Summary

A company must differentiate itself from others during the product life cycle by
creating an image that demands attention and fosters unique brand awareness.
Louis Vuitton is a company that continuously rejuvenates itself and has
maintained a highly coveted brand for 150 years. Monogrammed Louis Vuitton
products are in such demand that it has spawned a multi-million dollar market of
counterfeit products, most commonly referred to as “knock-offs.” The demand is
so high for these knock-off products that LVMH Moet Hennessy, owner of the
brand, has a special team that works with international police organizations. The
LV logo has become an icon in the designer luggage, handbags and accessories
market. The words Louis Vuitton are the code for describing an internationally
recognized and exclusive fashion empire.

LVMH Target Market: - It aims at the people who are aged between 18-35 and
love towards fine design, and the taste for tradition and luxury, Louis Vuitton has
maintained its lead in fashion through clever advertising in magazines like
“Vogue” with print ads that focus on LV logo products as chic. In recent years
the company has expanded its product line into ready-to-wear, shoes, watches
and etc

LVMH's strategy: - Concentrating on its star brands which have the most
growth potential.'' The group's most profitable brands include Louis Vuitton and
Christian Dior. Moet Hennessy Louis Vuitton (LVMH, the world's largest luxury
goods company), owns famous luxury brands like Dom Perignon, Christian Dior,
Donna Karan and Louis Vuitton. LVMH defines a brand's identity by mining its
history and finding the right designer to express it. LVMH believes in controlling
quality and distribution and creating brand excitement among customers with
innovation, which in its view is the ultimate driver of growth and profitability.

Chairman Bernard Arnault believes that star brands are born when a company
manages to make products that 'speak to the ages', yet remain intensely
modern. These products fulfil the consumer's fantasy. A star brand is timeless,
modern, fast growing and highly profitable. Arnault believes that the impression
of timelessness can be created with uncompromising quality.

• Lvmh, joint venture between giants

 • LVMH Sells Ebel

• LVMH to focus on top brands

• Regional Business Networks and the Multinational Retail Sector

Strategic planning OF Lvmh consists of the process of developing strategies to

reach a defined objective. As LVMH labels a piece of planning "strategic” BA
expect it to operate on the grand scale and to take in "the big picture" (in
contradistinction to "tactical" planning, which by definition has to focus more on
the tactics of individual detailed activities).

• "Long range" planning typically projects current activities and programs

into a revised view of the external world, thereby describing results that
will most likely occur (whether the planner wants them or not!)

"Strategic" planning tries to "create" more desirable future results by

(a) influencing the outside world or

(b) Adapting current programs and actions so as to have more favourable

outcomes in the external environment.

Investment Strategy:-Growth investing is a style of investment strategy. Those

who follow this style, known as growth investors, invest in companies that
exhibit signs of above-average growth, even if the share price appears
expensive in terms of metrics such as price-to-earning or price-to-book ratios. In
typical usage, the term "growth investing" contrasts with the strategy known as
value investing.

However, some notable investors such as BA knew that there is no theoretical

difference between the concepts of value and growth when considering ("Growth
and Value Investing are joined at the hip"). Indeed, when just investing in one
style of stocks, diversification could be negatively impacted.

The Wine & Spirits unit of LVMH, a world leader in luxury, includes five Houses of
Champagne and Cognac, all of them world famous brands: Dom Pérignon, Moà«t
& Chandon, Veuve Clicquot Ponsardin, Hennessy, Ruinart and Krug. Historically,
the houses had been fiercely competitive. Now that they were all under the
LVMH Group umbrella, the parent company needed to find a way to make them
work in a harmonized way with their clients.
Moàt Hennessy (MH) objectives—underpinned by harmonization, simplification
and innovation—were to improve the processes and IT solutions of its houses
with immense scope included. Supply Chain (planning linked to forecast and
distribution replenishment for subsidiaries and wholesalers, Production and
Quality Management, Maintenance, Purchasing, Finance and Reporting,
Traceability and Product Lifecycle Management.

About LVMH

LVMH Moet Hennessy Louis Vuitton is the world's leading luxury products group.
LVMH's Watch & Jewelry division comprises TAG Heuer, Ebel, Chaumet, Zenith,
Fred, as well as Omas, the prestigious Italian writing instruments company. The
Group is represented in Wines and Spirits by a portfolio of brands that includes
Moet & Chandon, Dom Perignon, Veuve Clicquot Ponsardin, Krug, Pommery,
Canard-Duchene, Mercier, Ruinart, Chateau d'Yquem, Chandon, Hennessy and
Hine.

LVMH is present in the Perfumes and Cosmetics sector with Parfums Christian
Dior, Guerlain, Givenchy and Kenzo, and has recently acquired six promising
cosmetic companies, Bliss, Hard Candy, BeneFit Cosmetics, Urban Decay, Make
Up For Ever and Fresh. Its Fashion & Leather Goods division includes Louis
Vuitton, the world's leading luxury brand, as well as Celine, Loewe, Kenzo,
Givenchy, Christian Lacroix, Thomas Pink, Fendi and Pucci. In addition, LVMH
recently finalized the acquisition of Donna Karan, the legendary American brand.
LVMH is active in selective retailing through DFS, Miami Cruiseline, Sephora, Le
Bon Marche and La Samaritaine. Phillips, one of the world's largest auction
houses, which has recently teamed up with L'Etude Tajan and Geneva art dealer
de Pury & Luxembourg Art, also belongs to the LVMH Group. Connaissance des
Arts and Art & Auction Magazine, two specialized publications, also recently
joined the Group. In 2000 LVMH also launched eLUXURY, the authoritative online
source for luxury goods on the Internet.

