Premium Essay

Lvmh Versus Hermès: Case Study

In: Business and Management

Submitted By Badr3331
Words 371
Pages 2
LVMH versus Hermès:
Case Questions
1. Hermès International was a family-owned business for many years. Why did it then list its shares on a public market? What risks and rewards come from a public listing?
Although in its sixth generation of family ownership, a number of the family members wanted to ‘cash-out’ of the business. Ordinarily this would be affected by having other family members buy those shares or interests. But other family members did not either have the capital or interest in buying those interests. The solution was to list 25% of the company’s shares on the public marketplace, therefore accessing a liquid capital market for the firm’s shares. The risk of a public listing is the increasing reporting and transparency (information for customers, suppliers, and competitors), and the fact that any investor can purchase those shares – even LVMH.

2. Bernard Arnault and LVMH acquired a large position in Hermès shares without anyone knowing. How did they do it and how did they avoid the French regulations requiring disclosure of such positions?
LVMH had acquired the position under the radar of the Hermès family, company management, and industry analysts, by using equity swap. Equity swaps can be structured so that only their value is tied to the equity instrument; at close-out the contract may be settled in cash, not shares. Using this structure, the swap holder is not required to file with the AMF, since they will never actually own the stock.

3. The Hermès family defended themselves by forming a holding company of their family shares. How will this work and how long do you think it will last?
The holding company structure essentially prevents other family members from taking their shares to the public marketplace – a risk associated with any family business where the many generations have grown increasingly apart, distant, and possibly in…...

Similar Documents

Premium Essay

Case Study Hermes Funds

...Hermes Fund Management Dr. Okan Geray 1. Is the role of institutional investors to influence the strategy of companies in which they invest? Yes, they are influence on the strategy for the company * Institutional investors are in a unique position to exercise influence over companies and to hold them accountable for good governance. Given the typically significant stake they hold, they have the ability to demand meetings with the senior management of companies, challenge them on issues of concern, discuss strategies for achieving the companies’ goals and objectives and be the leading voice of shareholders in demanding corrective action when wrongdoing occurs. * Thus institutional investors have a critical and proactive role to play in the governance of companies. They have better access to information and possess the resources to build the necessary monitoring Capabilities. Given their unique position of influence, there is a need to priorities their leadership role in governance. * Institutional investors are professional investors who act on behalf of beneficiaries, such as individual Savers or pension fund members, the categories of institutional investors are wide and can include Collective investment vehicles, which pool the savings of many, and licensed fund managers to whom these funds are allocated. * Hermes is a UK independent fund manager investing approximately £36 billion on behalf of over 100 clients, including pension funds,......

Words: 663 - Pages: 3

Premium Essay

Lvmh Innovation Case

...LVMH in 2004: The Challenges of Strategic Integration. 2004. Stanford SM-123 1. What’s the rationale of LVMH’s creation through merger in 1987? a. The rational of LVMH’s creation through merger is to build the luxury empire and create the largest conglomerate of luxury brands in the world. b. To redefine a bunch of small and fragmented industries into coherent and growing sector, which put into a good position to dominate the markets. c. Arnault believed that the action should be taken quickly when the few “star brands” are still available before others realize it. 2. How do you evaluate LVMH’s corporate strategy and the brand-centric business strategies for the individual businesses?  a. Tradition and vision lie with the brand, that the brand generates the energy and motivation. Thus, the independence of individual brands has be guaranteed during the pursuit of cross-brand synergy within LVMH Group. b. LVMH reflected the brand-centric culture. The headquarters flexibly review each brand’s business plan on a case by case basis and are very involved in deciding and assigning financial resources towards the implementation of the strategic plans. c. Strategic integration was established by formal dynamic and was gradually institutionalized. It started with the integration of the Perfume and Cosmetics branch, then created the Fashion group and the Watches and Jewelry branch. All the Wine and Spirites branch were integrated. The Seletive retails arm maintiend......

