MAUBOUSSIN JAPAN: A FRENCH GEM IN ASIA Harvard Case Solution & Analysis


Analysis by Alain Nemarq

After joining Nemarq as a new managing director, Dominique Fremont acquired 87.5% shares of Mauboussin’s equity, which raised questions about his financial objectives that he wants to achieve. The kind of analysis required in the given case is that, is he interested in strategic growth or organic growth of his business? And whether, is he interested in acquiring the business back to profit through cost cutting strategies?

In addition to this, it was also required to analyze that whether he is interested in removing its current products, or not? The financing structure also required analysis. All these issues should be considered by Nemarq in order to accept the position of a new managing director because the two have less experience in this business.

Nemarq's strategy between 2002 and 2007

By considering the overall situation, Nemarq at first decided to cut its extra cost by reducing the number of employees, extra stores and revamped the luxury brand of Mauboussin by targeting women. This target market rose to 60%, as they constituted the largest part of the brand’s revenues. In addition to this, a number of new products were launched with increment in the promotional budget for the brand. The company started to promote its brand through managing their own distribution network and selling their brand in boutiques, while the commercial distribution was entrusted to Desco.

The company offered low prices along with incurring low profit margins; therefore, the company had to provide competitive pricing. Furthermore, the product was made lighter by using lighter weight ornate jewels. The commercial distribution was handled poorly by Desco as identical brand positioning was developed, which created confusion about the brand because changes were made in the Asian brand of Mauboussin, while the French brand remained the same. Although the company did well to increase sales and profits, the net operating profit was at loss as expenditure was made on renovation of boutiques. The company should keep on continuing on launching more differentiated products to cater more customers. However, at high prices because high prices show a sign of strength in brand quality.

Global expansion strategy (Mark Carr)

The overall global expansion strategy is to expand in emerging markets for a wider market share to increase the revenues of the company through commercial retail development. In addition to this, the company has has to use a low price strategy in order to compete in the emerging markets.

By considering the middle/end of 2007, it can be seen from the graph that there is a significant increase in sales of watches and jewelry products because of a historic hit in 2007. The overall situation shows a high potential for manufacturers as well as suppliers of luxury products. Japan also showed a relatively good percentage but not as compared to the BRIC countries, which have an even greater potential..............

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