CASE STUDY

STRATEGIC APPROACH
GENERAL

LVMH
LOUIS VUITTON MOËT HENNESSY
 PLAN

INTRODUCTION

GENERAL STRATEGIC APPROACH

STEP 1: STRATEGIC SEGMENTATION

STEP 2: ENVIRONMENT ANALYSIS

STEP 3: COMPANY ANALYSIS

STRATEGIC CHOICES
 INTRODUCTION

History of LVMH

L The LVMH group was founded in 1987 through the merger of major companies:
Moët Hennessy and Louis Vuitton.
Heir to a long history, LVMH brings together noble professions with strong traditions and a
a unique collection of world-renowned brands.
In the field of champagne, spirits, and leather goods, the companies that
the components are more than a hundred years old: the origins of Moët & Chandon date back to 1743,
the ones from Veuve Clicquot Ponsardin in 1772, those of the Hennessy cognac in 1765. Johan-Joseph
The circle of the fonda with Maison in 1843. The origins of Yquem and its wine date back to 1593.

Louis Vuitton was founded, for its part, in 1854.

In the field of perfumes and cosmetics and in that of fashion design, companies,
sometimes more recent creations have developed their reach over time
international. The origin of the Guerlain House dates back to 1829, that of Christian Dior to 1947.
Givenchy was founded in 1951 and the launch of its perfumes dates back to 1957.
It is a series of successive mergers, carried out by companies that their
affinities destined to unite, which contributed to the formation of the LVMH group.
Thanks to its brand development policy and the expansion of its network
international distribution (more than 2,000 stores worldwide), LVMH is positioned, since
s ac creaoitnin1987in a dynamic of strong growth.

LVMH TODAY

More than 71,000 employees, of which 74% are based outside of France, share
today the values of the Group. Besides its action regarding
development of men - including theLVMH House, theLVMH Chair
ESSECand theScholarshipsLVMH Asiaare examples - LVMH drives of
multiple initiatives as part of its commitment to protection of
theenvironment. Faithful to s apatronage vocation, the Group is involved
also in the fields of culture and heritage, humanitarian action and
education and supports young creators. Here is the current one.
CEO of LVMH, Bernard ARNAULT, the first fortune in France and thirteenth in the world.
 STEP 1: STRATEGIC SEGMENTATION

In the luxury sector, the LVMH group has invested in five areas of activity.
different strategic areas which are wines and spirits, fashion and leather goods,
perfumes and cosmetics, watches and jewelry, and selective distribution.

Wines and Spirits: wines, champagne, and spirits

These products are grouped under the Moët and Hennessy brand of LVMH. The brands of
LVMH is emblematic of luxury worldwide and is part of Moët and Hennessy.
the world leader in champagne and cognac.

The flagship brand of the Wine and Spirits Division is Moët and Hennessy.

known worldwide and highly recognized.

Fashion and Leather Goods: ready-to-wear, leather goods, shoes, accessories

The flagship brand of the Fashion and Leather Goods division is Louis.

Vuitton, a brand adored by Asians and symbolizing the

luxury par excellence.

Perfumes and Cosmetics: perfumes, makeup, skincare, and beauty products

LVMH is present in the perfume and cosmetics sector with brands

prestigious French brands such as: Christian Dior, Guerlain, Givenchy, and Kenzo.
This set of globally established brands is complemented by young
cosmetic companies targeting a new customer category: BeneFit, Fresh
and Bliss in the United States as well as Make Up For Ever, a French brand specializing
in professional makeup products
 The flagship brand of the group is GUERLAIN with its
Champs Elysées perfume which is sold 70% abroad and
represented a turnover of 2.3 billion francs
in 1995.

