Case Study: Competitive Strategy and Diversification of Louis Vuitton

This case study examines the competitive strategy of Louis Vuitton, a prominent luxury brand. The analysis begins with an overview of the competitive strategy formulation model, focusing on corporate-level diversification and relevant strategic tools. The study identifies diversification strategy issues within Louis Vuitton, such as potential neglect of the core business and financial synergy challenges. The application of strategic frameworks includes a restructuring plan to improve profitability and the identification of talented artists to boost revenue. A PESTEL analysis evaluates the external environment, considering political stability, economic slowdown, social trends toward exclusive brands, the importance of digital marketing, and the legal challenges of counterfeiting. The conclusion summarizes key findings and the importance of the analysis, providing a basis for strategic recommendations.

Competitive strategy of Louis
Vuitton
NAME OF THE STUDENT
NAME OF THE UNIVERSITY
AUTHOR NOTE

Diversification Strategy Issues
in Louis Vuitton
 The management of Louis
Vuitton neglected the core
business that raised the
hindrance for the company.
 Building of the portfolio of the
global brands with that of the
diverse product markets made
the company to suffer the losses

 The company was not able to
create the synergy at the finance
level that damaged the
reputation of the company.
 It paved the path for the
decentralization by the design

Application of strategy
 The company have to restructure
the portfolio that can help the
company in making the profits.
 The management of LMVH can
discover the talented artists that
can help the company in earning
profits.

External Environment of Louis
Vuitton
Political- The countries where Louis
Vuitton have expanded performs
well on the basis of Political Stability
Index that would have positive
effect on Louis Vuitton
Economic- The world is
experiencing the slowdown in
economic growth that would
adversely affect Louis Vuitton.
Social- The people have the
tendency of trying the new brands
that are exclusive which would have
a positive effect on Louis Vuitton
Technological- The people spend a
large amount of time on the
platform of the internet and hence
Louis Vuitton should carry out the
marketing on the digital platform

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.
Environmental- The people are
concerned about welfare of the
animals that can affect Louis Vuitton

References
Benkraiem, R., Lakhal, F. and Zopounidis, C., 2020. International
diversification and corporate cash holding behavior: What happens during
economic downturns?. Journal of Economic Behavior & Organization.
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.
Jang, Y., 2017. International corporate diversification and financial
flexibility. The Review of Financial Studies, 30(12), pp.4133-4178.
Patrisia, D. and Dastgir, S., 2017. Diversification and corporate social
performance in manufacturing companies. Eurasian Business
Review, 7(1), pp.121-139.

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