Applied Corporate Strategy Report: An Analysis of LVMH's Strategies

This report provides a comprehensive analysis of LVMH's corporate strategy. It begins with an introduction to corporate strategies and the company's diverse product portfolio. The main body delves into external analysis, examining political, environmental, social, economic, and competitive factors influencing LVMH's operations. Porter's Five Forces are applied to assess the industry's attractiveness. The internal analysis focuses on LVMH's resources, highlighting its skilled workforce, physical and financial assets. The value chain is analyzed, detailing primary and secondary activities. The VRIO framework is used to evaluate the company's competitive potential. Finally, the report evaluates the overall strategy, leading to a concluding summary of the findings and strategic recommendations.

Applied corporate strategy

Table of Contents
INTRODUCTION ..........................................................................................................................3
MAIN BODY ..................................................................................................................................3
External analysis ........................................................................................................................3
Porter's five forces ......................................................................................................................5
Resources of Lmvh ....................................................................................................................7
Value chain .................................................................................................................................8
VRIO..........................................................................................................................................10
Evaluation of strategy................................................................................................................11
CONCLUSION .............................................................................................................................15
REFERENCES..............................................................................................................................16

INTRODUCTION
Corporate strategies is might be decision-making while looking across all business firms along
with that identified in how to create their value (Goethel And et.al., 2019). LVMH is
multinational corporation company with having many products such as clothing, cosmetics,
jewellery, perfumes, watches, wines. This report explains external and internal analysis plus
strategies evaluating of company with some different matrix.
MAIN BODY
External analysis
Business environment is a set of internal and external factor such as- employees, management,
customers, environment, political, economical etc. which affect the operations of an organisation
Political factors
Lvmh is a popular company in selling clothes, cosmetics, accessories, jewellery and perfumes all
over the globe. So the political changes of different countries affect the profit of the company.
Political factors includes the changes in laws, taxation policies and changes in political parties.
Government has a right to tighten or can liberalize the taxation policies to increase their revenue.
Same as government can impose new rules for the employees and for the wages. Like due to the
proliferation of Covid, government of many countries impose a rule to work with 50% of the
staff in companies and offices. It hits the working of Lmvh (Sholihah 2019).
Threat
Political factor has become a threat also for the company to expand the business in the world.
Country like china has imposed high import duties on the product of Lmvh which makes the
product more expensive and overpriced which becomes unaffordable for the people of china to
buy and on the other hand, Chinese product were cheap and affordable so the company has to
face huge loss in that country and bound to stop working in china.
Environmental factor
It refers to the economical, cultural, demographic, technological factors which impacts the
operation, profit and growth of the company. Environmental factors are hard to control by any
organization. In the case of Lmvh this factor has impacted badly to the company as it has faced
many obligations because most of its like- leather bags, wallets and jackets has been made from
the skin of animals so the animal welfare has claimed the company to harm the animals and
environment as well (Jelassi,2020)

Threat
Environmental factor has reduced the profit of the company. Due to the obligations of animal
welfare it has put a negative impact on the brand value and goodwill of the company. To not
harm to animals most of the people avoid buying product which made from leather. So the profit
of Lmvh has reduced. The impact of coronavirus also hit the profit of Lmvh. Due to the health
crisis many store and shops has remained close for months similarly all the stores of Lmvh
remains shut for weeks so it affects the margin profit and annual revenue of the company. It also
bounds the company to change it entire policies and strategies for the survival (Trimo, 2019).
Social factors
It refers the factors like lifestyle, buying habit, class of people, population etc. which impact an
organization. This factors work in the favour of Lmvh. Due to this sales of company's product
has been increased so it is an opportunity for the company.
Opportunities
Lmvh is enjoying its amazing brand value among the society. As it is a European company so
there is a belief among people that the products of European company is rich inn quality and
luxurious as compared to the products of Asian countries. Even people love to explore want to
try new brands and for more exclusive brands they can switch from their old brands. So it is an
opportunity for the company to expand the business (Yin, 2020).
Economical factor
This factor directly impacts the business and financial state of the company. This factor has put
negative impact on Lmvh.
Threat
economical factor is a threat for the company as the entire world is facing recession so people
preferring necessity goods over luxurious once. While Lmvh known to sell high quality and
expensive products.
Opportunity
Lmvh can take this as an opportunity they can invest in developing countries like- India whose
economy is in growth face and company can rule the market (Irfan, 2019).
Competitive factors

