Louis Vuitton Case Analysis
University of Windsor
04-75-498
Strategic Management
Louis Vuitton Case Analysis
Key Issue
Louis Vuitton is a flagship group of LVMH, which had double digit growth during 2010 and 2011. Michael Burke, the new CEO of LV group is uncertain about whether the group can grow sustainable. The main issue he current encounter is that how to push LV to grow steadily and protect LV’s values and heritage from being undermined.
External Analysis
PESTEL Analysis
Political: The global luxury goods market can separate into America, Europe, Japan, Asia-Pacific, and rest of countries by region. Overall, the major luxury goods consumption countries have relatively stable political environment in recent years. However, in southern Europe, the governments’ financial turmoil and austerity measures indicated an underlying weakening demand of luxury goods for local people. But the gap was filled by travelers from other countries. The import duty policy in different countries is another factor should be considered in the industry. The high import duty will be part reason of high price differences between different countries. Consequently, the grey market can be formed in the countries which have high price differences.
Economic: The major companies in this industry are based in Europe, so the euro exchange rate will be an important factor to the industry. The growth rate will be different by being measured with euro terms and nominal terms. In order to eliminate the exchange rate influence, the constant exchange rate measurement should be used. Currently, the luxury goods market has about 15% constant nominal growth rate. Another important economic impact factor is the world’s economic condition. The world economic encountered a recession phase around 2008, which slowed down the products’ price increase rate. Recently, the world economic condition has been gradually recovered, and the high demand in
04-75-498
Strategic Management
Louis Vuitton Case Analysis
Key Issue
Louis Vuitton is a flagship group of LVMH, which had double digit growth during 2010 and 2011. Michael Burke, the new CEO of LV group is uncertain about whether the group can grow sustainable. The main issue he current encounter is that how to push LV to grow steadily and protect LV’s values and heritage from being undermined.
External Analysis
PESTEL Analysis
Political: The global luxury goods market can separate into America, Europe, Japan, Asia-Pacific, and rest of countries by region. Overall, the major luxury goods consumption countries have relatively stable political environment in recent years. However, in southern Europe, the governments’ financial turmoil and austerity measures indicated an underlying weakening demand of luxury goods for local people. But the gap was filled by travelers from other countries. The import duty policy in different countries is another factor should be considered in the industry. The high import duty will be part reason of high price differences between different countries. Consequently, the grey market can be formed in the countries which have high price differences.
Economic: The major companies in this industry are based in Europe, so the euro exchange rate will be an important factor to the industry. The growth rate will be different by being measured with euro terms and nominal terms. In order to eliminate the exchange rate influence, the constant exchange rate measurement should be used. Currently, the luxury goods market has about 15% constant nominal growth rate. Another important economic impact factor is the world’s economic condition. The world economic encountered a recession phase around 2008, which slowed down the products’ price increase rate. Recently, the world economic condition has been gradually recovered, and the high demand in