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Impact Of Louis Vuitton On International Business

Paper Type: Free Essay Subject: Commerce
Wordcount: 3091 words Published: 21st Apr 2017

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International Business, due to significant features of its international context, was empowered by global competition which focused on both national and world economic development. Decision was the foremost approaches to be think of in the entry and retention of the business once entrepreneurs figured to denote the business in the international scene. Hence, strategies for the future of the business were influenced by the core managerial skills of the persons in-charged in integrating the core issues in the company. Company existed due to its aim and it should be retained utilizing the specific objectives that the company bounded to assure along the way of the operations. Since there was a competition scheme in all areas of business industry worldwide, success relied to planning, coordination, control and monitoring.

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Strategies used in the company should not be limited only to the concept of local industry. To assure the success in the company, the management should also revise the strategies which only fitted to local industry but to the international scene also. Every business was challenged by conflicts either internal or external. Some of the features of the conflicts for international marketing were the cultures, norms and national policies which the chosen country where the business will be reestablished had. In this regards, the company should used parameters in generating fast entry to the international business. It should seem like passing new era that the business was starting anew. Decisions should focus on the four core areas. These areas included the marketing programs, operations, organizational and financial viability. Thus, decisions are done massively to incorporate the changes on ways to be adjusted on the new environment.

Style of management in the international business is an open-ended sequence of decisive powers. Managers should be open to development empowering the organization with new technologies, complex challenges and reflection to more precise processes. It should be ended with predefined objectives of setting new values to integrate, beliefs to reinforce and attitudes to work out. The leadership style in this should be incorporated with the principles of having a purpose, structure, relationship, rewards and other mechanisms of progress.

Specifics of financial planning is determined by the following problems: volatility in exchange rates, revaluation of currencies, particularly the national taxation, possible difficulties with the export of funds from abroad, problems with in-house transfer pricing, problems in terms of estimating performance of foreign subsidiaries, etc.

Hence to highly intensify the key understanding in the international business, this study was made to ensure that context of international business was raised for better understanding of the readers. Thus, the researcher presented the status of Louis Vuitton in the international scene.


This photo was a screenshot of one of the Louis Vuitton Channel Distributor.

Historical Background of Louis VuittonLouis Vuitton becomes a partner of Damat

Louis Vuitton was established in 1854 with massive designs of bags which introduced other forms of luggage made from canvas. The LV logo patterned with the canvass with knowledge notifying the prestige and wealth during the 19th century. The business began its career from the first designs which was similarly to flat-bottom trunks with Trianon canvas.

The business altered the designs from Trianon to beige and brown designs. This was done not to be imitated and to avoid redundant designs. The successor of Louis Vuitton continued the business after his death on 1892. In 1893, it entered the U.S market and, in 1896, the company launched its signature Monogram Canvas and secured worldwide patents for it. It has since become the classic symbol of the Louis Vuitton brand. Under new management, Georges Vuitton altered some of the company policies and heightened the operations through new designs using monogram-canvas design.

During the new millennium, Louis Vuitton celebrated its 150th founding anniversary.

Impact of Louis Vuitton on International Business

Louis Vuitton has great impact on the economic environment aspect of the country. Louis Vuitton was known to be producers of luxurious, socialite and expensive products that elite class citizens used to dreamt of having one of the items provided by the company. Most of the celebrity and public figures worldwide often denote their current status in the wealthy class through exposing their collections of Louis Vuitton products. Thus, the company claimed their popularity in the international market. It can be observed that Louis Vuitton had massive impact to the international business industry. One observable impact of Louis Vuitton is on the economic aspect, for those developed countries there is the fast approach of the economic growth of their country.

Some of the researchers viewed Louis Vuitton as a linkage to communication, access to resources, and diverse ways of thinking. Viewing it as a student, I would have to say that Louis Vuitton is two-faced. While it has provided access to employment, it has also encouraged exploitation of labor. While it has opened the door to opportunities in other countries, it has also encouraged exporting of our human resources. While it has invited international communication, it also becomes apparent that this kind of communication benefits only those who have access. I have yet to continue examining the impact of Louis Vuitton on the life of other country.


This figure shows the SWOT Analysis of Louis Vuitton in the International Market.