Words: 478 - Pages: 2

Premium Essay

Louis Vuitton Case Study

...Table of Contents 1.0 CASE SUMMARY 1 2.0 PROBLEM STATEMENT 2 3.0 INDUSTRY ANALYSIS 3 3.1 Market Segmentation3 3.2 Target Audience3 3.3 Market Positioning4 3.4 Competitor Analysis5 4.0 COMPANY ANALYSIS 6 4.1 4P Analysis6 4.2 POD and POP Analysis10 4.3 Market Analysis10 4.4 SWOT Analysis12 4.5 PESTEL Analysis14 5.0 STRATEGIC ALTERNATIVES20 6.0 RECOMMENDATION23 7.0 ACTION PLAN24 8.0 CONTIGENCY PLAN28 9.0 REFERENCES28 1.0 CASE SUMMARY In recent years, modern customers are no longer acquiring shopping only for their goods and services. Nowadays, these customers are buying for different reasons such as to show off their personality, to boost self esteem or to satisfy physiological needs. Shopping good brands like Louis Vuitton, Gucci, Channel and other luxury brands is like a form of self expression and gives people a sense of accomplishment. Louis Vuitton or famously known by its acronym LV, is known for world’s most valuable luxury brand. It was founded by Louis Vuitton Moet Hennesy (LVMH) in 1854 on Rue Neuve des Capuccines in Paris, France. The historical journey began when Vuitton found out traveller trunk were easily stacked. He was made famous for crafting the luggage for Napoleon. This company is famous for its luxury products such as trunks and leather goods to ready to wear, footwear, watches, jewellery, accessories, sunglasses and books. Louis Vuitton stands out more among other brands through their relentless focus on product quality...

Words: 9151 - Pages: 37

Premium Essay

Lvmh

...1. Executive Summary Louis Vuitton Moet Henessy (LVMH) is one of the most demanded European leading corporations for luxury products. The corporation owns 60 different prestigious sub-divisional brands with more than 200 stores worldwide. In the current report, the LVMH’s distinctive major core competencies and the leading strategies will be analyzed in relation to its current external risk factors. The corporation’s sustainability is driven by its efficient strategic management of its internal and external environments. LVMH’s strength lies in its multi-divisional brand strategy which reduces the vulnerability to be influenced by particular external risk factors. The prominent positioning through mergers and acquisitions and the efficient human resource management also contribute to the corporation’s success in the market. However, as LVMH operates in the global market, external environmental factors should also be taken into account. These are, the changes of the global economic environments, structural changes of the major consumer market, and the risk of brand damage based on consumers’ perception. Since all these risk factors are both directly and indirectly related to the profit generation process of LVMH, this report will recommend some solutions to overcome the current risks, for example, focusing on its high profit products lines while it revise its low profit product lines. 2. Company background Since there have been dramatic growth of the......

Words: 2516 - Pages: 11

Premium Essay

Case Study: Estimating the Cost of Capital – Coke Versus Pepsi 2001

...drinks segment. In the last five years there was a 62 percentage growth in this segment, while soft-drink-volume growth had been sluggish. Nevertheless Pepsi is in the soft-drink sector behind Coca Cola but both companies signaled an aggressive new round of competition and invested a lot of money in marketing campaigns Now the question arises how the two companies differ financially. The paper answers this main question with presenting a variety of analytical ratios computed from the financial statements of each firm. Another discussing point here is the economic profit analysis, which you can help you to estimate the value created or destroyed by comparing firm´s cash operating profits or net operating profits after tax (NOPAT). In this case the EVA (economic value added) is used. With all the exhibits and estimated ratios, you can have a good financial comparisons of both firms....

Words: 464 - Pages: 2

Premium Essay

Hermes Fund Case

...enviable role in corporate governance since the primary responsibility lies in side the board room, with the top management not with people and system imposed from outside. Looking at Board of Directors and investors, investors are seen as “sources of finance” or “partners in the enterprise”. This means that shareholders are seen as faceless, financial resource whose trust may be limited and need for checks and balances real? Or are they part of the business? Companies do take advice and guidance from their institutional shareholder in domestic and foreign business growth decisions (Stuffman 2008). This takes us to Hermes Fund Management, an institutional investment Corporation, which plays a strategic role in the activities of Total and Premier Oil. Total and Premier Oil has sought assistance from Hermes in managing business concern in Burma. This case study will show how trusted are Directors bearing in mind the interest or the shareholders. Shareholders are in turn given consideration and the respect for their membership in merit. Institutional Investors and Corporate Social Responsibility: As earlier stated, institutional investors are organizations which pool large sums of money and invest in securities, real properties and other investment assets. Typical investors include banks, insurance companies, retirement or pension funds, investment advisors and mutual funds. They play a prominent role in the economy by acting as “highly specialized investors on behalf......

