Louis Vuitton Malletier, often known as Louis Vuitton, is a French company of fashion and luxury goods. The company was founded in 1854 by Louis Vuitton, with a monogram of LV which appears on almost every product, ranging from leather goods to luxury trunks, shoes, watches, accessories, jewelry, sunglasses, books, and accessories. It is one the most known international fashion house, leading the industry. Here is the detailed PESTEL analysis of LV; (LV, 2021).
Political Factors
These factors consider the changes in the country’s situation like political stability, changes in government policies related to business operations etc. LV is a world’s famous fashion brand and a leading company. It sells everything in fashion, from clothes to shoes, jewelries to books. It has thousands of employees across the globe which proofs that it considers the employment rights according to the country’s policy. Moreover, it operates in multiple countries, which means it needs to consider the trading rules and policies in consideration, which varies country to country.
Its customers are from across the globe, hence the tax rates, selling price, currency exchange, etc. all makes big difference on its revenue, which are needed to be settled according to the specific country rules (Sejal, 2021).
Economic Factors
There are various countries like Pakistan, who imposes tax on luxury brands, which makes it difficult for the companies to operate in every country of the world. Hence, LV has to choose its market wisely. This factor also makes a significant impact on the price differences among markets, and cause problems. This is an economic slowdown indicator which also causes “Lipstick Effect” which indicates towards customers purchases of alternative cheaper luxury goods during recession than the expensive ones.
Hence, there are more chances of observing increment in nail paint sales rather than fur coats. However, LV should expand itself in developing countries, like Pakistan, Bangladesh, as it can provide cheap labor which will help LV to reduce the cost of production and gain more profit, as these countries are growing rapidly (MBA skool, 2019).
Social Factors
Louis Vuitton has a big advantage in perceiving brand value. As the company has a French base, it becomes the most fashionable icon as people perceive France as the fashion base of the world. LV is a luxury brand with expensive price range that only targets high income customers. It cannot operate in less developed or developing countries like India, where majority is lower middle class.
This will affect the image of the brands. It needs to target more consumers from social media platform as the world is moving towards digital sales more now (MBA skool, 2019).
Technological Factors
LV sells its products on its retail stores, departmental stores, and own websites to make online sales. It as its in-house e-commerce portal for selling products, however, it is necessary for the company to have prominent presence in other e-commerce portals like Amazon, eBay, etc. This will help the company to target large audience and increase its sales.
Moreover, social media is a big game changer these days, hence it is important for LV to make proper utilization of social media platforms like Instagram, Facebook, Snapchat etc. This will keep LV interacting with consumers and increase the engagement on its posts (Murphy, 2018).
Environmental Factors
The industry of luxury goods across the globe may have adverse effect on the environment as their products involve leather, and animal skins. Moreover, the pollution from the manufacturing facilities is hazardous for the environment. However, LV is now paying much attention to the sustainability. But it needs to work towards procedures reducing carbon emission.
It needs to reduce the use of animal skin in its products as it is rated poorly in Animal welfare. Nowadays, customers are looking for environmental products, that’s why it’s important for LV to think in this way and implement strategies as soon as possible to maintain or increase the profit growth (Studymoose, 2016).
Legal Factors
It is important for the big businesses like LV to pay more attention on legal laws, procedures, and policies while running its operations in multiple countries. Counterfeiting is the most important legal factor for big brands, as it is a biggest challenge for LV to face. It has been found that over 10% of the sales are lost by the companies annually because of counterfeiting products in UK.
To overcome this issue, “Anti-Counterfeiting Trade Agreement” was signed by the company, but it is not implemented yet. China is considered as one of the biggest markets for copying the products and it becomes misleading for consumers too that whether they are buying original or copy product of LV (MBA skool, 2021).
Conclusion
Overall, the industry of luxury goods has very high growth and potential to grow more in future. As the market of LV is diversified across the globe, the revenues are not dependant on any single country. However, in order to lead the market position in the future too, LV should be careful regarding production, efficiency, and operational effectiveness while keeping the heritage of the brand in consideration.
References
LV, 2021. Magazine. [Online], Available at: https://me.louisvuitton.com/eng-ae/magazine, [Accessed on: 4th July 2021].
MBA skool, 2019. PESTEL analysis of Louis Vuitton. [Online], Available at: https://www.mbaskool.com/pestle-analysis/companies/17987-louis-vuitton.html, [Accessed on: 4th July 2021].
Murphy, E. 2018. PESTEL analysis of Louis Vuitton. [Online], Available at: https://www.essay48.com/term-paper/13839-Louis-Vuitton-Pestel-Analysis, [Accessed on: 4th July 2021].
Sejal, 2021. PESTEL analysis of Louis Vuitton. [Online], Available at: https://www.coursehero.com/file/54706658/PESTLE-ANALYSIS-OF-LOUIS-VUITTONdocx/, [Accessed on: 4th July 2021].
Study Moose. 2016. Louis Vuitton Case Analysis. [Online]. Available at: http://studymoose.com/louis-vuitton-case-analysis-essay, [Accessed on: 4th July 2021]