CEO Insider

LVMH’s Bernard Arnault: The Extraordinary CEO (Europe’s richest person’s Fashion Empire)

With a net worth of $167 billion, the LVMH Moët Hennessy Louis Vuitton CEO Bernard Arnault surpassed Bill Gates to become the third richest person globally. The French businessman is the driving force behind some of the biggest luxury fashion brands in the world. The central rationale of this discussion is to explore more about Bernard Arnault, his entrepreneurship journey, and the approach he used to create the world’s largest luxury empire. The discussion will analyze Bernard Arnault as the CEO of LVMH. The essay will document the attributes that made LVMH become a household name. The main approaches that Bernard Arnault used to make LVMH dominant are acquisition strategy, transformational and visionary leadership, and manufacturing unique products.

Bernard Arnault as the CEO of LVMH

Bernard Arnault is a French entrepreneur born on March 5, 1949. He is the founder, CEO, and chairman of the LVMH. The corporation LVMH is a group of many companies that deal with the manufacture and sale of luxury products such as designer clothes, fragrances, leather products, and alcoholic drinks. The luxury conglomerate consists of more than fifty luxury brands including, Fendi, Dior, and Louis Vuitton. LVMH Company has been regarded as the world’s largest marketer and retailer of luxury brands and products (Chen, 2021). The French company, located in the heart of Paris, has been built into a billion-dollar company through the keen leadership of Bernard Arnault. Because of his stern leadership and excellence in the fashion world, Bernard Arnault has been regarded as the “pope of fashion.” In one of his statements, the CEO of LVMH stated that the company’s role was to sell dreams. He added that his vision in LVMH was to make his company’s dreams a reality.

Manufacture of unique products

The brands that makeup LVMH today might have compromised on many factors but do not compromise on uniqueness. The different brands aim at making unique products that will satisfy customers’ demands and enable the brands to remain competitive in the market. Some of the major fashion and leather goods brands within LVMH include Emilio Pucci, Donna Karan, and Fendi (Donze, 2018). The cosmetic and perfume brands include Acqua di Pama and Guerlain. The watches and jeweler brands include Chaumet and Bulgari. One of the major challenges of LVMT brands is counterfeit and fake products. Louis Vuitton, for example, spends more than 10 million dollars annually in fighting counterfeit products from Turkey, China, Thailand, South Korea, and Italy. However, the CEO of LVMH stated that they seek to broaden their customer base, especially in rising economies such as India.

Utilizing the acquisition strategy

Bernard Arnault has built LVMH into the biggest luxury company by making multiple acquisitions. The CEO used the acquisition strategy to acquire companies dealing in fashion. The acquisition is one of the best strategies to participate in global markets. Owning this kind of investment requires a great commitment of capital and managerial efforts to regulate the vast portfolio. LVMH acquisitions have made it the majority shareholder in companies such as Marc Jacobs, Tag Heuer, Belvedere, and Christian Dior (Oliveira, 2020). The acquisition, joint ventures, and mergers allow LVMH to gain synergy, industry knowledge and skill, increased revenue, and diversification.

The company’s CEO believes that the surrounding he creates is just as important as the product. Products produced within the LVMH bear a mixture of luxury and art so that the clients feel special (Batat, 2019). LVMH has been keen on creating luxury apartments where customers can meet and have dinner-viewing parties. Clients can utilize these kinds of parties to do private shopping. The company has used exclusive parties as a marketing tool to display and advertise its products.

Entrepreneurship and leadership qualities portrayed by LVMH CEO

Advocating for creativity and innovativeness

With Bernard Arnault at the helm of LVMH, the company moved from a small clothing manufacturer to become a large conglomerate of more than 50 luxury brands, including Christian Dior, Dom Perignon, Hauer, and TAG. According to Arnault, one of his major reasons for the conglomerate’s success is his leadership and entrepreneurship skills. He states that coming up with a star begins with massive innovation and radical marketing techniques. His main aim was to work around creative people and deliver unique products to the market. Arnault states that he is very keen on creativity because that is the main secret that sells the company’s products (Donze & Wubs, 2019). For example, one of the designers, John Galiano, made dresses that resembled newspaper prints. Many people did not believe that this type of style would sell. However, when the style was sent down the cat-walk, it became one of the items that caught people’s eyes. Consequently, Dior sold many dresses that resembled newspaper prints and made considerable profits. The paradox of making clothes that resembled newspaper prints became an avenue to sell unique, modern, and highly profitable clothes.

