Case Study: Analyzing the Competitive Strategy of Louis Vuitton

This case study analyzes the competitive strategy of Louis Vuitton, a leading luxury brand. It begins with an introduction to competitive strategy and the business approach used by companies to attract customers and deliver superior value. The study examines Louis Vuitton's corporate-level diversification strategy, identifying associated issues and applying strategic tools such as PESTEL analysis and the Ansoff Matrix. The analysis explores the company's expansion strategies, including market penetration and product development, and the impact of external factors. The case study highlights the importance of adapting strategies to maintain a competitive edge in the luxury market, the impact of political and economic factors, and the application of the Ansoff Matrix. The case study covers the importance of strategic alignment, brand management, and adaptation to changes in the external environment.

Running head: COMPETITIVE STRATEGY OF LOUIS VUITTON
Competitive Strategy of Louis Vuitton
Name of the student
Name of the University
Author note

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Table of Contents
Introduction................................................................................................................................2
Summary....................................................................................................................................2
Diversification Strategy Issues in Louis Vuitton.......................................................................3
Application of strategy in Louis Vuitton...................................................................................4
PESTEL Analysis of Louis Vuitton...........................................................................................6
Conclusion..................................................................................................................................7
References..................................................................................................................................8

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Introduction
Competitive strategy refers to the business approach that is undertaken by a company
that helps in attracting the customers and delivering the superior value to the people. It helps
in fulfilling the expectations of customers and strengthening competitive position of a
company in the market (Rothaermel 2016). The managers want to improve market position of
company by providing satisfaction to customers. It helps in prescribing the ways that can help
a business in building the sustainable competitive advantage. The management adopts the
action plan that helps a company in competing in a successful manner with competitors
within the market (Franco, Urcan and Vasvari 2016). Louis Vuitton refers to the French
fashion house and the luxury retail company that was founded in the year 1854. It is a leading
fashion house and it sells the products with the help of the boutiques, department stores and
with the help of the e-commerce section of the website. This report throws light on the
concept of the competitive strategy formulation model and the external environment of Louis
Vuitton. This report discusses about the importance of Corporate-level Diversification for
Louis Vuitton and the strategy issues that the company have to face in the case of
diversification in the company.
Summary
The company Louis Vuitton have been chosen as it is a leading luxury product group
and the net sales of company have grown in last two years. The corporation has achieved
strong earning growth in the midst of the slumping economy with the help of its successful
competitive strategies. Louis Vuitton Moet Hennessy (LVMH) is the largest luxury product
company of the world that helped it in earning sales of around 12.2 billion euros in the year
2012. It carried various kinds of prestigious brand names in various sectors including wine,
fashion, jewellery along with the perfume. The corporation has acquired the 50 luxury brands

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like Donna Karen, Sephora along with Fendi. The corporation has also benefitted younger
brands with the help of the synergies that have developed in business group. The company
lays emphasis on the aspect of the core business design and the marketing that have helped in
providing benefits to the brand (Jang 2017).
The case of Louis Vuitton is interesting on account of the fact that the company have
been able to rise above the various competitors like the Mimco, Status Anxiety and The
Horse with the help of its effective business strategies. Louis Vuitton have adopted the
expansion strategy to increase the scope of the activity of the business (Linton and Kask
2017). It have helped in developing and introducing the products that have enabled the
company to penetrate existing markets and increase the market share, thus improving the
performance, growth and prestige of the company.
Expansion is also providing financial benefits and improving sustainability of the
company (Sakhartov 2017). The Corporate Level Diversification assists Louis Vuitton in the
co-ordination of the strategies and in developing the synergy that can help in the development
of the business (Parast 2017). It can help in the sharing of the departments and the resources
of the company that can help the company in experiencing economies of the scale that can
help the company in reaching the efficiency. The using of the PESTEL analysis model can
help Louis Vuitton in gauging the external environment that can help them in taking the
advantages of the opportunities and the threats.
Diversification Strategy Issues in Louis Vuitton
Louis Vuitton executed a strategy in the year 2001 with the help of the creation of the
diversified portfolio of the luxury brands that have helped the company in expanding in the
various regions. The company adopted semi-related diversification strategy to improve the
value chain of the company that can help it in getting competitive value strategic fit (Singh et

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al. 2018). The company chose mergers and the acquisitions for entering international markets
so that it can help the company in getting the access to the significant resources along with
the capabilities. The companies can benefit with the help of the mergers and the acquisitions
as it can help in enhancing the cost efficiency of a company. The business strategy entailed
the bringing together of the philosophies and the values of the companies that created the
barrier in the path of Louis Vuitton.
However, Louis Vuitton laid more emphasis on the financial and strategic aspects
instead of the human resources of the merged companies that caused the company to suffer
the losses. The various aspects of the organizational behaviour were neglected by the
organization that caused the corporation to suffer the losses (Wiersema and Beck 2017). The
management of Louis Vuitton neglected core business while dealing with the mergers that
raised the hindrance for the company. The merger helped in improving the market share of
the corporation however it was not able to match expectations of investing public.
Brand acquisitions along with the line extensions had to come at the high price and
the corporation could not generate the substantial profits. The profitability of the group was
dependent on that of the established business lines like wine, spirit along with the leather
goods. The building of the portfolio of the global brands with that of the diverse product
markets made the corporation to suffer the losses that tarnished the reputation of the
company. Louis Vuitton had been instrumental in maintaining the creative talent as the
independent pool however it did not generate the synergies across the product lines or the
brands (Benkraiem, Lakhal and Zopounidis 2020). The company was not able to create the
synergy at the finance, administrative along with the service levels which damaged the
reputation of the company. It paved the path for the decentralization by the design and the
few managers made the operations difficult for Louis Vuitton.

