business of buying and reselling. Counterfeit products diminished value of brand and led to more competition. Success of products heavily relied on expensive advertisements in magazines. Strengths ● Dominated asia-pacific region ● brand power that had propelled the company to leadership positions in almost every segment it served. ● LVMH was ranked number one in champagne and cognac, fashion and leather goods, and selective retailing. ● By early 2001, the company had been reorganized around five divisions spanning wines and spirits, fashion and leather goods, perfumes and cosmetics, watches and jewelry, and selective retailing. ● clearly the world leader in the wine and spirits business. ● Mr. Arnault believed that, “If you think and act like a typical manager around creative people—with rules, policies, data on customer preferences, and so forth—you will quickly kill their talent.”6 Thus, the company was decentralized by design and had a very small cadre of managers. New products contributed 15% of LVMH revenues in leather goods and 20% of sales in fragrances and cosmetics in 2000. Weaknesses ● In 2001, the company witnessed a 4% decline in division sales due to the poor performance of cognac labels in the traditional stronghold market, Japan (relies too heavily) ●
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