Watches and Jewelry: watches and jewelry

The Watches and Jewelry Division is the most recent of LVMH's business groups.
founded at the end of 1999, it brings together TAG Heuer, Ebel, Zenith, three renowned houses of

Swiss watchmaking, as well as Christian Dior watches also made in Switzerland. It

also includes Chaumet and Fred, two jewels of French jewelry and Omas, famous
Italian creator of writing instruments. He is now part of the joint venture De BeersLV,
created in June 2001, which opened its first store at the end of 2002.
The flagship brand of the group is TAG Heuer, specialized in
sports watches and luxury chronographs occupy the
fourth place in the luxury watch market in 2003.

Selective distribution: travel retail and selective distribution

Selective distribution is a true area of strategic activity as it allows for
distributing and implementing the group's products in a global market. This strategic business area is composed of

2 segments: travel retail (sale of luxury products to traveling customers)

international), profession of DFS and Miami Cruiseline, and specialized selective distribution
represented by Sephora and the department store division consisting of Le Bon Marché and the
Samaritan
The flagship brand of the group is DFS. DFS is the global leader in
sales to international travelers (more than 150 stores
distributed in 15 countries in Asia, the Pacific Basin, and on the Coast
West of the United States and 5000 employees worldwide). The DFS network is
essentially made up of shopping centers under the name 'Galleria', concessions of
duty-free products and others, from shops in large hotels and tourist resorts in
vogue as well as specialized boutiques. DFS stores are located in the heart of
major cities near hotels and restaurants, and in the largest airports
international
The sixth DAS is very recent: a heterogeneous hub

This recently acquired sixth DAS consists of

media. These new acquisitions are therefore
particularly strategic because the press allows for
example of making advertising inserts for the
other brands of the group; also, the trade press
economic (Capital or La Tribune) allows Bernard
Arnault to disseminate information about his group to deceive competitors but above all
the economists and bankers.
 STEP 2: ANALYSIS OF THE ENVIRONMENT

1- SECTORIAL ANALYSIS

The different actors with Porter's 5 forces model

Bargaining power of suppliers:

Suppliers do not have very high bargaining power; for example

Christian Dior, who benefits from its position as a leader and thus as a forerunner because it belongs to

LVMH can thus work with common suppliers for several brands since
LVMH includes more than fifty luxury brands.
A vertical integration of production is increasingly being developed, which allows for
different brands of the group can control all stages of production, this
this emphasizes the strong position. All of this allows for a collaborative effort between the
different companies in the group to reduce costs and thus rely less and less
to the suppliers.
Economies of scale are achieved (production and distribution), purchases are
carried out for several companies, which helps reduce the number of suppliers in order to
to increase the bargaining power of the group and to reduce costs
of supply.
Suppliers that would be difficult to replace are highly qualified suppliers.
and specialized for haute couture activities. However, the unprofitability of this activity
which allows the promotion of the various brands of the company (fewer than 500 women in
the world is likely to be clients), the houses disappear (23 in 1990, 11
today). Suppliers are therefore not in a favorable situation, which
limit their bargaining power.
This movement is exacerbated by outsourcing and the training of personnel abroad.

Bargaining power of customers:

Luxury clients can be classified into three different categories:

The usual people who represent a relatively limited and homogeneous core of
privileged clients. There are 4,000 clients that haute couture has around the world.
These customers allow the company to promote its products and showcase to the
world's eyes that its products are unique
 The outsiders who, by choice or lack of means, have no connection with the world of
luxury. They have no influence over the company LVMH

Tourists or occasional buyers who are transient customers.

A few years ago, most luxury product purchases were made by these
clients. This category of consumers is becoming the primary target for the majority
major brands, they have thus decided to develop their ranges of accessories
or to launch series of products at lower prices. More accessible, the universe
luxury increasingly appeals to a clientele that does not necessarily have the means
financiers and gradually this clientele is becoming increasingly larger.

It is important to take into account individual choices and sociocultural dimensions. However, we
we can observe that the current trend is leading towards a homogenization of tastes and
aspirations. Today's consumer belongs to a community; they need to
recognize within herself. Evolving in a competitive context that offers her a
extremely wide offer, he is more aware, more informed and more demanding. Confronted with the
stability of his purchasing power, he is more selective and cautious.

