Organisational Analysis of Louis Vuitton - Report Example

INTRODUCTION

Louis Vuitton is one of the main fashion houses of the world.it was founded in 1854 by LouisVuitton who named the company after himself. The LV monogram has been one of the most profitable brands of the company with multimillion dollar deals resulting from labelling alone. This is evident by how frequent it’s being referenced in popular culture. Products from the company range from luxury trunks to leather wear. Louis Vuitton is considered as one of the leading fashion houses with internationally acclaimed products. The company products can be found in their privately owned boutiques though they sometimes lease their goods to high end department stores with a respected customer base. They also possess an e-commerce website through which consumers can alternatively obtain their products. The company has been named the most luxurious brand in six consecutive years. This is from 2006-2012.Through valuation done by the Forbes magazine, the value of the company was estimated to be 25.9 billion. In 2013, the company was valued at 28.4 billion with an annual revenue of 9.4 billion dollars. The company has 460 department stores and it is represented in over 50 countries.

• COMPANY ANALYSIS

LV BRAND

The Louis Vuitton is one of the most recognized names in the fashion world with the LV monogram being a household abbreviation. Hubbard (1999) suggests that Louis Vuitton is one of the most valuable fashion brands with a world ranking at the 29th place. The brand has an estimated net worth of 19 billion us dollars.

Due to its highly acclaimed status, its products are one of the most counterfeited items in the fashion industry. Some of its products are usually considered as easy to counterfeit since some only clad the LV name. Ironically, from the history of the company, the highly acclaimed monogram canvas was constructed as a way of preventing people from counterfeiting the company’s products. In the European Union, Louis Vuitton counterfeit products amounted to 18% of all counterfeits that were seized in 2004.Louis Vuitton (Firm), & Lartigue, J.-H. (1980).

In the war against the counterfeit products, the company has employed several lawyers and special investigators as a way to deter people from producing their products illegally. Almost half of the company’s communications budget is usually used in fighting counterfeit products. TheCompany has a reputation of closely controlling and strictly monitoringtheir product distribution. The company sold its products in popular department stores like Neiman Marcus and sacks 5th avenue till the 1980s but Today most of its products can only be bought at authentic louis vuitton department stores with an exception of a few stores like Macys and sacks. The location of these department stores is usually in luxurious shopping districts with some being located in luxurious shopping malls. The company boutiques that operate in non-company owned department stores usually contain their own dependent employees and managers who are different from the parent company employees that own the department store. The company maintains an online presence through its website which is used in selling its product. The website possesses its own product storage.

PRODUCTS

The company was established to cater to high end travelers. hence there was a need for perfection in its products. The main means through which the company produces its products has always been by hand since the 19th. The trunks were made through specific instructions which were to be followed to the latter. Poplar used in making the bags was supposed to dry for a duration of four years and its age of maturation is supposed to be more than 30 years. Each product is then given a unique serial number. Due to the high extensive work ethic used in making the bags, each suitcase could take an approximate of 15 hours to make while a trunk could take up to 60 hours to construct.

The never full bags and the iconic speedy bags are some of the known products of Louis Vuitton. The company produces rare bags annually that can only be bought in their private company department stores. These bags can only be bought through pre ordering since they are high end and are highly contested.

Most of the products produced by LouisVuitton usually use their signature brown canvas material. The highly specific canvas is proprietary to the company having been used in their products since the 19th century. The LV initial is included in almost all their products. Selling their products through their privately owned department stores allows them the capability to control the pricing of its products and limit the possibility of counterfeiting that may result from security leaks. This also provides them with the capability of preventing counterfeit products from being passed as authentic goods at their stores. Product distribution is usually done through their own website. The websites domain name is louisvuitton.com

ADVERTISING

The Louis Vuitton has an aim of cultivating a following through high end celebrities. These celebrities usually provide a perfect means for advertising since the already possess a wide audience. This is evident in their large followings in various social media sites. Some of the commonly known celebrities known to endorse the brand includeJennifer Lopez, SeanConnery, Madonna and HaydenChristensen. Many rappers have referenced the brands in their songs.withsome going as far as showing some of the company’s products in their music videos.

Another common means of advertising involves the use of paper advertisement through magazines and the use of billboards. However the companies’ director of the communicationhas recently decided to go mainstream and delve into advertisement through television and cinemas.