While Louis Vuitton offers a world of possibilities, it also opens issues that relate to social justice, particularly to those who are not advantaged by the system. Hence, people must be shed with light on this matter for further knowledge and opinion. If you think about it and look around problems of Louis Vuitton in other country, you will notice that one of the main reasons there were less possibilities of improvement is because of the weakness of laws. Just as politics is ruled by personality so too are laws, courts and regulatory bodies fall before this. There are studies after studies confirming this weakness, and it has nothing whatsoever to do with Louis Vuitton, and everything to do with political and legal culture. And still, we might think that Louis Vuitton has a dramatic acceleration in the empowerment of territorial shifts.

Structure of Louis Vuitton in International Business

Before expanding into a foreign market, careful consideration must be made regarding type of business entity with which the firm will enter that market. Each organization type has specific strengths and weaknesses that should be carefully weighed according to the business and legal climate of the country we are entering and our business strategy. 

The three types of business organizations were used by Louis Vuitton in their entry to the international scene:

Louis Vuitton utilized the joint venture to partner with other business in different countries. Most of the country prohibited the foreign company to operate to their country unless being partnered with local business in the said countries. This was one of the strategic decisions that Louis Vuitton incorporated in order to select the more capable and competent business in the country where they prefer to sell their products.

Louis Vuitton becomes a partner of Damat

This was a joint venture of Louis Vuitton and Damat from Orka Group company in Turket for the operation of the company in the Turkish Region.

A joint venture of Louis Vuitton with Damat in the Turkey would allow the business to enter that foreign market of Turkey capitalizing on the pre-existing business reputation of that Damat. In addition to deferring part of the risk involved, Louis Vuitton’s market entry allowed minimal entry costs as the Damat’s pre-existing presence can be exploited. The customer base, reputation and distribution network of Damat allowed Louis Vuitton’s rapid market penetration with a minimum of supply chain and marketing problems. Additionally, partnership of Louis Vuitton and Damat accessed to suppliers and local financing easing potential problems associated with a foreign business operating in Turkey. Thus, the two make the contracts verifying the risks and sharing of loss and profit through the generation of business concerns like profitability, ethics, and situations that could potentially lead to litigation. 

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The second pre-operation of Louis Vuitton in the international market was through channel of distribution. Typically, the distributor is responsible for carrying inventory for the market and is the local service provider for warranty claims. As far as the buyer is concerned, the distributor is the face behind our products. Seemingly in the Philippines, Michelle Trading Company was the chosen distributor of Louis Vuitton. Through the license of the Michelle Trading Company in the Philippines, the said company acquired sample products of Louis Vuitton and resold the products to the residents in the Philippines who craved to have Louis Vuitton products. The buyers would no longer travel abroad to buy the expensive product plus allocated cost of transportation but instead, the products came available through the channel distributors.

This type of relationship allows market entry with yet lower entry costs, and offers the added benefit of deferring direct costs of doing business in the foreign country to the distributor. As a result, start up costs are nearly non-existent; the distributors existing business operations are used exclusively. Because of this, this arrangement allows immediate market penetration.

The last operational transaction of the Louis Vuitton to have successful entry to the international business was through the wholly-owned subsidiary. Louis Vuitton had many subsidiaries in different countries in North America and across Asia. The manner of organization of the new business entity would be determined by the needs of Louis Vuitton and the laws and regulations of the foreign country.

As explained, a wholly-owned subsidiary presents the best option for greatest control over market entry. It also allows for greater profitability as profits will not be disbursed between business partners or consumed by a distributor. Our firm will have direct contact with customers, the distribution chain, creditors and the local industry. As a result, this presents the best opportunity for long term growth in the foreign country and will allow for easier future expansion in the region.

Each form of business structure has strengths and weaknesses which empowered the Louis Vuitton operation very visible to public and a success in their orientated operations. In deciding which structure to utilize in entering a foreign market, careful consideration should be made regarding both our firms’ strategy and the legal risks and ramifications associated with that strategy. It is imperative that competent, experienced legal counsel be consulted to examine that strategy prior to committing to any action.


An evaluation of the company’s internal strengths and weaknesses and external opportunities and threats served as the foundation for this strategic analysis and marketing plan. The plan focuses on the company’s growth strategy, suggesting ways in which it can build on existing customer relationships, and on the development of new products and/or services targeted to specific customer niches.

