Case study Example | Topics and Well Written Essays - 750 words - 1

Case Study Example LVMH constitutes of 60 subsidiaries each controlling several prestigious market brands. The company is interested in five-service and product area that include leather and fashion products, jewelry and watches, cosmetics and perfumes, alcohol (spirits and wines), and selective retailing. The subsidiaries have independent management though the overall management influences operations. LVMH’s corporate strategy is defined as strategic merge of independent companies that produce different or slightly different products. The companies may be thriving in the same market region or different market region (Wendlandt & Denis 3). LVMH creation of value LVMH seeks to create value in different ways especially by providing new value, adding value to the existing brands and providing quality value. Since the company emerged, it has continually sought to create new value by searching for companies with high performance potential and signing them into the merger business. The company dynamic ally gains recognition and market ground that allow it to create new value by seeking and purchasing new brands (Hannaford 95). The cost of producing each commodity reduces by merging different production and marketing entities. Negotiating for reduced advertisement charges, raw material costs, distribution cost and other similar operation becomes easier. As a result, the quantity of specific items can increase to lure the customers. Another measure that LVMH strives to attain is setting standards that improve their brand items. This ensures improved commodity quality. Apart from the above strategies, LVMH organizes exhibitions to show case their products. Additionally, it participates in community activities to improve its image. The â€Å"LVMH Young Artistic Award† is an annual price for creativity competition for students sponsored by LVMH (Wendlandt & Denis 3). LVMH partakes in direct activities to ensure increased value by improving quality of products. These activities include formulation of vision, training, boosting technical skills to improve service, consolidating resources and interviewing new recruits. The newly employed recruits are initiated into their job environment immediately to evaluate their productivity. They later enroll in a training program to further their skill (Wendlandt & Denis 3) LVMH capacities that distinguish it from its competitors Several advantages place LVMH above its competitors. The synergies associated with its subsidiaries’ financial portfolios provide a strong financial backing. The organization can determine the benefits of each subsidiary and sponsor them accordingly (Hoskinsson, Hitt and Ireland 95). LVMH is strategically diverse especially in the market enabling the company to target and serve customers with different lifestyles. Each subsidiary provides a venture that targets different consumers. It caters for alcohol lovers as well as fashion-oriented people who do not drink. Diversification strength ens efficiency, parenting measures and increases market influence. Efficiency improves because each business benefits from links with the mother corporation. The corporation also gains from the relationship. Each separate business has numerous partnership options for coordination during distribution, research, logistics and purchasing (Thompson 145). In the event that a business encounters challenges that are difficult to address, the mother corpor