Case Presentation: UBER QUESTION

Case presentation: UBER Specific questions assigned and team analysts

Question 1 How would you characterize Uber’s business model and strategy? What are the key elements of its customer value proposition? Its approach to competing in the marketplace? (Christopher Di Cosimo) Question 2 How would you describe competition in the ridesharing industry? What leverage do buyers and suppliers have with ridesharing services? What competitive threat is posed by new entrants and substitute services? Prepare a Five Forces Model of Competition to support your answer. (Noel Edward) Question 5 With what strategic issues should Uber management be most concerned in 2016? What are the 4-5 issues that offer the greatest opportunities or that present the greatest threats to its well-being? (Enrico Romagnoli) Question 3 Does Uber operate as a socially responsible business? Assess the five components of Uber’s corporate social responsibility strategy. (Sai Kowshik Chennupati)

QUESTION N.1 How would you characterize Uber’s business model and strategy? What are the key elements of its customer value proposition? Its approach to competing in the marketplace? (Christopher Di Cosimo)

Textbook, articles and additional sources Textbook

N. Title Topic Chapter Page 1. Crafting Strategy 1 4 and Executing Strategy

Scientific articles/books

N Title Author Journal Year, number Link . 1. An Analysis of Jonathan Princeto January 22, Link the Labor V. Hall n 2015 Market for and Alan Uber’s Driver- B. Partners in the Kruger United States 2 How Uber and Sarah Harward 22 January Link the Sharing Cannon Business 2015 Economy Can and Review Win Over Lawrence Regulators H. Summers

Additional sources (company disclosures, web pages, video etc)

N. Title Author Journal Year, number Link 1. What Is the Shannon OneSpace Blog June 21, 2017 Link Sharing Economy? Durio Definition, Examples & Companies 2. What is Uber's Many Quora 2016/2017 Link business model? 3. How Does Uber Yuen Lo How does it make April 1, 2016 Link Make Money? money?

ANSWER AND RECOMMENDATIONS N.1 Write your answer and be critical not descriptive

The business model of Uber is based on the “sharing economy”. In the article written by Shannon Durio, sharing economy is an economic system in which goods and services are shared among individuals through Internet. Uber enters in this system because the drivers of Uber use their vehicles to carry passengers thanks to the application furnished by Uber itself. This system that is adopted by Uber is strictly connected to its strategy (referred to the definition written in the textbook Crafting and Executing Strategy), that consists in offering high standards at low costs. As said by Yuen Lo, the objectives of the company are different:

• Find drivers with access to a car who want to earn money. • Orchestrate them centrally to offer a highly scaled and distributed transport platform. • Allow people who want to make journeys book these drivers via a mobile application. • Create a review system to ensure great service. • Take a 20-30% cut of all bookings. • Leverage the data collected to minimize wait times and maximize drive times.

The strength of Uber is the ability to give drivers the best available deal, in fact they are paid more than the competitors do. In fact, in the paper “An Analysis of the Labor Market for Uber’s Driver-Partners in the United States” is written that Uber’s drivers received median net fares of $19 an hour, compared to typical taxi driver earnings around $13. Moreover, as we can see on the description of the business case, the strategy of Uber to make money is initially to offer the service at a low price, so Uber can penetrate the market and achieve a high market share. Achieving a high market share allows Uber to surge the prices. In the end, we can say that Uber tend to monopoly so that Uber can raise the profits that it makes. So, Uber takes 20% of every fare and the driver gets 80%. However, the biggest competitor of Uber are Lyft, Curb and Hailo, but Uber has a better brand recognition and it’s using high driver commissions and low fare prices to make them weaker. There is only one scenario in which Uber’s dominance can be deleted, it’s when a new competitor buys cars with autonomous driving systems. So, Uber should invest in cars without driver too if it wants to survive in the future.

What about the value that Uber proposes to its customers and drivers?

Customers may prefer Uber instead of other competitors because it offers a quick service, so no need to wait for a taxi for long times; discounted rides from time to time and free rides on certain occasions; Uber offers lesser prices than the normal taxi fares; Uber transfer to the mind of customers higher value because of the Uber’s tag-line “Your personal driver”; in the end, customers know the fare of the trip at the Trip request menu, so only if the customers accept the price then the trip is requested. On the other side, drivers may prefer Uber because it offers Higher payments than the rivals, flexible working hours, it offers quick and easy payment procedure, and Uber pays also just for the availability given by the drivers to be online, even if they don’t get any request.

QUESTION N. 2 How would you describe competition in the ridesharing industry? What leverage do buyers and suppliers have with ridesharing services? What competitive threat is posed by new entrants and substitute services? Prepare a Five Forces Model of Competition to support your answer. (Noel Edward) Textbook, articles and additional sources Textbook N. Topic Chapter Page 1. The Five Forces 3 49 Model of Competition: A Key Analytic Tool

Scientific articles/books N. Title Author Journa Year, number Link 1. 2.

Additional sources (company disclosures, web pages, video etc) N. Title Author Journal Year, number Link

1. Uber Porter’s Five John Research Methodology 2018 Link Forces Analysis Dudovskiy ANSWER AND RECOMMENDATIONS N.2 Write your answer and be critical not descriptive

The competition in the ride sharing industry is growing on a rapid scale. There are many coming up like, Sidecar, BlaBlaCar, Carma, Ridejoy, Car2Go and Lyft. Each company comes up with their own promotional offers and unique strategies to stand out amidst the eruption of more ride sharing startups. The leverage buyers gain by the multiple ride sharing platforms are the offers, cost saving and quality of the ride experience. 1. The potential threat of new market entrants: Upcoming rivals are utilizing lesser initial capital to jump start their operations thereby quickly penetrating the market. Hence Uber should be observant of the new entrants and up their game. 2. The threat of substitutions: Rivals come up with strategies involving lower-cost, efficiency and user- friendly designing. A minor rise of Uber rates can result in customer taking on the services of its closest adversaries and alternatives. 3. Supplier Bargaining Power: Suppliers have a major power in the performance of Uber as the company does not own vehicles as the company’s model is based on the driver owning cars. 4. Threat of buyers: High- Buyer Bargaining Power: As the market grows bigger, the number of opponents bringing customers more choice also becomes larger thus makes the switching cost for customers comparatively low. This is because Uber application software is not only free but just requires a client’ registration. Customers can therefore freely choose between Uber, Curb, Lyft, or other emerging ride-sharing entities at no cost.

