Guided Case: LVMH (Ch 10) Exam
Questions and Answers 100% Solved
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. - ✔✔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
1
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, d. Agency problems - ✔✔b
Which label best fits the diversification strategy employed by LVMH?
a. Value-chain diversification
b. Constrained diversification
c. Related diversification
d. Unrelated diversification - ✔✔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.
c. The additional costs associated with ethical sourcing that consumers
now demand has driven up production costs and reduced profitability.
2
©NINJANERD 2025/2026. YEAR PUBLISHED 2025.
Questions and Answers 100% Solved
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. - ✔✔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
1
©NINJANERD 2025/2026. YEAR PUBLISHED 2025.
, d. Agency problems - ✔✔b
Which label best fits the diversification strategy employed by LVMH?
a. Value-chain diversification
b. Constrained diversification
c. Related diversification
d. Unrelated diversification - ✔✔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.
c. The additional costs associated with ethical sourcing that consumers
now demand has driven up production costs and reduced profitability.
2
©NINJANERD 2025/2026. YEAR PUBLISHED 2025.
