Environment Analyses of Lv Essay

1786 Words Aug 29th, 2013 8 Pages
ENVIRONMENT ANALYSES

3. Global/Regional economic environment
Purpose of analysis: The economic environment consists of economic factors that affect consumer purchasing power and spending pattern. The economic environment can offer both opportunities and threats.
No company can avoid the influence of fluctuations in the global economy. And when you're in a developing market, the understanding of the economy is essential. Some elements of the economic environment (The divide between rich and poor purchasing power differences in social class, the market area, the stage of the economic cycle, the volatility of prices of some items such as gasoline, oil, gold) directly affect the purchasing power and consumer tastes, which determines the
…show more content…
For example, the economic crisis affected the LVMH which owns brand Louis Vuitton and reduced its stock from 40 to 10 at the end of 2008, but Louis Vuitton did not change its message to fit with the time. Louis Vuitton refused to lower the prices and quality of the products. The LV’s position and value "can not be reduced" regardless of its choice seems really risky.
For each country, the specific economic factors also bring significant risk. For example, the Indian market: The interest rate in India is higher than in France, it means that the operating costs for the Indian market will be higher especially in the case of loans to companies. On the other hand, the inflation rate increases the cost of the human resources which results in higher wages.
In Vietnam, high inflation pressure to increase wages, while labor quality does not increase correspondingly that disadvantage foreign firms. Import taxes contributed to the price of LV products increased, while their original cost is not cheap. Same product, its price may be higher in Vietnam than in France and 20%, while Vietnam's living standards are much lower.
4. Political and legal environment
Purpose of analysis: The political environment consists of laws, government agencies, and pressure groups that influence or limit various organizations and individuals in a given

Related Documents