5. Competitive rivalry: Lyft is considered the principal competitor of Uber. As Lyft is constantly focusing on superceding Uber’s model, to survive, it is vital for Uber to lower the cost of operation to avoid raising customer charges.

QUESTION N. 5 With what strategic issues should Uber management be most concerned in 2016? What are the 4-5 issues that offer the greatest opportunities or that present the greatest threats to its well-being? (Enrico Romagnoli)

Textbook, articles and additional sources Textbook

N. Topic Chapter Page 1. Political factors 3 48 2. Strategic group 3 68 3. Low-cost provider strategies 5 118

Scientiftc articles/books N. Title Author Journa Year, number Link 1. How Uber and the Sharing Econom y Sarah Cannon Harvard business review OCTOBER 13, 2014 wpressutexas.ne Can Win Over Regulators t OpenStreetCab: Exploiting Taxi Mobilit y 2. Patterns in New York City to Reduce Cecilia Mascolo Cornell University 10 Mar 2015 arxiv.org

Additional sources (company disclosures, web pages, video etc)

N. Title Author Journal Year, number Link 1. Uber Architecture Tech Primers 31 lug 2017 youtube.com 2. Uber facciamo chiarezza Marco Montemagno 23 set 2017 youtube.com 3. Una nuova strategia per Uber Francesco Paternò L'automobile 21/02/2018 lautomobile.aci.itxt

ANSWER AND RECOMMENDATIONS N. 5

Write your answer and be critical not descriptive

1) The biggest strategic issues would be with how the company is run. They need to revamp their entire company to be ethics focused and not just be chasing a profit. They need to start taking responsibility for the people they hire and really start showing drivers that they are appreciated. 2) The biggest issues that bring opportunities would first be with fingerprinting new hired drives to get a thorough background check, this would make people more confident in using the Uber service. Secondly they could pay employees minimum wage and actually considering them employees instead of independent contractors, this could cost more but you could retain many more drivers and get fewer lawsuits. Another option would be to potentially look into following more taxi related regulations so they can expand more and not give away territories to competition. For example they choose not to compete in Austin Texas because of regulations they refuse to follow, this left the 5 market open for the competitor “Get Me” to step in and offer basically the same service. The last issue that could address would be to compensate customers more when an issue arises, a free ride is not enough when one of their drivers abuses or mistreats a customer. Formal apologies need to be made, actions need to be taken to insure that driver never works for them again, and more than one free ride should be given, it should be like a year of free service or something similar.

QUESTION N. 3 Does Uber operate as a socially responsible business? Assess the five components of Uber’s corporate social responsibility strategy.( SAI KOWSHIK CHENNUPATI)

Textbook, articles and additional sources Textbook

N. Title Topic Chapter Page 1. Crafting Strategy 1 4 and Executing Strategy

Scientific articles/books

N. Title Author Journal Year, Link number 1. An Analysis of the Labor Jonathan Princeton January Link Market for Uber’s Driver- V. Hall 22, 2015 Partners in the United and Alan States B. Kruger

Additional sources (company disclosures, web pages, video etc)

N. Title Author Journal Year, Link number 1. What Is the Shannon OneSpace June 21, Link Sharing Durio Blog 2017 Economy? Definition, Examples & Companies 2. What is Quora 2016/2017 Link Uber's business model? 3 Uber Official Link entering website into air mode of transportati on 4 Proposal of 2016 Link uber elevator

ANSWER AND RECOMMENDATIONS N.3 Write your answer and be critical not descriptive

Is Social Responsibility Really Possible?

Uber has had to scramble in the wake of this boycott. The company has never had a sterling reputation. The latest backlash has prompted mass account deletions, spurred by the #DeleteUber movement. In response, Uber’s CEO has backed away from Trump’s economic advisory council and denounced the travel ban. He has now set aside a $3 million fund to help drivers affected by the ban. Uber still has a long way to go to regain the trust of many of its users. As you can tell, backtracking doesn’t usually go over well.

Unfortunately for protesters, however, being socially responsible is murkier than it looks. While users have been flocking to Lyft for an Uber alternative (praising the company’s $1 million donations to ACLU, a non- profit fighting the order in court), higher-ups in the company have ties that fly in the face of protesters’ values. Many do not believe Uber’s ultimate stand against the executive order. It bears nothing that one of Lyft’s major investors, billionaire Carl Icahn, is a Trump supporter. He also remains one of his advisors. He’s not the only Trump supporter making money off of Lyft’s newfound success either.

This begs the question: is “social responsibility” really possible, especially for businesses? Organizations are made up of all kinds of advisors, philanthropist, processes, and contributors, who might not all line up with the values consumers are looking for in a company. Whether it’s fair or not, most people agree that businesses should generally try to do the right thing. This does differ depending on who you talk to. Judgements can and do affect a business’s reputation, making social responsibility a concern for every organization.

Long-Term Effects It’s too early to say what the long-term effects of the #DeleteUber movement will be. In the short term, the trending hashtag compelled 200,000 users to delete the app. In the end, that might not make a difference at all. Backpedaling hasn’t helped the company yet, but they have dominated the market so thoroughly that it seems unlikely the movement will have a lasting effect on Uber’s business. Reputations can recover, but it takes a while for the trigger to fade from consumers’ memories.

What Businesses Can Learn So what lessons can be learned from Uber’s shaken reputation and Lyft’s rise? That businesses need to carefully consider their stance on any given issue—and be prepared to accept the consequences of expressing that opinion. There is no way for any organization to stay completely neutral. There will always be people who disagree with the executives who run them. However, businesses need to face facts: social responsibility matters in this day and age, for businesses and individuals alike. Remember your business will be judged on how it reacts to a political or social movement. Remember, the judgment of the Internet can go viral in an instant—and punishment will be swift.

