Strategic Analysis of LVMH: Opportunities, Threats, and Internal Analysis

Report

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................4
External analysis to identify opportunities and threats and assess industry attractiveness.........4
Internal analysis of the company.................................................................................................7
Value chain analysis....................................................................................................................8
VRIO framework........................................................................................................................9
Evaluation.................................................................................................................................10
TOWS matrix............................................................................................................................10
Application of SAFe criteria on strategy execution of the firm................................................10
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Strategic analysis is defined as a procedure which involve researching a company's
business environment within which it function or operates. It is significant to develop strategic
planning for decision making & smooth functioning of that business entity. Strategic analysis
brings the relevant information about development and evaluation of environment outside and
inside the organisation & reveals possible opportunities and threats which required to be
undertaken within strategic decision making (Armitage, 2016). The strategic alignment of
organisation with its objectives and goals by manner of effective course of plans, action as well
as policies. In the present report LVMH (Louis Vuitton) is taken into consideration. It is a French
multinational corporation and conglomerate that specialise in luxury products such as watches,
jewellery, clothing, wine, fashion accessories and many more. The company was established in
the year 1987 and its head office is located in Paris, France. In the recent,LVMH is looking for
the way to expand its business in U.S. Market and for this, it offers to buy US jeweller Tiffany.
The report will cover external analysis of respective organisation using framework that is
PESTLE and Porter's five forces. In addition to this, internal analysis will be conducted with the
help of value chain analysis and VRIO analysis. In the last, it involve SAFe criteria applied to
one of the future strategies of organisation.
MAIN BODY
External analysis to identify opportunities and threats and assess industry attractiveness
It is important for every business entity to focus on evaluating the business environment
in order to decide strategic course of action for its improvement as well as betterment. In order to
conduct external analysis, PESTLE analysis is adopt by the higher authorities of LVMH, which
are as follows:
PESTLE analysis:
It is defined as a strategic tool that is used by organisation in order to know about the
factors that impact on their performance and operations as well. In addition to this, it help
business entities to gain insight about the threats and opportunities that is improved by
companies in enhance its performance level. LVMH is one of the renowned and large French

multinational organisation that offer luxury goods. It is important for company to conduct
external analysis that take place with the help of PESTLE analysis, which is given below:
Political factor: It involve the factors that is political stability, entry mode of policies, taxation
regulations and so on.
Opportunity: It is determined that the political condition of France is quite well that
support companies to expand their business operations who came up with innovation.
Threats: The factors such as political instability, trade wars, change in policies, adverse
political condition is consider as threat for the company and also fluctuate the demand of its
product (Barry, 2016)(Feller, 2017). In addition to this, in the present time the condition of U.S.
Is not good which is the country in which LVMH expand and might affect on its performance.
Economical factor: This factor plays an important role that include factors such as interest rate,
inflation rate, exchange rate and many more.
Opportunity: It is analysed that the economic growth of France is high that develop
number of opportunities for companies to enhance their market presence and share as it directly
impact on the growth and development of economy.
Threats: It is determined that the buying power of people living in U.S. is comparatively
low that impact on the overall performance and profitability of LVMH. In addition to this, the
company is required to adopt pricing strategy which is reasonable for every section of society as
it ensure growth as well as development of organisation.
Social factor: It involve the factors such as value, beliefs, opinions and attitude of people
towards the offerings. In addition to this, customer lifestyle, change in preferences and market
demand are also involved in the social factor.
Opportunity: It is determine that the requirements and preferences of customer is
changed and to meet with this is an opportunity for LVMH (Jin, 2017). Along with this, it
acquire Tiffany that is present in U.S market that is consider as an opportunity for LVMH to earn
higher profits and strengthen its market performance.
Threats: The product in which LVMH is constantly change and is tagged wit”outdated”
products. In addition to this, it offer luxury products that is of high cost and to sell such products
is a big challenge for LVMH.