Being the flagship group within Moët Hennessy Louis Vuitton (LVMH), Louis Vuitton was instrumental to the growth of the group in 2010 and 2011. However, doubts arose as to the sustainability of the recent growth and how should Louis Vuitton face and deal with future burdens. This case study analysis depicts the challenges that Louis Vuitton dealt with as it maintained its growth as one of the most respected brands in the world. It discusses the strategies it may and must undertake given its resources as well as its limitations.
Mary M. Crossan; Manu Mahbubani
Harvard Business Review (W13009-PDF-ENG)
February 04, 2013
Case questions answered:
- Which numbers would be the best indicators of whether Louis Vuitton did or did not have a competitive advantage in the luxury fashion goods industry? (Note that these numbers may or may not be in the case.)
- Which generic strategy(or strategies) did LV use in the luxury fashion goods industry? Defend your choice by a) applying Porter’s framework (as discussed in class and described in the readings) b) using evidence and facts from the case. Describe the activities in Porter’s value chain which this generic strategy (or strategies) consisted of.
- Do you think LV had a sustainable competitive advantage at the end of this case? Why or why not?
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Case answers for Louis Vuitton
Which numbers would be the best indicators of whether Louis Vuitton did or did not have a competitive advantage in the luxury fashion goods industry? (Note that these numbers may or may not be in the case.)
Louis Vuitton (LV) enjoyed double-digit growth and healthy profitability in 2010 and 2011. However, these numbers are not the best indicators of whether LV had a competitive advantage in the luxury fashion goods industry. The best indicators would be ones that show that LV earns superior returns on the resources it deploys in comparison with other players in the industry. Return on invested capital is an example of such an indicator.
Louis Vuitton followed a generic strategy of differentiation. It provided unique and superior value to customers by putting emphasis on product design and quality, the buying experience, and brand image. Consumers were willing to pay a premium for high quality and unique types of goods crafted by talented artisans. LV had considerable power to increase prices. Differentiation strategy was being executed throughout the value chain.
Inbound Logistics. LV focused on the quality of components and materials. They sourced only high-quality materials. For example, leather was sourced from Northern Europe as it had fewer blemishes from…