Main question:

As a newly hired management associate at Uber, you have impressed the company’s leadership with your skills of analysis and sound strategic thinking. Your immediate supervisor has asked you to serve on a committee examining the company’s business model and strategy. In addition, you have been asked to evaluate the company’s commitment to corporate social responsibility and consider whether the company’s business model might be unethical. Please prepare a report (not more than 4 pages) including your assessment and strategic recommendations focusing on the 4-5 most important issues facing the company. BY: All the team analysts

Textbook, articles and additional sources Textbook

N. Topic Chapter Page 1. Strategy 1 4 2. Maintaining the 5 126 Value Chain to Create the Differentiating Attributes 3. Political factors 3 48 4. Strategic group 3 68 5 Low-cost provider 5 118 strategies …

Scientific articles/books

N Title Author Journa Year, Link . number 1 An Analysis Jonathan V. Princeton January, Link . of the Labor Hall and 22 2015 Market for Alan B. Uber’s Kruger Driver- Partners in the United States 2 How Uber and Sarah Harvard October wpressutexas.net . the Sharing Cannon business 13, 2014 Economy Can review Win Over Regulators 3 OpenStreetCa Cecilia Cornell March arxiv.org . b: Exploiting Mascolo University 10, 2015 Taxi Mobility Patterns in New York City to

Reduce Commuter Costs 4 How Uber and Sarah Harward 22 Link the Sharing Cannon and Business January Economy Can Lawrence H. Review 2015 Win Over Summers Regulators

Additional sources (company disclosures, web pages, video etc)

N. Title Author Journal Year, Link number 1. What Is the Shannon June 21, 2017 June 21, LInk Sharing Durio 2017 Economy? Definition, Examples & Companies 2. What is Many Quora 2016/2017 Link Uber's business model? 3. How Does Yuen Lo How does it April 1, Link Uber Make make money? 2016 Money? 4 Uber Tech Primers 31 July, Youtube.com Architecture 2017 5 Uber Marco 23 Youtube.com facciamo Montemagno September, chiarezza 2017 6 Una nuova Francesco L’automobile 21 Lautomobile.aci.itxt strategia per Paternò February, Uber 2018 7 Uber entering Official Link into air mode website of transportation 8 Proposal of 2016 Link uber elevator

ANSWER AND RECOMMENDATIONS Write your answer and be critical not descriptive

5. Competitive rivalry: Lyft is considered the principal competitor of Uber. As Lyft is constantly focusing on superseding Uber’s model, to survive, it is vital for Uber to lower the cost of operation to avoid raising customer charges.

What about the value that Uber proposes to its customers and drivers?

However, Uber is continuously criticized for its operations in the socially responsible environment. In fact, the biggest strategic issues would be with how the company is run. They need to revamp their entire company to be ethics focused and not just be chasing a profit. They need to start taking responsibility for the people they hire and really start showing drivers that they are appreciated. So, Uber must also increase the security by fingerprinting new hired drivers to get a thorough background check, this would make people more confident in using the Uber service. Secondly, they could pay employees minimum wage and actually considering them employees instead of independent contractors, this could cost more but you could retain many more drivers and get fewer lawsuits. Another option would be to potentially look into following more taxi related regulations, so they can expand more and not give away territories to competition. For example, they choose not to compete in Austin Texas because of regulations they refuse to follow, this left the market open for the competitor “Get Me” to step in and offer basically the same service. The last issue that could address would be to compensate customers more when an issue arises, a free ride is not enough when one of their drivers abuses or mistreats a customer. Formal apologies need to be made, actions need to be taken to ensure that driver never works for them again, and more than one free ride should be given, it should be like a year of free service or something similar.

By analyzing Uber’s operations, we can say that they are not very ethical, and one prime example is how many of the drivers refused to pick up people with disabilities whether they were blind or in a wheelchair or such. The Americans with Disabilities Act tried to work against this but since the employees are independent contractors it was shown that they really did not have to comply and service the disabled. As of now they offer an option Uber training in which drivers are instructed to pick up those with disabilities, but the course is optional so many opt out of even taking it. Actions to support charitable causes, participate in community service activities, and contribute to the overall betterment of society: They have participated in a few charities including collected money for the refugees in Europe and helping veterans get jobs through their “Ride for a Cause” philanthropy Actions to protect and sustain the environment; By having Uber Drivers being easily available, there are less drunk drivers on the road resulting in less injuries or deaths which was statistically proven by the MADD (mothers against drunk driving). Actions to improve employee wellbeing and make the company a great place to work; Although the Uber drivers get lots of worktime flexibility that seems to be just about the only benefit of working for this company. The employees are not even technically employees, but they are considered independent contractors, which means Uber doesn’t have to pay them minimum wage, give them benefits or worry about overtime. It can be seen from the many lawsuits and negative reviews that most workers do not feel they are getting treated fairly by Uber. Actions to promote workplace diversity; Again, by being an independent contractor they technically do not have to conform to the rules of enforcing workplace diversity, they can discriminate if they want. That being said Uber wants a lot of drivers so many in fact say they are not discriminating enough, with many cases being brought up insisting that Uber does not have a thorough enough background check and they even had 25 different cases in which they found out criminals were working for them. They still refuse to utilize fingertip background

FBI scanning and rely on social security tracing, and national/state databases for crimes that have happened in the last 7 years. Taxi drivers in New York temporarily stopped service to JFK airport during rush hours, to stand in solidarity with the detainees around the country being questioned by Homeland Security. In response, Uber stopped charging surge pricing and continued to send drivers to the airport, a move many people saw as a direct attack on the taxi association’s efforts, and an indication that Uber did not care about the plight of detainees. Despite Uber’s insistence that the move was not political or for increased profit, nor that it was meant to undermine the taxi strike, many, many former users deleted the app and flocked to the company’s biggest competitor, Lyft. Lyft catapulted up the free app rankings in the Apple App store, landing in at #4, while Uber dropped to #13. Uber’s competitor cashed in on public outcry—without having to do much themselves.

