Louis Vuitton: New Product Introduction Vs Product Availability Harvard Case Solution & Analysis

Louis Vuitton: New Product Introduction Vs Product Availability Case Solution

Introduction

The case talks about the issues faced by the significant fashion and luxury company, Louis Vuitton Moet Hennessy Group. The CEO of the company with the help of his significant management and strategic decision has created a strong brand image in the customers’ eyes that is better than its competitors, which is evident from the increasing historical trend of its profitability position. In addition to this, the company also gained significant customer loyalty from its variety of products introduced.

The company’s overall corporate level strategy is the diversification strategy with which it divides into six major business units. The case also described the real definition of luxury products, which are not sold as frequently as the other types of products because of its premium cost, therefore the company tried to target the wealthy individuals who could afford it easily. However, the company has been historically facing the issue of being out of stock, which has affected the image as the demands of the customers are not properly being fulfilled.

This issue has yet not been solved which are also affecting the sales revenues and the profitability of the company as it can be seen from the declining trend in these aspects over the current years. Due to this issue, the company is facing strong conflict between its internal management who are blaming each other on the flexibility as well as the responsiveness on its one end,whereas the other group is blaming on the improper forecasting of demand and the issue of recent increase in new production introduction. It can be seen that the downward economic aspects of the country are also hampering the performance of the company.

With the help of this report, issues relating to the manufacturing, marketing and supply chain would be dealt in detail to conclude some recommendation for the company.

Problem Statement

The premium quality as well as innovative design have increased the customer loyalty, due to which the demand for the products is increasing, as a result this has increased the problem of being out of stock in stores which is affecting the reputation of the company in terms of its profitability, which is also creating conflict between the internal management.

Analysis

Perform the industry analysis as well as the competitor analysis for LVMH and also draw some recommendation with the help of this analysis.

 PORTER’S FIVE FORECES ANALYSIS

 Rivalry among Competitors

 It can be seen that with the number of competitors present in the market, this is the significant issue faced by the company. The main concern of the customers is related to the quality of the product and not on its prices. It can be seen that similar types of products are also offered by the competitors in the industry, which would make this force very high. The major competitors include Gucci, Versace, Burberry and the others are giving a tough time for the company.

Bargaining Power of Suppliers

Throughout the history of the company, it can be seen that the company has made significant acquisition of its suppliers from the industry and due to this reason, the company is able to achieve significant economies of scale to increase its profitability over its competitors present in the market. It can be seen that due to these several acquisitions, the company is less likely to rely on the limited number of suppliers present in the market, which significantly lowered the bargaining power of suppliers. The majority of the production is done in in-house which concludes that the bargaining power of the suppliers is low..................

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