Guided Case: LVMH (Ch 10) Questions
with 100% Correct Answers
LVMH is described as a conglomerate. What does this mean?
a. It operates in many diverse industries.
b. It operates on a global scale.
c. It realizes economies of scale and scope.
d. It has become too large to be effectively managed. - CORRECT ANSWER- a
In which value-chain function do the various businesses owned by LVMH most likely
have the most commonality or share the most resources?
a. R&D
b. Engineering
c. Manufacturing
d. Marketing - CORRECT ANSWER- d
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.
with 100% Correct Answers
LVMH is described as a conglomerate. What does this mean?
a. It operates in many diverse industries.
b. It operates on a global scale.
c. It realizes economies of scale and scope.
d. It has become too large to be effectively managed. - CORRECT ANSWER- a
In which value-chain function do the various businesses owned by LVMH most likely
have the most commonality or share the most resources?
a. R&D
b. Engineering
c. Manufacturing
d. Marketing - CORRECT ANSWER- d
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.