Words: 3059 - Pages: 13

Premium Essay

Lvmh

...Case Study LVMH: Managing A Multi-brand Conglomerate Team 5: Ilario Fulvio Giannetti Chen Peng Priyesh Salunke Harjeev Sabherwal Inna Zinina What does globalization mean to the luxury industry? Opportunities • Market expansion • Low-cost raw materials, equipment and labor available in the local market • To achieve economies of scale and scope • Increased margins due to pricing policy • New consumer groups available in the local market • Extension of the definition of luxury • To adapt local and new trends for the local market • To source talent globally • Transfer of skills and strengths Threats • Counterfeiting • “Grey” market • Vulnerable to PEST-EL Factors • Successive decrease in brand value • Increased competition • Creation of new competition by sharing know how Conclusion Although there are significant number of threats to the luxury industry, globalization is unavoidable for continuous growth. Assessment of LVMH’s diversification LVMH diversification 25% 8% 5% 4% 18% 60% 35% 38% 18% -2% Sales Operating profit Wines&Spirits Perfumes&Cosmetics Selective Retailing Fashion&Leather Goods Watches&Jewelry Assessment of LVMH’s diversification Strengths • Share operational resources and competencies' across brands and divisions • Maintaining exclusivity by multiple brands under one division • Strong Balance Sheets help to absorb losses from unprofitable divisions and maintain position • Selective retailing complements other......

Words: 1313 - Pages: 6

Free Essay

Louis Vuitton- a Case Study

...3/14/2013 JITESH ANAND 10IB-033 CASE STUDY: LOUIS VUITTON IN INDIA Louis Vuitton in India | Jitesh Anand 1. INTRODUCTION: Luxury Brands in India If it was few decades ago, there was a very limited scenario one could see with respect to the luxury market in India. Those days luxury market was associated with the rich class and with very few upper-middle class people. However, with the involvement of number of international luxury brands in the country, the shape of the luxury market in India has undergone a dramatic transformation. When it comes to the word luxury it is mostly misunderstood with the meaning beyond the reach of common man. With every year passing by, the so called beyond the reach of common man is proving to be a false fact. Luxury products are becoming the necessities not only for the rich class or upper middle class but also for the middle class people. Luxury market in India is build up on basic four elements which are quality, value for money, customer satisfaction and the most important creativity. In order to be successful in Indian market luxury brands should be able to sustain and fulfill these criteria on a long term basis. The Indian luxury market is growing at a rate of 25% which simply implies the consumption of luxury products has been increasing at a fast pace. India is becoming the new destination for luxury brands across the globe and Indian government opening Foreign Direct Investment (FDI) in retail has resulted in many......

Words: 3072 - Pages: 13

Premium Essay

Case Study

...上海对外经贸大学 2014 — 2015 学年第 1 学期 《财务管理案例分析》课程期末考试A卷 选课序号: 612.043.201 任课教师: 唐旭君 姓 名: 学 号: 考试形式: □闭卷 ■开卷 双语教学: □是 ■否 修读方式: ■必修 □选修 □辅修 试卷页数 共 18 页 考试时间: 年级专业: 需计算器: 机考座位: 90 分钟 ■是 □否 号机 Case material: PRADA: TO IPO OR NOT TO IPO: THAT IS THE QUESTION, AGAIN It was January 25, 2011 and Guido Santini of the investment bank Grupo Capo Milano had just been asked to prepare a recommendation on how Prada should raise the money for its planned expansion in Asia and to pay the significant portion of its long-term debt that was maturing within one year. Although he had known this request would be coming at some point, he had expected a bit more time. His recommendation had to be presented to the Prada Board of Directors at their annual general meeting scheduled in two days, on January 27. THE MISSION The board requested that Santini prepare a report recommending and ranking alternatives for raising over 1 billion euros within the next six to 12 months. With more than €1 billion of debt maturing within 12 months (almost half in the next six months), Prada needed to have a credible plan in place to meet these obligations. In addition to the capital to refinance its existing debt, Prada had identified Asia as an area for future growth, and this growth also required capital. Asia was currently experiencing significantly higher growth than other parts of the world, and Prada wanted to be able to take part in and benefit from this. Consequently, Santini’s job was to recommend to the board how...