Is Social Responsibility Really Possible?

Case presentation:-LVMH Specific questions assigned and team analysts

Question 2 How have LVMH’s corporate strategy choices strengthened or weakened its competitive position in the branded luxury products industry? (Christopher Di Cosimo) Question 3 Is LVMH’s international strategy best characterized as a multi-domestic strategy, global strategy, or transnational strategy? (Noel Edward) Question 1 What are the major elements of LVMH’s competitive strategy in the branded luxury products industry? How well do the pieces fit together? Is the strategy evolving? (Enrico Romagnoli) Question 6 What recommendations would you make to Arnault to address the strategic issues confronting LVMH in 2016 to sustain its impressive growth in revenues and profitability? (Sai Kowshik Chennupati)

QUESTION N.2 How have LVMH’s corporate strategy choices strengthened or weakened its competitive position in the branded luxury products industry? (Christopher Di Cosimo)

Textbook, articles and additional sources Textbook

N. Topic Chapter Page 1. Corporate startegy 2 32 2.

Scientific articles/books

N Title Author Journal Year, Link . number 1. Resources, Firms, Nicolai J. 2005 Link and Strategies: A Foss reader in the Resource-based perspective … . … 14

Additional sources (company disclosures, web pages, video etc)

N. Title Author Journal Year, number Link 1. MC: FPEN Paris Bloomberg December 28, 2018 Link LVMH Moet Hennessy Louis Vuitton SE

ANSWER AND RECOMMENDATIONS N.2 Write your answer and be critical not descriptive

Corporate strategy, as said by Nicolai J. Foss, is the pattern of decisions in a company that determines and reveals its objectives, purposes, or goals, produces the principal policies and plans for achieving those goals, and defines the range of business the company is to pursue, the kind of economic and human organization it is or it intends to be, and the nature of the economic and noneconomic contribution it intends to make to its shareholders, employees, customers, and communities. Generally, the corporate strategy is applied to the whole enterprise, and it defines the businesses in which a company will compete by converting distinctive competence into competitive advantage. However, as it’s written in the description of the business case, LVMH has a specific strategy that consists into diversifying its portfolio, and we see that it used a lot of methods described in the textbook, so, for example, by acquisition of different companies. In fact, thanks to these methods, LVMH entered in different industry such as Wine and Spirits, Fashion and leather goods, perfumes and cosmetics, watches and jewelry. The elements that allows LVMH to be very strong in each market are the following:

-Product Quality: the quality of the products derives by hiring dedicated people with high skills capacity; -Innovation: it derives from the creativity of the designers, who have an important role for the success of the company, so LVMH can’t think in the same way of the typical managers, who tend to kill the talent of these workers; -Image: the brand reputation comes only if there is a growth in economic and financial terms; -Craftsmanship and the Production Process: Vuitton’s factories have very few machines, instead many people well trained work, this allows the company to achieve a higher quality of the products.

As we can see in the graphic below, taken by the site Bloomberg, the corporate strategy choices of LVMH have worked very well, in fact, its revenues and the its stock price values are arising year by year.

QUESTION N. 3 Is LVMH’s international strategy best characterized as a multi-domestic strategy, global strategy, or transnational strategy? (Noel Edward)

Textbook, articles and additional sources Textbook N. Topic Chapter Page 1. When to Consider 8 212 Diversification

Scientific articles/books N. Title Author Journal Year, number Link 1. LVMH's Christina The Wall Street Journal 2008 Link Diversification Passariello Pays Off

Additional sources (company disclosures, web pages, video etc) N. Title Author Journal Year, number Link 1. WER AND RECOMMENDATIONS N.___

Write your answer and be critical not descriptive

Initially, when LVMH entered Japan, they followed international strategy by selling domestic products internationally. However, LVMH’s strategy appears to be a multi-domestic strategy because the company was top in the global cognacs market with a 46.5 percent market share and sales volumes of 76 million bottles. It observed that customers of designer goods have substantial differences across nations. It adapted diversification. In addition to product innovation, LVMH’s strategy for the division focused on heavy advertising and media investments, in connection with its couture brands, and global expansion of its brands.

QUESTION N.1 What are the major elements of LVMH’s competitive strategy in the branded luxury products industry? How well do the pieces fit together? Is the strategy evolving? (Enrico Romagnoli)

Textbook, articles and additional sources Textbook

N. Topic Chapter Page 1. Broad differentiation strategy 1 7 2. Competition from rival sellers 3 49 3. Think global act global 7 191 4.

Scientiftc articles/books

N. Title Author Journa Year, number Link Louis Vuitton's 1. decommoditization strategy Elen Riot emeraldinsight 2013 emeraldinsight.com 2. Marketing Principles of Shin'ya Nagasawa WASEDA BUSINESS 2008 NO 44 core.ac.uk Louis Vuitton

Additional sources (company disclosures, web pages, video etc) N. Title Author Journal Year, number Link Marketing Strategy of 1. Louis Vuitton Hitesh Bhasin Marketing91 March 6, 2018 marketing91

2. Inside Louis Vuitton's succes s CNN Business 27 feb 2014 youtube.com 3. Bernard Arnault, il signore del Giulia Crivelli Il sole 24 ore 11 novembre 2018 ilsole24ore.co u i i d ’i p Lv h

ANSWER AND RECOMMENDATIONS N.1

Write your answer and be critical not descriptive The major elements of the LVMH’s competitive strategy are: -A wide business portfolio containing luxury goods product lines like wine and spirits, perfumes and cosmetics. -The company offers high quality luxury products which are rare and symbolic but still within the reach of the customers. -LVMH attempts to create operational synergies like in advertising -Exclusive supply and distribution system. Yes these different pieces fit together as they are complimentary to each other and this strategy is evolving as it has helped the brand to emerge a successful brand leader in the marketplace. 2 How have LVMH’s corporate strategy choices strengthened or weakened its competitive position in the branded luxury products industry? -Its diversification strategy has enabled the company to face the negative impacts of the global slowdown on its sales. The multi brand marketing approach has helped the company to maintain its growth, and prevent catastrophe when economy is down. -The global expansion strategy of the company has helped it to establish itself in the new potential markets like China which are expected to derive the future growth of the company. -The brand management and customer relations programs have helped the company to maintain a loyal customer base in its existing markets and develop a customer base in new and emerging markets. Allowed its divisions to listen to customer needs, better understand their tastes, and anticipate their desires. 3 Is LVMH’s international strategy best characterized as a multi-domestic strategy, global strategy, or transnational strategy LVMH's main strategy in the firm is a mix of multinational and global. The strategy for each product group is different, they have wines and spirits, fashion and leather goods, perfumes and cosmetics, watches and jewelry and selective retailing. In my opinion it is a constantly evolving company as it is right for a fashion company that must always be active and attentive.

