LVMH?s Diversification

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LVMH’s Diversification Strategy into Luxury Goods The problem 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 Recommendation Focus on core business To expand the current existing brands geographically. Alliances with new creators Gain access to distribution channels as a different proposition Sell the acquisition which don’t fit the company image Implementation Choose several countries to enter that is suitable for the luxury market and in order to develop the strategy of the company

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