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11 Cards in this Set

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High Fashion Fights Recession

Demonstrates the crippling effect to high end brands post recession (2008)

- High end brands traditionally do not provide discounts, coupons or price wars

- Key issue was managing rivalry among competitors and manage customers

- Of 5 forces threat of substitutes relatively insignificant

- Dominated by big 3: LVMH, Gucci group, Burberry

- Many firms quietly cut prices, apart from LVMH which "gained a market share in the crises" - their sales grew from $24B in 2008 to $29B in 2011

- Most firms prev targeted "aspirational" customers to fund their growth which decreased post recession

- Customers - aspirational, recession, economically depressed

- Move from Japan as target market to developing economies such as China ( and BRIC countries)

Emerging Markets: From Copycats to Innovators

Issue of emerging MNCS (eg Acer, Foxconn, Tata) copying innovative strategies from western MNC's and gaining advantage in developing economies

- In West Copying is a negative connotation and stems lack of creativity; in the East being a copycat is indicative of a conscientious student who mirror's the masters moves.

- Western firms relying on innovative edge e.g. "Ownership Advantage"

- Key capabilities of emerging MNC's is their learning abilities.

- Idea of "reverse innovations" - developing new products & services in emerging economies

Areas of Innovation for Emerging Multinationals:

1) Dramatic cost & price reductions that open the vast potential of base-of-the-pyramid markets; e.g. Tata Nano Car

2) Leapfrog to latest technologies due to their lack of financial & psychological attachments to legacy technologies; e.g. China's BYD battery maker

3) Frugal innovations that may have a ready market among poor people in developed economies

Case Discussion Questions: High Fashion Fights Recession


1) Using the five forces framework, how would you characterise the competition in the luxury goods industry?

Emerging Economies vs Developed Economies

2) How much bargaining power did consumers as buyers have during the Great Recession?

3) Why was discounting looked down upon by industry peers, all of which were differentiated or focus competitors?

4) What would be the likely challenges in emerging markets for luxury goods firms?


Case Discussion Questions: Copycats to Innovators


1) What are the core resources and capabilities of emerging multinationals from emerging economies?

2) What are the core resources and capabilities of most multinationals from developed economies?