COLLABORATIONS

The company is famous for having many collaboration with famous designers and some artists. Takashi Murakami, who is a world re-renowned artistcollaborated with the company in making special edition products.For example his Monogramouflage Collection was released in 2008 with the previous collection being released in 2002. This collection featured some of his artwork. His art was painted over the company’s distinct canvas which resulted in a twist of the signature design. Stephen Sprouse designed a collection that was released in 2001. This art had some resemblance to graffiti due to its boldness over the signature canvas. The art work was commemorated by mark Jacobs

LOUIS VUITTON COMPANY TOWS CHART

THREATS

OPPORTUNITY

• Market of some of its product differs in many continents
• Increase in problems arising from different animal rights group.
• Damaging profits arising from increased counterfeit products
• Highly dependent on a booming global economy
• High competition from other luxury brands such as Chanel, Gucci, Prada, Christian Dior and Salvatore Gallano
• Change in annual trends of clothing

• A strong brand equity is established through jewelry, watches, architecture
• The company is known to improve the company’s image from time to time.
• Increase in promotion from celebrity endorsement
• Worldwide brand expansion
• Exhibitions and events as a means of brand promotion
• Digital media as a means of brand propagation.

WEAKNESSES

STRENGTH

• The product can only be afforded by the rich who want to make a statement
• There are no options of discounts
• The company is highly dependent on a booming economy
• The company products are only sold through their independent stores hence they possess restricted retail opportunities.

• A legendary fashion house
• High end products with skilled handiwork
• Largest luxury brand with a legacy of 150 years
• International logistics center
• Material and design is exclusive to the company
• Endorsed by known celebrities

2. IMPROVING COMPANY SITUATION

With decrease in profits through successive annual quarters, and a rapidly rising image through the mass-market, Louis Vuitton faces the danger of losing its luxurious appeal which took them years to cultivate. The brand therefore needs to take some steps in order to counter these negative effects. The company has also begun to take some steps in alleviating its image.

The first step taken by the company in improving its image was through the termination of mike Jacobs and hiring of Nicholas Ghesquière.His actions have been seen through the re-invigoration of the Balenciaga brand which he stated would secure the future of the company and result in a more stable outcome.The following are some of the other examples the company could use in its improvement.

MINIMISING LOGO USAGE

A company that over uses its logo usually loses its exclusive appeal quickly. This is seen in many of the already failed fashion companies. This phenomenon is definitely being felt in the Chinese market. China possesses an economy with the highest counterfeit materials. Consumers nowadays value and appreciate good craftsmanship as opposed to flashy logos. In order to stay relevant in the Asian market, the company needs to create more high quality, low key goods that cannot be counterfeited by any one. The accessories the company produces need to be more subtle as compared to their previous products.

The logo used by the company in identifying its products has evidently run its course.Their hand bags and other high end goods nowadays resemble accessible goods rather than exclusive goods. High rate of counterfeiting is mostly due to the fact that the company currently does not produce any affordable goods as compared to its competitors such as coach or Michael kors.

Transitioning from a highly dependable visible monogram can be difficult in most companies. This can be evident in fall of bourbon which also over used its logo visibility. Louis Vuitton therefore needs to take very strategic steps when applying this transition rather than just pulling all products from the market. This step should be performed gradually and with high scrutiny to minimize negative blowback.

BRAND EXTENSION

LV should take advantage in expanding its branding since its one of the most internationally acclaimed companies in the fashion industry. This is evident through its ability to easily integrate its heritage into many products through advertising and marketing. Sometimes their digital presence could also be felt seamlessly. With an already known reputation that was used in catering for 19th century travelers, Louis Vuitton possesses the capability to re-instate its known luxury appeal by forming partnerships with other known brand. This could cater the needs for the 21st century traveler. An example is through partnerships with hotels in outfitting their rooms with Louis Vuitton linens. Their logos alone would go a long way in improving the status of the hotel.

FOCUS ON CLOTHES

The first produced means of clothing by the company was through former CEO mark Jacobs.Thetrends from this line has been popular and at most times considered as cutting edge. But its exclusivity and market price has made it inaccessible to the modern day average Joe. With a new face of the company, it is now possible for it to diversify into slightly affordable wears that can be accessed by common individuals.