Words: 5922 - Pages: 24

Premium Essay

Louis Vuitton Case Study

...hopefully become customers for life. These consumers are exactly who LV was targeting with their expansion plans. Louis Vuitton decided to target these consumers directly by moving their stores out of the safety of luxury hotels and into luxury malls. Luxury malls were new to India and LV desired to be involved in their design so as to avoid any “cheapening” of the malls by adding tenants that didn’t fit the luxury brand status. LV traditionally enjoyed the retail ambiance of the luxury retail cluster. However, as noted earlier, if a luxury retail cluster wasn’t feasible, the luxury mall was the next best option. LV had the advantage of more than one luxury brand under the LVMH umbrella with different product offerings including Fendi, TAG Heuer, Christian Dior, Givenchy, etc. These offering allowed LVMH to place multiple products into the malls so they could enjoy the “spillover” from browsing shoppers. Luxury brands struggle to gain footing in India even today due to a poor retail infrastructure and high import duty taxes.[i] The HNW Indian consumer likes to spend money and buy expensive items but also is price conscious. This means he won’t buy the same item in India if he can get it cheaper outside of the country. Also, the buying experience is apparently much better in foreign countries between the selection and customer service. There has been an effort by some luxury retailers to clear those obstacles by adding more of a local flavor in their offerings and......

Words: 2043 - Pages: 9

Premium Essay

Case Study: Place Your Bets: Netflix Versus the Field in Dvd Rentals

...Case Study: Place Your Bets: Netflix Versus the Field in DVD Rentals Answer to the Application Question no.1 : Netflix Core Competency:      Providing monthly subscription facilities. Providing a choice to make an order list. Not charging any late fees and customers can keep the products as long as they need. Providing the products to the customers’s hand as early as possible to make sure of cost. effectiveness and time efficiency. Providing “Watch instantly” feature to its eligible customers. Netflix strategic Asset:       Is highly experienced business since it launched 1997. Has a collection of 100 000 DVDs. Has a features of personalized video recommendation system based on ratings and reviews. Introduced Set-Top box with the help of Roku Inc. Plan to sell LG brand DVD players for downloading and watching movies on TV through Netflix. Has a brand name and a popular business model that was followed by Walmart and Blockbuster. Some Strategies of Netflix’s business model that hard to imitate:  Netflix follows “Cost Leadership Strategy” as it has not charged any addition cost of watching movies instantly for their subscribes.  Netflix is also using “Differentiation Strategy” as it has introduced Set Top box and DVD players.  Netflix has built a partnership network to Roku Inc. and LG. Those things are really hard to imitate by the competitors of Netflix. Answer to the Application Question no: 2 Some advisable things......

Words: 343 - Pages: 2

Premium Essay

Lvmh Case Study

...LVMH’s “spree of acquisitions” to expand product lines provides evidence to its pursuit of diversification as part of its corporate strategy. The pooling of resources across the production and support functions of LVMH’s businesses has allowed it to gain economies of scope (EOS) by achieving Operational Relatedness synergies. A case in point would be the leverage of R&D synergies in the Fragrances and Cosmetics (F&C) division, a business unit (BU) that requires large amounts of investment. By integrating R&D across brands, the R&D expenditure can be spread across the huge collection of products to achieve economies of scale. Similarly, in the Fashion and Leather Goods (F&L) division, Kenzo’s efficient production facility evolved to become the logistics platform for several of its other brands like Givenchy and Christian Lacroix. These examples showed how cost savings could be achieved by sharing resources and capabilities across brands and businesses. Besides cost savings, LVMH attains market power by being actively involved in vertical integration, specifically backward vertical integration to procure and produce high quality raw materials and products respectively. Examples include the acquisition of vast amounts of high quality land in California and Australia to focus on producing high margins Wines and Spirits (W&S) in-house, and the integration of purchasing functions across brands. LVMH’s efforts in forward vertical integration are evident in the......