International Business should establish an objective to achieve cumulative growth in net profit. To accomplish its marketing objectives, International Business should develop benchmarks to measure progress. Regular reviews of these objectives will provide feedback and possible corrective actions on a timely basis. The major marketing objective is to gain a better understanding of the needs and satisfaction of current customers. Since International Business is benefiting from reorder rate, it must be satisfying its current customers. International Business could use the knowledge of its successes with current clients to market to new customers. To capitalize on its success with current clients, benchmarks should be established to learn how International Business can improve the products it now offers through knowledge of its clients’ needs and specific opportunities for new product offerings. These benchmarks should be determined through marketing research and International Business marketing information system. Another objective should be to analyze the billing cycle International Business now uses to determine if there are ways to bill accounts receivable in a more evenly distributed manner throughout the year. Alternatively, repeat customers might be willing to place orders at off-peak cycles in return for discounts or added customer services. International Business also should create new products that can utilize its current equipment, technology, and knowledge base. It should conduct simple research and analyses of similar products or product lines with an eye toward developing specialty advertising products that are software based but not necessarily calendar related.


This study is focused on gaining knowledge of reality through the study of social construction of International Business which gives us an interpretive and explorative view of the interaction and relationship among dynamic capability, continuous innovation, and entrepreneurship. For a complete view of the interrelationship of these three components, we have selected case organizations of a similar size and operating in the same industry to be able to clearly contrast their organizational capabilities and the linked innovative results.

Business innovation is facilitated by the leader’s foresights and insights of the business opportunities as well as the internal and external resources. The dynamic capabilities in the model enable entrepreneurship and foster the process of innovation. The arrows indicate that any of the three components in the model are interlinked. Through the cyclical processes of entrepreneurship, dynamic capabilities and innovation, entrepreneurs can accumulate their capabilities to further capture opportunities and generate innovation continuously. Apart from the data gathered from annual reports and published articles on the companies, interviews were also conducted with business managers of the companies.

Several interview guidelines were developed for the interview, such as what is the most critical challenge the company faces in the textile industry? How does the company decide its expansion strategy? What are the most distinctive features in company’s management of human resources, products and external resources? How does company facilitate organization learning and how does company manage knowledge? What is the relationship between company’s decision making process and leadership? How does company manage its brand and innovation? How does company capture innovation and new investment opportunities? The interview data were transcribed and consolidated with secondary data into analysis tables. Iterative verifications and finding analysis were performed until several key points were developed.

In order to accept that the role of entrepreneurship has increasingly important role in corporate innovation, it becomes critical to identify the abilities which enable entrepreneurs to facilitate innovation. Dynamic capabilities create strategic advantages by integrating and recombining the external and internal resources. The capabilities of managing resources affect the performance that they can reduce costs and improve product/service quality to fit the firms’ strategy and technology to accomplish the task of continuous innovation.http://t3.gstatic.com/images?q=tbn:ANd9GcQCycX7-aDJBvI_3uQLHu1yxHWXtj3kAdHnsXMyEnAiJAB4fsNG1Q

Concluding Statements

International businesses face some serious challenges – issues and solutions about what products or services should be attractive for various foreign markets, possible problems with the transfer of currency, the uncertainties associated with predicting the costs and profitability, creating significant management problems, the impact of different cultures, the complexity of choosing the optimal structure for international business, taxation and pricing, high political risks, etc.

Series of development varies the effects of the structure, technology and people in the socio-technical system in such organization. It always depends on the existence of such organizations deriving change due to environments, kinds of people working and the community for acceptance. Along with the structure, skills and abilities of the particular hired in the organizational structure will affect the decisions about what the organization can do and how it will be done. For the technology, its effect is seen from the analysis of the rapid influx in modernization and how it dominate the social standards of the organization varying from the kind of processes integrated in the organization whether it is continuous, large scale or small scale. For the people, such participation is regarded with the control of the people governing and hired by the organization. People in this sense are also reflected as the receivers of the purpose of organizations. Their perception and acceptance is highly needed in the changes in the quality of life, workplace and in uplifting the socio-economic status of the organization.


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