Case 16

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Case 16

• LVMH Taking the Western Art de Vivre to the
  World
• By
• Alejandra De La Cruz
• Emmanuel Gomez
• Lizeth Herrera
• Jessica Hewitt
• Nuria Valdez

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(No Transcript)
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Who is LVMH ?

• A world leader in luxury goods
• 56,000 employees worldwide
• A unique portfolio of prestigious brands

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LVMH Brands

• Louis Vuitton
• Christian Dior
• Givenchy
• Guerlain
• Fendi
• Marc Jacobs

• Donna Karan
• Dom Pérignon
• Moët Chandon
• Pommery
• Tag Heuer
• Zenith

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Bernard ArnaultThe Early Years

• Then
• Born 1950 in Roubaix, France
• Educated at elite French military engineering
  institute
• Ran family construction business after school
• 1981 moved to US 1983 returned to France
• Now
• Best known businessman in France
• One of Frances wealthiest people

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An Opportunity Arises

• 1983 asked Pierre Gode to find business
  opportunities
• Best deal was the bankrupt Boussac Saint-Freres
• People know Dior not Mitterrand

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Building the Giant

• Radical changes
• Layoffs ordered
• Plants closed
• 1988 Henry Racamier (of the Vuitton family)
  elicits help
• Arnault initiates a hostile takeover
• Earned the nicknames Wolf in Cashmere Clothing
  and Terminator

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LVMH

• Characteristics
• Pursued an active external growth strategy
  oriented towards luxury product companies with
  high development potential
• Cover a large spectrum of businesses
• Two ways to growth
• To increase the sales of our existing portfolios
  of business
• To buy creative companies

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Characteristics

• In the genetics of the company
• Was the only company whose acquisition strategy
  was narrowly focused on its field of expertise
  Luxury Brands
• French term maisons (houses)
• Brand was the expression of the house
• Produce a product which, on the shelves, was
  seducing, and was pulled out rather than pushed
  onto the customers
• The structure of the Group would enable
  continuous growth of the Group for a long time to
  come
• LVMH has a big boss

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LVMH Established The Modern Luxury Business

• Made luxury more accessible to the everyday
  customer
• Formalized modernized the laws of luxury
• Characteristics of luxury goods
• Selected distribution
• Direct production and marketing
• Adding value rather than volume
• Communication

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LVMH Group Structure Respect Brand Autonomy
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Strategies for Success

• Each brand is kept separate
• Preserve autonomy and identity
• Share basic values
• Free to adapt own strategies

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Strategies for Success

• Benefit from bigness
• Share departments, avoiding duplication of
  efforts
• Brand company president brands strategy and
  marketing
• Branch presidents branch coordination

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Strategies for Success

• Top level leadership
• Arnault Heart of the groups culture
• Arnaults personal values
• No hierarchies within the organization

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Western Art de Vivre The Art of Living Well

• The central mission of LVMH philosophy
• Tradition
• History
• Elegance
• Modernity

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Philosophy of Creativity

• Customers are not just buying a product, they buy
  an image - a lifestyle
• LVMH has maintained a creative spirit
• Success comes from Arnaults talent for spotting
  creative talent

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Competing on Talent

• To be hired by the group, one must show autonomy
  and entrepreneurship
• An individual who works at the company must show
  a liking for theatre, cinema, the arts, and
  beauty
• People who travel a lot and visit museums fall
  into this category
• Recruiters pay attention to the way people dress
  and the accessories they wear

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Strategies for Finding Good Talent

• Sponsor MBA programs and network with
  universities
• Futura Program, Jeunes Diplomes Interntational,
  Global Leadership Program
• New graduates with a management position had no
  training, they were immediately given real jobs

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Future Focus

• Moving towards stronger industrialization,
  democratization and internalization
• Biggest challenge for the future is to retain the
  people
• Will face even bigger challenges than those
  already seen

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Questions ?