I. In 1990, Bernard Arnault assumed controlling

I. Introduction
In a few decades ago, the understanding toward the luxury good is just expensive and impractical in China. In fact, luxury goods do have a certain height in price, but almost luxury brands never forget the pursuit to quality. Every detail is ensured that products can meet the customers’ demands.
Louis Vuitton founded his company in 1854 in Paris. In 1990, Bernard Arnault assumed controlling interest of Louis Vuitton, purchasing LV in his multinational luxury goods conglomerate LVMH Moet Hennessy – Louis Vuitton. At the early stage, the company was devoted to produce high quality luggage and Louis Vuitton has been identified to the art of travel. However, in 1992, Louis Vuitton entered the Chinese market and the first store located in Beijing. At that moment, few Chinese know that the starting business of Louis Vuitton was “The Luggage” for travelers. Nowadays, Chinese buyers are Louis Vuitton’s biggest customers. According to the report from Bain & Company, Louis Vuitton is planning to set up more stores in the China market. However, the company sales and profits are falling due to several reasons. In this case, this paper is to figure out LV’s entry strategy into the China market by identifying the internal background of Louis Vuitton such as business model before entry to China or resources and external advantages that influence the development of Louis Vuitton from the perspectives of country factors and Chinese business environment.
II. Research Methods and Structure
The methodology of literature searches is adopted to this research paper. There are many resources on the annual reports of LVMH that are provided by consult company, and there are also a lot of existing studies on the development of LV in China. It should enrich my research paper by abundant literature search and literature review. However, I also use the SWOT analysis model to list the internal advantages and disadvantages of LV company, analyzing the operational plan for entering into China based on the Chinese market environment examination and including the power of parent company, structure and management modes, entry strategy and finance management as well as finance problem towards decline in profit and closing the stores frequently. At the end of the report, I will analysis the future trend of LV’s new strategy plan.

III. The internal and external Chinese business environment
The external business environment in China will be discussed in terms of the regulations of China government, policy about industry offshoring and China market. And it is undeniable that the cheap labor market is the most important internal environment in China. First, we talk about the China market for luxury goods. According to Yuval and Vinay and Cathy (2011), ‘China has increasing booming urban cities including the second and third-tier cities and the world second-largest GDP which means strong purchasing power the China consumers for luxury goods and great market potentials’. The China’s rapid economic development is the best explanation for reasons that LVMH continues to open new stores in second and third-tier cities. Nowadays, Chinese buyers will afford more than 30 percent of the global luxury market. Second, China’s younger population have lead to a “demographic divided” in the decades. The cheap labor attracts the LVMH to move their manufacture supply chain to China and the Chinese government always encourages foreign direct invested to expand the export. After offshoring LV’s industry, it is cheaper to export LV products to worldwide because of the tax refund policy. Until now, government regulations and policy are still positive for the development of Louis Vuitton in China, which indicates that if LV keeps adjusting itself to expand the advantages according to the Chinese business environment, it will continue to be successful over time.

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Based on the internal and external Chinese business environment analysis, the understanding of the Chinese market environment helps LV to make the entering plan effectively, which includes consideration to utilize the internal advantage of LV and to adjust the modes of LV’s entry into china compare with successful cases in other countries.
IV. The internal advantage and disadvantage of Louis Vuitton (SWOT Analysis)
Advantage *Oldest French fashion houses with more than 150 years of history always represents the highest standard for fashion design.

*Rareness, unique and being superior to others
*hand made by master craftsman
*As one of the most recognizable luxury brands in the world because of its logo and classic monogram canvas
*Only do direct own business and never have franchise business
*Series of prestigious service such as private meetings for VIP consumers and custom manufacturing
Weakness *Some products are too expensive, or LV’s premium price is too high.

*The LV product is only available in its exclusive stores, the rich in remote cities is difficult to buy LV goods.

*Fake good disrupts the market and affects brand and sale profits.

