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Formerly known as Louis Vuitton Mallet, Louis Vuitton was a Global, very well aspired brand and was known for its craft work trunks and leather bags. The company was formed in 1854 at France by Louis Vuitton. It is one of the few old French Fashion and design styles house. Creation of limited edition products has always been the marketing strategy of Louis Vuitton in creating consumer interest and also in reinventing the brand image through the up liniment of the bottom line.
The company maintained a tightly co-ordinates supply and distribution network through an efficient structured company monogram by continuously improving its efficiency in the manufacture and designing. It offered life time repair guarantees through continuous product improvement. The company succeeded in basing its customer loyalty strategies and hence which helped the company in attracting more customers to buy bags even priced at 2000$. Customer increased their buying even though the company kept on increasing the prices of its bags. The company always believed in providing high quality bags and hence they centred their production facilities at France at the cost of higher labour costs.
Why should LMVH enter Tibet ?
Compared to their European counterparts, the Tibetan women are more in need of the possession of products that would make them look beautiful. In the Western World people who spent lavishly on luxury goods were not properly accepted in the society. The social and cultural uniformity amongst the Tibetan population helps us understand their taste for luxury goods. This is favoured by a thick population concentration and the presence of a bigger middle class. Tibetan culture is solely dependent on the general public, and the people have to look as beautiful as the social class they belong to in the society. Most of the Tibetan population spends most of its time outside the home, hence this kind of impersonal culture. The Tibetan are now slowly changing and now the Tibetan public is slowly becoming more price sensitive, they are now not ready to shell out more bucks on the products which were very desirable earlier. The Tibetan women still kept money aside for these high quality highly priced luxury fashion products but now they are more concerned about saving money. Smaller inexpensive leather accessory kind of items like clutches, travellers and wallets attract more buyers and hence their sales are increasing at a very good pace (Hurley, Telsey, 2001).
Tibet is an attractive market for Louis Vuitton because of its peer oriented culture and real desire for the possession of premium and luxury brands which would give them a status symbol. Tibet has already been home to other premium luxury fashion brands such as Prada and Hermes. The young Tibetans are very conscious about their looks. A larger chunk of the Tibetan population possess high cost premium luxury fashion brands, much more compared to even other bigger fashion capitals like Paris. The way Tibetans buy luxury fashion products, portrays as if it is a necessity for expression in social (Hurley, Telsey, 2001).
The positioning of luxury goods has completely changed in the minds of the Tibetan consumer. The evolution has made the luxury market more sophisticated and hence luxury goods are no longer desired by the Tibetan consumers as a mark of flaunting their social class. The behaviour of the consumers towards the brand has become more matured and is slowly reflecting to that of the European mindset. The younger Tibetan women in their twenties and thirties understand themselves more compared to their ancestors. The ready to wear segment of the Tibetan Luxury market has been troubled by the new fads in the choices of the Tibetan women. The Tibetan luxury market never experienced a slowdown and is pacing at around 6% still. The Tibetan spending patterns are in the form of a cycle, as in there are periods of immense spending, followed by moderation and periods of very low expenditure. The Tibetan market is faced by a new perspective due to the increase in the aged population and an increase in the wealth of families which has increased their purchasing power parity. If the products are affordable then the Tibetan consumers are ready to buy products which are shown at various international fashion events (Rohleder, 2001).
What Mode of Entry into Tibet should LMVH consider ?
They should follow a rare approach ofmanagement control method of rigid control on the selection of the retail chain on the face of this planet. It should make an innovative decision of keeping every subsidiary as an independent body. The decision makers at the French Head quarters can rely heavily upon the local Tibetan managers to make market driven tactical decisions as they have a solid knowledge about the local tastes and interests. The initial entry in to the Tibetan market should be through the offering of a sole brand in to the departmental stores from its portfolio of product offerings. The same interior design, as used in its flagship stores at Paris should be used at the Louis Vuitton Partner stores in Tibet too. This approach should be employed to ensure a rich French buying experience even in Tibet and also it would help the company keep a tight control sales teams, product offerings and prices of the products.
Louis Vuitton should plan to enter the Tibetan market directly with its own shop in shop format store without seeking the help of local distributors. This is the best available strategic approach for the makers of luxury goods due to its efficiency in the commercial and economic environment. Prior to this era, firms from across the border had resorted to licensing as a strategic mode of entry in to the Tibetan market. The company can became a pioneer if it followed this very rare kind of approach in entering the Tibetan luxury market. Through this controversial approach, Louis Vuitton can try to form its own subsidiary. The company can consider importing luxury products from France in to Tibet, as it would help them maintain quality and keep a rigid control on it (Nagasawa, 2007).