Customers thus have strong influence over the LVMH company.

New entrants

The threat of new entrants in the luxury sector is quite low; there are
numerous barriers to entry.
These barriers are, first and foremost, of a 'cultural' nature. Indeed, history and the image
Brand reputation is a very important factor in building legitimacy for a brand, and they
may take some time to appear and engrave in the mind of
consumers.
Financial barriers are also very important due to many
necessary investments, particularly in terms of communication, which allows
also to forge this legitimacy. Today, if a luxury brand is not supported by
a large group, it has little chance of developing.

Substitution products

The luxury market is characterized by the prestige of high-end products.

that we create around them).
Thus, substitute products are very numerous and are characterized by the fact that they
corresponding to the same types of products but at a lower range level (not evolving
not in the luxury market.
Many mid-range or high-end brands but without reaching the level of
Luxury poses a danger. The same goes for large fashion chains with
volume strategies, such as Zara or H&M. This situation is also found for the
cosmetics.
There are therefore many substitute products that do not operate in the luxury market.

Competitive intensity

One of the characteristics of luxury products is their high degree of personalization.

However, each brand in this industry can only survive if it has its own values.
It is his values that will enable him to find his clientele and retain them.
companies emphasize the differentiation of their product.
It is noted that the success of brands is linked to a competitive advantage, and
some major brands dominate the market (Dior, Vuitton…). This competitive advantage
often relies on the means implemented, whether in terms of communication or
of distribution. It can be noted that the brands that benefit from these resources are often
affiliated with large groups like LVMH or PPR (Gucci).

2- IDENTIFICATION OF THE FCS

The company L.V.M.H has several strategic areas of activity:

Fashion and leather goods

Wine and spirits

Perfumes and cosmetics
Watches and jewelry
Selective distribution
Media
Generally, the CSFs must be analyzed according to each strategic business area.
But as the luxury sector is a field where the key success factors of strategic business areas
they have many similarities so we will treat them in a general way.

In general, there are five major categories of criteria:

The market position
Cost control (supply, production, marketing)
 the image, the brand and the commercial establishment
technological mastery
financial power and profitability

The F.C.S related to the company's market position

To assert itself in the luxury market, a company must be of a considerable size.

critique and relatively significant market shares. The advantage in this market is the role
engine of certain well-known major brands owned by the company on which
she will concentrate all her efforts and strengthen her position in the market.

The F.C.S related to procurement, manufacturing, and marketing costs

The luxury market is highly concentrated, the objective of companies is to

to establish a sufficiently large network that can be integrated into the company, to control the chain in
from production to marketing. This allows them to create synergies between the
jobs and power to recover the margins generated by distribution in addition to those of
industrial activity. One can thus distinguish a downstream integration.

The image, the brand, and the commercial establishment

The image:
These are high-quality products that are made thanks to craftsmanship.
artisanal. The consumer buys a luxury product for the image and the dream it provides.
Thus, he is willing to pay a high price for the value and enjoyment he derives from the product.
In the luxury sector, the reference to price is not automatic in the process of
purchase decision and represents above all a guarantee of quality.

The brand:
These products have a strong image on an international scale. In communications
different brands, they must convey strong values of meaning to enhance their
notoriety, the products themselves are already strongly symbolic and imbued with meaning. The
The name of a brand must be revealing in different countries. To do this, it is necessary to respect

the universe of the brand and its positioning. Communication must serve
of the product and the brand, and there is no need to assert because the products and the brands are
themselves bearers of strong messages and symbols.
In addition, each brand has its flagship products that help to make it known.
brand (Guerlain: Champs Elysées; Dior: its quilted bag…).
 Commercial implantation:
Overexposure harms the image of the product or service, depriving it of a
essential element of its value, its rarity. Also, most luxury houses choose to
establish a selective distribution in qualitative terms (choice of brand) and
quantitative (number of references or stores), resisting as long as possible
to the pressures of large distribution which would lead to the trivialization of products. In the
In the luxury sector, the location and atmosphere of a retail outlet matter more.
that its surface. A relationship marketing establishes itself in these sales points.

