Discuss about the Strategic Management for Corporation Identification.
In a nutshell, corporate identification can be described as the identity of an organization, which identifies both the similarities and differences of the company from the others. To add, the identities of a company creates its uniqueness trails that may include its marketplace, activities, organizational type, procedures, structure, culture, geographical scope, quality, location, and marketplace (Balmer 2008, p. 874).
Corporate identification lingers more along factors influencing communication, behaviour, and symbolism that is expressed towards an external and an internal audience. A good example of a corporate identity is LVMH (Louis Vuitton Moet Hennessey) considering it is a corporation that has changed the perspective of numerous business units and includes corporate functioning dynamics. Being a luxury company, LVMH have become a significant mark as a symbol on numerous products that are today used by several business units providing products associated with both luxury and style (He and Mukherjee 2009, p. 5).
The term corporation has several definitions as per different researchers. A corporation can be defined as an organization or business that is formed by a selected number of people and has both the liabilities and the rights that are separate from the persons who are involved. Taking this into consideration, a corporation can therefore be a non-profit organization that engages itself in several activities aimed towards the good of the public. For instance, a municipal corporation that may be either for a town, a city, or a private corporation that has been organized in a way that it can make some profit (Kanter 1993).
According to the law, a corporation has numerous responsibilities and rights that are alike as an entity. As such, it can own property, own, and even sell or bind itself to a contract or a lease, as well as sue its partners. In addition, it pays taxes. In most cases, a corporation can be punished or prosecuted with fines where the law is violated. However, its main advantages are its indefinite existence, which can be over a lifetime of the founder or any one member, and providing the limited personal liability protection to its owners (Reich 1998).
A product portfolio can be defined as a collection of the products that a corporation has. As such, it can entail of a wide array of product categories, diverse in their lines, and lastly the individual product itself. However, in all the three levels of a product’s portfolio, the management is needed. This is because mangers are required to manage the product lines, the individual products, and lastly the top management level that is responsible for managing the entire portfolio (Day 1977).
On the other hand, service portfolio refers to all of the services description that are involved in all of the stages of the service lifecycle. In addition, it represents the investment and the commitment made to all the marketplaces and customers by the service provider (Janssen and Feenstra 2006, p. 227).
In LVMH, there are several business units, among them, wines and spirits. The business unit has exceptional brands that are unique in their own different ways. A strategic management business unit can be defined as a significant segment of an organization that undergoes analysis to advance the strategy of an organization to generate future revenues or businesses. In LVMH, the wines and spirits business unit is considered to be a single and complete product line. Despite the fact the fact that a strategic business unit varies in the form it takes, a common characteristic is common. In addition, all strategic business units are sole businesses, or in other cases a collection of businesses. As such, it means that the business units have their own managers and competitors. The managers are operationally accountable for all the operations taking place and can therefore be planned for independently (Gupta and Govindarajan 1984, p. 36).
According to Kekre and Srinivasan (1990, p. 1223), a product line can be defined as a group of products that are similar under a single brand, and that are sold by the same company given that consumers are highly likely to procure products from a brand that they may be familiar with already. Service line, on the other hand, refers to the more or less the same. It can be defined as an array of services provided by a single brand that are the same, and that are highly likely to be taken up by consumers considering they are already familiar with the brand (Lei, de Ruyter and Wetzels 2008, p. 272).
The business unit revenue center is responsible for measuring each unit’s revenue that is generated per unit or user. On average, every unit’s revenue makes it possible for company’s analysis growth at every level’s unit and revenue generation that enables investors to identify the products or services that are either low or high generators of revenue (Davis 2000, p. 566).
In LVMH, the Wines and Spirits division accounts for over a third of the corporation’s group revenue (Lvmh 2017). The term revenue can be defined as the total amount of money that a company such as LVMH generates within a certain period that includes the deductions and the discounts for the merchandise returned. In actuality, it is the gross income or the top line figure from where there is a subtraction of costs for the determination of the net income. The calculation of revenue is done by the multiplication of the goods or services price that are sold by the unit’s numbers or the sold amount (Pan 2016).
There are several environmental factors affecting LVMH politically, economically, socially, technologically, and legally. Politically, legally, and economically, a country like China, which is among the organization’s most promising markets, is considering to raise consumer taxes on luxurious goods to improve the income distribution (Lin and Wu 2014, p. 405). As a result, this has a high possibility of affecting the sales of LVMH’s products. Socially cultural, according to Haddon (2013), there are conditions that have caused a rise in the awareness environmentally among governments and consumers. As such, for the LVMH products to attract more customers, they have to adopt to sustainable environmental practices. Technologically, the fast development of internet is remodeling the market of luxury goods industries.
