Good day everyone.
Today, I will present the Balanced Scorecard analysis of Hermès
International. The Balanced Scorecard is a strategic management tool used to evaluate a
company’s overall performance beyond just financial results. It helps organizations analyze four
important perspectives: Financial, Customer, Internal Business Process, and Learning and
Growth.
Using this framework, we can better understand how Hermès maintains its success as one of the
world’s leading luxury brands.
Let us begin with the Financial Perspective.
The financial perspective focuses on profitability, growth, and long-term financial stability.
Hermès performs exceptionally well in this area because of its premium pricing strategy, strong
brand reputation, and controlled exclusivity. The company generates high revenue and operating
income through luxury products such as the Birkin and Kelly bags. Hermès also maintains a
strong cash position and low financial risk, which allows the company to continue investing in
expansion, innovation, and craftsmanship. Instead of focusing on mass production, Hermès
prioritizes long-term sustainable growth and high profit margins. Basically Hermes is doing their
best to be financially wise instead of putting some money into new machineries and advertising
promotions that’ll help them to produce more products, they’re more focus on investing on their
company, such as training their employees like putting up a school for the next generation of
their skilled artisans will learn more about the exquisite craftsmanship of making Hermes
products.
Next is the Customer Perspective.
The customer perspective focuses on customer satisfaction, loyalty, and brand image. Hermès
has built one of the strongest luxury brand reputations in the world. Customers value the
company because of its exceptional craftsmanship, exclusivity, heritage, and prestige. Limited
product availability increases customer desire and strengthens the perception of luxury. Hermès
also provides a high-quality shopping experience through its exclusive boutiques and
personalized customer service. As a result, the company enjoys strong customer loyalty and
global demand. In short, despite Hermes’ products being expensive that doesn’t stop customer to
love them.
The third perspective is Internal Business Process.
This perspective examines how efficiently the company operates and delivers quality products
and services. Hermès uses a vertically integrated business model, meaning the company controls
many parts of its production and supply chain. This allows Hermès to maintain strict quality
control and ensure product excellence. The company focuses heavily on handcrafted production,
ethical sourcing, and artisanal techniques. However, because Hermès prioritizes quality over
quantity, production capacity is limited and waiting times for products can be long. Even so, this
process supports the company’s strategy of exclusivity and luxury positioning. It may seem like
they are controlling but the truth is they are just preserving their unique technique in producing
their products.
Finally, we have the Learning and Growth Perspective.
This perspective focuses on employee development, innovation, and long-term organizational
improvement. Hermès invests heavily in training programs, artisan schools, and leadership
development. The company works to preserve traditional craftsmanship by teaching new
generations of artisans. Hermès also encourages employee growth through internal mobility and
continuous learning opportunities. By investing in its people and culture, the company ensures
that its heritage and craftsmanship continue into the future.
Overall, the Balanced Scorecard analysis shows that Hermès successfully balances financial
strength, customer satisfaction, operational excellence, and employee development. The
company’s strategy of exclusivity, craftsmanship, and controlled growth allows it to remain
competitive and respected in the global luxury industry.
In conclusion, Hermès International demonstrates that long-term success is not based only on
profit, but also on customer relationships, efficient processes, and continuous learning and
development. Through the Balanced Scorecard, we can clearly see how Hermès maintains its
position as one of the most successful and prestigious luxury brands in the world.
Thank you for listening.