Gucci Case Analysis

INTRODUCTION

Gucci group is one of the world’s leading multi-brand luxury goods companies, generating 3.8 billion Euros in sales with 548 stores around the globe. Having nine different brands such as Yves Saint Laurent, Bottega Veneta and Sergio Rossi under their umbrella Gucci Group had to keep changing their strategic decisions due to the political, economical, social and technological changes. Besides the outside factors, Gucci Group had to also respond to their high-need customer base and the steep competition in the industry. The luxury goods industry consists of three main competitors: LVMH, Gucci and Prada.

Conducting a PEST Analysis of the environment in the first decade of the 21st century, there were many external factors that influenced Gucci’s strategy and success. Politically, the September 11th terrorist attacks and the Iraq War distracted customers from spending so they caused Gucci sales to drop. Similarly the SARS breakout in Asia and the 2001 economic recession and 2008 economic crash had a negative effect on Gucci’s performance and profits as less people were interested in luxury spending. Gucci sales fell 10% in 2002. On the other hand, BRICS were gaining ground and thus luxury sales could be expected to increase in those countries, and socially, the celebrity culture was engaging more and more in luxury purchases. Technologically, stores were offering online shopping enabling customers to buy online and not in stores.

No advantage in Value because other firms already have a grasp of existing opportunities and many offer equally valuable goods, or Rarity because all firms have same access to resources. Advantage in Inimitability, because, while the products themselves may be imitable, the brand/logo are a valuable resource/capability as are the talents of the designers they employ. Advantage is there in Organization, because now that they have a better business strategy under Polet, so they are now ready and able to take more aggressive...