Strategic Analysis of Christian Dior Name of the student Name of the university

STRATEGIC ANALYSIS STRATEGIC ANALYSIS STRATEGIC ANALYSIS 20 20 Strategic Analysis of Christian Dior Name of the student Name of the university Author Note: Executive summary: The report below shows that the premium fashion firms like Dior comes under the influences of several macroeconomic factors like political, legal and environment. Executive summary: 1 Introduction: 4 Discussion, analysis and finding: 4 Internal analysis-VRIO model: 4 Value: 5 Rarity: 6 Imitability:

Running head: STRATEGIC ANALYSIS
Strategic Analysis of Christian Dior
Name of the student
Name of the university
Author Note:

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Executive summary:
The report below shows that the premium fashion firms like Dior comes under the influences of
several macroeconomic factors like political, legal and environment. The premium fashion
industry has become intensely competitive owing to presence of global firms as well as smaller
firms which even compete to poach the customers from their larger counterparts. Firms in order
to sustain in the stiff competition have to adapt to the macroeconomic factors.

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Table of Contents
Executive summary:........................................................................................................................1
Introduction:....................................................................................................................................4
Discussion, analysis and finding:....................................................................................................4
Internal analysis-VRIO model:........................................................................................................4
Value:...........................................................................................................................................5
Rarity:..........................................................................................................................................6
Imitability:...................................................................................................................................6
Organisation:................................................................................................................................6
External analysis:.............................................................................................................................7
PESTEL of France:..........................................................................................................................7
Political factors:...........................................................................................................................7
Economic factors:........................................................................................................................8
Social factors:..............................................................................................................................9
Technological factors:.................................................................................................................9
Environmental factors:...............................................................................................................10
Legal factors:.............................................................................................................................10
Porter’s 5 forces:............................................................................................................................11
Threats of new entrants:.............................................................................................................11
Bargaining power of buyers:.....................................................................................................11

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Bargaining power of suppliers:..................................................................................................11
Threats of substitutes:................................................................................................................11
Industry rivals:...........................................................................................................................12
Conclusion:....................................................................................................................................12
Recommendation:..........................................................................................................................12
Strengthening its presence in emerging market:........................................................................12
Acquisition of small scale boutiques:........................................................................................13
References:....................................................................................................................................14
Appendices:...................................................................................................................................18
Appendix 3. GDP of France:.........................................................................................................19
Appendix 4. Exchange rate of EUR against USD, GBP, AUD and JPY:.....................................20

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Introduction:
Management of business organisations need to carry out strategic analysis of their
respective current positions to ensure that their strategies are aligned to the market conditions.
Prajogo (2016) business organisations have to conduct analyses of the business environmental
factors like economic factors and technological factors to ensure strategic fit with these
environmental factors. They often obtain services of consultants to have these strategic analyses
conducted. These analyses also enable the companies recognise their future strategies. The aim
of the report would be conducting strategic analyses of the business environment of a business
organisation. The research would involve application of three models. The VRIO model would
be used to conduct the internal analysis. PESTEL and Porter’s 5 forces would be used to conduct
external analysis. The company would be form the substratum for the research would be
Christian Dior SE, also known as Dior (Dior.com. 2020). The company is based in France and
hence, the PESTEL would largely be viewed from the point of view of the country though it
would have mentions of other countries wherever deemed necessary. Similarly, Dior operates in
the premium fashion industry marketing apparel, accessories and skincare products. Thus, the
consultant in the research take into account the competitors of Dior wherever deemed necessary.
The consultant would then conclude the findings from the analyses and recommend future
strategies before the management of Dior.
Discussion, analysis and finding:
Internal analysis-VRIO model:
The following is the VRIO analysis of Christian Dior SE:

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Value:
Christian Dior SE is able to create value for its stakeholders, both internal and external
stakeholders. The main internal stakeholders of Dior are the management body of the company
and the employees. The company earned a revenue of EUR 46826 million for the year ended
December 31, 2018 compared to the revenue of EUR 43666 million it earned for the year ended
on December 31, 2017. The company earned a net profit of EUR 6942 million in 2018 compared
to EUR 5825 million in 2017 (Dior-finance.com. 2020) (Appendix 1). Thus, the company is able
to protect the interest of the management which is generation of profits (Chien, Chen and Hsieh
2018). Secondly, the company is able to acquire and retain high market goodwill of value as high
as $89.6 billion, which again means it able to protect the interests of the management
(Forbes.com. 2020). The company in the same way is able to create value for external
stakeholder groups like investors, governments and customers. For example, the company is able
to create value for shareholders. The graph compares the share market trends of Dior against two
of its main international competitors namely, Marks & Spencer Group Plc.based in the United
Kingdom and Hermes International S.A., based in France. The graph shows that the Dior
experiences the strongest share market position among the three premium fashion giants
(Bloomberg.com. 2020) (Appendix 2). This means that company is able to give higher ROI to
investors, thus creating value for them. The company similarly can create value for government
bodies, both its home government namely, France and host country governments like the United
Kingdom in forms tax payments and employment creation in these countries. For example,
company paid income taxes amounting to EUR 2518 million in 2018. This company opens
chains of boutiques in its home country as well as host countries, like India, thus creating
employment opportunities (Mansworldindia.com. 2020). The company offers premium fashion

