MGT4100

INTERNATIONAL
BUSINESS
STRATEGY

SUBMITTED TO-
DR. HELEN CAI

SUMBITTED BY-MUSKAAN SONI(M00727356)

BHAVANA SHARMA(M00697730)
TABLE OF CONTENT
1.Executive summary………………………………………………………………2
2.Selected MNE and the challenges……………………………………………3
3.Internal business environment…………………………………………………..4
4.External business analysis………………………………………………………8
5.Recommendations………………………………………………………………..11
6.References………………………………………………………………………13

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 1. Executive summary

The XY PVT. Ltd is a Start-up business. It’s an E-commerce firm which provides
services to other luxury fashion brands to help them to attain global reach. The new
client which XY PVT. LTD. Has is LOUIS VUITTON which is an luxury fashion brand
around the world. In this report the research is about the strategy which XY PVT. Ltd
has to make Louis Vuitton as a client. The objective of the report is to suggest the
strategies which makes them better from the other competitor. As we know that the
Louis Vuitton is a well-established French company and top leading luxury brand in
the world. They have their own brand image and Market share in the market but they
still face many issues which restrict their global reach. In this report all the strategic
challenges are mentioned with the help of internal and external analysis which
restrict the reach of this brand globally. At the end there are recommendation from
the XY PVT.LTD firm to Louis Vuitton to remove the hindrances. Detailed information
can be found in the recommendation section of this report.

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 2.Selected MNE and the challenges
The selected MNE that our company is interested into is LOUIS VUITTON a French
fashion house luxury brand company. As our business is about the group of luxury
brands and collaborating our trade with such a big brand can lead to a notable
profits. They deal in the luxury trunks, ready to wear, shoes, watches, accessories,
sunglasses. They sell there products in the high end department stores that are
designed according to there brand name and reputation or a standalone boutiques,
on a high cost, they have started there start up product price with $10000. The brand
origin is in Paris France and it operates in more than 50 countries and 460 stores
worldwide. Marc Jacobs is behind the great collection of louis Vuitton bags and
charmed bracelets which are in high demand. The brand is obsessed with the
leather in most of its products. The advertisement campaigns are propagated by the
print ads and billboards in cosmopolitan cities by the known celebrities. They have
monogram canvas in there handbags and accessories that makes them unique, the
monograms are available in different colours inside the bags. Extensively, the brand
has eminence, economical to affluent level of people, and has high demand.

Challenges encountered by this company are of the e-tail acceleration for the global
consumption and has to accept the fact that the digital distribution is a priority. Such
expansion can lead to shrink a culture of brick- and- mortar store networks that may
affect the wholesale clients. This kind of chronicles is paramount to preserve the
brand name. They should expand there business in ASIA, as there are demanding
customers those have to opt different ways to buy the product for example- the louis
Vuitton stores are not available in most of the states in India, where there is demand
for the products but people do not have the access to buy. They have to travel to
other cities or countries to buy the product.
The another challenge is of the advertisement the brand does not takes the initiative
to promote there brand all over the globe. They have less range introducing there
new products. Although, they are exclusive and less distant to there customers. In
comparison to the number of stores in India the insistence of its product is high.
Therefore, cost of luxury stores can be nullify if they enhance there reach of
customer services, which is the main key to produce high revenues.

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3.The international analysis of the Louis Vuitton
in the external business environment

The extrinsic factors of the MNE will be explained by the PESTEL analysis
framework of the company in order to understand how all the outside factors
influence the working of the organisation in the international market . it will examine
the various external factors such as Political, economical, social, technological, legal
Which impacts the business environment.
The PESTEL framework figure out the market dynamics and leads to the continuous
growth of business. This type of framework is imperative for companies like Louis
Vuitton.

Political
The high import duties becomes the problem for brand to serve the customers
internationally like the countries which has high import duties such as china leads
the customers to buy the products overseas and purchase the items on low prices to
cut out the import duty. Government establishment is important in this industry as
outside the Europe and America, the demand for this product is tremendous.
Therefore, the brand has to produce or move there stock all over the globe. Tourism
plays a vital role in this organisation, the customers are aware of duplication of the
LVMH products and high import duties that they prefer to buy from the stores in the
countries they are visiting.

Economic

All the luxury brands has the highest luxury goods tax that is one of the biggest
economical factor for the industry. The high tax rates has been imposed on luxury
goods and LVMH is one the high paid luxury brand which results in more and more
tax rates. Some of the countries want to remove this ‘luxury goods tax’ in order to
boost up there sales. In case of Louis Vuitton a potential price gap is uncontrollable

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issue. Economically, the price of the LVMH products are very high that only rich
community can afford them. At the times of recession, customers will tend to buy
those luxury goods which are less expensive. The brand should cut out its unusual
cost by switching to the countries that developing fast and has cheap labour.

Social
LVMH has a huge brand name. The company has its origin in Europe and the
European luxury brands more preferred more than any other luxury good that are
made in ASIA or America. As we all know luxury brands helps to maintain a status in
the society. As the industry deals in the diversified services that has luxury travel
experience that is one of the most contributing social factor. Nowadays, people like
to boaster there high paid products in order to manifest there living style. LVMH
deals in daily essential accessories, travelling, office and in comfy homey products.
LVMH offers the high status lifestyle experiences.

Demographic factor is also considered a huge difference in culture by the brand

logo. It has a high importance of logo in society. Whereas, some of the other brands
like in china are less exclusive with there brand logo.

Technological
As the challenge of e- trade is discussed above is the main concern that effects the
technological issue in this industry. Revolution has been changed and it imposes the
massive impact on the sales. In order to maintain the value in market and gain the
competitive advantage the firm has to start selling the products through online that
one may take the aura of exclusivity in the positive manner and boost up the sales.
Chanel has the more market value and brand equity as they uses the technological
services to advertise and sale there products. They need to maintain a constant

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engagement with there customers by promoting there brand through ad campaigns
to reach out its prospects to customers
It is important in order to minimize the costs.

Environmental
The environmental protection is the major concern for all the industries as the LVMH
deals in leather products which has a huge impact on the environment. according to
the PETA ACT (2015) modifying the animal skin into leather needs high energy
consumption that may harm the environment as they uses the dangerous chemicals.
All the industries are suggested to use the natural resources and limiting the carbon
footprint to reduce the harmful effect.

Legal
The LVMH industry as being the part of the luxury goods and is one of the big
business and they have to focus on many legal laws while working in multiple
nations but most of the paramount legal factor for all the luxury brand is
‘counterfeiting’. It becoming a challenge for LVMH. According to the analysis from
Anti-counterfeiting group LV in UK has lost almost 10% of its sales every year. To
encounter this problem a trade agreement has been signed which is yet to be
implemented. The protection of the intellectual right of LVMH products is also a
major concern that operates in producing the duplicate products. Some of the
countries is complied by the US chamber of commerce not to invest in that have low
rate of intellectual property. The brand has to deal with many stores so, have to go
through with different employment laws in different countries even they are not
matching up with the memorandum

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LEG A

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Fig 3.1

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4. THE MNE INTERNAL ENVIRONMENT

Louis Vuitton is a well-established brand but there are multiple hindrance in their
way. It is very much clear that LVMH has hit the maturity of the product life cycle but
the industry is still growing and the competition also has become very fierce in terms
of channel of distribution, customer relationship and profitability. To identify the
internal environment the SWOT analysis is used here.
“SWOT analysis is a framework used by organisation to analyse the internal
environment of the firm. this identifies the Strength, weakness thereat and
opportunities of the organisation”. (SWOT Analysis, 2020)

strength weakness

threat opportunity

(fig
ure 4.1 SWOT ANALYSIS OF LOUIS VUITTON)

STRENGTH- the louis Vuitton has the strength of brand recognition which is the
symbol of class and status for the society and business can easily become profitable
if they have brand image like LOUIS VUITTON. The quality of the product which they
provide to the consumer people are willing to pay premium for it. (Bhasin, 2020)
So the quality of and the brand image is the biggest strength of this brand which is
the foremost reason of XY.PVT.LTD want them as their client.

