This paper discussed the particular aspect of globalization and its effect on LVMH. Globalization is defined as “the intensification of worldwide social relations which link distant localities in such a way that local happenings are shaped by events occurring miles away and vice versa”…
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aper versions of products looking like and even constructed with the firm’s proprietary materials, logo and designs, began flooding the market, selling at a fraction of the prices of originals. The brand was thereafter seen in the possession of the masses, eroding its desirability as a luxury item and diminishing the status of its legitimate purchasers. This particular aspect of globalization and its effect on LVMH shall be discussed in this paper. Theoretical framework The situation of Louis Vuitton Moet Hennessy exemplifies one effect of globalization on an already successful business. It shall be analysed in this study through the use of the following theoretical frameworks: (1) The PESTEL framework is a macro-environmental analysis tool that examines the political, economic, social, technological, environmental, and legal issues that impact upon a particular industry. The framework can be used to gain an idea of future trends in these areas, and thereby arrive at possible scenarios that a firm in the industry may have to strategically address (Swoboda, Morschett & Rudolph, 2009, p. 165). This method of analysis enables business strategists to identify sources of general risk and opportunities (Witcher & Chau, 2010, p. 91). http://www.whatmakesagoodleader.com/macro-environment-analysis.html (2) The SWOT analysis is another popular analytical tool that is “one of the most important instruments for the internal analysis of a company’s situation” (Bohm, 2009, p. 24). The method involves the identification of the company’s internal strengths and weaknesses and how these could impact on the company’s ability to meet external opportunities and threats to the company’s best advantage. It is simple, flexible, and it promotes integration and synthesis of...
According to the research findings it may be concluded that LVMH has strong prospects for pursuing new markets and developing its traditional as well as new products, given the globalization process. However, the risks of proprietary rights infringements and piracy is particularly damaging to a firm the foremost competitive advantage of which is its luxury brand name. Without the Louis Vuitton Möet Hennessy brand name and image, despite the high quality of design and construction, its products would only be one of several, much lower priced substitutes currently available in the mass market, and it is doubtful that the firm will be able to recover its costs given those dire prospects. LVMH should also actively investigate and litigate in those cases where evidence of piracy is high and prevalent. The firm has the backing of the World Trade Organization (WTO) instrumentalities in this so as to bring countries where regulatory infractions and weaknesses are common, to be held responsible for strengthening their institutions in promoting strict enforcement of intellectual property rights. Finally, LVMH can strengthen its own supply and distribution chains – its “value chains” – so as to ensure the protection of its intellectual property, its trade and service marks, and its design and manufacturing processes. There is no better solution than prevention, because the firm could not spend more than it is likely to earn, in legal processes and court cases. Where IPR rights cannot be protected and infringements actively and effectively pursued, then LVMH should prefer not to enter such markets, in order to preserve its brand name.
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