Louis Vuitton Moet Hennessy: Expanding Brand Dominance in Asia SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Sales & Marketing
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Louis Vuitton Moet Hennessy: Expanding Brand Dominance in Asia
Explores the predicament Louis Vuitton Moet Hennessy (LVMH), one of the world's leading luxury products makers, faces with respect to brand management while expanding operations in China. LVMH, a $13 billion group of companies with operations across the world--1,500 retail stores in about 60 countries--had conquered the luxury goods market successfully in Europe, the United States, and some parts of Asia. In the early 1990s, LVMH decided to expand its operations in China and South Korea. A decade later, LVMH made its entry into India. In 2004, Asia accounted for about 40% of the sales of LVMH. LVMH is determined to capture the growing Asian market. However, it faces several challenges in its expansion plans in Asia; one of its major concerns is protecting its brand against dilution. Although China is a huge market, phony branding is endemic there. In addition, LVMH's expansion plans in Asia introduced the issue of private ownership vs. franchising with regard to the profitability of companies in the luxury goods industry.
Authors :: Yigang Pan, Pan Yigang, Marissa McCauley
Topics :: Sales & Marketing
Tags :: Business models, Growth strategy, International business, Pricing, SWOT Analysis, SWOT Matrix, TOWS, Weighted SWOT Analysis
Swot Analysis of "Louis Vuitton Moet Hennessy: Expanding Brand Dominance in Asia" written by Yigang Pan, Pan Yigang, Marissa McCauley includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Lvmh Asia facing as an external strategic factors. Some of the topics covered in Louis Vuitton Moet Hennessy: Expanding Brand Dominance in Asia case study are - Strategic Management Strategies, Business models, Growth strategy, International business, Pricing and Sales & Marketing.
Some of the macro environment factors that can be used to understand the Louis Vuitton Moet Hennessy: Expanding Brand Dominance in Asia casestudy better are - – banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing commodity prices, digital marketing is dominated by two big players Facebook and Google, geopolitical disruptions, talent flight as more people leaving formal jobs, supply chains are disrupted by pandemic , challanges to central banks by blockchain based private currencies,
increasing household debt because of falling income levels, increasing transportation and logistics costs, etc
Introduction to SWOT Analysis of Louis Vuitton Moet Hennessy: Expanding Brand Dominance in Asia
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Louis Vuitton Moet Hennessy: Expanding Brand Dominance in Asia case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Lvmh Asia, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Lvmh Asia operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Louis Vuitton Moet Hennessy: Expanding Brand Dominance in Asia can be done for the following purposes –
1. Strategic planning using facts provided in Louis Vuitton Moet Hennessy: Expanding Brand Dominance in Asia case study
2. Improving business portfolio management of Lvmh Asia
3. Assessing feasibility of the new initiative in Sales & Marketing field.
4. Making a Sales & Marketing topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Lvmh Asia
Strengths Louis Vuitton Moet Hennessy: Expanding Brand Dominance in Asia | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Lvmh Asia in Louis Vuitton Moet Hennessy: Expanding Brand Dominance in Asia Harvard Business Review case study are -
Ability to lead change in Sales & Marketing field
– Lvmh Asia is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Lvmh Asia in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Innovation driven organization
– Lvmh Asia is one of the most innovative firm in sector. Manager in Louis Vuitton Moet Hennessy: Expanding Brand Dominance in Asia Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Analytics focus
– Lvmh Asia is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Yigang Pan, Pan Yigang, Marissa McCauley can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Organizational Resilience of Lvmh Asia
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Lvmh Asia does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
High switching costs
– The high switching costs that Lvmh Asia has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Cross disciplinary teams
– Horizontal connected teams at the Lvmh Asia are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Effective Research and Development (R&D)
– Lvmh Asia has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Louis Vuitton Moet Hennessy: Expanding Brand Dominance in Asia - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
High brand equity
– Lvmh Asia has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Lvmh Asia to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Successful track record of launching new products
– Lvmh Asia has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Lvmh Asia has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Ability to recruit top talent
– Lvmh Asia is one of the leading recruiters in the industry. Managers in the Louis Vuitton Moet Hennessy: Expanding Brand Dominance in Asia are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Sustainable margins compare to other players in Sales & Marketing industry
– Louis Vuitton Moet Hennessy: Expanding Brand Dominance in Asia firm has clearly differentiated products in the market place. This has enabled Lvmh Asia to fetch slight price premium compare to the competitors in the Sales & Marketing industry. The sustainable margins have also helped Lvmh Asia to invest into research and development (R&D) and innovation.
Superior customer experience
– The customer experience strategy of Lvmh Asia in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Weaknesses Louis Vuitton Moet Hennessy: Expanding Brand Dominance in Asia | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Louis Vuitton Moet Hennessy: Expanding Brand Dominance in Asia are -
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Lvmh Asia supply chain. Even after few cautionary changes mentioned in the HBR case study - Louis Vuitton Moet Hennessy: Expanding Brand Dominance in Asia, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Lvmh Asia vulnerable to further global disruptions in South East Asia.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Lvmh Asia is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Louis Vuitton Moet Hennessy: Expanding Brand Dominance in Asia can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Louis Vuitton Moet Hennessy: Expanding Brand Dominance in Asia HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Lvmh Asia has relatively successful track record of launching new products.
