7 MARCH 2011
Introduction
Moet Hennessey. Louis Vuitton S.A., which is usually shortened to LVMH, is a French conglomerate. It is the world’s largest producer of luxury goods. LVMH has over 50 mostly autonomous daughter concerns, to which it is a parent company. A number of the world’s renowned brands are managed in turn, by each daughter company. The LVMH Company came into existence when one of the world’s largest manufacturers of champagne, Moet et chandon, formed a merge with Hennessey, a leading manufacturer of cognac. LVMH group, in its present form, was realized in 1987, following a further merger with Louis Vuitton, a fashion house. LVMH is based is based in Paris, France, and it has employed over 56000 people, with a 63% of whom work outside France. It is a global giant with a portfolio of 50 prestigious brands, with each brand having a unique history and culture. Its activities include business in jewelry and watches, wines and spirits, cosmetics and perfumes, fashion leather and goods, among others. (Paul N, 2002)
In this assignment, am going to major on Christian dior company, because it is the main LVMH holding company. It owns 42.38% of its shares, and voting rights of 59.3%. Christian Dior’s majority shareholder is also the chairman of both companies. He is LVMH’s CEO. By successfully integrating various famous aspirational brands, other luxurious companies, e.g. Richemont and Gucci, which is now part of French conglomerate, to do the same. The assignment also covers Chateau d’Yquem, which is the oldest brand of the group, the producer of premium vintage wine.
Challenges facing LVMH
Intercultural training
LVMH is facing the challenge of preparing its expatriates to its international assignments so as to facilitate the cross-cultural adjustments. Therefore, the adjustment process would be accelerated.it involves training the employee together with his/her family. At present, both post-arrival and pre-departure training develop the language courses. Little time is left for intercultural training since an international position requires to be filled urgently. As a result, very little training is provided even to ‘culturally tough’ countries like Mexico and Brazil, where people usually adjust to their own cultures. They are however not put under pressure to perform as though they had undergone rigorous training. In some cases, subsidiaries provide help to newcomers and the trainees are allowed preparatory field trips. As a rule, a candidate has to have some previous international exposure, for instance, through studies or earlier professional exposure before he/she is sent on an international assignment.
Support for spouse
LVMH employees rarely turn down international assignments. However, it has been noted that the employees have some characteristics that impede their mobility, and in most cases this is related to the spouse. To assess willingness of an employee to take on an international assignment, LVMH puts out feelers. When it anticipates a potential problem with the spouse or reluctance, it does not offer an international mobility. To counter this, international assignments are usually assigned to young graduates, who are mostly single, and understand the developmental purpose of taking up the assignments.
Repatriation
Whether an employee’s international assignment is a local contract or an expatriation per se contract, always there is a deliberate limitation of the assignment’s length, reason being that most of the expatriates lose contact with their home country, thus creating a difficulty in the repatriation. Assignments are usually limited to a period of 2 to 3 years, so as to facilitate the repatriation or the next move. In most cases, once one has begun a career with the LVMH group, they are anchored to a home base, and throughout their career the home base country remains the same regardless of the many international moves.
Gender discrimination
In some cultures, women are considered virtually non-existent and are more or less their husband’s property. In Saudi Arabia, for instance, there is a strong restriction on women’s mobility. They are not allowed to travel alone or drive cars, neither can they stay in hotels or pay visits to other people without the company of a male family member. This would greatly limit any international LVMH assignment.
Child labor
The concept child labor is not in reference to children doing part-time jobs on family farms or in businesses, but to employment that is permanent making schooling either impossible or difficult. In estimation, child labor occurs in over two-thirds of all nations worldwide. Among the reasons why child labor is widespread is the fact that children have no access to resources needed to secure them their rights, for instance unions and other types of organizations.