Application of transformational leadership style

Arnault is keenly aware of the crucial role in creating and managing such an entity. He observes that many brands have untapped potential but might not become stars because they are poorly managed. He analyses that a brand should always be seen and treated like a person who needs and requires care. The brand enables the CEO to analyze how best it performs its role and improve that.  A brand, just like a person, requires multiple inputs to become functional and beneficial to people who depend on it. Therefore, Bernard Arnault has always seen the conglomerate as a “person” who requires many inputs to perform well in the market.

Bernard Arnault has been regarded by many as a transformational leader because of the success he has amassed at LVMH Company. The company generally deals with fashion products, making it one of the toughest operating businesses. Bernard has been regarded as a transformational leader because he can keep pace with the many changes in the market in matters fashion. The fashion industry requires a leader who can identify the target customers and provide that. Arnault is one of the persons that has accentuated success in LVMH (Pandeya, 2019). The CEO of LVMH was keen on bringing together a team of committed people working for the world’s biggest fashion company.  Through the transformational leadership of Arnault, the company has managed to rise to become one of the biggest companies in the manufacture and sale of perfumes, jewelry, and cosmetics.

Through the leadership of Arnault, a brand such as Christian Dior, Vuitton, and Fendi rose to become one of the most preferred companies in the sale of perfumes. While growing up, Alnault always wished to trade in luxury products, a dream that purchased him to purchase a Boussac. He sold the Boussac and later purchased part of the LVMH. Despite his limited knowledge in the fashion industry, Arnault had a deep passion for excelling and becoming dominant in the fashion industry (Raimondi, 2020). His strong leadership skis, authoritarian and transformational, made him gain control and grow. His ability to steer a global enterprise and promote creativity is one factor that made him a great leader and outstanding CEO.

Arnault was keen on running a big enterprise. He decided to acquire and merge several companies to form one big conglomerate. The acquisition started when Bernard Arnault learned about the sale of Christian Dior in 1984 (Antonaglia & Ducros, 2020). The acquisition went on with Arnault acquiring more companies such as Louis Vuitton, Givenchy, Berluti, Kenzo, Guerlain, Celine, and Loewe. Other companies acquired by the LVMP group include Marc Jacobs, Sephora, Thomas Pink, Heer, Gucci Group, Emilio Pucci, and Rassimoda. Arnault acquired other companies into LVMP to develop a stronger form that would take over the fashion industry. The merging and acquisition were also used as a growth and expansion strategy. In the present day, LVMP has more than 2,500 stores globally. The control of information is very necessary across the retail network of LVMH.

Maintaining a functional network between different departments.

Another crucial element that Arnault has utilized to grow the LVMH is the enterprise resource planning systems used to centralize the company’s information. All departments within LVMH are expected to share information about the company’s flow of goods and services (Schmitt et al., 2021). Sharing of information improves communication throughout the company. For example, the main role of LVMH is to focus on the manufacture and sale of luxury products. Sensing a change of fashion is vital to the company to work on that change. The research department has been keen on ensuring that they are at par with the market demands. The research department also gets customers’ feedback and researches how they can fulfill their needs. If the fashion trends have changed, the research department will quickly adjust. All changes within the company will be communicated throughout all departments. The product design department will look at the information presented and decide whether there is a need for changes in design. This collaboration between different departments has made it easy to implement changes within LVMH. High collaboration and communication between departments enable the company to enact changes faster.

Improved financial and cost management

In rapidly changing economies, many individuals and companies go bankrupt, including those that used to go wealthy. The LVMH conglomerate deals in the sale of luxury products. Part of the clients can use mortgagees to purchase and pay for them in installments. If the customers go bankrupt, the company will suffer many bad debts, automatically leading to losses. The company has provided its customers with various options to purchase products. The company provides an avenue for customers to purchase products and pay for them in installments.

