LVMH owns more than 200 stores worldwide with over 71000 employees (LVMH 2008). The enterprises major strategy of maintaining prestigious image have been complied by holding the world recognized luxurious Louis Vuitton brand as the most leading profitable brand. (Preiholt & Hagg 2006, p.115). Furthermore, the company also started its new movements to position high quality in the wines and spirits markets with the growing emergence of the LVMHs other leather and fashion subsidiary brands (Gancheva et al. 2008).
3. Internal Factors
3.1 Multi-divisional brand strategy
The LVMHs cores of success can be attributed by its distinctive management strategy which combines the Multi brand Strategy and the prestigious brand positioning. Aligning to the corporations prestigious multi-divisional brand strategy, LVMH Moët Hennessy - Louis Vuitton possesses a unique portfolio of over 60 prestigious brands. The iconic brands include Louis Vuitton, Hennessy, Moet & Chandon and Parfums Christian Dior (LVMH 2008). The company is the only player which has three of its brands featuring in top 100 brands list (Business Week 2007). A portfolio of investments in different types of products brings many advantages such as protection of the company from being exposed to the external risk factors that influence the particular market, resource allocation efficiency, increased overall growth of net profits, and the achievements of the greater impact to the scale of market (Razzaque & Mohammed 2005, p.3). For example, the excess profits generated from one of the sub-divisional brands can counterbalance the loss of the other brands. As a consequence of the this strategy , LVMH announced an 8% rise in annual net profit, to 2.03 billion euros and the sales at the company raise 8% to 16.5 billion euros as well (Passariello 2008).
3.2 Prestigious brand positioning through Mergers and Acquisiti View More »