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products including apparel, skincare products, accessories and fragrances to its target customer
segments namely, upper class customers and middle class customers (Dior.com. 2020). One can
establish on the basis of the analysis that Dior is able to create value for its stakeholders.
Rarity:
The products which Dior markets are rare and unique in terms of style and design. The
companies have to protect their innovative designs and attributes using IPRs in order to prevent
the unauthorised identities getting access to them (Maresch, Fink and Harms 2016). Dior protects
the innovative designs and features which it incorporates into its products with IPRs (Dior.com.
2020). This prevents the competitors of the company from introducing products which are
exactly similar in terms of attributes like shades and designs. This prevents the rarity of the
products like authentic fragrances which Dior markets.
Imitability:
The products Dior markets are highly imitable. This is because the prices of the products
are extremely high which makes them unaffordable to middle class customers. The competitors
of Dior like Marks & Spensers market similar products as the former at lower prices
(Marksandspencer.com. 2020). In fact, the fashion brands based in the host countries are offering
products similar to Dior like apparel at lower rates. Thus, in short one can establish that the
products which Dior markets may be rare but not inimitable.
Organisation:
Dior is averagely ready in terms of organisation to exploit the market opportunities and
manage the market risks. For example, the company is based in France and operates in more than
ten countries in the world, thus generating revenue from. The company operates in most of its
host countries by either exporting its products or entering into third party contracts to sell its

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products in the particular markets. This means the company has very limited direct market
presence. This limited presence inhibits the management of the company from gaining real time
market information from these markets like newly emerging market opportunities or risks. Thus,
the management not able to take decisions to capitalise on these opportunities like introduction
of innovative products. Similarly, the company is not able make decisions regarding
management of risks like emerging new premium fashion firms in markets like Australia
(McDonald 2018).
External analysis:
PESTEL of France:
The following section would analyse the macro environmental factors impacting the
premium fashion industry:
Political factors:
France is a politically stable nation and a member of the European Union (BBC.com.
2018). The government of the country seated in Paris makes laws and policies which has
attributed the high level of political stability. The country has strong bilateral relationships with
different nations which enable the business organisations to expand into these markets. For
example, the country has a strong bilateral relationship with the United Kingdom
(Diplomatie.gouv.fr. 2020). The company under research namely, Christian Dior has a strong
presence in the UK. This allows the company to get access to a large base of customers in its
host nations to generate immense revenue (Kotabe and Kothari 2016). Scott (2019) mention that
entering foreign markets enable the firms to diversify their business risks which in turn boosts
their competitive advantage. For example, Dior by entering markets in Asia and Europe is able to

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diversify the loss of revenue it suffers owing to presence of strong competitors like Hermes
International (Hermes.com. 2020). Xu et al. (2016) contradict the opinion of the previous author
pointing out that global expansion of firms is also a disadvantage for firms as well. This is
because, owing to bilateral relationships of the governments of countries, foreign firms enter the
markets making it more competitive for the resident firms. For example, Marks & Spencer’s
Group Plc has entered France, thus stiffening the competition for the resident firms like Dior
(Marksandspencer.com. 2020).
Economic factors:
The country is France is economically extremely strong with a GDP of $ 2890 billion
achieved in 2019 (Tradingeconomics.com. 2020) (Appendix 3). The country is the seventh
largest economy in the world trailing behind the US, China, Japan, Germany, India and the UK.
The country is expected to grow at a rate of 1.3% in 2020 (Nasdaq.com. 2020). This means that
the market of France is experiencing an increase in production of final goods and services which
means the firms in the country are experiencing growth in productivity. This means that the firms
in the country would employ more people to meet their increasing productivity need which in
turn would create more employment opportunities. This means that the people in France would
have higher disposable income which would enable them to purchase premium fashion goods
from international fashion firms like Dior. Thus, it can be construed from the above discussion
that the economic conditions of France are favourable for the premium fashion industry firms
like Christian Dior SA.
The second economic factor which Christian Dior would take into account while
operating in France and its host nations would be foreign exchange rates. This is because the
premium fashion company namely Dior operates in several markets like the US, the UK and

