Abstract
Louis Vuitton Moët Hennessy, or LVMH, is currently the world leader in the luxury market. LVMH had recorded high profits in 2006, thus making it the best performer in the fashion and luxury industry. This achievement was acknowledged by the present CEO of the group, Bernard Arnault, who stated that the excellent performance recorded in the year 2006 illustrates the vitality of the major brands of the company. This achievement continues to strengthen and help the company gain market share (Finanznachrichten.com, 2007). As mentioned in Arnault‘s speech, LVMH consists of various autonomously run sub-companies, that are composed of distinct brands. In 1987, the conglomerate was established by consolidating Moet et Chandon, Hennessy and Louis Vuitton, which are the three producing and designing companies of the luxury products of champagne, cognac and fashion respectively.
However, being located in the exclusive luxury market brings several opportunities as well as complications. The company offers exclusive and expensive products and has thus created one major limitation in this industry, which is the danger of counterfeit products. The ways and means by which the company decided to deal with this problem by going through the various steps of strategy formation is an interesting topic that is worthy of a discussion. Another issue that stems from this topic is the need to conglomerate the environment through further regulations and by increasing the responsibility that is recognized by LVMH. The paradox of strategic change, as to whether a company tackles its concerns that are revolutionary or evolutionary in nature are applied to this issue and seem to be of absorbing nature. Additionally, in order to analyse the industry of the company, an analysis of the five forces of Porter's model seem to be an adequate tool.
This paper will cover the following mentioned points. An introduction to the strategy of the LVMH group will be presented. After evaluating the performance of the company over the period of five years from the year 2005 until the present day, the paper will provide an in depth discussion about the strategic formation with respect to counterfeit goods. The paradox of strategic change, as mentioned above, will be applied. Following this, the third point, being an analysis of the industry will be provided through the application of Porter‘s five forces to this case. Recommendations on how to improve and sustain the performance of the company will be provided in accordance with the issues highlighted beforehand. In order to clarify the implications of the arguments,a conclusion will bring these together and summarize the outcomes.