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WEAKNESS-Louis Vuitton is a French company so they have very lack sense of
sensitivity towards the culture of foreign and their trends which hinders the growth of
the company. (Louis Vuitton SWOT Analysis Matrix [step by step] Weighted SWOT, 2020)
This company obviously target the niche market because the company offer basic
product for 1500 USD. In japan 85% of the Japanese women has their own LV
product which reduced the ability of the company to look at other markets.

OPPORTUNITIES- the global rate of luxury goods is around 42 billion with the
growth rate of 4% pa which could be huge opportunity for the luxury merchandise.
(Bhasin, 2020). Most of the countries are now having increase in per capita income
which can create the huge demand of essential items and luxury goods (SWOT
Analysis, 2020).

THREATS-The biggest threat which Louis Vuitton has is ‘COUNTERFEITS’

products. They are known first copy or just similar looking product but they are not
original. The quality of those products are very poor which can harm the image of the
brand. (Louis Vuitton SWOT Analysis Matrix [step by step] Weighted SWOT, 2020)
People buy these items because the price of these products are very low and
sometimes they don’t understand the difference between the originals and the fake
product. The biggest challenge which they face is that there forte is their ability to
create exclusive merchandise and also this means the need to customize the
individual culture which they couldn’t do it. (Bhasin, 2020).

-To analyse the internal environment of the LOUIS VUITTON more appropriately.
VRIO framework is also used to make the better analysis-
VRIO framework is a strategic analysis tool designed to help the organization to
uncover and protect the resources and capabilities that give them a long term insight
of the competitive advantage. (Smith, Smith, Chandler and Weaver, 2020).

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 V-VALUABLE R-RARE

I- O-
INIMATBALE organisation

competitativ
e implications

(Figure 4.2 Vrio framework)

Valuable? Rare? Difficult organisati Competitive

to on implication
Imitate? s
Financial yes yes no no temporary
stability
Human
yes yes yes no temporary
resource
innovation
yes yes yes yes sustainable
quality
yes yes yes yes competitive
Effective
yes yes no yes Temporary
production
system
Quick
yes yes yes yes sustainable
adaption to
demand
changes
Quality
yes yes no yes temporary
customer
service
Superior
Yes yes yes yes sustainable
craftsmen
Utilisation of
yes no no yes competitive
resources

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Vrio framework one of the biggest resources that are helping and maintaining the
success of the company is unique heritage and French tradition but it also could be
hindrance at global level. A competency which LV has to create sustainable
competitive advantage. Is to quickly adapt the customer changing demands. There is
also a constant need to refresh the product ranges according tom the production
system for workers. The intangible asset which LV has is there brand image which
can easily influence the consumer decision making around the world. But if we see
the activity of LV which is how frequent they turn asset into cash they are worst
performer in that.

5.RECOMMENDATIONS
 LOUIS VUITTON should increase the usage of innovation and digital
marketing for the better promotion of the product to the consumer. This will
also increase their sale as they will be able to increase the awareness about
the products in the market.
 They have the limited consumer base which only focuses on the females.
They should also start to make more unique products for males with the
experimental workforce.
 Creating products according to the different culture will eliminate their
competitions as now they only focus on making the collection which belongs
to the French culture. (Full Strategic Appraisal of Louis Vuitton, 2020)
 There are several countries in which people can afford the LOUIS VUITTON
product but they don’t have any showroom in their city which is the great
hindrance for the LOUIS VUITTON. Even having the affordability people
sometimes couldn’t able to buy the product due to lack of global reach. This
problem could be solved with the help of E-commerce which XY.PVT.LTD is
providing to them.
 They should maintain balance in the distribution channels and should have
the wide range of the retail investment.

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  They should also engage themselves in some kind of social responsibilities
and environmental activity programs because as manufacturing the leather
creates too much pollution which harms the environment. (Market analysis of
LVMH, 2020).
 They should do the cost cutting of their products at time of recession because
there competitor do the same thing like CHANEL,DIOR and many more.to do
this they use the select the place which has cheap labours and which can also
reduce the manufacturing cost.
 They should able to cope up with the dynamic changes and adapt them with
the changing trends and advanced technologies to eliminate the competition.
(Market analysis of LVMH, 2020).
 They should stay socially connected to their consumers to maintain the
customer relation through media which can lead to advance communication.
 To maintain the heritage of the product they should only use hand-made stuff
made by superior craftsmen only. Relying on heavy machine can reduce the
image and quality of the product.