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Japan besides its respective home market namely, France. The graph shows that the main
currency of France namely, EUR is enjoying stronger positions against AUD, USD and GBP.
However, it is showing a downward trend against JPY (Bloomberg.com. 2020) (Appendix 4).
One can point out that the company should acquire raw materials from countries whose
currencies are weaker compared to EUR and sell in nations whose currencies are stronger
compared to EUR. This would enable the company generate high profits.
Social factors:
The social factors have great impact on the operations of the premium fashion firms like
Dior. This is because they sell products which are extremely high priced. The demand for
premium fashion goods is generally dependent on the disposable income in the hands of the
consumers (Zhang and Zhao 2019). As far as Dior is concerned, one can point out that the
company takes into account this factor before entering host markets. This is evident from the fact
the company is present in developed countries like the UK and the USA to a large extent. The
company also has to take into account the cultural aspects of the consumers. For example,
acceptance of western dressing style in foreign markets enables the company to expand
Technological factors:
Technological factors play a very significant role in the operations of the premium goods
companies like Christin Dior. This is because, right from manufacturing to marketing of these
products are dependent on technology. For example, the manufacturing of high quality premium
perfume products require synthesis of biotechnology, dermatology and perfumery. Similarly, the
premium fashion companies make and receive payments using fintech platforms (Lee and Shin
2018). Thus, it can be established on the basis of the analysis that technology plays a very
important role in the industry. France being a developed nation is able to provide resident

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premium goods companies like Dior with easily available technology. However, the fintech
platforms are subjected to hacking and stealing of customer data (Ahn and Cho 2019). This data
theft risk can have severe impact on the premium fashion market like losing of financial
resources to unauthorised identities.
Environmental factors:
The premium fashion firms based in France including Dior require procurements of
immense amount of raw materials like cotton and fragrances to make their finished products like
apparel and perfume products. Thus, they should acquire these raw materials from, sustainable
sources (Europarl.europa.eu. 2020). Similarly, these companies should not resort to animal
testing of their high end cosmetic products as the practice is banned in European Union
(Ec.europa.eu. 2020).
Legal factors:
The premium textile firms like Dior have to comply with immense amount of laws and
policies. The companies have to comply with income tax or equivalent laws in both their home
nations and host nations by paying taxes as per the IT rates on their respective net profits laid
down by the governments. For example, Dior has to pay VAT in France, its home country on its
global profit as per the VAT rates laid down by the government of the country (Douane.gouv.fr.
2020). The company similarly has to pay GST on the profit earned in Australia as per the rates
decided by the government of the country which is 10% at present (Ato.gov.au. 2020). Non-
compliance or infringements of laws in either its home country or host nation would attract high
penal charges towards the company namely , Dior.

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Porter’s 5 forces:
Threats of new entrants:
The fashion market in France experiences high threats from newly entering boutique
firms. These new boutiques offer environment friendly and affordable fashion wear which blends
traditional styles with modern trends (Nytimes.com. 2019). These newly entrant boutiques are
gradually poaching customers of premium brands like Dior, thus competing with them for
revenue generation.
Bargaining power of buyers:
Bargaining powers of buyers are extremely high owing to the existence of large number
of premium fashion textile, accessories and skincare firms which offer superior products to the
buyers. For example, in terms of apparel products, buyers can choose between firms like Zara
and M&S. Similarly, in terms of skincare products customers can choose among products owned
by global companies like L’Oreal, also based in France (Loreal.com. 2020).
Bargaining power of suppliers:
The bargaining powers of suppliers in the French premium fashion market is extremely
high. Suppliers which supply raw materials to premium firms like Dior usually charge higher
rates from smaller premium fashion firms.
Threats of substitutes:
The threats of substitutes in the premium fashion market is extremely high. For example,
the customers may prefer premium semiformal apparel products marketed by sports goods firms
like Nike (Nike.com. 2020).

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Industry rivals:
The competition which Dior receives from industry rivals is extremely stiff. For example,
the company receives threats from other premium fashion giants like Hermes, Gucci, Zara and
M&S.
Conclusion:
One can conclude from the analysis that Christian Dior SE faces stiff competition in both
its country of domicile namely, France and in host markets like the UK. The three models
discussed above namely, VRIO, PESTEL and Porter’s brings into the light several salient aspects
regarding Dior. First, the products marketed by Dior are extremely expensive compared to
similar products marketed by other premium fashion giants like M&S. Secondly, though the firm
protects the designs and specifications of its products using IPRs, they are not rare. In fact,
customers can obtain similar products which the firm markets from smaller premium firms.
Thirdly, the business of Dior is still very much concentrated in the developed markets like the
US and UK unlike its competitors like M&S which have already entered emerging fashion
markets like India.,
Recommendation:
The following are the recommendations which can be placed before the management of
Dior in the light of the above findings:
Strengthening its presence in emerging market:
Dior should strengthen its presence in the emerging markets like India and China. This
would enable the company to generate higher revenue by catering to the increase demand for
premium goods in these markets.

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Acquisition of small scale boutiques:
Dior should acquire chains of small scale boutiques in its host markets like the USA
under its brand. The boutiques would market premium fashion products adapted to the local
tastes at affordable prices. This would enable the company cater to the middle class customers
which would lower the level of competition the firm faces from these boutique firms.

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Appendices:
Appendix 1: Except of financial statement of Christian Dior SE (December 31, 2018):

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Appendix 2. Share price graph of Dior, M&S and Hermes International S.A:
Appendix 3. GDP of France:

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Appendix 4. Exchange rate of EUR against USD, GBP, AUD and JPY: