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 - – technology disruption, banking and financial system is disrupted by Bitcoin and other crypto currencies, there is backlash against globalization, supply chains are disrupted by pandemic , increasing energy prices, cloud computing is disrupting traditional business models, competitive advantages are harder to sustain because of technology dispersion,
wage bills are increasing, customer relationship management is fast transforming because of increasing concerns over data privacy, 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 -
High brand equity
– Lvmh Liquors has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Lvmh Liquors to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
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.
Ability to recruit top talent
– Lvmh Liquors is one of the leading recruiters in the industry. Managers in the LVMH in 2004: The Challenges of Strategic Integration are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
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.
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.
Effective Research and Development (R&D)
– Lvmh Liquors 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 LVMH in 2004: The Challenges of Strategic Integration - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
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.
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.
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.
Successful track record of launching new products
– Lvmh Liquors has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Lvmh Liquors 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.
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.
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 -
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.
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.
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.
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.
No frontier risks strategy
– After analyzing the HBR case study LVMH in 2004: The Challenges of Strategic Integration, it seems that company is thinking about the frontier risks that can impact Strategy & Execution 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.
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.
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.
Low market penetration in new markets
– Outside its home market of Lvmh Liquors, firm in the HBR case study LVMH in 2004: The Challenges of Strategic Integration needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Slow decision making process
– As mentioned earlier in the report, Lvmh Liquors has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Lvmh Liquors even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
High cash cycle compare to competitors
Lvmh Liquors 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.
Capital Spending Reduction
– Even during the low interest decade, Lvmh Liquors 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.
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 -
Redefining models of collaboration and team work
– As explained in the weaknesses section, Lvmh Liquors is facing challenges because of the dominance of functional experts in the organization. LVMH in 2004: The Challenges of Strategic Integration 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Lvmh Liquors 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.
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.
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.
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.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Strategy & Execution industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Lvmh Liquors 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 Liquors 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.
Manufacturing automation
– Lvmh Liquors can use the latest technology developments to improve its manufacturing and designing process in Strategy & Execution 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Lvmh Liquors 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, LVMH in 2004: The Challenges of Strategic Integration, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
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 Liquors 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.
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.
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.
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.
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 -
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.
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.
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 Liquors 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.
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.
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.
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 Liquors needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
Easy access to finance
– Easy access to finance in Strategy & Execution field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Lvmh Liquors can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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.
Environmental challenges
– Lvmh Liquors needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Lvmh Liquors can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
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.
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.
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.
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.
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.