*Low production capabilities
*The design of LV relies too much on the monogram canvas. For example, when you got a lot similar monogram canvas LV product, you would like to see something new.

Opportunity *The company should increase advertising impact and depend on different countries.

*More luxury good about Chinese feature. To be honest, LV do have some design about Chinese feature. In my mind, these products are ugly design because they don’t understand the Chinese people prefer. Poor sale was an announcement that had it all.

*The company could expand new business to third and fourth-tier cities. They can just open one or two store in small cities as advertisement.

Threat *Financial crisis can influence the sale on luxury goods directly.

*Luxury market is subject to political problem, not only in financial crisis, but also the strength on relationship with China and France.

*LV always needs to adopt the current fashion trends and to keep their advantage because of threat from other luxury brands.

*Every new series product must be positioned carefully as not to shake the brand’s position as a leader in luxury market.

V. Organization Structure:
Rick S (2018) argues that a company’s organization structure must be designed to effectively meet its goals and objectives. Types of organizational structure in management can include flat structures as well as functional, product and geographical-structured organizations. With LV is an international company, which the management directly controlled the share by LVMH. The organization form of departmentalization is rather appropriate. The management department of LVMH is to delegate certain authority to the leader who is from LV China or LV Japan. As we all know, Louis Vuitton has a lot of store in China. It should be better if the center of power delegates authority to the managers in the different countries for allocating the resources or managing the stores more efficiently. Robbins, Mary & Nancy (2005) argue that If the business of a company is in fast pace and tend to change quickly, and is operated in diversified different areas, it should choose the form of decentralization. As an international luxury company, the business of LVMH cover everywhere around the world and change its fashion world quickly. Thus, the managing form of decentralization and the method of delegation is the most suitable for such a big company.

V. Enter strategy and process:
David & Cynthia (2004) argue that the entry modes for international companies need strategic alliance, exporting, licensing or franchising, a new wholly owned subsidiary, and acquiring established enterprises. Although the first LV store which opened in Beijing does not advertise on TV and newspapers, it is successful to keep a sense of mystery at that moment in China. The company try to promote the brand through local high-class events to reach a wider audience. It is worth mentioning, because LV has its own stores in China, LVMH group hold wholly-owned subsidiary to enter Chinese market for keeping its unique and independent brand value. In other words, there is no Chinese partners to cooperate with LVMH. At the beginning of the first store, the company only hires the salesperson from their special Louis Vuitton training program in Paris, even the foreign salesperson from Pairs provide support and guide the Chinese salesperson because the transitional period was so important at that moment in China. On the other hand, where to enter into market is also important for LVMH operation in China. LV has already opened many stores in mainland China and some of these stores open in same time. Most of its focus is the first-tier cities such as Beijing, Shanghai and Hongkong and less second-tier cities. For instance, nearly 55% of LV’s stores in China are in Beijing, Shanghai, Hongkong and Macau. Of course, there are enough rich people in second-tier or third-tier cities. At the early stage, this does not affect the sale because the rich from second-tier cities can move to anywhere in China.
On the other side, LVMH is very clear that the tourist such as Hangzhou, Chengdu and Chongqing are very important for expanding their business strategy. Many times, tourists are more likely to purchase the luxury products when they are happy in the holidays. Also, the renting fee of second-tier cities is cheaper compare with Beijing and Shanghai, especially in the center of business circles. Thus, LV always put their eye on the growth rate of these second-tier cities and become pioneer in the settlement of store in second-tier cities.

For special marketing plan, Louis Vuitton targets the following two groups: wealthy middle-aged women who are under the age of fifty and affluent young generation or elite aged 18 to 30 years old who have excellent income or rich family. We all know that Chinese family spoil their children, especially in rich family, the young can always easily get parents’ money to purchase luxury goods. Thus, the preference of design is to attract young’s eyes and LVMH prefer to choose the young Chinese superstar as its advertising ambassador. In terms of advertising, LV centers on delivering its unique value and product attributes to every buyer and it choose its spokesperson cautiously. In the result, emphasis on young is highly profitable in return.

