Louis Vuitton: New Product Introduction Vs Product Availability Case Solution
Bargaining Power of Buyers
The targeted customers of the company due to the luxury nature of the product are wealthy individuals that are not at all sensitive to the price.Moreover, it can be seen that the different companies in this industry have launched their different products which is also going in favor of the current company. Thus, from the strong loyalty of the customers with this company as compared to its competitors,it has been revealed that the bargaining power of buyers is low.
Threat of Substitute
The company is dealing in the luxury and fashion related products, which have a variety of substitutes and the demand of these is various depending on the different lifestyles and tastes of the customers. The small producers with the help of cheap raw material could produce that product which would create problems. However, the brand and the quality of the current company as perceived by its customers, have took this threat to a medium level.
Threat of New Entrants
Â The luxury as well as the fashion industry is targeted mostly to the wealthy individuals, which shows that huge capital would be required to enter this industry. Moreover, the already present giant companies have gained significant experience,which is very helpful in generating high profits with the help of the economies of scale. Moreover, it can be seen that the industry requires specialized knowledge for the product which is not easily met by the new entrants. The overall situation concludes the fact the threat of entry in this business is very low.
With the help of the analysis of the different forces as laid down by Porter, it can be concluded that the company is not affected with these different forces except the force of competition which could significantly affect the profitability of the company. Since the company has strong and loyal customers, the company should strongly focus on its optimum inventory strategy as well as it should focus on the labor force in order to timely meet the demands of its customers which can reduce this force as well.
What are the key strengths, weaknesses, opportunities as well as the threats of the company and what recommendations could be drawn from this analysis?
The first and the foremost major strength of the company lies in its strong brand image in the eyes of its customers better than its competitors present in the market and this is due to the provision of premium quality products. The companyâ€™s focus on the diversification as well as the innovation is another major strength of the company with which it would easily increasing revenues. The efficient use of marketing and distribution through various channels including the online stores is also yielding favorable results. Lastly, the companyâ€™s adoption of decentralization strategy is also adding towards the strength of the company.
The significant weakness of the company is related to the entire dependence on its Louis Vuitton brand which could create issues. Moreover, it can be seen from the problem statement that the company is unable to meet the demands of its customers because of improper inventory holdings which could is creating reputational issues for the company. It can be seen that the sales of the other brands of the company are very low due to different reasons.The last factor is the adoption of the strategy adopted by other competitors in the industry……………….
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