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Choice of international strategy for LVMH

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  1. The LVMH group
    1. Portrait of the French leader of luxury
    2. History
    3. Overview
  2. International strategy of LVMH
    1. External growth and focus on the development of activities through organic growth
    2. A highly decentralized group: promoting synergy
    3. Geographical diversification
    4. A strategy of globalization that adapts to local aspects
    5. Selective distribution
    6. The corporate communications at LVMH
    7. A skimming strategy: towards democratization?
  3. International strategy of two brands
    1. Success: Dior
    2. Failure: Sephora
  4. Conclusion

In a society where there are real differences in wealth, the luxury industry has always generated more excitement, because it conveys a value of aspiration for its products. In 2005, it rebound in activity after a period that was a little more difficult, mainly in Asia and Europe (high growth), United States (pace), and also in new emerging regions such as Russia and India (promising growth opportunities).

In the first half of 2005, the French leader, LVMH (Moet & Chandon, Louis Vuitton), recorded a turnover of 3.082 billion euros, representing a growth of 12% of sales versus the first half of 2004. It was therefore quite legitimate to question the elements that make up the international strategy of such a group to ensure its growth in challenging new markets as listed.

Therefore, this will focus at first to define the identity of the LVMH group, through the character of its leader, the history tracing its major acquisitions, and an overview of its business, its mission and values, and finally its major competitors. In the second part, it will study a concrete device of international strategy as implemented by the group. Finally, it will illustrate two examples of brands, Christian Dior and Sephora, in order to understand how such a strategy can be a success and failure, to one another.

Aged 56, Bernard Arnault is, and always has been since its inception, the head of the largest luxury group in the world. A graduate of the Polytechnic, he began his career in real estate in the family business, and Florida in the same area.

In 1984 it acquired a group of textile on the verge of bankruptcy, Boussac Saint Frères(Christian Dior, Conforama, Le Bon Marché), and it gets a stake in LVMH, the newly created group. Despite the difficulties, he managed to emerge as President of the prestigious group in less than a year.

For ten years, the character became famous for the number ofaggressive takeovers, which earned him the nickname "Napoleon of luxury." Boldly challenging the traditions Arnault is said to be constantly looking younger, the brightest and most talented. He then deftly juggles between tradition and creation, as well as conventional methods and innovations.

LVMH, the undisputed leader of luxury, has successfully established itself in a few years in the international arena by developing numerous strategies: innovation, growth, globalization, acquisitions are the key words of the group. The group, sought to expand its business internationally and expand its global network, including the acquisition of numerous luxury brands, more prestigious as each other, and large retail stores such as Bon Marché and LaSamaritaine. With over 56,000 employees, 65% of working abroad and about 1,700 stores worldwide, LVMH is an international group .Despite the popularity of luxury brands and the strong image associated with them, the group must take into account the economic conditions and the various global crises, including currency fluctuations that can significantly influence the course of its shares on the stock exchange and therefore, sales. Moreover, even in the luxury sector, competition is exacerbated including PPR (Pinault Printemps La Redoute)-Gucci. The main strategy of the group was diversifying its activities in five areas that are explained in this discourse.

Tags: LVMH, luxury group, international strategy,

[...] In parallel with global products, each division of the group is responsible for developing local strategies taking into account the specificities of each domestic market, including the introduction of new commodities.These principles can be illustrated by the international politics of Veuve Clicquot champagne that made clear the outlines of its overall strategy, based on values a clear strategic vision, but allow their foreign affiliates the option of local initiatives without necessarily following the strategy of the headquarters. In addition, local initiatives are often pilot tests and adapted by other subsidiaries if successful. [...]

[...] This selective perfumery chain suffered a big failure in Japan because of an implementation strategy too expensive and ambitious. Indeed, it has had to close its seven locations in 2001 after losing more than 100 million euros. Ignoring the Japanese culture, Sephora imposed its concept of self-service not paying heed to the fact that the Japanese do not buy anything without advice, Poor market research to enable the implementation of the stores in Japan is also responsible for this fiasco owing to poor understanding of the habits of local customers, in fact, Japan is mainly a market for skin care , not perfume Also, Sephora has been hard hit by competition from Japanese department stores, which, while being placed in the best areas of cities, were also already highly effective in selling the brands that Sephora would introduce Finally, soaring property prices in the heart of inner cities has proven to be a major barrier to the implementation of the foreign groups. [...]

[...] Through a complex financing package, PPR-Gucci offered a final settlement agreement by buying shares in Gucci from LVMH for a total of over two billion euros. - 1999: It won the trial, acquired Chateau d'Yquem (famous producer of white wines) for 84 million euros. Acquisitions of Krug (Champagne), Thomas Pink (English textile retailer), Bliss (American company specializing in hot tubs and cosmetics) Hard Candy (small American company that specializes in cosmetics for teenagers), the Italian fashion house Fendi (in partnership with Prada, LVMH owns 51% stake in Fendi). [...]

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