Technological mastery

The luxury sector calls for creativity and innovation, the professions and the
the services in this sector are close to art and are rich in creativity,
Technological innovation plays a crucial role in ensuring sustainability and good health.
of different companies. The innovation strategy is primarily at a creative level.
Brands are looking to offer new products, so companies rely on
a technological mastery to renew the range: launch of new fragrances or
bags. The strategy also involves betting on fashion phenomena orchestrated by the
brands themselves resulting in the emergence of so-called "ephemeral" products that play on
the public's enthusiasm for rarity. This policy ensures various successes
commercial

Financial power and profitability

Luxury revenue is growing by 9.8% in published figures and

15.9% on a comparable basis in the second quarter of 2004.

Evolution of Revenue since 1999:

The luxury market is booming, being a leader becomes a competitive advantage, which
is a significant argument to attract the best creators.
One can mention the example of LVMH, which stands out through the purchase of the newspaper.
economic ECHOS where they are tackling a 6th area of strategic activities in order to
to serve as an instrument of communication.

3- EVALUATION OF THE ATTRACTIVENESS OF THE SECTOR

The degree of maturity of the sector

The luxury sector represents a global market estimated at 150 billion euros, which
grows three times faster than the economy of each continent on which it is present. To
traditional luxury markets such as Japan, the United States, and Europe are being added
new territories like China or Russia. Global growth of the
highest revenues, the expansion of product ranges or even democratization
Certain segments are the main elements driving the luxury sector.

The luxury market is therefore experiencing strong growth; according to certain studies, luxury affects

today, beyond its traditional clientele, an occasional clientele that represents

about 200 million people. Another study indicates that 60% or more of the populations
European, Japanese or North American individuals have had access at least once to a product from
luxury.

The potential for development

For about ten years, the luxury sector has experienced significant growth.
This growth is largely related to the density of tourist flows, particularly from the
clients from Asia. Due to the high price of luxury products in Asia (about 30% higher than
in Western countries), and especially in Japan, Asian consumers have become
important luxury clients outside Asia

The emergence of a new clientele with high purchasing power is also a determining factor.
for the growth of this sector. It will allow in the future to boost sales.
 STEP 3: Company Analysis

1- ANALYSIS OF STRENGTHS AND WEAKNESSES

The LVMH group (Louis Vuitton Moët Hennessy) is globally known,

notably in the Fashion & Leather Goods sector. Its current growth situation
can be explained, among other things, by the analysis of its strengths and weaknesses.

Internal Factors
Strengths of the company
Colossal turnover (16.48 Vulnerability to fluctuations
Financial
billions of euros monetary (Yen and Dollar)

High operating result and average result of the division

growth Perfumes and Cosmetics
Continuous growth of market shares Debt of 3.2 billion euros
Strong market capitalization
Fashion-leather goods sector stands out

considerable margins
Physiques and Unique heritage (status of
Ready-to-wear is not profitable enough.
Techniques brands stars)
Geographical coverage (political
Weakness of watchmaking
of internationalization
Image of the marquee seeing Few competitors but intensity
of excellence (fame) very strong competition
Problems in responding to the
Does e-commerce and wants to become a growing demand (but this is to be)
a major player for the Internet assimilated to a desire to create a
effect of scarcity
Product suitable for different types
of clients
Close to customer concerns
to enrich the database (stores
reporting customer information
Alliance of tradition and innovation
products (innovation capacity)
Perception of excellent quality
 To extend the life cycle of a product in
relaunching it in other countries, this
who creates a balance at the level
international
Vertical integration

Prestigious partnerships

Strong pressure on suppliers

Master the technology
Secures the supply
High-end positioning
in all markets

Diversification of activities
Permanent pressure on the most
close collaborators from where fear of
Humans Coexistence of different cultures
fall from grace (pressure from the
hierarchy)
Dehumanizing attitude from
Teams of great talents
Bernard Arnault
Lack of social dialogue that
Renews and strengthens its teams characterizes the management teams of
group
Constant succession of directors
generals

