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All three brands have a well established luxury image and reputation that leads to a sought after status symbol in society as per their target customers. The premium pricing, top designs and high quality of the three brands enhances all three of the brand’s images.The fine craftsmanship and high quality materials used in all three brands again build up the image and reputation of what means to own a luxury brand. Their hand stitching sets the three brands in a new benchmarking standard in the luxury market.LVMH is by far the leader in the market of all three major competitors, however, all three fall in the range of 3.3 to 6.7 which indicates moderate competitive strength vis-a-vis rivals.RATIO ANALYSISFrom the ratio analysis below we see that LVMH is needs to make some changes to their financial state by the standards of what ratio analysis indicates in the “what is shows” column. The areas that stand out are profitability ratios there has been a major drop in from 2014 to 2015 in net profit margin, Total return on assets, ROA and ROE. Liquidity ration are showing some cause for concern, as current ration is only at 0.5 points than the ration standard of 1. For a company such as LVMH this should
Lopez Castell Fatima – COMM 4005 EL13 – 2018SP Page 7of 12be much higher. Again same with Working capital alarming for a company such as LVMH. Leverage ratios again are causing some cause for concern due to an excessive reliance on long term borrowing which indicates lower credit worthiness and weak balance sheet strength. In 2015 it does show a slight improvement in leverage but not enough. Overall this indicates that there may be some portofloio inddustries that may not be carrying theirweight and they are eating up profits of other business units. This needs to be addressed by management, a change needs to occur to bring LVMH back into a healthier financial state.
Lopez Castell Fatima – COMM 4005 EL13 – 2018SP Page 8of 12SWOT ANALYSISStrengthsHistorical value built over timeStrong brand recognition which consumers like to portray as high luxury status and classBrand is recognized for its exclusive merchandise created by artists and top designersGlobally well knownTop celebrity endorsements areworn, displayed by the most recognizable names in the businessSets the benchmark in quality and design for all products in the industry by its craftsmanshipVertical integration has lead to control of the distribution network through own chain store, high end retail chains and website.WeaknessesAll products geared for a niche market that can afford the luxurious price tag, your average middle class income worker would have difficulty making a purchase of any of their productsOverall morale is on the low scale due to the dictatorship mentality lead by Arnault Focused on the Asian market only, Asia is one of the best geographic markets with 2/3 of sales of luggageOnly a few brands in the business portfolio are carrying the rest of the portfolioOpportunitiesExpand and explore further markets besides the Asian marketSynergies between all prestigious brands across the product lines.