Intrapreneurship Plan
LVMH evolved from a family-owned winery from way back in 1593 into the sophisticated LVMH Group in present time and centuries later, taking pride in the acquisition of numerous elegant fashion houses and successful partnership with famous designers, craftsmen and artisans in Europe (LVMH#1, 2016). It can be gleaned that its supply chain management involves mostly suppliers and artists from across Europe and Latin America. While it has shipped Cognac in China since the 16th century, and opened its first LV store at the Peninsula Hotel in Beijing in 1992, it remained elusive to the Asian Market (LVMH #2, 2016). Thus, I see a big opportunity for the company to explore other areas such as the Asia-Pacific regions where low costs materials can also be sourced instead of depending its entire production and operational capacity in European channels. I see this as an innovative idea as it will address supply chain management problems such as cost, quality and delivery or shipment of raw materials and other concerns. Without compromising its status of being a high-end retail store, it can establish back up supply chains in Asia where costs are relatively lower than in Europe. LVMH may also use this to enhance its corporate image by partnering with low income countries and championing philanthropic activities in the host communities other than concentrating in sophisticated Europe particularly in global issues such as climate change and other environmental concerns. Introducing sustainability as a core value and practice in business is said to be one of society’s most promising means for safeguarding natural resources and eco-systems (Ephemera, 2016) and LVMH takes aggressive move on this matter.
Thus, without sacrificing elegance and glamour, LVMH shows to the world that it is willing and able to foster ecological development initiatives by helping these countries maximize the use of their natural resources in a sustainable manner.
While at first this plan of action is seemingly costly as it considers exploring areas thousands of miles away, but with the use of modern technology, this can be done systematically and cost efficiently which means that in the long run, any capital investments that the company will put in this endeavor may be recouped. This is because accessing lower costs supply chain will surely lower overhead expenses and at the same time it will have a chance for market expansions in these regions. Many fashion retail houses which are as popular and successful as LVMH have already been involved in the principle of ethical economics; and it is high time that the company pursue specific actions towards this end in a more assertive way and in areas whose vulnerability on the effects of climate change is very high and significant. Because, sustainable development is not just a fad or a trend but it has a major impact to the continued successful existence even of companies that have been pioneers in their line of business as consumers all across the globe have now become increasingly aware of current issues on environment and ecology and would willingly patronize or support products that are eco-friendly. LVMH will be known not only as luxury goods conglomerate but a company that minds not only the sustainability but the social responsiveness of its product lines and this will translate into positive bottom line.
Thus, a new breed of loyal customers particularly those in high society whose voice matters will emerge.
This new value proposition will work on the principle of social intrapreneurship which creates and executes business in the context of its social positive impact (The Social Intrepreneur: A Field Guide for Corporate Changemakers, 2008). This plan will involve a number of strategic departments but first and foremost it should obtain buy in of senior management lest it will not progress from the drawing table as it entails considerable costs inputs and other resources such as financial, personnel, technological and other logistical concerns.
A strategic team that will include supply planners, buyers, designers, information technology specialists, production managers and other technical people will be part of the planning stage and the implementation phase. The project will start with the brainstorming sessions of the strategic team. After the concept is finalized the research and development unit together with the information technology department will conduct extensive research on possible supply chains in the selected region (Asia-Pacific). Once a particular host country or community is identified to be a potential source of raw materials and labor (including artisans, designers and craftsmen), the procurement team will contact the supply chains and make the proposition for possible business relationship. Since LVMH is already an established brand, creating a new supply chain will not necessarily affect the quality or salability of the products; in fact it may even boost marketability particularly if the company will use massive promotional campaign that will highlight the sustainability and social responsiveness efforts that are involved in the consideration and selection of the alternative supply chain or the community.
Thus, the company while it enhances its corporate image may also expand its market and ultimately its profitability by creating a new breed of artisans and craftsmen as well as product lines that may be launched in the host country or back to European markets.
While it may be easy to put these ideas in the planning board, the resources such as manpower, logistics and the corresponding budget allocation for every activity and task shall also be put in place. These include man-hours and other logistics and equipment e.g. hardware and software to be used in the research pre and post implementation i.e., product experimentation/prototypes, soft launch, and other activities requiring technological advancements. Pre-implementation stage will be allotted about three months or one quarter. The actual procurement and setting up of supply channels also takes time as matters such as local culture and policies on importation of the host community will also be handled. The design execution will be given another quarter which will start as soon as raw materials are shipped. Then this is followed by the production stage. Once the desired product is completed or achieved the marketing and promotion units take over. All of these activities are expected to take about a year to complete or execute.
What is most vital here is the willingness or openness of top management to pursue the intrapreneurial idea and as such, the company will continue to have its own roster of highly committed, motivated and passionate workforce whose mindset and core values are anchored on the sustainability of the company and ultimately this will result in greater productivity and profitability (Ahmad, Nasurdin and Zainal, 2012).
References
LVMH. (2016). Retrieved from http://www.lvmh.com/group/milestones/1593-to-the-present
Lehner, M and Halliday, SV. (2016, February) Ephemera:Branding Sustainability: Opportunity and risk behind a brand-based approach to sustainable markets. Retrieved from http://www.ephemerajournal.org/contribution/branding-sustainability-opportunity-and-risk-behind-brand-based-approach-sustainable
Allianz. (2008). The Social Intrapreneur: A Field Guide to Corporate Changemakers.
Retrieved from https://www.allianz.com/v_1339502342000/media/current/en/press/news/studies/downloads/thesocialintrapreneur_2008.pdf
Ahmad, N.H, Nasurdin, A.M. and Zainal, S.R.M. (2012). Intrapreneurship to Enhance Job Performance: The Role of Pro-Intrapreneurship Organizational Architecture. Retrieved from http://www.ibimapublishing.com/journals/JIMSME/2012/868880/868880.pdf