This factor gives an opportunity to lmvh. Remain competitive in the market is itself an
opportunity for the company. To be a strong competition gives an organization a benefit to know
the needs and demands of the customers and try to fulfil them.
International environment
This factor can impact the performance of their business in abroad and other countries. This
factor can be an opportunity for the company as it bounds the company to work in across the
national boundaries not just in domestic market.
Porter's five forces
Industry
 Lvmh deals is
multinational corporate
which deals in
clothing, accessories,
jewellery, etc.
Threat of substitute
 Difference between
Lvmh products and its
competitors
 cost of switching to
substitute
 Difficult or moderate
switching
Threat of new competitors
 How much time is
needed to enter in the
market
 entry barriers
 Market regulation
Competitive rivalry
 how many competitors
does Lvmh have
 Who is the biggest
competitor of Lvmh
 Quality of products and
goofs of competitors as
compared to Lvmh
 How Lvmh is different
Bargaining power of
customer
 How many buyers can
affect the business of
Lvmh
 what is the capacity of
order does Lvmh gets
 Importance of the
product of Lvmh
Bargaining power of
suppliers
 Number of suppliers of
Lvmh
 What quality of
services suppliers give
to Lmvh
 How can lmvh find out
the alternative

from others among customers suppliers.
Competitive rivalry
It refers how many competitors a company have. If the competition is high and the competitors
have large market capitalisation then it assesses as a high and intense. Rivalry will also get high
and impact the market of Lvmh if the growth of the company is slow. It also dependence that
who is the biggest competitor of Lmvh and what strategy is the competitors using. This factor
considered to be highly attractive in industry.
Threat from substitute
Any company can get affected from the products of the substitute. What the cost has been beard
by the customers if they switch to the competitors of Lmvh, it can impact the company. This can
impact moderately to Lvmh, because if the product makes the customer habitual then it will be
difficult for therm to switch and get satisfaction from other products.
Threat of new entries
This can put a low effect on the business of Lvmh if they rule the market as Lvmh is one of the
oldest company and having a large market cap so it will become difficult for the new company to
compete with Lvmh. This factor has a low impact on the company as they have invested h huge
capital which is not easy for the competitors to invest.
Bargaining power of customers
It can highly affect the business and profit of any organisation as all the companies are dependent
on the customer. The business of Lvmh get easily affected that how many quantities of then
product is being purchased by the customer if they started purchasing few products instead of
bulk buying it will affect the profit margin.
Bargaining power of suppliers
This factor put high impact on industry as well as any company because the quality of final
product depends on the raw material supplied by the suppliers. It becomes difficult for the

company also to find out the alternative suppliers there for the bargaining power of suppliers are
high it can influence the market as well.
Resources of Lmvh
Lmvh is rich in the section of resources, by which it can easily get the core competency and
competitive edge. Due to the gem of resources competitors can't touch the market of Lmvh. The
correct distribution of resources is become possible only by the internal resource such as
leadership and efficient management.
Skilled and professional employees
The reason behind delivering high quality products which are rich in design and can easily attract
the customer is high skilled and talented designers. This is the strength of the company which
makes it different from the competitors. The products are expensive but it gives decent and
elegant look when the customer put up them.
Physical resources
Lvmh have huge number of resources which they use in manufacturing the products, like- good
quality in raw material, delivery network, warehouse and storage etc. these resources are the
strength of Lvmh.
Human resources
This resource is the biggest strength of the company because HR management select the talented
candidate who are expert in their field and can contribute their role in increasing the profitability
of the company.
Financial resources
This resources help the company to know whether they can purchase the raw material with cash
or they have to go with credit. This is also the biggest strength of the company.

Value chain
Primary
Activities
Marketing and
sales
 major
marketing
has done
by
advertisin
g
 investmen
t in
enhancing
distributio
n network
 retailers
have been
hired to
sell the
products
Outbound logistics
 various
delivery
partners such
as blue dart
and fed-ex
 Lvmh has its
owns physical
stores
Operations
 Lvhm has
its own
production
houses.
 It has great
team of
worker
who fulfil
the orders
on time
 Lvhm has
skilled
designers
to design
the product
Inbound logistics
 Lvmh
works on
quality not
quantity
 Most of the
raw
materials
has been
purchased
from
reliable
suppliers
 The quality
of raw
material
used in
clothing so
it gives
comfort and
elegance.

