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1Case 22: LMVH in 2016: Its Diversification into Luxury Goods, by John E. GambleJeanny PattersonThomas Edison State UniversityBusiness Administration Capstone (BUS-421-OL009) May 2020Dr. Christie CruseJune 28, 2020
2Case 22: LMVH in 2016: Its Diversification into Luxury Goods, by John E. GambleInfluential Strategic ApproachSince 1984 Louis Vuitton has been acquiring some of the most notable brands making it the world’s largest and leading luxury products provider. Its merger with Moet Hennessy started a quest for some of the biggest brands and provides the company name we know today; Moet Hennessy Louis Vuitton (LVMH). A broad differentiation has always been and continues to be the strategy that is an influential contributor to the company's success. There are 75 different houses or brands grouped into six different sectors. Twenty-five of those houses are legacy houses with only five that are younger than five years old. The six sectors are; Wine & Spirits, Fashion & Leather Goods, Perfumes & Cosmetics, Watches & Jewelry, Selective Retailing, and Other Activities. The success of LVMH is also attributed to the importance placed on their long-term vision. They work to develop each of their houses or brands by providing the resources and materials needed to create and market their products. All while respecting their characteristics and the success theybring to the company. LVMH Chairman and CEO, Bernard Arnault expects that all company employees follow three values. "Be creative and innovative" explains how creativity and innovation are the success of each of the houses. "Deliver excellence" expounds how, in their pursuit of excellence, they will not sacrifice quality. Finally, "Cultivate an entrepreneurial spirit" this last value, provides us a glimpse into how the company sees itself, and how it wants the world to see as well; as an "agile and decentralized organization that encourages efficiency and responsiveness."Through a broad differentiation strategy, LVMH provides products and services that appeal to a broad spectrum of consumers. These masses are willing to pay a premium for these products and
3services. An example of this a woman's Louis Vuitton bag at the cost of $500. This demonstrates