Louis Vuitton Strategic Analysis: PESTEL, SWOT and Decision Making

This report provides a comprehensive strategic analysis of Louis Vuitton, a leading company in the personal luxury goods industry. It begins with an introduction to the company, highlighting its history, product range, and consumer service focus. The core of the analysis involves the application of PESTEL and SWOT frameworks to evaluate the external and internal environments. The PESTEL analysis examines the political, economic, social-cultural, technological, legal, and environmental factors influencing Louis Vuitton, such as import duties, tourism dependence, tax rates, consumer spending, social media, cybercrime, anti-counterfeiting measures, and environmental sustainability concerns. The SWOT analysis assesses the company's strengths (brand image, geographical availability), weaknesses (competition, imitations), opportunities (tie-ups, online expansion), and threats (competitors, government policies). The report concludes by integrating the findings of the PESTEL and SWOT analyses, demonstrating how the company can leverage its strengths to capitalize on opportunities, mitigate threats, and make informed decisions. The analysis emphasizes the importance of adapting to external factors and using internal capabilities for strategic advantage. References to relevant academic sources are also provided.

Louis Vuitton-Strategic Analysis
Name of the Student

Introduction & About the company
• The company has been in business since the last 150 years
and has dominated the personal luxury goods industry.
• The company has a wide range of products to offer to all
genders
• The company is built on the backbone of solid consumer
service and continuous innovation
• The given presentation aims to analyze the external
environment and internal environment of the company using
PESTE and SWOT Analysis
• It will also discuss how to apply this tools and take decisions
accordingly.

PESTEL Analysis
• PESTEL analysis is a tool whereby the various factors present in the
external environment of the business are analyzed and its impact on
the working of the given firm is identified
• The components are :
• Political
– The political environment of the business, is one of the most important factors
that need to be taken into consideration while functioning the business.
– Louis Vuitton is facing the problem of import duties fro various Asian countries
like China.
– This causes the company to purchase the product overseas and take advantage
of the price difference (Barney 2014).
– Tourism dependence also plays a key role as terrorism has increased and the
sale have decreased due to this.

Economical
• A high tax rate is being applied on the various
products. This is because the goods fall under
the luxury categories (Wheelen et al. 2017).
• The price gap also plays a key role in
determining the strategies of Louis Vuitton.

Social-Cultural
• The product is a symbol of social status in the society.
• However, currently the viewpoint of the different
consumer markets have been changing and this impact
its market performance.
• The income level and spending capability of the
consumers also play a key role in determining the
purchasing patterns.
• Culturally, different countries have a different outlook.
In China logos are considered to be less exclusive
whereas in Japan its good.

Technological
• Technological- The
advent of technology has
had a huge impact on the
firm.
• Social media is one of
the most usual tools and
almost all the firms have
a social presence these
days.
• However, cyber crimes
are also prevalent and
risky for the firm (Hill,
Jones and Schilling 2014).
• The digital drive provides
various opportunities for
Louis Vuitton to go
online.

Legal
• The company has to follow various laws as it is
present in the luxury sector.
• These laws include Anti-Counterfeiting Group
as counterfeits situation is currently very poor.

Environmental
• Sustainable business practices and
environmental protection tend to play a huge
role in the business of LV. LV deals in pure leather
products which is greatly objected by PETA
(Barney and Hesterly 2015).
• High-energy consumption also takes place which
goes against the sustainable practices of the firm.
• The company needs to see to it that it reduces its
carbon footprint

Utilizing the PESTLE Tool to analyze the
external environment
• Hence, Louis Vuitton needs to see to it that the company is always well
prepared to face the factors in the external environment of the business.
• It needs to conduct regular analysis and figure out the negative as well as
positive points that will be affecting its business and see to it that the firm,
has sufficient resources to abide by them
• The positive impacts:
– Increased demand for the products due to the increase in income of various
developing countries.
– Advanced technology leads to better production facilities with the digitalization
movement enabling growth.
• The negative impacts:
– Increase in environmental laws will have an impact on the income of the firm
– Political meetings between BRICs countries, will decide the fate of the brand.
– Various taxes impact the brand and its revenue.

SWOT Analysis
• Strength
– A strength can be described as that characteristic of the firm which gives it
a competitive edge
– The strengths are :
– Good brand image
– Geographical availability
– International celebrity linkage
– High brand recall an global presence
• Weaknesses
– The weaknesses can be described as a component which can hamper the
working of the firm.
– Strong competition
– Fake imitations

• Opportunities:
– Presence of such factors in the business environment which can be
helpful for the brand:
– Tie-ups with big hotels
– explore into the unexplored markets
– Increase online base.
• Threats
– The threats in the business firm can be described as those factors
which can be a weakness for the firm
– Threat of competitors
– Government policies
–

Linking SWOT with external analysis
• The SWOT Analysis consists of both an internal analysis it the external analysis.
While the strength and weaknesses and internal analysis, the Opportunities and
threats is an external environmental analysis.
• Hence, when the company becomes aware of its opportunities and threats in the
external environment it can make use of its strengths to overcome the threats an
sharpen its weaknesses to take advantage of the Opportunities present.
• Thus, conducting the SWOT Analysis will go a long way in impacting the
DECISION of the firm as it will be a sense of guidance for the firm whereby the
weaknesses and strengths of he company will be used to impact on the decision.
• For example, the company can make use of its wide base and strong production
and distribution system to explore the emerging markets.
• Or, if a good opportunity exists in the external environment like the removal of a
certain law, the LV weaknesses can be overcome.

Merging the two tools

References
• Barney, J.B., 2014. Gaining and sustaining competitive
advantage. Pearson higher ed.
• Barney, J.B. and Hesterly, W., 2015. Strategic management
and competitive advantage concepts and cases. Pearson.
• Hill, C.W., Jones, G.R. and Schilling, M.A., 2014. Strategic
management: theory: an integrated approach. Cengage
Learning.
• Wheelen, T.L., Hunger, J.D., Hoffman, A.N. and Bamford,
C.E., 2017. Strategic management and business policy.
pearson.