LouisVuitton Strategic Management
LouisVuitton Strategic Management
AFrench entrepreneur called Louis Vuitton Malletier founded LouisVuitton Company in 1854. The organization experienced tremendousgrowth through acquisition and merger over the years. The mostsignificant integration was the 1987 incorporation with the MoëtHennessy. The merged companies agreed to operate independently, witheach organization retaining its operation principles and leadership.Nevertheless, numerous wrangles emerged between the organizationssoon afterward. As a result, Racamier, the previous owner of the LVCompany took Bernard Arnault as a partner. Subsequently, Arnault tookover the entire company (Dess, Lumpkin, Eisner & McNamara, 2014).
Presently,the Louis Vuitton Company leadership is efficient since it hasassisted the company to grow from insolvency in 1990s to highprofitability. Arnault, the new CEO who replaced Racamier, began bychanging the former managers who had let the organization deterioratealmost to bankruptcy. Second, he changed the policy of outsourcingsome products. During his predecessor tenure, 70% of the serviceswere outsourced. Subsequently, the management could not control thequality of the products (Dess et al., 2014). Arnault overcame theweakness by bringing back the production units in-house. As a result,the management can easily control the quality and quantity of theproducts manufactured since they have direct supervision over theworkers. In order to accommodate the production units locally, theorganization purchased
Secondly,the management also controls the distribution channels of itsproducts. It has outlets in fast-growing markets in China, Europe andAmerica. Besides, it has a contract with independent distributors.The CEO believes that a business can only be efficient when themanagement has control over the production and distribution units(Hess, 2011).
LVaims to achieve higher growth through production of high quality andbranded products. Since its establishment in the late 18th century,the organization emphasized on customized high-end goods. The designsalso have a history of being innovative. For instance, the flat toptrunks are made with unique canvas that the competitors cannotimitate (Hess, 2011).
Second,the organization uses the economics of large scale to manufacturehigh-end products, but at a lower cost compared to the bigger brands.Consequently, the clients opt to purchase its products because oftheir affordable prices (Dess et al., 2014). In 2012, over 65% of theluxury sales from the company were made to the wealthy Chinesetourists in both Europe and France because the prices wereapproximately 40% less in the countries than in mainland China (Desset al., 2014).
Third,the organization has put strict measures to prevent counterfeiting ofits products. Furthermore, it has brought its production unitsin-house. As such, they only outsource selected products that in turnensure the supplies are high products (Hess, 2011).
LVpursues assorted growth strategies. First, the company hasdiversified the line of its products. For example, the companyfocused on manufacturing trunk bags in the 18th century. Thesuccessor of the company’s founder began introduced new productssuch as handbags. Annual expanded the products to include perfumes(Dess et al., 2014). The diversification also included the launch ofnew product lines such as perfumes and cosmetics, wines and spirits,watches and jewellery, fashion and leather goods, as well asselective retail products (Rothaermel, 2015).
Onthe same note, the company has focused on the acquisition of othercompanies that manufacture high-quality products. Examples of theorganizations that the company had acquired included the wineryChâteau d’Yquem (1996), Givenchy (1998), Céline fashions (1996),Miami
CruiseLine Service (2000), the perfume chains Sephora (1997) andMarie-Jeanne Godard (1998). In 2011, it also Bulgari, a jewelry andwatch manufacturing company (Rothaermel, 2015).
Dess,G.G., Lumpkin G.T., Eisner, A.B. & McNamara, G. (2014) Strategicmanagement: Text and cases (7th ed).New York, NY: McGraw-Hill Education.
Rothaermel,F. T. (2015). Strategicmanagement (2nded).New York, NY : McGraw-Hill Education.
Hess,E. D. (2011). Growingan entrepreneurial business: Concepts and cases.Stanford, CA: Stanford Business Books.