• LOUIS VUITTON COMPANY STRATEGIC FACTOR ANALYSIS SUMMARY

Importance to the industry 0-1

How well the company does

Weighted score

Strengths

Nostalgic brand image

0.15

5

0.75

Recognizable products

0.05

5

0.25

Strong presence of products

0.05

3

0.15

Tailored products for customers

0.05

4

0.2

1.35

WEAKNESSES

Market only for the wealthy

0.05

5

0.25

Fake imitation of products

0.05

1

0.05

Availability only in exclusive stores

0.05

5

0.25

0.55

OPPORTUNITIES

Adopt new trends

0.3

1

0.3

Offer loyalty membership

0.1

1

0.1

Discount for retention

0.05

3

0.15

0.55

THREATS

Counterfeited products

0.05

5

0.25

Economic crisis can hurt sales

0.05

5

0.25

0.50

Total

1

2.95

On the other hand, the analysis of Louis Vuitton’s Company can be made by using Strategic Factor Analysis Summary. SFAS, as a system, in this way, scores over the customary SWOT examination structure, in wording, of its capacity to measure qualities, shortcomings, opportunities and dangers individually in light of the apparent key noteworthiness and potential level of impact of each vital variable being broke down and the organization's proportionate level of responsiveness to that, consequently, making it a great deal more viable for aggressive evaluation and investigation and from a vital arranging angle with the formation of a quantitative, similar key preview and general SFAS score on every organization. From the SFAS, it is evident that the company gives more weight to its Strengths. The strengths are more important to the industry than any other factors. Although the weaknesses are equally important to the industry as they impact their performance, the opportunity cancels them out. Therefore, the company has positive future performance and will do well in the industry.

• IMPLEMENTING STRATEGIES

BALANCED SCORECARD FOR IMPLEMENTING STRATEGY

STRATEGY

OBJECTIVES

FINANCIAL

Increase profit margins

Increasing market price and funding anti-counterfeiting programs

30%revenue

Increase profits and reduce liabilities

CUSTOMER

Creating affordable luxury goods

Putting some items on sale

Decrease by 5%

Decrease interest rates in advertising

INTERNAL

Improve security to minimize counterfeit materials

Installing proper agents for investigations

Reduce in counterfeits by 10%

Dealing with culprits apriopriately

LEARNING AND GROWTH

Improving company image

Forming foundation that helps the maasai

Positive comments on social media

Decrease in anti-company protests

PROCESS

Charlton, J. (1990), Reed and Buckley, 1988; Galbraith, J. R., & Kazanjian, R. K. (1986). Proposed steps for strategy implementation

• • • STRATEGY ARTICULATION

Smit, P. J., Palmer, P. N., & Van, M. M. A. (2000) suggested that Strategy articulating is used in translating the strategy into a means through which shareholders and the managers would come to an agreed decision. The decision is usually one that benefits both parties. This is used in describing a companies end goals. In the LouisVuittonCompany, both the managers and the stake holders could come to an agreement in setting aside funds which can be used in donating to law enforcement with the aim of counter actin counterfeit products.

• • • STRATEGY COMMUNICATION

Speculand, R. (2009) attested that strategy communication is one of the most important means in implementing a strategy. The communication should be both internal and external and it is the duty of the head of the company to ensure that the strategy has been fully communicated to everybody.

• • • STRATEGY TRANSLATION

In order to implement a strategy into actionable steps, a strategic plan needs to be translated efficiently. This is because every person associated to should be able to understand the study easily. This was proposed by Flood, P. C. (2000) in which he purported that the objectives are supposed to be translated into sub-objectives. Speculand, R. (2009)Went further and proposed that the plan should be linked to the companies’ individual goals. The most essential part is for people to understand the plan effectively.

STRATEGY MONITORING AND CONTROLLING

The process of strategy Monitoring is supposed to start in the early stages. This is used in minimizing damages on the company. Damages to the company image can become uncontrollable in situations where there was failure in determining the cause early. Galbraith, J. R., & Kazanjian, R. K. (1986) suggested that objectives with a shorter life span requires a means which should be associated with a solution. This can either be an action plan with a metric or a problem.The small number of high level solutions can be used in tracking down the problem in the bigger picture.

STRATEGY ENGAGEMENT

In order to achieve this goal,Huber, A. J. (2011)suggested that a means through which intervention is possible, needs to be established to enable the company managers obtain the power to engage with members of their organization. This is to ensure the correct actions are being carried out and to be able to shift the mode of action as required.For example the managerial staff from the Louis Vuitton Companycould meet in specific times through special company appointed meeting. This would enable them to easily air out their agenda. In situations where problems have been encountered, they would easily find a solution collectively rather than one person struggling to find one.

Huber, A. J. (2011)also suggested that the implementation of a plan through slow stepsin most instances results to a positive influence and improves the implementation performance. This usually engages the managerial staff to stay active on the task and therefore motivates other employees in performing their duties diligently.