Internal factors fall into three categories:

Financial
The sales for the fiscal year 2007 amount to 16,481 million euros.
growth of 8% compared to the previous fiscal year. They are affected by the
decrease of the main billing currencies of the group compared to the euro
(Yen and dollar) and its operating result is growing by 16% yet the
DAS Perfumes & Cosmetics has only increased by 1%.
The gross margin of the Fashion & Leather Goods division is substantial and represents

34% of the total.

The group's development is ongoing with a growth of 12% in 2006

to which all geographical areas and professions contribute.
 This allows the company to reduce its debt by a billion per year.
for three years.
The LVMH group is part of the CAC 40.
Physics and Techniques
Louis Vuitton Moët Hennessy has a unique heritage of 60 brands
all more prestigious than the others (Dior, Guerlain, Dom Pérignon,
Tag Heuer,…).
However, there are weaknesses in watchmaking and ready-to-wear is not
quite profitable.
The group is also struggling to meet demand but this can also
to be interpreted as a desire to create a sense of scarcity among customers.
The luxury sector is targeted, therefore, it is organized around few
competitors. But the competitive intensity is very high there.
One of the great strengths of LVMH is undoubtedly its presence.
commercial in the world with more than 2000 stores.
Luxury is a lifestyle characterized by large expenditures dedicated to
the acquisition of superfluous goods, out of a taste for ostentation and the greater good -
to be. It is notably synonymous with rarity and the notion of image is crucial. And
LVMH has an image of excellence because their quality is very well perceived.
by consumers. Indeed, the products are adapted to different types
of clients.

They perfectly master their high-end positioning across all

markets that are quite diverse elsewhere. The world of luxury maintains
also a privileged relationship with the past that LVMH dominates without great
difficulty.

The oil combines tradition and innovation of the products. Once the product is put on
the market, LVMH adopts a strategy that allows its cycle to last
by relaunching it in other countries to create a balance in the world and
at the same time generate profits.
Upstream, the company exerts strong pressure on suppliers which forces them
allows to control the production chain and to ensure
the supply.

Human
 Just by its name, the luxury giant attracts teams of great talents, it has
even the possibility to renew and enhance one's skills.
Moreover, at the level of the company's human resources, its image is tarnished.
by the lack of dialogue that characterizes the leaders of the group since it
there is pressure from the hierarchy added by the dehumanizing attitude of
CEO.

LVMH is an undisputed leader in the luxury sector. It has many strengths and
few weaknesses. But it can be noted that from a human perspective, there are more weaknesses
what forces.

2- Identification of competitive advantages

In the second part, we identified what the key success factors were.
Now we will identify the competitive advantages, in other words, the key factors.
of success mastered by Louis Vuitton Moët Hennessy.
The most important competitive advantage of the company is its image/portfolio of
brands, which she cultivates tirelessly. Moreover, the communication budget is very
important at LVMH. It relies heavily on luxury, the value of excellent quality
is perceived. It also plays on very high prices, the certainty of rarity for the
consumers and the effect of experience as the luxury world maintains a privileged relationship
with the past.

Sanotorié is no longer to be done; today it suffices that a brand, however little known it may be,
to be assimilated to the LVMH house so that individuals perceive quality.
Of course, to survive in the luxury market, one must have significant capital, and
LVMH, a leader in the sector, has financial power. This financial power enables it
allows for a capital intensity that it puts at the service of the innovation of these
products and services.
Another competitive advantage is cost control: by integrating into the chain of
value the distribution, LVMH minimizes contract issues, surcharges, and delays,
and controls the price of its products. By saving on costs, LVMH can then finance the
the communication and advertising campaigns required by luxury. The mastery of
costs are part of the synergy "Distribution - Production House".

