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1. Country specific advantages are the advantages which can be captured by any producer in that particular country. For LVMH, which is originated from France, can benefit from some privileges of France:
Country of Origin: ¡§Made in France¡¨ represents classics and quality so that people are loyal to the luxurious products manufactured in France. France is also a leading luxurious market worldwide which brings France reputation on high-end product.
Good supply: Excellent and the best textiles, leather or even grapes are possessed by France or maybe its neighboring countries (for example, Italy). Those are important raw materials of LVMH¡¦s major products like leather for briefcase, grapes for champagne, etc. In addition to the tangible raw materials, France, has a distinguish history of arts, brilliant sense of beauty, brings up many talented designers to develop and sustain French fashion sense, are very critical and essential to luxurious products
Skilled labor: The reputation of craftsmanship of French labor is famous around the world. Long history in arts nourishes French to fine soa.
2. Firm specific advantages are the benefits or assets owned by the company uniquely and cannot be duplicated by other firms. The following would be the three most important factors utilized by LVMH:
Vertical integration: This can be explained by the example of Moet and Hennessy. They were leading manufacturers of cognac and champagne before they merged with fashion house Louis Vuitton. Therefore, some of the best-selling wine brands such as Moet Chandon and Veuve Clicquot are exclusive to LVMH because those grapes, used as raw materials in the f ...