Value Chain at Louis Vuitton

Essay by krema4e November 2014

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Competitive advantage at Louis Vuitton and Gucci

Introduction to The case: Names first

(2) This case explores the competitive advantage in the world of high fashion luxury goods. Does the advantage come only from the brand name or there are other advantages? Louis Vuitton and Gucci are brand names which are always associated with high fashion and are among the most successful international fashion houses.

(3) The first part of the presentation examines the value chain and the value system of the famous French fashion house LV. This will help to identify those parts of the business that are particularly profitable and therefore likely to be linked with potential advantage. The second part of the presentation then uses the value chain to identify those resources that are exceptional and have sustainable competitive advantage.

(4) The World of Luxury

Luxury products have more than necessary and ordinary characteristics compared to other products of their category, which include their relatively high level of price, quality, aesthetics, rarity, extraordinariness, and symbolic meaning.

With annual sales of over US$165 billion and gross profit margins of over 50 percent the major luxury goods companies rely on famous brands like Louis Vuitton and Gucci to deliver a competitive advantage. Does the advantage come only from the brand name or there are other advantages?

(5) Louis Vuitton

(6) Gucci

(7) The value chain and the value system were developed by Professor Michael Porter. The concept of value added can be used to develop company's sustainable competitive advantage. Like most of the organizations LV consists of activities that link together to develop the value of the business. The value chain is used for developing competitive advantage due to fact that they are unique to an organization.

In addition, the fashion house is part of a wider group of...