Secondary
activities
Human resource
management
 HR hires
high
skilled
designers
 Give
proper
training
and
developm
ent to the
workers
 Major
concern to
hire
excellent
candidate
Technology
 Huge
investment in
research and
development
 Uses modern
technology
 Uses creative
way in
production
Supply
management
 Endorse a
common
supply
chain
Financial services
 Provides
proper
finance to
all the
departments
for efficient
work.
Primary activities
Value chain consists various activities like-
marketing and sales
The major marketing of Lvmh has been done by advertising. As it is a big brand so many
celebrities are ready to endorse this brand. Lvmh has invested a huge amount to maintain its
delivery network and many retailers have been hired to sell its own products.
Outbound logistic
Lvmh has hired many delivery partner such as- Blue dart and Fed-ex to reach at many customers
and it has opened physical stores to attract the customer (Baxter, 2019).
Operations
As it is a big brand so it has excellent employees and have its own production houses.

Inbound logistics
It gives more emphasis on quality rather than quantity. There for it uses good quality raw
material from its most trusted suppliers.
Secondary activities
It involves all the activities like –
HRM
HR departments of Lvmh is indulged in hiring right candidate for the right position so that it can
enhance the profitability of the company and provide proper training to the existing employees.
Technology
Lvmh uses modern and advanced technology.
Supply management
Lvmh uses conman supply chain to deliver the goods.
Financial services
The finance department of Lvmh provide funding to all the departments.
VRIO
VRIO is the tool which is used to determine the competitive potential of the company.
Resource value rare imitate organisation
Human resource yes yes no yes
finance yes no no yes
marketing yes no yes yes
IT yes yes no yes
Human resource:
Valuable: the value of human resources are very much because without the help of humans
production, supplying etc. activities can't perform.
Rare: it is rare because every organization do not have skilled workers which LVMH is having.
Imitate: the skills which human resource is having cannot be imitated easily.
Organisation: proper organisation of human resources are important so that they are utilized in
the effective manner.
Finance:

Value: finance sector is very important in the organisation like LVMH because it is the big
company and finance sector will tell the financial position of the company.
Rare: it is not rare because every company have finance department which run under their
company's guidelines.
Imitate: it can be imitated easily.
Organisation: it is organised in the good manner because mismatch will not be tolerated here.
Marketing:
value: marketing is valuable because LVMH needs marketing strategy to fight with the
competition.
Rare: it is not rare as every organisation do marketing for the sales.
Imitate: it can be imitated because your rival company can see your marketing strategy and can
copy that.
Organisation: it should be organised as proper organisation will ensure good sales and good sales
will bring good revenue.
IT:
value: it is valuable because IT deals with advanced technology and LVMH needs advance
technology to deal with market trends.
Rare: yes it is rare because every organisation do not invest much on it.
Imitate: no it cannot be imitate easily as LVMH have unique way of production.
Organisation: yes it is organised proper because it is necessary to increase the market share.
Evaluation of strategy
LVMH strategies is too high that can help them in developing more at market place with
their some brands or either with some of their merger brands which they have gathered from
other brands images. Here is TOWS analysis of company-
TOWS matrix Strength
 High image of brand
along with brand value
percept
 Globally illustrious
products and
worldwide range of
Weakness
 having limited
customer platforms.
 Quantity added
 Positioning with strong
brand image.
 No more offers and

products
 Function foremost and
best quality of
products.
 Celebrity promotion.
discount on goods and
services.
Opportunities
 Developed their strong
brand equity
 Having powerful
images of brand
movement,
 Expansion of brand
through across the
world.
 Prevailing evidence
moreover events.
S-O strategies
 Passively act in further
awareness of nay
products and services.
 Increasing efficiency
with more adopting
new technologies and
advance (Gupta and
Muhuri,2019).
 Produce different
goods with various
price
 Development of
worldwide range.
W-O strategies
 On some occasion they
basically provide offers
and discount.
 Merger with changing
environment.
 Understanding
customer needs and
wants.
 Production of broad
scope of goods and
service with many new
design and price.
Threat
 competition
concentrated
 due to growing
population
 Increaser of trends or
fashion.
 Personage brand
endorse.
 Accrued imitative of
goods and services.
S-T strategies
 Meet with various
competition along with
their new frame
designs.
 Producing new design
with lower price than
others competitors.
 Actively collected
more information about
their customer in
W-T strategies
 Approaching with their
some weakness by
building them with
strengths.
 Providing flexible
products.