4. Psychographics – These include people's lifestyles and behaviors – where they like to vacation, the kinds of hobbies they have the values they hold and how they behave. To further target the efforts, one has to determine not only who buys (or will buy) your product, but what makes them want to buy it. One has to know what their spending patterns are, whether they are brand conscious when it comes to your product type, what influences their buying behavior, what promotional efforts they respond to most often, etc.

5. Technological forces and advancements – impact of Internet, Portable Information Devices, Electronic networking, smart mobile robots, and increase in the speed of microprocessors will have tremendous impact on business. There has been a tremendous impact of e-Business on the typical businesses. The information is exchanged much more quickly than any other thing which is helping the organizations to make more quick and accurate decisions. E business has removed geographical and time restrictions for the organizations.

· HRM

1. Increase number of working women – The need for status symbols is growing at the workplace as more women enter there. This creates a significant opportunity for Louis Vuitton in their prime segment which is formal luggage options.

· OPERATIONS & SUPPLY CHAIN

1. Globalization – Globalization means operating in the world economy as a single economy. Globalization is a compulsion now. A convergence of expectations is happening globally. And as barriers fall further, technology advances rapidly, customers talk more to each other on the back of a robust telecom network, the ranks of the Universal Customers will only swell. Thus it will bring good growth for LVMH due to liberalization in many parts of globe. In future there will be huge growth in emerging economies such as China, India, Brazil and other countries.

· INFORMATION TECHNOLOGY

1. Technological forces and advancements – impact of Internet, Portable Information Devices, Electronic networking, smart mobile robots, and increase in the speed of microprocessors will have tremendous impact on business. There has been a tremendous impact of e-Business on the typical businesses. The information is exchanged much more quickly than any other thing which is helping the organizations to make more quick and accurate decisions. E business has removed geographical and time restrictions for the organizations.

Threats:

· MARKETING

1. Increasing government regulations

· HRM

1. Cultural differences

2. Increasing government regulations – Increased government regulations regarding employment could prove costly for LVMH

· OPERATIONS & SUPPLY CHAIN

1. Counterfeiting – The biggest threat that luxury good face today is that of counterfeit products in the market.The presence of counterfeits not just gives the brand a negative image but also dilutes the market share.

2. Increasing government regulations – Government regulations in different countries of production could increase production costs and time.

· INFORMATION TECHNOLOGY