Guided Case: LVMH (Ch 10) with verified
answers (already passed)
How does LVMH benefit from economies of scale?
a. It can more easily afford to open a new shop in a prime location.
b. It can open more shops for less money in a wider variety of locations.
c. It can produce more goods for less money than its competitors.
d. It can set prices on a sliding scale based on individual consumers' ability to pay. - correct answer ✔✔a
LVMH attracts and retains managers who are able to move between businesses, expanding their own
skills and enjoying a strong career path. This mobility of managers also suggests that LVMH has been
able to successfully overcome what potential pitfall of acquisition?
a. Overestimating economic benefits
b. Integrating the acquired company
c. The expense of acquisitions
d. Agency problems - correct answer ✔✔b
Which label best fits the diversification strategy employed by LVMH?
a. Value-chain diversification
b. Constrained diversification
c. Related diversification
d. Unrelated diversification - correct answer ✔✔c
The economy is one element of the environment that can impact the success of a diversification strategy.
How has LVMH's sales been affected by this type of environmental change?
a. As the global economy has faced a downturn, the focus on high-priced luxury goods has led to a drop
in sales.
b. As the number of super wealthy consumers globally has increased, the demand for luxury goods has
also increased.
answers (already passed)
How does LVMH benefit from economies of scale?
a. It can more easily afford to open a new shop in a prime location.
b. It can open more shops for less money in a wider variety of locations.
c. It can produce more goods for less money than its competitors.
d. It can set prices on a sliding scale based on individual consumers' ability to pay. - correct answer ✔✔a
LVMH attracts and retains managers who are able to move between businesses, expanding their own
skills and enjoying a strong career path. This mobility of managers also suggests that LVMH has been
able to successfully overcome what potential pitfall of acquisition?
a. Overestimating economic benefits
b. Integrating the acquired company
c. The expense of acquisitions
d. Agency problems - correct answer ✔✔b
Which label best fits the diversification strategy employed by LVMH?
a. Value-chain diversification
b. Constrained diversification
c. Related diversification
d. Unrelated diversification - correct answer ✔✔c
The economy is one element of the environment that can impact the success of a diversification strategy.
How has LVMH's sales been affected by this type of environmental change?
a. As the global economy has faced a downturn, the focus on high-priced luxury goods has led to a drop
in sales.
b. As the number of super wealthy consumers globally has increased, the demand for luxury goods has
also increased.