VI. Finance management and local business operation
In terms of finance management of Louis Vuitton in China, Fani (2014) argue that Over the past five years, the luxury-retail business has been reliant on price hikes that far outpace inflation to compensate for stagnant sales growth. And here is interesting thing that in the four years ago, a Chanel bag cost 70% more than its’ price in China. It is obviously unreasonable for Chanel Company to deal with high inflation in China. However, a classics LV travel bag is around 25% more expensive in 5 years. In my view, although high inflation has bubbled up in china, Louis Vuitton try its best to adapt the local business environment. LV adjust its finance management according to the inflation situations of China. On the other hand, China government control its currency which means exchange rate is much more stable than other countries. The depreciation of currency will benefit the export of home country to foreign country. That is one reason why Louis Vuitton move its industry and manage its supply chain in China. It is kind of benefits from the Chinese environment. In terms of local operation management, LVMH could prefer local debt financing in China because government devalue the CNY in the currency market. In theory, LVMH transfers its cash to repay the debt in CNY, which reduce the transaction costs. The company take advantage of regulation to get the subsidiary in another way.

VII. Strategy transformation and business model revision strategy:
As for current strategy, LV should stick to its successful strategy of selling their product to buyers directly through its store. However, LV make the important change to add the Online shopping for adopting new business environment. In the past, if consumers find something what they like in the LV official website, they should make a call to the LV staffs and ask them whether this product is still available or where they can buy this. Better yet, upscale brands in Western Market require credit cards, and most of the time, luxury brands only accept Visa, Mastercard or American Express in other countries. However, WeChat pay and Alipay has already become the most important marketing media in China, LVMH changed their mind and cooperated well with WeChat pay and Alipay in China. It is a very efficient and convenient way that complies with the payment method of the Chinese people very well.
On the other side, at least 70% of Chinese use Taobao as a daily must in China. Online shopping business such as Taobao and Jindong has reached high turnover in recent years. It is possible for LV to set up Official Online Store on Taobao or Jindong which conforms to Chinese shopping style under the circumstance of the China market. Anyway, I found that Burberry as the leader of British luxury fashion house has already set up its official website on the T-mall. So, I think it is time for LV to lay down its face and prepare to enter the new market since the e-commerce of China is become mature.

In terms of pricing strategy, Louis Vuitton figure out (2018) “in consideration of the recent cuts on import duties and value-added tax, Louis Vuitton China has decided to mark down prices on a wide range of items to fully support the government’s efforts to reduce the price premium for luxury goods sold in China and overseas. Louis Vuitton China will continue to support the government’s efforts.” It is the biggest news about Louis Vuitton recently. I believe that luxury consumers would buy cheaper LV products via purchasing agents because of the middle part of the profits. It is safe to say that, it is the same LV product may have different prices in different markets depend on the countries, even if the same enterprise has different pricing strategies due to different regions. But, Louis Vuitton set up its supply chain in China and take advantage of cheap labor market for lowering the operational cost. To this day, it is the first time for Louis Vuitton to change its price strategy. It will be better for LV to keep same price in different countries in the future, which means Chinese consumers don’t fly to France to get the LV products due to price difference. In the long run, I think LV must apply the same pricing strategy for boosting its sale in China.

VIII. Summary

David C. ; Cynthia M. (2004). Corporate strategy. New York.

Fani K (2014) Why Luxury Brands Like Louis Vuitton Are Raising Their Prices.
Suttle R. (2018) “Types of Organizational Structure in Management.” Small Business – Chron.com, http://smallbusiness.chron.com/types-organizational-structure-management-2790.html. 30 June 2018.

Robbins p. ; Mary C. ; Nancy L. (2005). Management. 8th ed. Canada. Washington: Pearson Education.