LVMH’s international transfer policy
From the start, LVMH was a global business. It however soon realized that it lacked international skills in its human resources. For instance, it was realized that in 1987 too many managers were not so fluent in English and since then, the company has sought to come up with a pool of potential global managers, who possess a working knowledge concerning international markets. The international managers can perform their tasks from any place in the world. This has been made possible by a global vision, together with skills in managing multicultural and multilingual teams. One must have been in a position to work in several countries so as to have their potential noticed and realized. According to LVMH, the best way to develop its employees is mobility as opposed to formal training. This entails horizontal, vertical and geographical moves within the company.
LVMH’s international transfer policy operates as part of a scheme to develop career requiring training of managers globally, on a limited time basis. LVMH is not into creating expatriates pursuing their careers outside their home bases, and as a result creating cost effective practices. Ever is en though its incentive programme is highly competitive, LVMH strives to win managers to international assignments through career development projects that are exciting, and not through economic incentives. To get a manager into becoming ‘internationally mobile’, a HR does so by offering the manager a job that is more challenging, accompanied with more freedom to perform the task, than when working at home. The practice is inevitable as it allows for business intercultural and helps to tackle language barriers. It also assist tap international talents. LVMH has had to adopt a recruitment process so as to obtain a pool of global managers to send on global assignments. Though the company is very attractive to French prospects, no international labor markets it is not as successful. For this reason, global recruitment will aid in developing the employees’ global skills.
Tackling the issue of international adjustment
The international transfer policy provides a logistical support which is needed for ensuring smooth relocation. This includes support in administrative procedures, searching for a house, utilities and hook-up, among others. Services of relocation help families to find schools and also assist them with the process of enrollment. The policy is expanding to assist in offering services in relocation, such as moving furniture. The experts on international transfer also write up the requirements for services of relocation on suppliers so as to assist companies. They seek to provide more than just financial support. The organization also offers support for spouse. Since some expatriates hesitate to take up an international assignments at the expense of leaving their spouses. At present, many senior expatriates are men who are married to spouses who are not working, thus the policy comes in handy by offering support to the spouse.
The issue of international adjustment is further tackled by offering intercultural training. The training is mainly provided on an ad hoc basis. Companies offer it according to characteristics of the host country and depending on past practices and is usually it is proposed at the corporate level. Employees in ‘culturally tough’ countries like Mexico and Brazil are not pressured to perform as quickly as those in countries where the cultures are similar to those in France. International adjustment is also put into check by repatriation. Even after the expatriates have been compensated just like the locals, they offered a theoretical home-based salary so as to facilitate their return to homeland. This process of repatriation begins six to one year before one is set to return home. Chiefly, it tackles issues related to the career by addressing the concerns of the expatriates on career progression and return positions.
As a business associate I would pay close attention to the global economic situation and accelerate necessary steps towards maintaining and gaining more market share and increase the profitability. I would also give serious priority to developing tangible growth of the operating income and to generation of cash. I would use the strength of the brands, the quality of the products, the dynamic innovation policy, the good geographical balance of the sales and the motivation of LVMH teams to be vital in reinforcing the group’s leadership in the worldwide luxury market.
Conclusions
The World Economy globalization has facilitated the reduction of entry barriers and liberalization of many markets. The further expansion and entry of the markets has brought many benefits to the group brands. However, to establish the strong presence and to leverage the opportunities that are emerging on the regions that are fast growing, LVMH requires developing a human resource management approach through international mobility and career development. This approach would be very vital as it would address the changes, future and present, on the firm’s strategic content and environmental factors. The management of the organization has an obligation to realize the currently existing drawbacks of ethnocentrism which affect the potential career opportunities for employees who are not French. Also to be considered by the policy is its ‘ready to move’ approach.
REFERENCES
http://uk.reuters.com/article/internetNews/idUKL2910194320080701 -accessed on July 15, 2008
http://www.lvmh.com -accessed on July 15, 2008
Baden – Fuller, C. & Fish, A., (1991) Globalization frustrated: the case of white goods. Management Journal 12: 493-507
Paul N. Gooderham (2002): Cross-boundary challenges; case study LVMH; New Orleans.
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