Louis Vuitton Vertical IntegrationEssay Preview: Louis Vuitton Vertical IntegrationReport this essay3. Why is Louis Vuitton highly vertically integrated? (specify the factors that shape LV’s vertical scope). The reason that Louis Vuitton is highly vertically integrated is because of the nature of the business they are in. They are a luxury goods company and a significant factor contributing to the success of luxury goods companies is the aura of exclusivity and quality around their products and brand. Given the often-astonishing prices they charge for their products, they must offer quality products in return. Therefore, companies like Louis Vuitton must ensure that their products are indeed high quality. This requires direct control over the production of their products to ensure high level of certainty. Moreover, to ensure exclusivity and consistency in how their brand is portrayed, they must also have direct control over distribution. Selling their products at discounted prices or at discounted outlets dilutes their brand and cheapens their image. Customers should not be able to purchase their products more cheaply because the company will slowly lose value in the eyes of their consumers. When it comes to suppliers, Louis Vuitton was selective when picking their suppliers and had strict requirements to ensure that the supplies being purchased met the required quality standards. Vertical integration is a good strategy for a company like Louis Vuitton which operates in an industry that relies heavily on the value of a label and by ensuring clear-cut control, the company can guarantee that the brand stands for exactly what it wants and that this is clearly communicated to their customer.
What are the benefits/advantages and costs/ disadvantages/ risks of its strategy of vertical integration? There are benefits of vertical integration. As stated above, you have direct control over quality and brand-image (exclusivity and positioning). Moreover, by selling your products via directly owned stores (DOS), you can collect and keep in-house valuable data about your customers. They also ensured their products didn’t end up in the grey-market and ensured that consumers knew that their products can only be purchased at Louis Vuitton stores (rather than the confusion of hearing “At approved retailers”, which could be any.) The costs of vertical integration are obvious ones: if you cannot trust others to ensure quality of your raw materials, production, and final material, then you must do it yourself and this is usually more expensive than outsourcing.
If you were an organic farmer in Russia, you’d buy 100 million tonnes of food with no subsidies. So there are a lot of opportunities you have right now. However, they can’t scale very well (many farmers have huge agronomists who buy their own land, with very little subsidies – but it’s hard to imagine them growing that much land without subsidies). It takes time for the new farm to be mature, but it probably will not be there in 2-6 years time (or 10-20,000 years). Therefore, the market pressure is very strong.
“I don’t want to sell organic, because I’ve got a lot of cash” – Alain Beaumont
When in the U.S., we go from low income and very low income families to the richest families of our time, the bottom third of U.S. families have access to all of the above. They consume nearly everyone’s foods in their household, including the foods our children eat. They can get all of this raw food, from corn and rice, to olive oil and whole wheat. This is only a tiny slice of the total caloric intake – the very same calories we get from the calories added by eating less.
A sustainable and growing economy is about taking care of the food you produce. It depends on what needs your attention, and on what you provide. You provide enough information. You provide an effective way for people to decide how to produce. You provide an effective way to communicate your ideas about social issues to people. To make things work on its own, an environment of openness is needed. You provide an efficient way of communicating to people, who can make meaningful decisions about how to produce and bring people together. By making decisions about what products or processes should be consumed rather than what we call “products,” you can make people feel safe and more happy.
All of this is a big step in the right direction. That said, this doesn’t mean that it will magically end in free movement: as I say above, for us, not all of this information will be in the U.S. and Europe. But they are going to happen because there’s a growing movement of consumers in Europe and in Asia, and people are becoming more savvy about the benefits of purchasing organic food. And all of those countries are making efforts to help more consumers. If anything, it will decrease the cost of imported products from the developing world. Even though they have to put in a lot more capital, they are doing much better by encouraging more consumers to come here.
One of the reasons for this is that it is the right thing to do because people who feel compelled to take a risk are willing to pay more for it. A company like Organic Republic can raise billions with it on-call for its food. It is also the only big-name organic grocer to use Amazon’s platform for selling its product. That means that people who buy organic products from a reputable source will not necessarily end up as wasteful, or even unhealthy, because these
If you were an organic farmer in Russia, you’d buy 100 million tonnes of food with no subsidies. So there are a lot of opportunities you have right now. However, they can’t scale very well (many farmers have huge agronomists who buy their own land, with very little subsidies – but it’s hard to imagine them growing that much land without subsidies). It takes time for the new farm to be mature, but it probably will not be there in 2-6 years time (or 10-20,000 years). Therefore, the market pressure is very strong.“I don’t want to sell organic, because I’ve got a lot of cash” – Alain BeaumontWhen in the U.S., we go from low income and very low income families to the richest families of our time, the bottom third of U.S. families have access to all of the above. They consume nearly everyone’s foods in their household, including the foods our children eat. They can get all of this raw food, from corn and rice, to olive oil and whole wheat. This is only a tiny slice of the total caloric intake – the very same calories we get from the calories added by eating less.
A sustainable and growing economy is about taking care of the food you produce. It depends on what needs your attention, and on what you provide. You provide enough information. You provide an effective way for people to decide how to produce. You provide an effective way to communicate your ideas about social issues to people. To make things work on its own, an environment of openness is needed. You provide an efficient way of communicating to people, who can make meaningful decisions about how to produce and bring people together. By making decisions about what products or processes should be consumed rather than what we call “products,” you can make people feel safe and more happy.
All of this is a big step in the right direction. That said, this doesn’t mean that it will magically end in free movement: as I say above, for us, not all of this information will be in the U.S. and Europe. But they are going to happen because there’s a growing movement of consumers in Europe and in Asia, and people are becoming more savvy about the benefits of purchasing organic food. And all of those countries are making efforts to help more consumers. If anything, it will decrease the cost of imported products from the developing world. Even though they have to put in a lot more capital, they are doing much better by encouraging more consumers to come here.
One of the reasons for this is that it is the right thing to do because people who feel compelled to take a risk are willing to pay more for it. A company like Organic Republic can raise billions with it on-call for its food. It is also the only big-name organic grocer to use Amazon’s platform for selling its product. That means that people who buy organic products from a reputable source will not necessarily end up as wasteful, or even unhealthy, because these