QUESTION N.6 What recommendations would you make to Arnault to address the strategic issues confronting LVMH in 2016 to sustain its impressive growth in revenues and profitability? (Sai Kowshik Chennupati)

Textbook, articles and additional sources Textbook

N. Topic Chapter Page 1. Corporate 2 32 strategy

2. Broad 1 7 Differentiation Strategy

3. Think Global 7 191 Act Global

Additional sources (company disclosures, web pages, video etc)

N. Title Author Journal Year, Link number 1. Share Link holders expectiations on LVHM 2 Human Link resourse of LVHM

Scientific articles/books

N. Title Author Journa Year, Link number 1. Balance sheet of LVHM 31 Link LVHM-2014 December 2014

2. Balance sheet of LVHM 31 Link LVHM-2015 December 2015

3. Balance sheet LVHM Link for first 6 months

ANSWER AND RECOMMENDATIONS N.6 Write your answer and be critical not descriptive

Recommendations that I’m making after going through the report and many other balance sheets of LVMH which I found in website of LVHM their balance sheets from 2014-16 , 1) I found there is a slight declining in the sales of Leather and Cosmetics in first six months. Its better they reduce the number of sales units so that they will be benefited to some extent. Though products of LVHM are the best Luxurious items all over the world in the previous year in order to maintain the steady growth for the products company have to spend on advertisements. 2) As wines and spirits are being liked by many people across the globe they can expand the market of this to many other sale units. In the first half year of 2016 LVMH experienced the declining of its sales them immediately changes happened according to the situation kept them again in the first place by the ending of the financial year. It may not incur many losses but to withstand the in the market they need to consider the huge markets like china and design products according to the local preferences. 3) Watches and Jewelry is also one of the area which got affected during this year if they work in the selective retailing it will help them in saving their sales and profit percentages.

So by following necessary managerial and stastical steps finally LVMH is not very effected by the end of the financial year of 2016. Note The above graphical chart is taken from first six months Balance sheet of LVHM [Link]

Main question:

LVMH CEO Bernard Arnault has learned of your considerable skills in strategic analysis and has hired you to develop a strategic plan that will enable LVMH to improve its position in the branded luxury goods industry, continue to build a stronger financial position, and make a decision about future diversification or retrenchment from its existing lineup of businesses. In developing your recommendations, you should assess the luxury goods industry. You should also assess LVMH’s portfolio of diversified businesses and analyze its recent financial performance. Finally, the plan should offer specific, actionable recommendations that will allow LVMH to further improve its position. Your recommendations should be well and critically supported with arguments and justifications for each recommendation. Your report should recommendations and whatever supporting charts, tables or exhibits you deem useful. (BY: All team Analysts)

Textbook, articles and additional sources Textbook

N. Topic Chapter Page 1. Corporate 2 32 strategy

2. Ross Border 7 198 Strategic moves

3. Strengthening a 6 144 company's competitive position

4. Corporate 12 342 culture and leadership

5. Building and 10` 296 developing critical resources and capabilities

6. Broad 1 7 Differentiation Strategy

7. Competition 3 49 from Rival Sellers

8. Think Global 7 191 Act Global

Scientific articles/books

N. Title Author Journa Year, Link number 1. Resources, Nicolai J. 2005 Link Firms, and Foss Strategies: A reader in the Resource-based perspective

2. Louis Vuitton's Elen Riot emeraldinsight 2013 emeraldinsight.com De- commoditization Strategy

3. Marketing Shin'ya WASEDA 2008 NO 44 core.ac.uk Principles of Nagasawa BUSINESS Louis Vuitton

4 Balance sheet of LVHM 31 Link LVHM-2014 December 2014

5. Balance sheet of LVHM 31 Link LVHM-2015 December 2015

6. Balance sheet LVHM Link for first 6 months

Additional sources (company disclosures, web pages, video etc)

N. Title Author Journal Year, Link number 1. MC: Bloomberg Decembe https://www.bloomberg.com/qNuote FPEN r 28, /MC:FP Paris 2018 LVMH Moet Hennessy Louis Vuitton SE

2. Hitesh March 6, marketing91.com Marketing Bhasin Marketing9 2018 Strategy 1 of Louis Vuitton

3. Inside CNN 27 Feb Link Louis Busines 2014 Vuitton's s success

4. Bernard Giulia Il sole 24 11 ilsole24ore.com Arnault, il Crivelli ore Novembe signore r 2018 del lusso e

i segreti dell’imper o LVMH

5 Share Link holders expectiation s on LVHM 6 Human Link resourse of LVHM

ANSWER AND RECOMMENDATIONS Write your answer and be critical not descriptive

Assessment The major elements of the LVMH’s competitive strategy are: -A wide business portfolio containing luxury goods product lines like wine and spirits, perfumes and cosmetics. -The company offers high quality luxury products which are rare and symbolic but still within the reach of the customers. -LVMH attempts to create operational synergies like in advertising -Exclusive supply and distribution system. Yes, these different pieces fit together as they are complementary to each other and this strategy is evolving as it has helped the brand to emerge a successful brand leader in the marketplace. 1) Its diversification strategy has enabled the company to face the negative impacts of the global slowdown on its sales. The multi brand marketing approach has helped the company to maintain its growth, and prevent catastrophe when economy is down. -The global expansion strategy of the company has helped it to establish itself in the new potential markets like China which are expected to derive the future growth of the company. -The brand management and customer relations programs have helped the company to maintain a loyal customer base in its existing markets and develop a customer base in new and emerging markets. 2) LVMH's main strategy in the firm is a mix of multinational and global. The strategy for each product group is different, they have wines and spirits, fashion and leather goods, perfumes and cosmetics, watches and jewelry and selective retailing. I think, it is a constantly evolving company as it is right for a fashion company that must always be active and attentive.