Words: 353 - Pages: 2

Premium Essay

Luxury Wars-Lvmh vs. Hermes” Case Study

...Luxury Wars-LVMH vs. Hermes” case study 1. Hermès International was a family-owned business for many years. Why did it then list its shares on a public market? What risks and rewards come from a public listing? It listed its shares on a public market in order to support the long term development of the company as a larger number of potential buyers will be able to invest and help the company grow. It also makes shares easier to trade by the shareholders. There are several risks which come from public listing such as; the need for added disclosure for investors. Public companies are regulated by the Securities Exchange Act of 1934 in regard to periodic financial reporting, which may be difficult for newer public companies. They must also meet other rules and regulations that are monitored by the Securities and Exchange Commission (SEC). Public companies also are faced with the added pressure of the market which may cause them to focus more on short-term results rather than long-term growth. The actions of the company's management also become increasingly scrutinized as investors constantly look for rising profits. This may lead management to perform somewhat questionable practices in order to boost earnings. There are also many advantages for a company going public. The financial benefit in the form of raising capital is the most distinct advantage, this capital can be used by the company to fund research and development alongside capital expenditure.......

Words: 436 - Pages: 2

Premium Essay

Lvmh

...power or those looking to boost brand power. Key words: luxury brand, brand management, Louis Vuitton. 1. Introduction Consumers like brand items, while researchers like brand theory. Although scholars also use the word “brand” to refer to the likes of Coca-Cola and McDonald’s, there is a vast gulf between these brands and the luxury brands we e xplored i n t he p revious b ook. I n researchers’ brand m anagement theories, one r arely fi nds m ention o f representative luxury brands like Louis Vuitton or Dior, or of LVMH. Based on this awareness, we carefully scrutinized the ecology of the unique LVMH firm, considering the nature of the brand as distinct from commodity markets, although small in scale [1]. This time let us focus on the grand champion of the LVMH empire: the Louis Vuitton brand. By systematically breaking down the strategy of the single Louis Vuitton luxury brand into the four Ps (Product, Price, Place, and Promotion), our aim of this study is to extract the rules or principles of its brand marketing that differ from that of general consumer goods. In other words, the object is to distill the rules and principles of success strategies for luxury brands as well as to derive a business model for success. Showing that the current rise of Louis Vuitton is not a co incidence bu t rath er something achiev ed throug h strategy will su rely b e of in terest to firm s struggling with lack of brand power or those looking to boost brand power [2]. 2. Set of......

Words: 6576 - Pages: 27

Free Essay

Hermes Fund Case

...Hermes Fund Management It would be ludicrous to say that institutional investors have no say in the chain of corporate governance, even at the level of strategy. Institutional investors like mutual funds act in the interest of many smaller investors who are seeking low-risk investment. They have the right to influence strategy and to threaten to take their business elsewhere if they are not satisfied, and they usually hold a substantial interest in companies like Hermes. However, institutional investors are beholden to all of their investors in turn, and those people have a range of expectations both in terms of ethics and their investment goals. It is true that the people that the institutional investors represent in turn authorized them to make decisions with their money, but the general rule should be that institutional investors should avoid trying to change a company’s policies or strategies too much, lest they kill the goose that laid the golden egg. That having been said, institutional investors are an important short-circuit on companies, because institutional investors often have longer-term aspirations and thus will stop short-term profit grabs. However, Hermes’ stance justifies interference in Total’s operations in a few ways. First, note that Total’s decision, no matter what it ultimately decides, would not be illegal. Since it would violate no laws by attempting to exert influence over Total, Hermes simply has to decide if it would be best for its own......

Words: 317 - Pages: 2

One Piece 381 | Собибор (2018) HDRip от Scarabey | Лицензия | 6 Below: Miracle On The Mountain FRENCH DVDRIP 2018