Yuval A., Vinay D. ; Cathy W. (2011). Tapping China’s luxury-goods market. Mckinsey quarterly.
Yiling P. & and Rachel Z. (2018). Louis Vuitton Cuts Prices in China As Gov’t Seeks to Boost Luxury Buying.

I. myBSN Firstly, myBSN provide information centre

Bank is a financial institution licensed to received deposits and make loans. Bank may also provide financial services , such as wealth management , currency exchange and safe deposit boxes(Armedo Kimberly, 2018). In this world, there are two types of bank which is commercial bank and investment bank. Bank are regulated by national government or central bank. (investopodia, 2018). The most famous and most used is commercial bank which offer services divided into primary and secondary functions. Primary function offer services such as accepting deposits, granting loans and advances. Secondary function offer services such as issuing letters of credit, travellers cheques, circular notes, transfer money from one place to another, providing customers with facilities of foreign exchange. (Gaucho, 2015)
A. Application 1 : Bank Simpanan Nasional
There are many advantages in Bank Simpanan Nasional.

• it provide an application for Online Banking System called myBSN. There are many facilitites offer in myBSN.

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Fig.1 myBSN

Firstly, myBSN provide information centre for user to know more about my BSN. It including corporate profile which give information about myBSN, annual report, career and media centre which provide section for information and announcement. (Bank Simpanan Nasional, 2010)

Fig.2 aboutUs in myBSN

Secondly, it also provide customer care. In this section, myBSN provide FAQs where customer can read on frequently asked question by other customer. It also provide online feedback form where customer can send their feedback of anything regarding Bank Simpanan Nasional online. It also provide latest information for auctions, tenders and space rental offer by Bank Simpanan Nasional.
(Bank Simpanan Nasional, 2010)

Fig.3 Customer care
Next is Personal banking, this section provide deposits, Cards and loans. It also offer banking channel which is alternative channel for us to perform transactions and utilise our services. Banking services which offer loads of value-added services to complement our needs. BSN Wealth Management which offer us a complete financial planning solutions for every stage in our life. (Bank Simpanan Nasional, 2010)

Fig.4 Personal Banking

Next is Islamic Banking, myBSN also offer islamic way for deposits, cards,financing . it also provide Islamic Banking Shariah Committee where we can meet with our Shariah committee.(Bank Simpanan Nasional, 2010)

Fig.4 Islamic Banking

Next is business financing, which provide information about myBSN product, centres and also share their success stories.(Bank Simpanan Nasional, 2010)

Fig.5 Business Financing

• Bank Simpanan Nasional (BSN), is transforming their products and services to appeal to a new generation of digital-enabled customers by deploying Virtual Teller Machines (VTM) across 31 branches.(Marketwired, 2015)

• Each BSN branch will have three VTM machines and these self-service kiosks that are supported by 450 virtual teller agents placed to assist their colleagues at branches that have higher customer traffic.

• The virtual tellers will be able to attend to customers’ needs, provide advice on banking products and services, and handle account inquiries as well as loan applications.

• The VTMs installed at BSN branches have highly secure features including encrypted electronic signature, thumb print verification, and card identification to ensure customers are protected.

• Bank Simpanan Nasional (BSN) was established to promote and mobilise private savings, especially of small savers in the lower income groups and those in the rural areas. As at end of 2000, the BSN has 427 branches nationwide with a network of 610 ATMs. Besides providing financial services such as extending loans and accepting deposits, BSN also provides payment services through its own proprietary ATM network, credit cards, and pre-arranged crediting of salaries and debiting of public utility charges. (Bank Negara Malaysia, 2002)


Bank Simpanan Nasional also have many disadvantages that give bad impression for Bank Simpanan Nasional itself.

