Louis Vuitton Strategy Essay
Louis Vuitton Strategy
LVMH is the world’s leading luxury products group. The strategy of LVMH is based on combining LVMH fashion and leather goods. Net sales have grown 57% in the past two years. In 2001 LVMH had a strong earning growth in a slumping economy. This was due to the strength of the Louis Vuitton brand, which is the world leader in luxury goods and benefited the younger brands from the synergies that developed within the business group. Each company could focus on their core business design and marketing while they benefited from shared financial and technical expertise. Each one is moving toward its objective and improving sales.
Mr. Carcelle made strategic plans to establish the organizations overall goals. LVMH’s goal is to grow faster than their competitors. The logic of acquiring several companies over a short period of time was based on the internal growth of LVMH. They had a strong support of brand image; they are number one in the world with 50 brands and have a strong presence in all luxury sectors. They have a good geographical balance and control over distribution. The strategy was based on the constant and sustainable growth of multi brands. Carcelle’s thought is what happened for the Louis Vuitton brand can and will happen for his new smaller brands. Carcelle is in for the long run and understands the time lines. LVMH is building up design teams and continue to expand and renovate their worldwide store network. They continue to invest in advertising and promotion while making the capital expenditures required to increase production capacity and meet the strong demand for their products.
Yves Carcell is charismatic and a visionary leader. He has the ability to create and articulate a realistic, credible, and attractive vision of the future and improved upon the present situation. He is often at his desk well before dawn, but before sitting down to an early morning meeting in his Paris office, Carcelle, 54 invites a visitor to step on to the balcony and watch the sun rise over the Seine. “Isn’t it beautiful?” he asks with a delighted grin (Business Week-online June 17, 2002) His twenty years working in sales and marketing for consumer goods companies made him the logical person to preside over LVMH fashion group. Carcelle is a fierce defender of his brands and it is said that he bawled out a French government official attending a Vuitton store opening in Bangkok when he spotted her carrying a fake Vuitton bag.
That certainly shows attention to detail. Carcelle is fluent in English, Spanish, and French. His experience and charm make him as comfortable talking with shop managers and designers as he is conducting high powered business negotiations with CEOs. He oversees LVMH’s most valuable portfolio of brands. He must also keep tight control over a global network of factories and stores, without snuffing out the creative spark that gives the luxury business its luster. He was responsible for bringing in new designers to spiff up Vuitton’s styling and expand the product line, while terminating franchise agreements so that LVMH regained exclusive control of retailing. Carcelle’s leadership has been effective. Last year, fueled largely by Vuitton, the fashion group accounted for nearly 30% of LVMH’s $10.8 billion in sales, and more than 80% of its $1.4 billion operating profit. (Business Week-online June17, 2002)