LOUIS VUITTON CASE Solution
Introduction
The case talks about the strategic issues that the Louis Vuitton Company is facing for its growth sustainability.
The main issue identified in the given case is related to the sustainability of the growth rate, the company is historically producing and in addition to this the other issue is related to the company’s ability to balance the core products with the ever changing demands of growing the business in the cosmetic industry.
In order to understand the prevailing issue using the exhibits of the company it can be seen that the three segments of customers are absolute, as pirational and accessible that have different growth rate in different market. It can be seen that the historical cost has been increasing significantly because of the issues in distribution of products in the expanded market and a strategy is require to obtain the cost effective manufacturing process.
The three alternatives available with the company is to either focus on the expansion in the cosmetic industry or the company should halt expansion and focus on its core products.
The first alternative with the company is to pursue automated alternative by continuing expansion in the cosmetic industry which could help the company significantly in competing in all the major areas which could yield required growth. Moreover, the company by using the pre-established brand cannot only save time but also could gain the opportunity to enter in China market for wider acceptability. However, the cons associated with this alternative is that the acquisition program is not very easy to implement and too much cost is then tied also the revenues generation are not certain.
The second alternative available with the company is to focus on heritage based alternative by sticking to the core competencies of the company and halt the expansion program which could prove to be least risky in terms of generation of revenues and making the huge investment. In addition to this, the company should shift its focus on quality of the product rather than its quantity and provide the customized products according to the needs. Whereas on the other hand with this option the company could not gain additional revenues in terms of new customers and this could also not help in combating the counterfeit issue.
The third alternative available with the company is to focus on the Hybrid alternative by mixing the above two alternatives which could results in the balance between the two different bases of alternatives as described in the issue identification but could have the potential to lose the number of customers.
From the overall analysis of the above alternatives, the best and the recommended option with the company in order to resolve the current issue is to pursue the hybrid strategy and halt the overall expansion and remain on its core competencies and tries to increase its brand equity of its company.
This could not only reduce the amount of risk but simultaneously could yield required return for the company.
External Assessment
PEST analysis
Political Factors
The political factors for this industry are quite satisfactory in the European regions since, there are no excess taxes or duties to be imposed on the products of this industry which could make the more expensive. This factor is very favorable for the industry since; this allows the companies to produce products in bulk quantities.
Economic Factors
Economic factors are also very favorable since, the European economy is very stable and the individuals are having a high income therefore, the industry can increase its sales by serving more customers. However, the basic target market of the industry is brand and value conscious people but still the companies can add more customers. Moreover, the economy is growing with a stable real growth rate while the luxury goods market is also growing with almost 15% nominal rate which is also favorable for the industry.....................
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