3- Portfolio analysis
 The business portfolio of LVMH is quite diversified. However, we note that
their core businesses (traditional), namely, "Fashion & Leather Goods", "Fragrances &
Cosmetics and Wines & Spirits stand out for their strong profitability. It is
why these are the STARS sectors of the group with 34.15%, 19.57% and respectively
16.57% of sales in 2007.
Indeed, LVMH is the world leader in champagne and cognac, the undisputed leader of brands of
luxury of haute couture, fashion, and luxury accessories. It holds several major
French perfumery names.
As for the Watches & Jewelry division, which is in a DILEMMA position, it is experiencing some.
financial difficulties (strong investment needs) which are offset by the strategic business areas
STARS, these also allow for its development. Its goal is to become a
significant player in this sector.
The selective distribution pole has posed a problem: not only is it far from the others
group jobs but the levels of growth and margin have also been disappointing.
Fortunately, in recent years, he has managed to pull himself together and today he is in a position to
MILK COW.
And the latest DAS Media is in a DILEMMA position, this is understandable since
it is a recent area of activity for LVMH. Its takeoff should be soon because this
The sector records an annual growth of 6.4%.

After studying the BCG matrix, we see that LVMH is in a

maturity phase, a phase characterized by a slowdown in the sales rate of the product and
a more intense competition. This stage usually allows achieving good profitability.
In the case of LVMH, at this stage, it seeks to optimize its costs and innovate on its products.
but also to develop its distribution network and its image. Indeed, for example, 20%
12% of the revenue is invested in the company's R&D and 12% of the total revenue in the
communication because the group's image is fundamental to its profitability. Moreover, it is
constantly on the lookout for new distribution networks and currently its goal
is a more significant presence in Asia, particularly in emerging countries.
Finally, cost control is achieved through a vertical integration strategy, the company wants
control the production chain and a desire to internationalize the range and production
by developing the commercial function and strengthening its competitive position.
Thanks to the table below, we will better understand the place of each DAS within
of the group.

LVMH
Value of the activity
Strong Average Weak
DAS Mode Leather Goods
DAS Watches & Jewelry
Strong DAS Wines & Spirits
Selective Distribution
DAS Perfumes & Cosmetics

Average DAS Media

Weak

First of all, no DAS is at the level of a weak positioning or a

low activity value. Half of LVMH's business units seek to maintain their position
Leader at all costs, these are the group's historic DAS, together they account for 70%.
of the CA.

On their side, the Watches & Jewelry and Selective Distribution divisions want to maintain the
position and track development. The value of their activity is not that of the most
significant but still important. In the field of jewelry, the strategy of
diversification through external growth finds its limits due to the risk of dispersion of
activities and the dissemination of the group's profitability.

And finally, the DAS Media, the new acquisition of the group is cautiously turning a profit. Even
if the sector has strong development potential, it is the newcomer of the group and
therefore cannot yet claim significant market shares. He wants to position himself
at a market.
 STEP 4: STRATEGIC CHOICES

1- DIVERSIFICATION STRATEGY

VERTICAL DIVERSIFICATION

The desire of the LVMH group to want to control the entire circuit of the
sale confection requires vertical diversification. This determination is reflected in
by increasing pressure on suppliers, without giving them any chance to
retrieve licenses.
Downstream, it is the mastery and selection of the appropriate distribution for the products that
prevails. Brand-specific stores are developing in order to better differentiate themselves
in the consumer's "universe".
The value chain dimension allows it to maintain pressure upstream to minimize the share of the
production in the cost price of the product and use the resources thus released for
expand the market and enhance other competitive advantages.
Moreover, this integration strategy secures the supplies and
master complementary technologies in the stages of the production cycle.

HORIZONTAL DIVERSIFICATION

It can be noted that there is no common skill among the different ones.
LVMH professions (five completely different business areas).