Insights The assessment has led me into thinking, that there is a slight decline in the sales of Leather and Cosmetics in first six months. It would be ideal if they reduce the number of sales units so that it would benefit them. Though the products of LVMH are luxurious all over the world, in the previous year, in order to maintain the steady growth for the product, the company should spend on promotions and advertisements. As wines and spirits are a hype for many people across the globe, they can expand the market to many other sale units. In the first half year of 2016, LVMH experienced the decline in its sales and immediately fluctuations came through and somehow, they landed in the first place by the end of the financial year. It may not incur many losses but to withstand in the market, they need to consider the huge markets like China and design products according to the local preferences.

Watches and Jewelry is also one of the areas which was affected during this year and if they work in the selective retail group, it will help them in saving their sales and profit percentages. Plan Corporate strategy, as said by Nicolai J. Foss, is the pattern of decisions in a company that determines and reveals its objectives, purposes, or goals, produces the principal policies and plans for achieving those goals, and defines the range of business the company is to pursue, the kind of economic and human organization it is or it intends to be, and the nature of the economic and noneconomic contribution it intends to make to its shareholders, employees, customers, and communities. Generally, the corporate strategy is applied to the whole enterprise, and it defines the businesses in which a company will compete by converting distinctive competence into competitive advantage. However, as it’s written in the description of the business case, LVMH has a specific strategy that consists into diversifying its portfolio, and we see that it used a lot of methods described in the textbook, so, for example, by acquisition of different companies. In fact, thanks to these methods, LVMH entered in different industry such as Wine and Spirits, Fashion and leather goods, perfumes and cosmetics, watches and jewelry. The elements that allows LVMH to be very strong in each market are the following: -Product Quality: the quality of the products derives by hiring dedicated people with high skills capacity; -Innovation: it derives from the creativity of the designers, who have an important role for the success of the company, so LVMH can’t think in the same way of the typical managers, who tend to kill the talent of these workers; -Image: the brand reputation comes only if there is a growth in economic and financial terms; -Craftsmanship and the Production Process: Vuitton’s factories have very few machines, instead many people well trained work, this allows the company to achieve a higher quality of the products.

Case presentation:_Tesla Specific questions assigned and team analysts

Question 5 What, if any, changes/adjustments in Tesla’s strategy would you recommend that Elon Musk consider? (Christopher Di Cosimo)

Question 4 What are the issues/problems that Elon Musk and other members of Tesla’s top management team need to address? (Noel Edward)

Question 3 Are you impressed by the strategy Elon Musk has crafted for Tesla? Why or why not? (Enrico Romagnoli)

Question 2 Which one of the five generic competitive strategies discussed in Chapter 5 most closely approximates the competitive approach that Tesla is employing? (Kowshik Sai Chennupati)

QUESTION N.5 What, if any, changes/adjustments in Tesla’s strategy would you recommend that Elon Musk consider?( Christopher Di Cosimo)

Textbook, articles and additional sources Textbook N. Topic Chapter Page 1. PESTEL analyze 3 46 2. Value Net 3 64 3. SWOT analysis 4 90

Scientific articles/books N. Title Author Journa Year, number Link 1. Implications of Robert E. Conference on Risk April 5, 2002 Link Corporate Hoyt & Theory Seminar

Diversification and Kathleen A. Focus Strategies McCullough

Additional sources (company disclosures, web pages, video etc) N. Title Author Journ Year, Link al number 1. Tesla Decemb Link er 29, 2018 2. Why The daily May 6, Link Tesla's Coversati 2015 "Powerwa on ll" Battery Is Amazing 3. SWOT Link analysis Link 4. … . …

ANSWER AND RECOMMENDATIONS N.5 Write your answer and be critical not descriptive

The biggest issues for Tesla Motors can be identified by the PESTEL analysis and the SWOT analysis. Moreover, Tesla works in a Value Net, where the role of complementors (charging station) is very crucial for the success of Tesla Motors. From the PESTEL analysis, we can find that there are many threats, such as the low oil prices, that reduces the demand for electric automobiles. Moreover, some States of USA have banned Tesla from selling directly to customer, such as New Jersey, Texas, Colorado, and Arizona, and there are ongoing battles with others, such as New York, Massachusetts, Virginia, North Carolina, Minnesota, Georgia, and Ohio. From the SWOT analysis, and in a particular way, the analysis of the Weakness of the company and the Threats from the external environment, it emerges that Tesla could face different problems with suppliers because these have had trouble in keeping up with Tesla’s demand. Moreover, normal gas-powered cars can be filled and recharged very quickly at any gas station of which there are over 168,000 only in USA, while there are very few Tesla Supercharger stations, almost 1,386, as we can see in the picture below taken from the official webpage of Tesla Motors.

So, after saying all the weak features of Tesla’s strategy, let’s say all the changes that Musk should consider. Initially, to face the low oil prices, Tesla should continue to develop diversifying technologies, such as their Powerwall battery technology, that is very innovative. Moreover, the company could diversify into markets that are independent of oil price fluctuations to create alternative revenue. Secondly, Tesla should develop own batteries, already in the works Gigafactory. Followed by, to avoid the problems related to the legislation banning direct sales, Tesla should begin to work on franchising plans, create deals to get into those states. In the end, Tesla should heavily work on developing their network of Superchargers because they are very few all over the world compared to the traditional gas stations. Below there is the SWOT analysis taken from Bing, in which there are described some features that have been analyzed before.

QUESTION N. 4 What are the issues/problems that Elon Musk and other members of Tesla’s top management team need to address? (Noel Edward)

Textbook, articles and additional sources Textbook N. Topic Chapter Page 1. Maintaining the 5 126 Value Chain to Create the Differentiating Attributes

Scientific articles/books N. Title Author Journal Year, number Link 1.

