1. Why is analysis of social trends important? Give examples from the organization your team selected.

 

Social trends are important for luxury product. In luxury product field, LVMH need to aware the environment and animal protection organization and government regulations. Since LVMH major market share is focus on Fashion and Leather products. Using animal leather or fur may cause the protest or fine.

 

  1. What are some of the most critical economic factors for your organization to track? Why are they important?

 

Luxury industry is easily effect by the income change. Since luxury goods are not necessary goods. When customers can’t afford it they can stop buy it immediately

Also, as a global company LVMH needs to consider the exchange rate to adjust the price in different countries. For most country the exchange rate change everyday, that is important to make a reasonable and strategic price. Because you can change the product price everyday. LVMH need to analysis the current economic status to estimate the future economic.

  1. Which industries have been transformed by the Internet including social and mobile technologies? How is your organization taking advantage of these technological trends?

 

LVMH can use the technology to open more market and distribution channel. Currently LVMH still mainly focus on selective distribution or  direct sale. With the technology LVMH are able to sale the product online, and provide customer service online. Also , LVMH can use email to reach out our customers to notice them the new season is  coming. In this way, LVMH are able to reactive some customers to come back.

In addition, internet able to provide LVMH lots of information. Currently, Big Data is the most popular statistic forecast. With the forecast the LVMH are able to determine the market situation to make the accurate decision.

  1. When do customers exhibit a powerful force on competition in an industry?

Small amount of customers make a big different. In any industry customer are powerful. These customers will come back and repurchase. This frequently buyers purchase several times more than regular customers. but they are not big enough to negotiate the price with LVMH.

In luxury industry customers are able to choose other brands. But LVMH owns most luxury brand in the marketplace. There is lots of brand cannibalization in LVMH. However, it makes sure that if customers want luxury goods they will come to LVMH.

  1. What are strategic groups? Why are strategic group maps useful?

 

  1. According to Michael Porter, what are the conditions that create advantages for firms in certain countries and industries? How does this apply to the organization your team selected?
  2. LVMH has 3384 stores and online channels. For different channel of distribution their number of product categories is different. In outlets their products’s price is lower than selective distribution. And LVMH offer commercialize its product. It’s high price but more

Besides social, economy, legal environment and technology. There are four characteristic are applied.

  • Factor Conditions: The raw material and employees. LVMH most product still product in Europe to maintain the quality and the “country of origin” feeling of being luxury product. LVMH sales products oversea. However, the shop window, the display, decoration are still from headquarter. LVMH just need to find qualified employees.
  • Demand Condition: In this case, LVMH might need to hire consulting companies to discover the nation’s income average, spending habit and so on. As luxury brand, LVMH as demand in most developed and developing countries. As long as the economic is good. LVMH are able to find market in most major international cities.
  • Related and Supporting industries: As global companies, the SKU transportation is important to LVMH. If the nation has great transportation industry that can be helpful to LVMH.
  • Firm Strategy, Structure and Rivalry: LVMH will change the product to fit the local demand. In past year, LVMH added new elements into the product to attract Japanese customer. Also start to produce more small items to attract young customers.

 

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