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, competitive advantages are harder to sustain because of technology dispersion, increasing household debt because of falling income levels, central banks are concerned over increasing inflation, there is backlash against globalization, wage bills are increasing, there is increasing trade war between United States & China,
increasing commodity prices, customer relationship management is fast transforming because of increasing concerns over data privacy, 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 -
Diverse revenue streams
– Lvmh Asia is present in almost all the verticals within the industry. This has provided firm in Louis Vuitton Moet Hennessy: Expanding Brand Dominance in Asia case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
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.
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.
Learning organization
- Lvmh Asia is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Lvmh Asia is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Louis Vuitton Moet Hennessy: Expanding Brand Dominance in Asia Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
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.
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.
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.
Operational resilience
– The operational resilience strategy in the Louis Vuitton Moet Hennessy: Expanding Brand Dominance in Asia Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
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.
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.
Training and development
– Lvmh Asia has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Louis Vuitton Moet Hennessy: Expanding Brand Dominance in Asia Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Low bargaining power of suppliers
– Suppliers of Lvmh Asia in the sector have low bargaining power. Louis Vuitton Moet Hennessy: Expanding Brand Dominance in Asia has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Lvmh Asia to manage not only supply disruptions but also source products at highly competitive prices.
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 -
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.
No frontier risks strategy
– After analyzing the HBR case study Louis Vuitton Moet Hennessy: Expanding Brand Dominance in Asia, it seems that company is thinking about the frontier risks that can impact Sales & Marketing strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
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.
Increasing silos among functional specialists
– The organizational structure of Lvmh Asia is dominated by functional specialists. It is not different from other players in the Sales & Marketing segment. Lvmh Asia needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Lvmh Asia to focus more on services rather than just following the product oriented approach.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Louis Vuitton Moet Hennessy: Expanding Brand Dominance in Asia, it seems that the employees of Lvmh Asia don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
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 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.
Interest costs
– Compare to the competition, Lvmh Asia has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
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.
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.
High bargaining power of channel partners
– Because of the regulatory requirements, Yigang Pan, Pan Yigang, Marissa McCauley suggests that, Lvmh Asia is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
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 -
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Lvmh Asia can use these opportunities to build new business models that can help the communities that Lvmh Asia operates in. Secondly it can use opportunities from government spending in Sales & Marketing sector.
Building a culture of innovation
– managers at Lvmh Asia can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Sales & Marketing segment.
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.
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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Lvmh Asia is facing challenges because of the dominance of functional experts in the organization. Louis Vuitton Moet Hennessy: Expanding Brand Dominance in Asia case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, 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.
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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Lvmh Asia in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Sales & Marketing segment, and it will provide faster access to the consumers.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Lvmh Asia can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Learning at scale
– Online learning technologies has now opened space for Lvmh Asia to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
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.
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.
Manufacturing automation
– Lvmh Asia can use the latest technology developments to improve its manufacturing and designing process in Sales & Marketing segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
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 -
High dependence on third party suppliers
– Lvmh Asia high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Lvmh Asia will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
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.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Lvmh Asia.
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.
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 .
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.
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 .
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.
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.
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.
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.
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.
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.