The basic DAS is the area of activity of Fashion and Leather Goods, which is a DAS.
very specialized with brands such as Christian Dior, Louis Vuitton, etc.
LVMH has diversified to balance its business portfolio and complement its
know-how in luxury.
We can talk about the 6 [Link] of the company, which is, according to Bernard's will
ARNAULT, very eclectic. The goal pursued by this method of horizontal diversification.
By conglomerate is the synergy between the business units, and this is possible thanks to a strong
coherence between the different business units of the LVMH group: LUXURY

Geographic Diversification

The LVMH group is seeking to enter European and global markets.

the prototype of a group that does not wish to have borders!
 This means that there is an internationalization not only of the production function.
but also from the commercial function to enlarge the market and strengthen its position
competitive.
2- COMPETITIVE STRATEGY

COST STRATEGY

The sought goal is to minimize costs at the investment level.

fabrication, commercialization but also operating costs and related savings
to the size of the group.
It can limit production to create a scarcity effect. This increases selling prices.
as it benefits from the experience gained due to the high product demand
LVMH from the consumers. The LVMH group does not pass on any price reductions.
costs on selling prices, preferring to increase its margins.
The choice of a pricing strategy depends on the competitive position of the company.
As a result, the LVMH group, being the leader in the market, uses an umbrella strategy that
It allows for high margins.
This strategy had an impact on the market as we see more and more appearing.
In addition to substitute products that are often copies (parallel trafficking of 'counterfeits').

DIFFERENTIATION STRATEGY

Differentiation consists of a marketing and communication aspect and another.

based on the study of consumer behavior and its strategic implementation. Under
The CEO's drive is a differentiated marketing strategy that is being implemented.
The LVMH group offers its consumers unique and ...
strong added value. Moreover, it offers a maximum of products with a high-end offer.
range (sophisticated offer) and selective distribution that it has through Sephora, Le Bon
Market or also DFS.
The group seeks to propose a model that corresponds to the need and personality
of each one", which translates to a wide range of products and strategies of
communication adapted to each segment (group brand).
Therefore, he adapts the offer to his target clientele of luxury products which is a
particular segment with high expectations in terms of quality, services, and performance
to be worth
The value of the differentiation strategy lies in highlighting the needs.
of consumer esteem and recognition, that is to say to combine the valued criteria
by the consumer (hedonism).

3- DEVELOPMENT STRATEGY

INTERNAL GROWTH STRATEGY

Innovation and technology increase the productivity of the business, so it is therefore

Of course, the LVMH group is developing this innovation strategy. Moreover, it
has an important research and development division whose laboratories are located
everywhere in the world (France, USA, China, etc.)
He takes advantage of his knowledge of technology in a market known for it.
develop internally in the business units: Fashion & Leather Goods, Wines & Spirits, and Perfumes &
Cosmetics. These are activities that are characterized by a development potential.
limited (cash cow), hence the predominance and the necessity to offer new products to
consumers. The objective is to seek to develop the product range of each
brand while avoiding product cannibalism.
Certain activities have a strong development potential, such as the Watch &...
Jewelry and the DAS Selective Distribution. They position themselves in a known market with
new yet familiar technologies and must access technologies to
justifying internal development or acquisition.

EXTERNAL GROWTH STRATEGY

The LVMH group is expanding by taking control of a company through its house.
mother and not by integrating it as a subsidiary. This is an acquisition strategy or strategy
external growth based on the appropriation of resources and skills of
the company it acquires. They were the pioneers in using this acquisition method.
"indirect" which allowed them to create a huge conglomerate of luxury brands.

Through this external growth diversification strategy, the group

LVMH is looking to quickly establish a position in the new Watches and Jewelry business segment.
Thus, it consolidates its competitive position in the luxury market and benefits from the advantages
related to diversification (synergies, economies of scale, easier talent recruitment: hub
attraction).
 Moreover, the LVMH group seeks to limit the competitors' response but it is
directly competing with the PPR group.
This strategy finds its limits particularly due to the risk of dispersion of
activities and the distribution of the group's profitability. The CEO wanted to develop the group
independently and especially without alliance or cooperation with other companies outside
of the group.