LVMH’s Diversification Strategy into luxury Goods

LVMH’s Diversification Strategy into luxury Goods

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1. What is LVMH’s corporate strategy? What does Bernard Arnault mean by ‘star brands’ and how do they contribute to corporate advantage? Is there a common strategic approach utilized in managing LVMH’s portfolio of luxury products businesses? Briefly identify the business strategies that LVMH is using in each of its business segments–champagnes and spirits, fashion and leather, perfumes and
cosmetics, selective retailing, and other businesses. 2. What is your evaluation of Bernard Arnault’s acquisitions? Has he diversified LVMH into attractive industries? Does each luxury products group hold a strong competitive position in its respective industry? What does a 9-cell industry attractiveness/business strength matrix displaying LVMH’s business units look like? 3. Is there good strategic fit among all the various star luxury brands? What value-chain match-ups do you see? What opportunities for skills transfer, cost sharing, or brand sharing do you see? Do the key strategies and competencies Bernard Arnault believes contribute to the development of star brands benefit all businesses in LVMH’s portfolio? 4. Is there good resource fit among all the various star luxury brands? What are the financial characteristics of each of LVMH’s six segments? Which businesses might be considered cash hogs and cash cows? How does LVMH’s financial performance by business segment in 1999-2001 compare to 1988? 5. Based on the preceding analysis, what is your overall evaluation of LVMH’s business lineup in 2002? Does the portfolio provide the company’s shareholders with an opportunity for above-average market returns? Is its weak 2001 financial performance related to a cyclical downturn in demand for luxury products or is its poor performance a sign of a portfolio weaknesses? 6. What strategic actions should Bernard Arnault carry out to improve the company’s financial and market performance? Should LVMH undertake portfolio restructuring to eliminate certain businesses? Should
Arnault make additional acquisitions to expand any of its luxury products groups?

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