LVMH: Diversification Strategy into Luxury Goods Essay -- CGSE Busines

LVMH Diversification Strategy into Luxury GoodsStrategic IssuesBy 2002, Moet Hennessy Louis Vuitton was the fields largest high life crops social club, enjoying annual sales of 12.2 billion euros. LVMH carries the most prestigious brand names in wine, champagne, look, jewelry, and perfume. Upon entrance of this luxury product industry, LVMH was conscious that they produced products that nobody needed, scarce that were desired by millions across the world. This desire in some way fulfills a fantasy, making consumers feel as though they must buy it, or else they will not be in the moment, and thus will be left behind.The LVMH business portfolio began to take design in 1987 with the merger between Louis Vuitton and Moet Hennessy which was a four billion dollar bill merger. Over the course of time, LVMH has acquired over 50 luxury brands, such as Donna Karen, Fendi, and Sephora. They called it, a collection of star brands and rising stars. LVMH rig this industry to be timeles s and modern, highly useful, and very rapid growing.Despite all of the higher up mentioned, LVMH did experience some bumpy times. Some of these times were induced done internal problems, while others were caused by externalities, like Sept. 11. With such a grand range of product offerings, LVMH was on top of the industry in authorized aspects, but has room for growth in other areas. One face in particular nearly caused a division in the company. Hennessy believed the company should focus on wine, strong drink, and champagne, however Vuitton wanted to focus on fashion and leather goods. The decision fell into the hands of Bernard Arnault, who became president of LVMH, and sided with Hennessy.Analysis and ratingUnder Arnault, the company was the worlds leading luxury product group. Arnault believed that LVMH control of retail chains was critical to luxury brand success. The better points of retailing were believed to be, influencing of the overall image of luxury products, as much as the product attributes.LVMH was able to broaden the companys media operations, create newly retail outlet, enhance their line of champagne, and open fashion houses, like Fendi. LVMH found their corporate strategy was diversification into a wide variety of luxury products. They grouped all of their brands into six different business units. Their wine/spirits unit poss... ...at divulges attention to a few aspects in order to do it the best, as opposed to LVMH who does it all.RecommendationsIt is important for LVMH to continue to distinguish themselves from other luxury brands, and by continuing to acknowledge that their products are desires and not necessities. They sell luxury, and image. It would be advisable to have better relations with their customers, to increase customer loyalty, but to also get into the minds of the consumer to give the consumer what they desire, all the while staying ahead of the competition. Researchers should be assigned to each specific business unit it would be a good idea to treat each unit as a separate entity, all-contributing to the same end. By individually enhancing each unit, and eventually collaborating in the end, LVMH will be most profitable. Internet ventures are very important, we buy the farm in a time that thrives on technology, and making efforts easier for consumers will be key. Continuing to portray an image or a message with each product will contribute to the brand differentiation. The continual acquisition of profitable names and organizations will continue to increase the profitability of LVMH.