LVMH shares (LVMH.PA) are listed on the Paris Stock Exchange and NASDAQ in
the United States (LVMHY)

LVMH Moet Hennessy Louis Vuitton SA - Financial and Strategic Analysis

Challenge statement:
“Despite worldwide softness in the sale of luxury goods, LVMH has cemented its
position as the world’s largest and most profitable player in the category. To stay
there it must keep its customers loyal and its brand strong and find new markets
worldwide” (Hazlett C. 2004). That is why in its mission they state to represent
the most refined qualities of Western “ art de vivre” all around the world. Their
objective is to be the leader in the luxury market, continuing to transmit
elegance and creativity. This poses some major challenges, the main one is to
keep being the leader in the luxury market through a sustainable growth. The
main problem to achieve it is the high dependency on three main countries,
France, Japan and USA. This becomes a threat because if there is an economic
downturn in one country it affects LVMH directly that is why.

LVMH founds itself in a stable financial situation. Being positioned as the market
leader they have better financial results than the rest of the competitors.
Although the sales results for 2004 were under the industry’s average the overall
performance over the last 5 years was 3% higher then the industry. It is
important to note that the major owner of the company’s capital is present CEO
Bernard Arnault with 47.52% of the control of the company with 64% of voting
rights. This may have an Important impact in the overall performance and
operating decision taken in the company.

Global Markets Direct, the leading business information provider, presents an in-
depth business, strategic and financial analysis of LVMH Moet Hennessy Louis
Vuitton SA. The report provides a comprehensive insight into the company,
including business structure and operations, executive biographies and key
competitors. The hallmark of the report is the detailed strategic analysis and
Global Markets Direct’s views on the company.

Scope

• The company’s strengths and weaknesses and areas of development or

decline are analyzed. Financial, strategic and operational factors are
considered.
• The opportunities open to the company are considered and its growth
potential assessed. Competitive or technological threats are highlighted.
• The report contains critical company information - business structure and
operations, the company history, major products and services, key
competitors, key employees and executive biographies, different locations
and important subsidiaries.
• It provides detailed financial ratios for the past five years as well as
interim ratios for the last four quarters.
• Financial ratios include profitability, margins and returns, liquidity and
leverage, financial position and efficiency ratios.

Reasons to buy

• A quick “one-stop-shop” to understand the company.

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opportunities available to them.
• Compare your company’s financial trends with those of your peers /
competitors.
• Scout for potential acquisition targets, with detailed insight into the
companies’ strategic, financial and operational performance.
LVMH’s Diversification
Strategy into Luxury Goods

The problem

By 2002, Moet Hennessy Louis Vuitton was the world’s largest luxury products
company, enjoying annual sales of 12.2 billion euros. LVMH carries the most
prestigious brand names in wine, champagne, fashion, jewelry, and perfume.
Upon entrance of this luxury product industry, LVMH was aware that they
produced products that nobody needed, but that were desired by millions across
the world. This desire in some way fulfills a fantasy, making consumers feel as
though they must buy it, or else they will not be in the moment, and thus will be
left behind.

The LVMH business portfolio began to take shape in 1987 with the merger
between Louis Vuitton and Moet Hennessy which was a four billion dollar merger.
Over the course of time, LVMH has acquired over 50 luxury brands, such as
Donna Karen, Fendi, and Sephora. They called it, “a collection of star brands and
rising stars.” LVMH found this industry to be timeless and modern, highly
profitable, and very rapid growing.

Despite all of the above mentioned, LVMH did experience some bumpy times.
Some of these times were induced through internal problems, while others were
caused by externalities, like Sept. 11. With such a wide range of product
offerings, LVMH was on top of the industry in certain aspects, but has room for
growth in other areas.

After the case and readings the problems of LVMH there are several problems
such as the declining demand for luxury goods because it is linked to political
events, situation and social trends. (After the attacks of 9/11 an impact on luxury
goods has dropped and had automatically an impact on LVMH sales)
Secondly luxury products are easy to counterfeit, some countries such as china,
turkey, and other still have to improve their IPR policies
and finally LVMH diversification strategy (Bernard Arnault) is making acquisitions
outside the company’s sector. In sector where they don’t have the “know-how”
and don’t match the company Image. The current CEO (Arnault Bernard) is also
the major shareholder which makes him easier to make decisions on new
acquisitions

The swot analysis

Strength:

• Name recognition which makes them the largest product marketplace

• Their experience during the time
• Leading position
• Quality provider
• Distribution
• Public Relation

Weaknesses

• Their Diversification
• Conflict of interest (fashion vs. wine and spirits)
• Forward and backward integration
• Luxury goods are easy to imitate. (Perfumes, Louis Vuitton bags…)
• Finance problems: net sales decreased by nearly 6% in 2003
• Declining shares

Opportunities

• Merger and acquisition

• Consumer trends
• Current increase in wealth
• Emerging market
• Improvement of way of selling their large product line (distribution channels)
• Expansion to other markets

Threats

• Change in consumer taste

• Economic recession
• Competitor in smaller markets
• Counterfeit