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Gucci Strategy

In: Business and Management

Submitted By nureme
Words 844
Pages 4
SWOT Analysis of Gucci
Strengths
The strength of Gucci is in its established, very strong brand image and international presence. Gucci has also the ability to control its distribution channels. This is part of Gucci’s defensive strategy in the chain value to capture the value added instead of giving it to the middlemen such as suppliers and retailers.
The company has also increased the number of their Directly Operated Stores (DOS) as part of the defensive strategy of taking more control of the distribution process. The 2003 figure showed that DOS accounted for 61.3% of revenues compared to a much lower 32.5% in 1999.
Its aggressive strategy accomplished through diversification and communication is also another of Gucci’s strengths. Gucci changed its strategy of carrying a single brand to branching out to a multi brand group. This strategy is also adopted by other conglomerates such as Louis Vuitton and Prada.
Some luxury companies use the strategy of focusing only on one brand and add other business segments such as what Armani, Polo Ralph Lauren, and Versace did.
Read on
Discount Luxury Brands
Big luxury brands offer discount and cheap luxury products under tough economic time.
This strategy is done in order to allow the positioning of the brand in the industry to differ depending on the number of brands and the number of business segments the company wants to compete in. This is the idea behind focus (mono brand) versus diversification (multi-brand). Gucci Group has more than 10 brands, including Gucci, Yves Saint Laurent, YSL Beauté and Sergio Rossi.
Weaknesses
The weaknesses of Gucci include instability in management and financial base. The instability of its management can affect the group’s corporate strategy and vision.
The financial base is weak and alarming, with a long term debt increase from $17 million in 1998 to $143 million in 1999 and…...

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