Additional sources (company disclosures, web pages, video etc) N. Title Author Journal Year, number Link 1. Tesla Model S Fred Electrek 2018 Link battery caught on Lambert fire ‘without accident’, says owner – Tesla is investigating

ANSWER AND RECOMMENDATIONS N.4 Write your answer and be critical not descriptive

Tesla was ardent in advancing their technology to improve their car models, however, they did not crosscheck to prevent any technological happenings of mishaps or maybe pay close attention to areas of danger in the car and eventually, there were fire incidents due to battery pack of Tesla Model S. Secondly, the competitors like BMW and Mercedes-Benz observed the strategy of Elon Musk and they started incorporating additional features which appeared better than the models of Tesla. Hence, Tesla should have also paid attention to the strategy of the competitors and added twerks to their own models which would have been far better than the competitor’s models leading to market reputation and customer demand.

QUESTION N. 3 Are you impressed by the strategy Elon Musk has crafted for Tesla? Why or why not? (Enrico Romagnoli)

Textbook, articles and additional sources Textbook

N. Topic Chapter Page 1. Political factors 3 49 2. Legal and regulatory factors 3 49 Competitive pressures from the 3. sellers of substitute products 3 57 4. Business ethics 9 255 … . …

Scientiftc articles/books 31

N. Title Author Journa Year, number Link The 21st Century Electric 1. Car Tesla Motors Martin Eberhard October 9, 2006 idc-online.com The Tesla Roadster 2. Battery System Gene Berdichevsky August 16, 2006 stanford.edu 3. The globalization of Tesla Motors Edwin Mangram Taylor e Francis 10 jan 2012 tandfonline.com

Additional sources (company disclosures, web pages, video etc)

N. Title Author Journal Year, number Link Tesla Business Model: 1. What makes Tesla so attractive? Startup Xpress 18 ott 2017 youtube.com 2. Elon Musk's Tesla Strategy CNBC 3 mag 2018 youtube.com La più grande innovazione di Tesla KEVIN WANG 1 june 2017 marketrevolution.it 3. non è l’auto elettrica 4.

ANSWER AND RECOMMENDATIONS N.3

Write your answer and be critical not descriptive

I’m highly impressed by the strategy Elon Musk has crafted for tesla motors. In business and innovation, you must be ready to sacrifice and take risk and that what Elon Musk has done. In the case, they gave a brief summary about his career and everything I read about his career were impressive of a person who is willing to give his all to his business. Why I said I’m impressed by Elon Musk’s strategy for tesla is that it will most certainly work. Elon Musk strategy is focused on making an entirely different unique product with good quality from that of his rivals. He also encourages collaboration with other companies so as to produce funding for tesla. Tesla were mentioned to form a partnership with a German company Daimler. He also conducting funding programs for the company when weren’t enough funds to complete their projects. And the most impressive part was that he invested his own money into the business by taking part of the funding program and donating huge sum of money for the company. He also manage other companies like PayPal and eBay and so I think with the success of those companies it’s fair to say Elon Musk will take tesla motors to new height and will most certainly do something good about the company.

QUESTION N.2 Which one of the five generic competitive strategies discussed in Chapter 5 most closely approximates the competitive approach that Tesla is employing? (Sai Kowshik Chennupati )

Scientific articles/books N. Title Author Journal Year, number Link 1. Daniil Link How Tesla MotorsChaika can manage the extreme competition from large and premium manufactures

2. Tesla model Fred Electrek 2018 https://electrek.co/2018/06/1 S battery Lambert 6/tesla-model-s-battery-fire- caught on investigating/ fire without accident

Additional sources (company disclosures, web pages, video etc) N. Title Author Journa Year, Link l number 1. Tesla December https://www.tesla.com/supercharger 29, 2018 2. Why Tesla's The daily May 6, https://www.youtube.com/watch?time "Powerwall Coversation 2015 _continue=24&v=OARwwN7PoA4 " Battery Is Amazing

ANSWER AND RECOMMENDATIONS N.2 Write your answer and be critical not descriptive

“Focused Differentiation” is the strategy followed by the Tesla’s company to be in the best position. They are concerned of quality rather than quantity so that kept them as a challenger for the global companies coming up with “Electric Automobile Companies”. So they themselves restricted to limited group of people who are ready to pay more and so that they can get the additional or substitution benefits.

Enough research has been conducted in every perspective to deliver the best product.

Main question:

Prepare a brief report to Tesla Motors CEO Elon Musk outlining (1) the 3-4 top priority issues that Tesla management needs to address, (2) your outlook for Tesla’s future performance, and (3) the company’s prospects for revolutionizing the global automotive industry’s use of gasoline-powered engines versus battery-powered engines. (By: All team Analysts)

Textbook, articles and additional sources Textbook N. Topic Chapter Page 1. Types of Generic 5 117 Competitive Stratagies 2. Maintaining the 5 126 value chain to create differentiating attributes 3. Political, legal and 3 49 regulatory factors 4. Competitive 3 57 pressure from sellers and substitute products 5. Business ethics 9 255 6. PESTEL analyze 3 46 7. Value Net 3 64 8. SWOT analysis 4 90 9. Political factors 3 49 10. Legal and 3 49 regulatory factors 11. Competitive 3 57 pressures from the sellers of substitute products 12. Business ethics 9 255

Scientific articles/books N. Title Author Journal Link Year, number 1. Daniil Link How Tesla Motors can manageChaika the extreme competition from large and premium manufactures

2. Tesla model S battery Fred Electrek Link 2018 caught on fire without Lambert accident 3. The Tesla Roadster Gene Berdiche stanfor August Battery System vsky d.edu 16, 2006 4. La più grande KEVIN marketr 1 June innovazione di Tesla WANG evoluti 2017 non è l’auto elettrica on.it 5. Tesla Business Model: Startup Youtub 18 Oct What makes Tesla so Xpress e 2017 attractive? 6. Tesla Linkr Decembe r 29, 2018

7. Why Tesla's The daily Link May 6, "Powerwall" Coversat 2015 Battery Is ion Amazing

8. Elon Musk's Tesla CNBC youtube 3 March Strategy .com 2018

Additional sources (company disclosures, web pages, video etc) N. Title Author Journal Link Year, number 1. The Edwin Taylor tandfonline.com 10 Jan globalization Mangram e 2012 of Tesla Francis Motors 2. Tesla Startup Youtube 18 Oct Business Xpress 2017 Model: What makes Tesla so attractive?

