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 - – digital marketing is dominated by two big players Facebook and Google, increasing commodity prices, banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing transportation and logistics costs, talent flight as more people leaving formal jobs, geopolitical disruptions, central banks are concerned over increasing inflation,
increasing household debt because of falling income levels, supply chains are disrupted by pandemic , 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 -
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.
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.
Sustainable margins compare to other players in Strategy & Execution industry
– LVMH in 2004: The Challenges of Strategic Integration firm has clearly differentiated products in the market place. This has enabled Lvmh Liquors to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Lvmh Liquors to invest into research and development (R&D) and innovation.
Diverse revenue streams
– Lvmh Liquors is present in almost all the verticals within the industry. This has provided firm in LVMH in 2004: The Challenges of Strategic Integration 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.
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.
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.
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.
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.
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.
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.
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 -
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 Liquors supply chain. Even after few cautionary changes mentioned in the HBR case study - LVMH in 2004: The Challenges of Strategic Integration, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Lvmh Liquors vulnerable to further global disruptions in South East Asia.
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.
Slow to strategic competitive environment developments
– As LVMH in 2004: The Challenges of Strategic Integration HBR case study mentions - Lvmh Liquors 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 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.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the LVMH in 2004: The Challenges of Strategic Integration 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 Liquors has relatively successful track record of launching new products.
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.
High operating costs
– Compare to the competitors, firm in the HBR case study LVMH in 2004: The Challenges of Strategic Integration 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 Liquors 's lucrative customers.
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.
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.
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.
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 -
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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Lvmh Liquors 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 Liquors to hire the very best people irrespective of their geographical location.
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.
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.
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 Liquors in the consumer business. Now Lvmh Liquors can target international markets with far fewer capital restrictions requirements than the existing system.
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.
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.
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.
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.
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.
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.
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.
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 -
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.
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.
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.
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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Lvmh Liquors 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 LVMH in 2004: The Challenges of Strategic Integration .
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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study LVMH in 2004: The Challenges of Strategic Integration, Lvmh Liquors may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Strategy & Execution .
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.
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.
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.
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.
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.
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.