documents.mx_gucci - Industry and Competitive Analysis course Professor Karel Cool INSEAD MBA Program C AN LUXURY GOODS C ONGLOMERATES SUSTAIN

documents.mx_gucci - Industry and Competitive Analysis...

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‘Industry and Competitive Analysis’ course Professor Karel Cool INSEAD MBA Program C AN L UXURY G OODS C ONGLOMERATES S USTAIN A BOVE - NORMAL R ETURNS ? THE G UCCI G ROUP CASE © Gucci Christophe ANDRE Sophie BERTIN Anne-Elisabeth GAUTREAU Philippe de POUGNADORESSE Rodrigo SEPÚLVEDA SCHULZ April 2002
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INSEAD MBA – “Can Luxury Goods Conglomerates sustain above-normal returns? The Gucci Group case” ICA course – Professor Karel Cool Christophe André, Sophie Bertin, Anne-Elisabeth Gautreau 2/40 Philippe de Pougnadoresse, Rodrigo Sepúlveda Schulz TABLE OF CONTENTS PART I – THE LUXURY GOODS INDUSTRY ...................................................................... 4 1. D EFINITION ..................................................................................................................... 4 2. M ARKET OVERVIEW ......................................................................................................... 4 2.1 Market segmentation ............................................................................................................................................ 4 2.2 Growth, operating margins and concentration ...................................................................................................... 5 2.3 Analysis of the value chain ................................................................................................................................... 5 2. 4 Analysis of the five forces (M. Porter’s framework) .............................................................................................. 8 2.5 Growth drivers of the global luxury goods industry ............................................................................................. 10 3. T RENDS ........................................................................................................................ 10 3.1 Vertical integration ............................................................................................................................................ 11 3.2 Consolidation ..................................................................................................................................................... 11 3.3 Diversification .................................................................................................................................................... 12 3.4 War for talent ..................................................................................................................................................... 13 4. C REATING AND S USTAINING COMPETITIVE ADVANTAGE ...................................................... 13 4.1 How to create your competitive advantage? ........................................................................................................ 13 4.2 Three successful ways of growing in Luxury Goods ............................................................................................. 14 4.3 Key challenges in the industry ............................................................................................................................ 15 4.4 Conclusion: the Winning Concept ....................................................................................................................... 16 PART II - WHAT DOES A LUXURY CONGLOMERATE BRING TO A COMPANY? ......... 17 1. M ETHODOLOGY ............................................................................................................. 17 2. C OMPETITIVE ADVANTAGE BROUGHT BY THE C ONGLOMERATE MODEL ................................. 17 2.1 Structure and organisation ................................................................................................................................. 18 2.2 Process and operational management ................................................................................................................. 19 3. L IMITS IN THE VALUE BROUGHT BY A L UXURY CONGLOMERATE .......................................... 20 3.1 Strategic constraints ........................................................................................................................................... 20 3.2 Operational arbitrages ....................................................................................................................................... 21 4. O VERALL BENEFITS OF A L UXURY CONGLOMERATE TO A PURE PLAYER ................................. 23 PART III – THE NEW KID ON THE BLOCK: GUCCI GROUP .......................................... 24 1. T HE H ISTORY OF G UCCIO G UCCI S P A ............................................................................... 24 1.1 1923-1989: the Origins ....................................................................................................................................... 24 1.2 1989-1994: the Death Spiral ............................................................................................................................... 25 1.3 1994-1999: the Gucci turnaround ....................................................................................................................... 25 2. S OURCES OF UNIQUENESS AND ABOVE - NORMAL RETURNS AT G UCCI G ROUP .......................... 27 2.1 Management ....................................................................................................................................................... 27 2.2 Manufacturing .................................................................................................................................................... 27 2.3 Marketing ........................................................................................................................................................... 28 2.4 1999 – 2002: the integration of YSL Beauté and RTW ......................................................................................... 30 3. T HE CHALLENGE OF TRANSFORMATION FROM A MONO - BRAND TO A MULTI - BRAND GROUP ...... 33 3.1 Image generation ............................................................................................................................................... 33 3.2 Manufacturing .................................................................................................................................................... 34 4. I S G UCCI G ROUP THE RIGHT LUXURY GOODS CONGLOMERATE MODEL ? ................................. 34 4.1 Management ....................................................................................................................................................... 36 4.2 Image generation ............................................................................................................................................... 37 4.3 Manufacturing .................................................................................................................................................... 37 4.4 Distribution ........................................................................................................................................................ 38 5. C ONCLUSION ................................................................................................................. 38 BIBLIOGRAPHY ............................................................................................................... 40 1. P RESS ARTICLES ............................................................................................................. 40 2. I NVESTMENT BANKING RE SEARCH .................................................................................... 40 3. INSEAD MATERIAL ....................................................................................................... 40 4. O THER S OURCES ............................................................................................................ 40
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INSEAD MBA – “Can Luxury Goods Conglomerates sustain above-normal returns? The Gucci Group case” ICA course – Professor Karel Cool Christophe André, Sophie Bertin, Anne-Elisabeth Gautreau 3/40 Philippe de Pougnadoresse, Rodrigo Sepúlveda Schulz P ART I – THE L UXURY G OODS I NDUSTRY 1. Definition The Luxury Goods industry is defined by the personal consumer goods positioned in the high end of the market. Luxury products transcend product functionality. Traditionally, the Luxury Goods industry has been associated with French families and designers, still represented by the Comité Colbert 1 , but it is becoming a global industry.
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