This report is based on the Louis Vuitton (LV) group that belongs to luxury giant LVMH group. The main focus on this report is to analysis what is the challenge that company may have to face in the future and whether the company’s current performance can deal with the potential risks and challenges in the future. Therefore this report has followed a bottom-up approach, firstly it analyses the internal capabilities and resources of the firm, secondly, it takes an analysis of the company’s external environment, illustrate and evaluate the environment the company operates in. Thirdly, to summarize both internal and external analysis into SWOT, to present a more general picture abut the current situation. Finally, based on the analysis and research, this report will provide several strategic options for the company; in order to assist the company to make future strategic decisions and an implementation plan will be presented.
Key Performance of the Company
The organization LV is in personal luxury goods, this industry is objected to have revenue of €212 billion in 2012, LV products includes a wide range of personal fashion goods for both women and men. This include handbags, wallets, luggage and ready-to-wear clothes, it also have a collection of jewelry and watches. The company is well known for its leather collection and unique pattern. When Malletier first founded the company, the major buyers/clients are Napoleon III’s wife and a Spanish countess. The business strengthened further in the 19 centuries by expands its stores to London and New York. However, after the WWII, the business forced to close down and international distribution contracts were interrupted. By 1977, the company only made $20 million and had no profit, however, by appointing Racamier to be the new director, LV has focused on expanding its company-owned stores globally, and this boosted the company’s turnover to a significant $1bilion by 1987. In the recent years, the company enjoys double-digit growth rate in its major businesses, and revenue has achieved €3.2 billion by the year 2012. Therefore, based on the current performances, LV has grown to be one of the most successful luxury brand in the world and this will have significant impact on the analysis this paper presents below.
Strategic Capabilities/ Resources
Firstly, the brand of LV has growing to be one of the most famous luxury groups in the world; this enhances the company’s strength in the market. People around the world would recognize its unique pattern on its leather goods like handbags and wallets, this create a potential benefit for the company. It is considered to be its physical resource, because the public image of the brand is significant and this could reduce the cost of promoting the brands in some emerging countries. For example, when LV plans to launch its flag store in Thailand, it does not necessary to spend a huge amount of money in advertising in order to introduce the brands to the locals. Most people would buy LV bags rather than some other brands like Mulberry and Paul Smith because they are familiar with it. By saving a significant spending on advertising, LV could become more competitive in terms of efficiency, which is also a major objective that company trying to achieve in the long run. However, this is no the resource that LV can reply on in the long run, since technology has changed dramatically in the past decades, customers re now more aware of other brands like Gucci and Prada, therefore the advantage of LV have now is shrinking and this could restrict the future growth.
Secondly, the distribution chain through the global. As the report previously illustrated, LV sold its major goods through company-owned stores, the number of stores increase to 458 in 2011 from 368 at the end of 2006. This 24% expansion illustrates another major physical resource that company has, the effective