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6.References

Netmba.com. 2020. SWOT Analysis. [online] Available at: <http://www.netmba.com/strategy/swot/>

[Accessed 10 May 2020].

Bhasin, H., 2020. SWOT Analysis Of Louis Vuitton - Louis Vuitton SWOT Analysis. [online]
Marketing91. Available at: <https://www.marketing91.com/swot-analysis-louis-vuitton/> [Accessed 10
May 2020].

Fern Fort University. 2020. Louis Vuitton SWOT Analysis Matrix [Step By Step] Weighted SWOT.
[online] Available at: <http://fernfortuniversity.com/term-papers/swot/1433/1232-louis-vuitton.php>
[Accessed 10 May 2020].

Slideshare.net. 2020. Full Strategic Appraisal Of Louis Vuitton. [online] Available at:

<https://www.slideshare.net/ChrisMarshall80/full-strategic-appraisal-of-louis-vuitton> [Accessed 10
May 2020].

kandelmanita. 2020. Market Analysis Of LVMH. [online] Available at:

<https://kandelmanita.wordpress.com/2014/08/04/market-analysis-of-lvmh/> [Accessed 10 May 2020].

En.wikipedia.org. 2020. Louis Vuitton. [online] Available at:

<https://en.wikipedia.org/wiki/Louis_Vuitton> [Accessed 10 May 2020].

Yoogiscloset.com. 2020. Louis Vuitton Information Guide. [online] Available at:

<https://www.yoogiscloset.com/louis-vuitton/guide> [Accessed 10 May 2020].
Jing Daily. 2020. Three Problems Overhanging Luxury Giant LVMH | Jing Daily. [online] Available at:
<https://jingdaily.com/lvmh-morgan-stanley/> [Accessed 10 May 2020].

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REPORT SUMMARY-BHAVANA SHARMA(M00697730)

This report is about strategic analysis of the luxury brand which we taken as a client
of our start-up company. I and my group partner Muskaan Soni divided this report
equally. We have discussed the whole report with each other and decided the topic
We have written 1250 each. I have written the executive summary which has the
background of our start up business as well as the background of client company. It
has the structure of the report and also key result and challenges faced by the client
company. I have also done “the Internal business environment analysis of the
organisation in which I have used to framework which is 1) SWOT ANALYSIS, 2)
VRIO FRAMEWORK in which I have written the strategies and challenges faced by
the organisation as well as their I have also mentioned the opportunities they get and
strength which they already have to make them successful brand in the market. At
the end I have mentioned the recommendation which the client company should
follow to maintain their brand image and market share. It will help them to overcome
the hindrances of the internal and external environment. At last I have mentioned all
the sources from where I have collected the data as reference and in-text citation
and also applied all the professional specification which was mentioned for the group
coursework. I and my group partner Muskaan Soni has carried out this report by
equal contribution and team work.

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 Contribution to the coursework by MUSKAAN SONI M00727356
I have elucidated the cover page, contents, justification of the selected MNE to our
group of business, that we are interested to fabricate in our organisation is LOIUS
VUITTON, the description about the company and the challenges they are facing in
enlarging there business. By this research work I understood the strategies of such
big brand and even by being a big brand there are some of the mistakes that the
organisation can encounter and has to be changed by the time. The LVMH has
some of the unusual cost that can be reduced and by confronting there challenges
they can lift up there business
The external analysis of the LVMH is done by me, which I have explained through
the PESTEL framework. I have choose this framework as it helps to explains the
extrinsic scenarios as whole including the legal and environmental factors. The
brand is on the international level and the legal and political factors are the major
concern to be adapted while doing the international business. It impacts there
business performance and gives a critical understanding of external business
factors. And we have discussed the recommendations. All the pros and cons of the
brand has been discussed in order to collude in a proper manner which will be two
way beneficial to our business and to LVMH. An appropriate homework has to be
concluded before engaging into the business.

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