LV SWOT Analysis

 3.2 SWOT Analysis

 

There are four strategies element that applicable to the LV brand that have been known as SWOT analysis. This analysis are match the internal strengths of LV to attractive opportunities in the market, while overcoming weaknesses and minimizing threats (Keller, 2012). The following is SWOT analysis of LV.

 

3.2.1 Strengths

 

In this context, LV has strong brand heritage (Lois Vuitton, 2010). This is why LV can be popular for decades, because LV is very concerned about the heritage of its product so that LV able to attract the attention of customers. According to Keller (2009), customers appreciate luxury brands that have history and heritage. The reason is because, history and heritage lead to credibility, authenticity and legitimacy in the eyes of consumers. LV which is a product of the French country is the oldest luxury brand with the longest heritage in fashion history. Therefore, the privilege that has been established at the end of the 19^th century makes LV favored until this century because at the time of its creation that demanded a social class framework characterized by society and nobility. It is proven that the LV brand still maintains its unique identity, true heritage and expertise that all of it are presented as keystones to the brand’s long-term success ( Som & Blanckaert, 2012).

 

3.2.2 Weakness

 

Despite being the best luxury brand in the world market, there is no denying that LV also has weaknesses that should be considered from the external and internal aspects. This is because knowing the weaknesses in company is important so that problems can be contained immediately.The most weaknesses of LV brands is LV facing with fake imitations issue. According to Eisend & Schucher (2006), counterfeiting has become an economic problem of international importance and has led to a variety of counter measures based on legal, political, administrative or business techniques. In this case, it can affect LV sales and destructive brand reputation of LV. The reason of the making and selling fake brand is illegal because it violates trademark and copyright law. Counterfeit luxury brands can breach copyrights and trademarks, raise benefits for organized crimes, and lower the profits of brands and governments (OECD, 2019). If this phenomenon expand widely, LV will facing a big problem because it has to compete with third parties.

Furthermore, the counterfeit selling are cheaper compared to the original price. Obviously, that will make LV’s reputation affected due to the prevalence of fake LV brand. However, LV actively fighting this issue by using a team of lawyers and special investigative services to detect attempts to sell or produce LV brands. According to Matlack et al (2004), the introduction of new product line and adaptation of the LV’s classic monogram in 1999 was a successful attempt to stop counterfeit LV brands.

 

3.2.3 Opportunity

 

LV is indeed a global brand which is one of the most valuable brands in the world. So it is a great opportunity fo LV to expand its operations in around the world. It really helps LV to increasing sales and shifting defence from saturated developed nations to developing countries. LV which is already well known makes it a bonus in identifying target and market segment.  For example, LV relevance using product strategy is very simple. This because LV believes in offering contemporary designs that made from the finest materials that will depict high quality. The biggest opportunity of LV are aiming for the market in Asia especially China ( Danziger, 2019).

 

3.2.4 Threat

 

The success of a brand indeed creates a huge opportunity that can be applied. However, the possibility of things happening that can have adverse effects to the business. Threats are those factors that can be detrimental to the growth of the business. One of the threats that LV had to face is global recession or financial crisis. This threats have impacted all industries including the luxury industry which is LV is one of them. In 2020, the biggest threat is that surprising us is the presence of COVID-19 pandemic that spreads around the world. In fact, all the activities was paused by the explosion of the COVID-19 ( Qingyi Shen, 2022). According to income statement of LVMH started  in 2019 to 2021, we can find that the firm’s revenue in 2020 is more lower than in 2019 and 2021. In 2019, LV net profit is 7,782 but LV only get 4,955 in the year of 2020 which is lower than 2019’s profit. However, LV managed to gain as 12, 698 net profit in 2021 which is higher that the last two years ( LVMH, 2021). To analyze this income statement of LV, it is proven that the global crisis are able to influence the luxury brand industry. To explain this, the pandemic that hit has blocked economic growth globally. So it it not surprising that LV is also impacted by the decrease in profit. However, LV managed to stable their profit back after the world successfully fought the pandemic.