The rapid development of the Internet is reshaping the playing field in the luxury goods industry. As a result, LVMH has been weighing its odds to merge with a potential technology company to better launch its products (Peitz and Reisinger 2014).
The term operating environment can be defines as the grouping of circumstances, conditions, and influences determining the use of an organization’s forces while assisting its leaders make the decisions necessary. In addition, the operational environment entails of numerous variables that are interrelated including the interactions and relationships in the development of objectives and missions (Ansoff 2007).
Sustainable competitive advantage refers to the occurrence of an organizations acquirement of attributes enabling it to perform better than its competitors. The attributes vary and can therefore entail access to skilled and highly trained staff or access to natural resources (Hatch and Dyer 2004, p. 1158). In the case of LVMH, the sources of its sustainable competitive advantage includes its value for both customers and the company. Rarity of its product given that the quality of their product is unlike others due to the fact that they are quite selective in terms of the way they use their raw materials as well as pick up their supplies. Inimitability, taking into consideration that their products have to undergo several testing stages in order to ascertain both the durability and quality of the product they sell to the consumers. In fact, there is guarantee on the products they sell in the market given that a majority of their workers are skilled as well as experienced in crafting their signature products. Non-substitutability of its products: the quality of products as provided by LVMH is not at a risk of being replaced by others with any other company. As such, there is directly no substitute for the quality they provide their customers with (Louis vuitton, 2017).
There are several common factors of sustainable competitive advantage: valuable resources, rare resources, imperfectly imitable resources, and non-substitutable resources (Oliver 1997, p. 703).
LVMH has to further its agility and motivation so as to benefit from the hands on enterprise culture. As a result, they will be able to make the right decisions quickly, make the right investments where need be, and take on more opportunities that will enable them to increase their market share. In addition, this will apply regardless of the global economy growing or shrinking (Rumelt 2012).
Strategic direction can be defined as a roadmap taken by an organization towards the achievement of set goals and objectives. Through the use or implementation of a strategic direction, an organization is able to identify what its objectives are, the way through which the objectives will be accomplished, the necessary resources needed, and the creation of a plan through which the organization has to work (Samra?Fredericks 2003, p. 149).
References
Ansoff, H., 2007. Strategic management. Springer.
Balmer, J.M., 2008. Identity based views of the corporation: Insights from corporate identity, organisational identity, social identity, visual identity, corporate brand identity and corporate image. European Journal of Marketing, 42(9/10), pp.879-906.
Day, G.S., 1977. Diagnosing the product portfolio. the Journal of Marketing, pp.29-38.
Davis, J.H., Schoorman, F.D., Mayer, R.C. and Tan, H.H., 2000. The trusted general manager and business unit performance: Empirical evidence of a competitive advantage. Strategic management journal, pp.563-576.
Gupta, A.K. and Govindarajan, V., 1984. Business unit strategy, managerial characteristics, and business unit effectiveness at strategy implementation. Academy of Management journal, 27(1), pp.25-41.
Haddon, R.C., 2013. Graphene: noble no more.
He, H.W. and Mukherjee, A., 2009. Corporate identity and consumer marketing: A process model and research agenda. Journal of Marketing Communications, 15(1), pp.1-16.
Hatch, N.W. and Dyer, J.H., 2004. Human capital and learning as a source of sustainable competitive advantage. Strategic management journal, 25(12), pp.1155-1178.
Janssen, M. and Feenstra, R., 2006. From application to service portfolio management: Concepts and practice. In European Conference on E-government (EGEG) (pp. 225-234).
Kanter, R.M., 1993. Men and Women of the Corporation. Basic books.
Kekre, S. and Srinivasan, K., 1990. Broader product line: a necessity to achieve success?. Management science, 36(10), pp.1216-1232.
Louis vuitton. 2017. Louis Vuitton Lockit. [Online]. [10 April 2017]. Available from: https://us.louisvuitton.com/eng-us/stories/lockit#/knowhow
Lei, J., de Ruyter, K. and Wetzels, M., 2008. Consumer responses to vertical service line extensions. Journal of Retailing, 84(3), pp.268-280.
Lvmh. 2017. WINES & SPIRITS. [Online]. [10 April 2017]. Available from: https://www.lvmh.com/houses/wines-spirits/
Lin, Y. and Wu, L.Y., 2014. Exploring the role of dynamic capabilities in firm performance under the resource-based view framework. Journal of business research, 67(3), pp.407-413.
Peitz, M. and Reisinger, M., 2014. The economics of internet media.
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Oliver, C., 1997. Sustainable competitive advantage: Combining institutional and resource-based views. Strategic management journal, pp.697-713.
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Reich, R.B., 1998. The new meaning of corporate social responsibility. California management review, 40(2), pp.8-17.
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