• Bank Simpanan Nasional being insensitive to pensioners. The bank terminated the use of passbooks for all the pensioners. All the pensioners need to use ATM cards to retrieve their pensions because no passbooks allowed and updated for those pensioners. It give uncomfortable situations for them to keep up with technology. Those pensioner faces difficulty to checking correct amount was withdrawn from their accounts. (Raj Paul Selva, 2017).
• For the staff, they cannot fully access to other bank database system. The staff need to wait for other staffs finish using the system before they can have access to the system. Other than that, the staffs not provided with equipment needed. (Ahmad Izzudin Ahmad Zamri, 2013)

Security issues
• In myBSN, the system always upgrading everyday but it is a burden to customer. The upgrading process takes a long time and it halt customer from using the system. (Newsdesk Lyn, 2018)

• The SSTS, which is part of the RENTAS system, is an on-line book entry system to effect and to record the trading of Government securities, Treasury bills, Cagamas Berhad(National Mortgage Corporation) papers, unlisted private debt securities and Bank Negara Certificates and Bills. The system, apart from facilitating the electronic settlement of deals on a DVP basis, also eliminates completely the dangers of loss, theft and destruction of scrips and enhances the ability of the system to handle a larger volume of transactions.
B. Application II : Muamalat Bank
• Muamalat have online banking system named i-muamalat. The application can be installed on any electronic devices such as mobile phone , tablet and many more. (Bank Muamalat, n.d.)

• Bank Muamalat is a full-fledged Islamic Bank, commencing its operations on 1st October 1999.

• Muamalat Bank is built as a means of mediating between the fund and its owner. Muamalat is one of the Islamic bsnk in this world which using Islamic concept .(Idrus Syafei ; Setiawan, 2013).
• Bank Muamalat Malaysia Berhad (Parit Raja) who chose Bai Bithamin Ajil (BBA) concept as their housing finance scheme. The calculation shows that total repayment in Islamic. Calendar is lower than the Gregorian Calendar. Expert interview were used to identify the effect of employing Islamic Calendar in Islamic Banking system especially for Islamic Housing Finance. Finding indicates that the differences of total repayment between two calendar system reach average 1.04 per cent and most of the banks agree that Islamic Calendar can be employed as the basis of accounting system although many challenges appeared. (Dwidayati, 2016)

• At the operational level, change was also much sought after. Staff at all levels of the organization who were exposed to the end-user interface found that the infrastructure was inadequate. User experience was deemed lacking and its overall ability to quickly configure new or existing products. (Yeo, 2015)

Security issues
• Bank Muamalat is a product of historical mergers of other banks. There is a sharing physical space and operating on separate systems but there was no sharing of data between the bank and the situation no longer met with Bank Negara’s security and risk requirement.(Yeo, 2015)
• At the operational level, change was also much sought after. Staff at all levels of the organization who were exposed to the end-user interface found that the infrastructure was inadequate. User experience was deemed lacking and its overall ability to quickly configure new or existing products was deemed to be insufficient for the growth that the bank was looking for. At the heart of the issue was the lack of a master customer information file (MCIF), enabling staff to quickly identify and prioritize customer information.(Yeo, 2015)

• All key systems and applications were to be replaced in one phase rather than the multi-phase approach selected by other institutions. Bank Muamalat’s smaller size meant that the big bang approach was optimal in reducing disruption and effort involved in the switch over. A phased approach where relevant modules are turned on in sequence over a designated period of time would have added unnecessary complexity and effort to this operation.(Yeo, 2015)
There are two different type of bank that I do some research on it. It is Bank Simpanan Nasional and Bank Muamalat. These two bank existed in Malaysia and used mostly by Malaysian.

The method that I used based on internet research(Megan, 2016) which give me many resources such as case study, web sites and proposal. In this research I also able to explore online banking system and study about their benefits and disadvantages. (“Essay Methodology Example,” 2003)

I would like to thanks to my lecturer , Dr Feresa Foozy who give me opportunity to learn on how to make this paper with references from internet and books. Secondly, I would like to thanks my parents for their endlessly prayer and support for me since the beginning. (Educationalwriting.net, 2010)



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