Products dominated business model
– Even though Lvmh Asia has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - Louis Vuitton Moet Hennessy: Expanding Brand Dominance in Asia should strive to include more intangible value offerings along with its core products and services.
Skills based hiring
– The stress on hiring functional specialists at Lvmh Asia has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Capital Spending Reduction
– Even during the low interest decade, Lvmh Asia has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Lack of clear differentiation of Lvmh Asia products
– To increase the profitability and margins on the products, Lvmh Asia needs to provide more differentiated products than what it is currently offering in the marketplace.
Low market penetration in new markets
– Outside its home market of Lvmh Asia, firm in the HBR case study Louis Vuitton Moet Hennessy: Expanding Brand Dominance in Asia needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Slow to strategic competitive environment developments
– As Louis Vuitton Moet Hennessy: Expanding Brand Dominance in Asia HBR case study mentions - Lvmh Asia takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
High operating costs
– Compare to the competitors, firm in the HBR case study Louis Vuitton Moet Hennessy: Expanding Brand Dominance in Asia has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Lvmh Asia 's lucrative customers.
High cash cycle compare to competitors
Lvmh Asia has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Opportunities Louis Vuitton Moet Hennessy: Expanding Brand Dominance in Asia | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Louis Vuitton Moet Hennessy: Expanding Brand Dominance in Asia are -
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Sales & Marketing industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Lvmh Asia can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Lvmh Asia can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Lvmh Asia can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, Louis Vuitton Moet Hennessy: Expanding Brand Dominance in Asia, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Better consumer reach
– The expansion of the 5G network will help Lvmh Asia to increase its market reach. Lvmh Asia will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Low interest rates
– Even though inflation is raising its head in most developed economies, Lvmh Asia can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Buying journey improvements
– Lvmh Asia can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Louis Vuitton Moet Hennessy: Expanding Brand Dominance in Asia suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Lvmh Asia to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Lvmh Asia in the consumer business. Now Lvmh Asia can target international markets with far fewer capital restrictions requirements than the existing system.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Lvmh Asia to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Lvmh Asia to hire the very best people irrespective of their geographical location.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Sales & Marketing industry, but it has also influenced the consumer preferences. Lvmh Asia can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Creating value in data economy
– The success of analytics program of Lvmh Asia has opened avenues for new revenue streams for the organization in the industry. This can help Lvmh Asia to build a more holistic ecosystem as suggested in the Louis Vuitton Moet Hennessy: Expanding Brand Dominance in Asia case study. Lvmh Asia can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Developing new processes and practices
– Lvmh Asia can develop new processes and procedures in Sales & Marketing industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Leveraging digital technologies
– Lvmh Asia can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Loyalty marketing
– Lvmh Asia has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Threats Louis Vuitton Moet Hennessy: Expanding Brand Dominance in Asia External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Louis Vuitton Moet Hennessy: Expanding Brand Dominance in Asia are -
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Louis Vuitton Moet Hennessy: Expanding Brand Dominance in Asia, Lvmh Asia may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Sales & Marketing .
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Lvmh Asia needs to understand the core reasons impacting the Sales & Marketing industry. This will help it in building a better workplace.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Lvmh Asia in the Sales & Marketing industry. The Sales & Marketing industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Stagnating economy with rate increase
– Lvmh Asia can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Regulatory challenges
– Lvmh Asia needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Sales & Marketing industry regulations.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Lvmh Asia can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Louis Vuitton Moet Hennessy: Expanding Brand Dominance in Asia .
Technology acceleration in Forth Industrial Revolution
– Lvmh Asia has witnessed rapid integration of technology during Covid-19 in the Sales & Marketing industry. As one of the leading players in the industry, Lvmh Asia needs to keep up with the evolution of technology in the Sales & Marketing sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Lvmh Asia with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Lvmh Asia in the Sales & Marketing sector and impact the bottomline of the organization.
Consumer confidence and its impact on Lvmh Asia demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Shortening product life cycle
– it is one of the major threat that Lvmh Asia is facing in Sales & Marketing sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Lvmh Asia business can come under increasing regulations regarding data privacy, data security, etc.
Weighted SWOT Analysis of Louis Vuitton Moet Hennessy: Expanding Brand Dominance in Asia Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Louis Vuitton Moet Hennessy: Expanding Brand Dominance in Asia needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Louis Vuitton Moet Hennessy: Expanding Brand Dominance in Asia is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Louis Vuitton Moet Hennessy: Expanding Brand Dominance in Asia is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Louis Vuitton Moet Hennessy: Expanding Brand Dominance in Asia is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Lvmh Asia needs to make to build a sustainable competitive advantage.
