Zeeshan Halim

Meng Lian
Sean Campeau
Liangjia Xie
2014/10/16

INTRODUCTION

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INTRODUCTION

Introductio
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INTRODUCTION

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on

INTRODUCTION

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n

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INTRODUCTION

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INTRODUCTION

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INTRODUCTION

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INTRODUCTION

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PROBLEM

How to grow sustainably without

undermining the value of LV?

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ISSUES
Limited capacity results from handcraft
One-third of the sales in Europe were
made to Chinese tourists
Counterfeits and copies in the market
Potential financial risk
Current ratio is low (1.58)
Current ratio=Current Assets/Current Liability

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ISSUES

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SWOT
Strengths

Weaknesses

Quality
Control of end to
end Production
No upper limit to
pricing for absolute
luxury
Brand Image
Dominant player in
the market

Limited Capacity for

hand made items
Low Asset to
Liability Ratio
Business units with
low profitability
Business units with
low growth

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Global Luxury Goods Market by

Region and Estimated Growth
Rates
Share of Total Market
in 2011

Estimated Growth
2012 (Euro)

Americas

30%

13%

Europe

37%

5%

Japan

9%

8%

Asia-Pacific

19%

18%

Rest Of The World

5%

8%

SWOT contd..
Opportunities

Threats

High Growth in Asia

Dilution of Brand
Pacific
Image
People Becoming
Currency Exchange
Richer in Asia Pacific
fluctuation
Expansion in the rest of Threat to Quality and
the world
Uniqueness
Acquire other Luxury
Counterfeiting
Brands
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DECISION CRITERIA
LABEL
IMAGE

DESCRIPTION
How much will the
alternative benefit LVMHs
brand image?
PROFIT Profit Growth
How much growth will the
Potential
alternative bring to the
bottom line?
AFFOR Cost of
How affordable is the
D
Implementatio alternative to implement?
n
SPEED Time to
How quickly can the
implementatio alternative be
n
implemented?
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Recommendati Implementati
n

DEFINITION
Brand Image

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on

DECISION CRITERIA
WEIGHT
1X

1X

1X

PROFIT

COST

TIME

2X

IMAGE
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DECISION CRITERIA
SCALE

criteria are rated on a scale of 1 (lowest) to 3 (highe

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Alternative1:Consolidation

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Alternative1:Consolidation

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Alternative 2: Diversification

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Alternative 2: Diversification

Less focus on
innovation
Promote weaker
brands with stronger
brands
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Alternative 3: Expansion

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Alternative 3: Expansion

Focus on high profit

business

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Lower brand value

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Decision Matrix
Alternati
ves

Image
(2X)

Profit
(1X)

Afford
(1X)

Speed
(1X)

Net
Score

Consolidati
on

14

Diversificati
on

Expansion

12

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RECOMMENDATION
Consolidation
Focus on the high-growth fashion and
leather goods market
Take resources out of low-growth market.
Sell low-growth brands and partial
ownership of other brands
Improve the exclusivity of the Louis
Vuitton brand.
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SALES PLAN:
READY TO WEAR
Focus on sales in
Asia-Pacific and
U.S.
Accelerate planned
LV store openings
Focus innovation
on new LV products
Sell limited
products only in EU
stores

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SALES PLAN:
MADE TO MEASURE
Increase private
fittings in Asia/U.S.
Train French
employees to work
overseas
Focus on
exclusivity
Fittings only in EU
for limited products
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FINANCING PLAN
Consolidate profits
by selling
Partial ownership
positions
Unaligned brands

Use profits to fund

focus on LV brand
Increase pricing
selectively
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BRAND IMAGE
Focus on exclusivity
Better personal
relationships for key
customers
Enhance
membership
program using
mobile technology
By invitation only
events
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SUMMARY
FOCUS ON LOUIS VUITTON
BE EXCLUSIVE
BE THE BEST

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Thank you
Q&A