3. La più KEVIN marketrevolution.it 1 June grande WANG 2017 innovazione di Tesla non è l’auto elettrica 4. Tesla Link December 29, 2018 5. Why Tesla's The daily Link May 6, "Powerwall" Coversation 2015 Battery Is Amazing

ANSWER AND RECOMMENDATIONS Write your answer and be critical not descriptive

First issue they should address is the safety issues concerning their battery pack. Another issue is global expansion. The global market for energy efficient automobiles is relatively small, giving Tesla a chance to compete with the already successful Toyota hybrids. The final issue Tesla needs to address is the growing competition of energy efficient cars. Most car manufacturers are now making their own versions of hybrids and other electric cars. These companies are also older than Tesla Motors, and have been in the public for longer. Tesla will need to make sure they can compete with the established companies by making their cars better, affordable, and offer a wider range of products to fit all consumer needs.

Few issues that the management of tesla need to work on for the growth of the company internationally Tesla was ardent in advancing their technology to improve their car models, however, they did not crosscheck to prevent any technological happenings of mishaps or maybe pay close attention to areas of danger in the car and eventually, there were fire incidents due to battery pack of Tesla Model S. Secondly, the competitors like BMW and Mercedes-Benz observed the strategy of Elon Musk and they started incorporating additional features which appeared better than the models of Tesla. Hence, Tesla should have also paid attention to the strategy of the competitors and added twerks to their own models which would have been far better than the competitor’s models leading to market reputation and customer demand.

Future performance of Tesla can never be beaten by others if at all they look into these key factors mentioned below. 1) Tesla has to give a briefing about their manufacturing process so that customers will trust it at most. 2) The challenging thing is if it has enough skilled labor to keep them in a remarkable place that if they give assurance that if has got enough man power with enough skilled. 3) Other challenging thing is how the company market its products in International market and they must look into the issue if they can provide services in many places. 4) Can stock price survive need for more capital? 5) What is the core of Tesla’s business model-cars or the Gigafactory?

These are the areas that the company has to focus on so that they will never come down in the trending market though the revolution in technology is taking place they have to keep them updated with it and its done.

The biggest issues for Tesla Motors can be identified by the PESTEL analysis and the SWOT analysis. Moreover, Tesla works in a Value Net, where the role of charging station is very crucial for the success of Tesla Motors. From the PESTEL analysis, we can find that there are many threats, such as the low oil prices, that reduces the demand for electric automobiles. Moreover, some States of USA have banned Tesla from selling directly to customer, such as New Jersey, Texas, Colorado, and Arizona, and there are ongoing battles with others, such as New York, Massachusetts, Virginia, North Carolina, Minnesota, Georgia, and Ohio. From the SWOT analysis, and in a particular way, the analysis of the Weakness of the company and the threats from the external environment, it emerges that Tesla could face different problems with suppliers because these have had trouble in keeping up with Tesla’s demand. Moreover, normal gas-powered cars can be filled and recharged very quickly at any gas station of which there are over 168,000 only in USA, while there are very few Tesla Supercharger stations, almost 1,386.

Here comes the most interesting and innovative thought of Tesla this is the actual reason why and how they started to build cars that are operated by Electricity. One of the other common assertions we hear all the time from the anti-EV (Electronic Vehicle) crowd is that electric cars are no more efficient than cars powered by internal combustion engines. Let’s take a closer look at that claim. According to the US Department of Energy’s Office of Energy Efficiency and Renewable Energy, “EVs convert about 59%–62% of the electrical energy from the grid to power at the wheels. Conventional gasoline vehicles only convert about 17%–21% of the energy stored in gasoline to power at the wheels.” An electric motor typically is between 85% and 90% efficient. That means it converts that percentage of the electricity provided to it into useful work. The difference between the efficiency of the motor and the overall efficiency of an electric car is accounted for losses attributed to charging and discharging the battery and, for some charging (for some cars), converting AC to DC current and back again. In a recent post for Quora, Brian Feldman, a robotics expert and entrepreneur, offered this explanation: “Consider the Tesla Model S, which has an available 85 kWh battery and a 265 mile range. Consider a similar gas-powered car, which gets 35 mpg. Gasoline contains about 33 kWh of energy per gallon. The Tesla uses 320 Wh/mile of energy (85 kWh/265 miles). The gas powered car uses 940 Wh/mile of energy (33 kWh/35 miles). Once the energy is on board (not counting the efficiency of the power generation, oil refining, or charging), the Tesla is using only about a third as much energy as the comparable gasoline-powered car.”

To conclude, I’m highly impressed by the strategy Elon Musk has crafted for tesla motors. In business and innovation, you must be ready to sacrifice and take risk and that what Elon Musk has done. In the case, they gave a brief summary about his career and everything I read about his career were impressive of a person who is willing to give his all to his business. Why I said I’m impressed by Elon Musk’s strategy for tesla is that it will most certainly work. Elon Musk strategy is focused on making an entirely different unique product with good quality from that of his rivals. He also encourages collaboration with other companies so as to produce 38 funding for tesla. Tesla were mentioned to form a partnership with a German company Daimler. He also conducting funding programs for the company when weren’t enough funds to complete their projects. And the most impressive part was that he invested his own money into the business by taking part of the funding program and donating huge sum of money for the company. He also manage other companies like PayPal and eBay and so I think with the success of those companies it’s fair to say Elon Musk will take tesla motors to new height and will most certainly do something good about the company.

Case analysts: CHRISTOPHER DI COSIMO NOEL EDWARD ENRICO ROMAGNOLI SAI KOWSHIK CHENNUPATI