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Application of strategy in Louis Vuitton
The company can take the right steps in the path of the diversification by using
analytical tools that can help the company in the area of expansion and in the allocation of the
resources. The company have to restructure the portfolio and take into consideration the
performance of the various brands that can help the company in making the profits. LVMH
can develop the clear vision that can help in maximising the corporate-wide performance of
the company. The company can make use of coaching that can help the company in the
development of the strategic capabilities that can help in improving the skills and the
confidence of the workers.
The company can exploit the common strategies that can help the company in
capturing benefits across portfolio. The strategy of the company should be on the basis of the
core values that can ensure success of the business units of the company. LVMH can
demonstrate the commitment and the creativity that can aid the company in the area of the
product excellence. LVMH can lay control over the aspect of the distribution and the sales
that can be helpful for the company. It can aid the company in listening to the needs of the
customer (Mackey, Barney and Dotson 2017). The company employs the dedicated people
that can help in contributing to the sustainability of the organization.
The management of LMVH can discover the talented artists along with the designers
that can make the company earn significant amount of the profits. The company can achieve
the growth in the event of having a balance in between the timelessness and the fashion. The
advertising of the company can be done with the help of the design team instead of the
marketing team that can assist in the maintenance of the proximity in between product and
the message. The production process should be carefully planned that can help in the
company in the area of the corporate level diversification.

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The company can make use of the internet that can help the company in improving
the relations with the customer. The site can help in the creation of the deeper ties with that of
the target customer that can create the customer loyalty (Demirci, Eichholtz and Yönder
2018). The company can lay focus on the element of the “soft luxury” that can enable the
company in earning the bigger margins in the market. The company can move into the area of
the high jewellery that can help the company in fitting into the exclusive image of the
company. The company can aim to build the brand in a structured manner that can help in
maintaining the prestige of the company.
PESTEL Analysis of Louis Vuitton
Political- The countries where Louis Vuitton have expanded performs well on the basis of
Political Stability Index. The decision of United Kingdom to exit European Union have given
rise to the situation of the uncertainty along with the political instability within the nations of
UK (Christoffersen et al. 2018). It may have long term effect son the prospects of Louis
Vuitton. There exists the high import duties in relation to the products of Louis Vuitton that
can have a bad effect on the company. There are nations like China that have the high import
duties that can create the significant price difference from that of the other nations.
Economic- The world is experiencing the slowdown in economic growth that may adversely
affect the future of Louis Vuitton. The customers develop the tendency of buying the
products that are cheap during the times of the recession that would affect the prospects of
Louis Vuitton.
Social- The corporation enjoys a great advantage in relation to the brand perceived value.
The people have the tendency of trying the new brands that are exclusive which would have a
positive effect on Louis Vuitton (Patrisia and Dastgir 2017). The people have the tendency of
switching from established regular brands to that of exclusive brands.

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Technological- The people spend a large amount of time on the platform of the internet and
hence Louis Vuitton should carry out the marketing with the help of the e-commerce portal
that can prove to be advantageous for the company. The company runs the paid
advertisement campaigns that can help the company in reaching out to the prospective
customers.
Legal- The legal factor that is crucial for the luxury companies is “Counterfeiting” that can
act as a challenge for Louis Vuitton across the globe. There exists the “Anti- Counterfeiting
Trade Agreement” that can work to the benefit of Louis Vuitton. There exits the intellectual
property rights that can have influence on the reputation of company.
Environmental- The people are concerned about the environment in present age and the
company should implement the process that can help in the reduction of the carbon emission.
The people are concerned about the welfare of the animals and hence the production of the
fur coats along with the leather wallets are looked down upon by the people.
Ansoff Matrix
The applying of the Ansoff Matrix can help Louis Vuitton in planning the strategies
for the growth. It can help the leaders in understanding the risk pertaining to the growth of
business. Louis Vuitton can increase the sales of the existing products to the existing market
with the help of the market penetration. The product development can introduce the new
products to that of the existing market that can take care of the profitability of company. The
diversification can help Louis Vuitton in entering the new market that can increase its
popularity among the people.
Conclusion
Corporate Level Diversification can be of benefit for Louis Vuitton as it can co-
ordinate strategies and develop synergy which can aid the process of development of

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business. It can prove to be helpful in the area of sharing of resources which can help
organization in achieving the economy of scale. It can help company in attainment of
efficiency and increase the revenue of company. The strategic issues of the company rose on
account of the fact that the company paid greater attention on financial aspects and neglected
human resources which are crucial in the process of the diversification. The company
neglects elements of the organizational behaviour that was a negative aspect of Louis
Vuitton. The development of clear vision by Louis Vuitton can be instrumental in
maximising performance of company. The coaching can be provided to the employees of
company that can develop strategic capabilities of workers of organization. The organization
can lay emphasis on aspect of high jewellery that can help in improving exclusive image of
company.

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References
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corporate cash holding behavior: What happens during economic downturns?. Journal of
Economic Behavior & Organization.
Christoffersen, P., Jacobs, K., Jin, X. and Langlois, H., 2018. Dynamic dependence and
diversification in corporate credit. Review of Finance, 22(2), pp.521-560.
Demirci, I., Eichholtz, P. and Yönder, E., 2018. Corporate diversification and the cost of
debt. The Journal of Real Estate Finance and Economics, pp.1-53.
Franco, F., Urcan, O. and Vasvari, F.P., 2016. Corporate diversification and the cost of debt:
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Jang, Y., 2017. International corporate diversification and financial flexibility. The Review of
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