The ERP systems integrated into the company’s operations improve cost management. For example, the manufacturing department in the company is expected to come up with the number of products required in the market. LVMP must control the number of products they produce by balancing demand and supply. The ERP systems help the company only manufacture products that will satisfy the demand in the market. The ERP has been fundamental to the company because it helps the firm avoid purchasing surplus materials that might not be needed.

Establishing a robust supply chain

The supply chain in LVMH includes getting raw materials, product design, manufacturing products, and distributing them to the final customer. The ERP system is part and parcel of the supply chain in LVMP. The supply chain function is the very heart of all businesses. The supply chain in LVMH encompasses multiple skills that come up with the beautiful designs seen at the stores (Borstrock, 2021). The supply chain manager in LVMH, Alain Doudard, stated that his team had to develop the best practices to speed up processes in the supply chain. An efficient supply chain is vital to delivering an excellent customer experience. The supply chain is also responsible for ensuring that the products that reach the final customer are in good shape.

The supply chain in LVMH continually adapts to align with the latest innovations and transformations in the fashion industry. For instance, LVMH recently adopted the supply chain at Ecole Paris (Mase, 2020). The main aim of this collaboration is to have close relationships with future graduates from engineering schools. The central role of the company’s supply chain process is to enable quality products to be manufactured under scrutinized positions. Employees whose well-being is well-maintained manufacture LVMH products in remarkable facilities. The employee’s health and safety are well taken care of in the manufacturing process in LVMH. The manufacturing of products in LVMH is keen on ensuring that environmental sustainability is preserved (Cavender, 2018). For example, the supply chain for Loius Vuitton leather products was given the ISO 14001 to comply with the global environmental conservation standards.

Conclusion

LVMH, led by Bernard Arnault, has pursued a consistent approach to developing unique products. Bernard Arnault is a visionary leader who has been the main reason for LVMH’s success within the fashion industry. Under his stern leadership, LVMH significantly improved the quality of its acquired brands and made them outstanding. Arnault never compromised on the company’s shortcomings but rose above the challenges to bring one of the most stable fashion legacies. The company has produced selective, quality, and detailed-oriented products to attract customers and keep them hooked. One aspect that is quite evident with LVMH products is that they overwhelmingly meet the expectations of its customers. The company has also incorporated the preferences of customers from different cultures. For example, in places like Japan, the customers demand and have an eye for details. Therefore, LVMH has integrated the architecture of different cultures into its products.

References:
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Batat, W. (2019). Transforming luxury brand experiences through artification: A marketing and consumer research perspective. Marche et organisations, (2), 135-151.
Borstrock, S. (2021). Disrupting the Chain: The Luxury of Craftsmanship. In Sustainable Luxury and Jewelry (pp. 21-40). Springer, Singapore.
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Raimondi, M. (2020). Key players in luxury: the dominance of conglomerates in the new oligarchy of the luxury market.
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Prof. Dr. Amarendra Bhushan Dhiraj
Prof. Dr. Amarendra Bhushan Dhiraj is chief executive and editorial director of The CEOWORLD magazine, overseeing the organization’s news and features departments.

Under Dr. Amarendra's leadership, The CEOWORLD magazine has become the world's most iconic news organization, whose rigorous reporting and unsurpassed storytelling connect with millions of business leaders every day.

Dr. Amarendra holds a Ph.D. in Finance and Banking from the European Global School in France; a Doctoral Degree in Chartered Accountancy from the European International University Paris; and a Doctorate in Business Administration from Kyiv National University of Technologies and Design (KNUTD), Ukraine.

He earned his Master of Business Administration degree in Finance and his Master's Degree In Chartered Accountancy (CA) from European Global School Paris. Dr. Amarendra also holds a Master of Business Administration degree in International Relations and Affairs from the American University of Athens, Alabama, United States. Prof. Dr. Amarendra Bhushan Dhiraj is a macro-economist and visiting professor at Kyiv National University of Technologies and Design (KNUTD), Ukraine.

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