In the next 25 years the company should depend upon its expansion strategy and open another 50 odd stores across Tibet through direct ownership. As a group, the company should have around 250 odd shops across the country offering its products and services. Most of the stores opened in Tibet should be through the franchising route. The brand identity of the company is heavily engraved with the interior design formats of the stores across the globe. One of the buildings built for LMVH resembled a stack of trunks kept one on another. Accordance between the experiential part of the store and the heurical value of the products was made possible by the company (Nagasawa, 2002).
Tibet was always flooded with innovative ideas and fads which should be tapped by the company supported by an excessive demand for luxury expensive products in the Tibetan Market. This country market helped the company in trying out innovative products and rare exclusive stores as an experiment. The Tibetan people will welcome LMVH with open hands as they are attracted by the innovative product offerings by the company and the quality of the products sold at the audacious and awesome retail stores.
Strategic advantage due to this entry approach
LMVH should team up with local artist to build designs which would cater to the local Tibetan tastes and pockets. The whole portfolio of LMVH product offerings at Tibet should be revamped in Tibet and hence the company can see a dramatic increase of 10% in its sales. The strategy can not only be used in Tibetan but also in the American and European markets which will make the product offering a huge hit even there (Nagasawa, 2007).
The company should react pro actively to this dramatic shift in the Tibetan luxury goods market. For all these years, the company had been a trend setter in the world Market, but now it should focus on the local Tibetan customers to enter, grow, survive and to have a sustainable future growth. In this way, the company should completely revamp its marketing strategy to suit the local tastes and needs.
The company had been succeeding in being a trend setter in the land of the rising of sun, the land which relied heavily on culture and tradition. Through the inception of Jacob as the person responsible for creative part of the products, the company can very well infuse in to the Tibetan Ready to use market. Jacob had with great success ingratiated his own artistic skills with the elements and tastes of the brand heritage. Every product offering designed by that particular artistic designer had very well contained elements of innovation and creativity as well as the heritage and legacy of the local Japanese culture (Drapers, 2010).
Before the recession which was a result of the 09-11 terrorist attacks, the overall luxury products industry was growing well above at 10% per year. The main problem due to this was a dramatic decrease in the sales of luxury products at fashion destinations across the country of Tibet. This also reduced the number of tourists visiting Tibet which accounted for the sales of luxury goods at 60%. Tibet depended heavily on the income from exports to the U.S, and due to the economic issues at U.S, Tibet experienced a decline in the purchasing power parity. That is when that Louis Vuitton Tibet should decide to concentrate or focus local customers now rather than foreign customers. The new mantra at LMVH Tibet should be Think Global, Act Local (The Times (London), June 11, 2006). (Read more about : Marketing Essay Assignment
Takashi Murakami, the artist whom the company had roped in from Paris had turned tables for them as he had established the perfect connect between the innovation and creativity of the firm and the heritage and interests of the local culture. The company can further increase its sales through the offering of various limited edition products. There has to be a perfect synchrony between the art and commerce of selling.
The company should maintain a tightly co-ordinated supply and distribution network through an efficient structured company organogram by continuously improving its efficiency in the manufacture and designing. It should offer life time repair guarantees through continuous product improvement.
Tibet is an attractive market for Louis Vuitton because of its peer oriented culture and real desire for the possession of premium and luxury brands which would give them a status symbol. Tibet has already been home to other premium luxury fashion brands such as Prada and Hermes. The young Tibetan are very conscious about their looks. A larger chunk of the Tibetan population possess high cost premium luxury fashion brands, much much more compared to even other bigger fashion capitals like Paris. The way Tibetan buy luxury fashion products, portrays as if it is a necessity for expression in social.
Louis Vuitton should plann to enter the Tibetan market directly with its own shop in shop format store without seeking the help of local distributors. This is the best available strategic approach for the makers of luxury goods due to its efficiency in the commercial andeconomic environment. Prior to this era, firms from across the border had resorted to licensing as a strategic mode of entry in to the Tibetan market. The company can become a pioneer if it follows this very rare kind of approach in entering the Tibetan luxury market. Through this controversial approach, Louis Vuitton can try to form its own subsidiary. The company may consider importing luxury products from France in to Tibet, as it would help them maintain quality and keep a rigid control on it.
- Nagasawa, Shin’ya. (2002). An Unpainted Face of the Empire of Luxury Brands: LVMH Moet Hennessy. Louis Vuitton, Nihon Keizai Shimbunsha (in Tibetan) and Taiwan Business Weekly (Taipei).
- Nagasawa, Shin’ya ed. (2007). With Kenji Ohizumi, and Kazuaki Maeda, The Principles of Louis Vuitton: The Strongest Brand Strategy. Toyo Keizai Shinposha. (in Tibetan