INBA 6151: STRATEGY OPTIONS FOR BUSINESS GROWTH

DISCUSSION FORUM: LOUIS VUITTON CASE

FACULTY MEMBER: PAUL ANDERSON

Date: 6/12/2019

BY:

Tracy Amanda Smith (Student ID: 816013555)

Question:

In a 750-1000 words, analysis the Louis Vuitton Case using an appropriate school of strategy.

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Louis Vuitton Case Analysis

This was a brilliant case on the Louis Vuitton and its growth strategy. I agree that strategy is a
visionary process (Mintzberg 1998) and despite Mr. Arnault’s strategy in the beginning to
acquiring Louis Vuitton Moet Hennessey (LVMH hereinafter) it is impressive to see the strategy
he employed to make this LVMH into the luxury brand that it is today. This analysis focuses on
the effectiveness of the Entrepreneurial School of Thought with a healthy mix of environmental
and positioning school of thought.

In this case we see that Georges Vuitton had a vision for his father’s company, however, he seemed
to not only lack the business skills to take the brand further but also the connections and having to
deal with the fall out from World War II. The Vuitton family then made a entrepreneurial strategic
decision to have Racamier run the business. Under his vision, LVMH did well but faced
management issues which turned out sour and resulted in the business being taken over by Bernard
Arnault.

Bernard Arnault’s entrepreneurial strategy from the beginning was dominant and it showed in his
approach to the finest detail. He carefully selected his team and together they strategized pricing,
distribution, and product design very well. The entrepreneurial school portrays Arnault very well
in that it strongly focuses on the mental state. (Mintzberg, 1998) It uses intuition, judgment,
wisdom, experience and insight and we see this in Arnault leadership and vision for achieving
success with LVMH. Arnault knew from the being that in order to succeed he had to ensure control
over his factories and distribution. This was the only way he could control his quality and brand
image. One would argue that this move was one from the positioning school and that is correct. It
is understood that no one school of though should be exclusive in this case and it is clear that
Arnault and team had both entrepreneurial and positioning school of thought at play. The move to
make acquisition of key luxury brands was of both schools so as to ensure its dominance in the
luxury industry among its competitors and to the various customer segments that it is the leading
luxury brand.

It is submitted that Arnault via LVMH understood the customer very well and strategized how it
would maintain its following. Making the entrepreneurial decision to focus on the three customer
segments positioned the brand to be a trusted brand everyone wanted to shop from. The brand’s
strategy to sell only from LV stores was another entrepreneurial strategy to control distribution
and further know where the customer base was located. This strategy also helped to ensure that
products didn’t get lost. This also meant that LVMH didn’t allow for other third parties to sell their
merchandise and they burnt the surplus in order to avoid products on the grey market.
LV also made sure that its entrepreneurial strategy meant that it would manufactured all of its
products as oppose to buying externally. This is where it is submitted that strategic planning is
“seeing” (Mintzberg, 1998). Arnault saw his vision through and through. (Mintzberg, 1998) The

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strategy was well put together and executed well so as to grow without having to manipulate the
image of what LVMH is known for.

The entrepreneurial and positioning schools of thought were also applied in LVMH’s product
design and innovation. The brand made sure that their strategy for expertise and quality was
paramount. The brand ensured that high quality materials were bought from the best suppliers and
rigorously tested to ensure the standard of LVMH. What made the brand even more premiere is
the fact that it products lifetime repairs to all customers. This strategy would automatically make
customers feel as though they are important and valued. Thus, the brand positioned itself as one
that cared of the life and quality of its products but most importantly the happiness of its customer.
It clearly intends that the brand would be a desire for years to come.

Finally, LVMH’s strategy to deal with its competitors is also noteworthy and it speaks to the
entrepreneurial school of thought. Mr. Arnault vision for the brand ensured that he did not
compromised on any aspect of the brand be it price, quality or design. Along with his team, he
managed to use this vision to bring together creative minds and organized them in order to execute
the vision of the brand. Thus, while we see the positioning school of thought revealed in some
aspects of this case it is no doubt dominated by the entrepreneurial school of thought. For Arnault,
he had a long term vision of his organization and secured the right team to ensure just that. In this
case, we also see Arnault uses his vision to go after each segment of managing his brand. He was
deliberate in his vision and this is what helped the brand to form a niche for luxury and because of
this it protected him from his competitors.

In conclusion, while one may argue that the entrepreneurial school of thought focuses mainly on
one individual it is clear that Arnault’s gift or strategy rather was to be able to manage many
creavtive minds in different businesses in order to create this impactful empire that now dominants
the luxury industry. Thus, utilizing another school of thought than those aforementioned would
not help in recognizing the extraordinary efforts of the brands.

References

Bernard Arnault, Chairman and CEO of LVMH.

https://www.youtube.com/watch?v=wRZvHxUJUoE (Accessed: 10 June, 2019)

Gillespie, A. (2010). Business Economics (2nd Ed.). Oxford University Press, United Kingdom.

Mintzberg, H. et al. (1998) Strategy Safari: A Guided Tour through the Wilds of Strategic
Management. The Free Press, New York. P 162

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