LVMH in 2004: The Challenges of Strategic Integration SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of LVMH in 2004: The Challenges of Strategic Integration
Examines the challenges and opportunities for strategic integration at LVMH, global, luxury brands company based in Paris. The company is composed of established and newly developed brands of luxury goods such as apparel, leather goods, watches, wines and liquors, and fragrances, which it manufactures and sells in countries around the world. Includes in-depth interviews with key LVMH executives.
Authors :: Robert A. Burgelman, Frederico Antoni, Philip Meza
Swot Analysis of "LVMH in 2004: The Challenges of Strategic Integration" written by Robert A. Burgelman, Frederico Antoni, Philip Meza includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Lvmh Liquors facing as an external strategic factors. Some of the topics covered in LVMH in 2004: The Challenges of Strategic Integration case study are - Strategic Management Strategies, Strategy execution and Strategy & Execution.
Some of the macro environment factors that can be used to understand the LVMH in 2004: The Challenges of Strategic Integration casestudy better are - – increasing household debt because of falling income levels, technology disruption, increasing inequality as vast percentage of new income is going to the top 1%, customer relationship management is fast transforming because of increasing concerns over data privacy, wage bills are increasing, central banks are concerned over increasing inflation, cloud computing is disrupting traditional business models,
increasing government debt because of Covid-19 spendings, increasing energy prices, etc
Introduction to SWOT Analysis of LVMH in 2004: The Challenges of Strategic Integration
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in LVMH in 2004: The Challenges of Strategic Integration case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Lvmh Liquors, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Lvmh Liquors 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 LVMH in 2004: The Challenges of Strategic Integration can be done for the following purposes –
1. Strategic planning using facts provided in LVMH in 2004: The Challenges of Strategic Integration case study
2. Improving business portfolio management of Lvmh Liquors
3. Assessing feasibility of the new initiative in Strategy & Execution field.
4. Making a Strategy & Execution topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Lvmh Liquors
Strengths LVMH in 2004: The Challenges of Strategic Integration | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Lvmh Liquors in LVMH in 2004: The Challenges of Strategic Integration Harvard Business Review case study are -
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Lvmh Liquors digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Lvmh Liquors has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Low bargaining power of suppliers
– Suppliers of Lvmh Liquors in the sector have low bargaining power. LVMH in 2004: The Challenges of Strategic Integration has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Lvmh Liquors to manage not only supply disruptions but also source products at highly competitive prices.
Analytics focus
– Lvmh Liquors 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 Robert A. Burgelman, Frederico Antoni, Philip Meza 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.
Ability to lead change in Strategy & Execution field
– Lvmh Liquors 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 Liquors in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Cross disciplinary teams
– Horizontal connected teams at the Lvmh Liquors 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.
Operational resilience
– The operational resilience strategy in the LVMH in 2004: The Challenges of Strategic Integration 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.
Organizational Resilience of Lvmh Liquors
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Lvmh Liquors 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 Liquors 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.
Superior customer experience
– The customer experience strategy of Lvmh Liquors in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Training and development
– Lvmh Liquors has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in LVMH in 2004: The Challenges of Strategic Integration 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.
Innovation driven organization
– Lvmh Liquors is one of the most innovative firm in sector. Manager in LVMH in 2004: The Challenges of Strategic Integration Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Learning organization
- Lvmh Liquors 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 Liquors is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in LVMH in 2004: The Challenges of Strategic Integration Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Weaknesses LVMH in 2004: The Challenges of Strategic Integration | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of LVMH in 2004: The Challenges of Strategic Integration are -
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Lvmh Liquors is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study LVMH in 2004: The Challenges of Strategic Integration can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Lack of clear differentiation of Lvmh Liquors products
– To increase the profitability and margins on the products, Lvmh Liquors needs to provide more differentiated products than what it is currently offering in the marketplace.
Increasing silos among functional specialists
– The organizational structure of Lvmh Liquors is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Lvmh Liquors needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Lvmh Liquors to focus more on services rather than just following the product oriented approach.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study LVMH in 2004: The Challenges of Strategic Integration, in the dynamic environment Lvmh Liquors has struggled to respond to the nimble upstart competition. Lvmh Liquors has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Products dominated business model
– Even though Lvmh Liquors 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 - LVMH in 2004: The Challenges of Strategic Integration 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 Liquors 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.
Need for greater diversity
– Lvmh Liquors has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
High bargaining power of channel partners
– Because of the regulatory requirements, Robert A. Burgelman, Frederico Antoni, Philip Meza suggests that, Lvmh Liquors 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.
Interest costs
– Compare to the competition, Lvmh Liquors 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Lvmh Liquors needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study LVMH in 2004: The Challenges of Strategic Integration, is just above the industry average. Lvmh Liquors needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Opportunities LVMH in 2004: The Challenges of Strategic Integration | 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 LVMH in 2004: The Challenges of Strategic Integration are -
Building a culture of innovation
– managers at Lvmh Liquors 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 Strategy & Execution segment.
Creating value in data economy
– The success of analytics program of Lvmh Liquors has opened avenues for new revenue streams for the organization in the industry. This can help Lvmh Liquors to build a more holistic ecosystem as suggested in the LVMH in 2004: The Challenges of Strategic Integration case study. Lvmh Liquors can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Better consumer reach
– The expansion of the 5G network will help Lvmh Liquors to increase its market reach. Lvmh Liquors 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.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Strategy & Execution industry, but it has also influenced the consumer preferences. Lvmh Liquors can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Learning at scale
– Online learning technologies has now opened space for Lvmh Liquors 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 Liquors 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Lvmh Liquors can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Developing new processes and practices
– Lvmh Liquors can develop new processes and procedures in Strategy & Execution 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.
Buying journey improvements
– Lvmh Liquors can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. LVMH in 2004: The Challenges of Strategic Integration 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.
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 Liquors can use these opportunities to build new business models that can help the communities that Lvmh Liquors operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
Using analytics as competitive advantage
– Lvmh Liquors has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study LVMH in 2004: The Challenges of Strategic Integration - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Lvmh Liquors to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Loyalty marketing
– Lvmh Liquors 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Lvmh Liquors in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Strategy & Execution segment, and it will provide faster access to the consumers.
Threats LVMH in 2004: The Challenges of Strategic Integration External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study LVMH in 2004: The Challenges of Strategic Integration are -
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Lvmh Liquors with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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 Liquors in the Strategy & Execution sector and impact the bottomline of the organization.
Stagnating economy with rate increase
– Lvmh Liquors 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.
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 Liquors.
High dependence on third party suppliers
– Lvmh Liquors 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.
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 Liquors business can come under increasing regulations regarding data privacy, data security, etc.
Technology acceleration in Forth Industrial Revolution
– Lvmh Liquors has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Lvmh Liquors needs to keep up with the evolution of technology in the Strategy & Execution 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 Liquors 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 Strategy & Execution industry regulations.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Increasing wage structure of Lvmh Liquors
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Lvmh Liquors.
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.
Consumer confidence and its impact on Lvmh Liquors 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 Liquors is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Weighted SWOT Analysis of LVMH in 2004: The Challenges of Strategic Integration 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 LVMH in 2004: The Challenges of Strategic Integration 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 LVMH in 2004: The Challenges of Strategic Integration 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 LVMH in 2004: The Challenges of Strategic Integration 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 LVMH in 2004: The Challenges of Strategic Integration 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 Liquors needs to make to build a sustainable competitive advantage.