HERMÈS INTERNATIONAL BUSINESS PLAN AND STRATEGY

HERMÈS

International business plan and strategy

INGRID XIMENA CRUZ GALVÁN , JOSE GABRIEL JIMÉNEZ PINEDA, MAGNUS KRISTOFFER BRUNSBERG , TINO PIERRE JEAN PANDOLFI

Table of Contents

ABOUT HERMÈS

Paris or Hermès is a French manufacturer of luxury goods. The industry to which it belongs is the Luxury goods, producing textile and clothing. Contributing the most to the company are leather goods and leather goods, followed by ready-to-wear and accessories, silk, textiles and fragrances.

The company was founded in 1837 by Thierry Hermès. It started as a harness workshop in Paris. Originally, it sought to meet the needs of European nobles with saddles, bridles, and other leather riding gear. At the beginning of the 20th century, CharlesÉmile, brought the Hermès store to 24 Rue Du Faubourg Saint-Honoré in Paris, the store remained to this day and is the company's world headquarters.

Since Hermès started, has remained faithful to the artisanal model and humanist values. The uniqueness of Hermès is by the freedom to create, the constant quest for beautiful and good materials, and the transmission of exceptional know-how.

It is a family-run company, independent, and socially responsible for six generations. They are committed to maintaining the majority of its production in France. Hermès has 52 production sites, while developing its international distribution network of 300 stories in 45 countries.

Brand Essence

An independent house: Hermès remains committed to retaining the majority of its production in France, and to perpetuating its creative know-how. Its supported by a family-based shareholding structure. This dynamism drives the house forwards in keeping with its human values and commitment to transmission and sustainability. Hèrmes group has been listed in the CAC index since 2018 and joined the Euro Stoxx 50 index in 2021.

A house that creates social value:

Hermès demonstrates its attachment to creating social value that promotes sustainable growth both in France and abroad. Job creation is the clearest example. In 2021, 1000 people joined the company, including 600 in France

An entreprenurial spirit: The humanistic values of the Hermès craftsmanship is demonstrated in its freedom and abundance of creation and constant capacity for innovation, combined with exceptional know-how, new manufactures and store openings, in synergy with local cultures

A house of artisans and

Creative Freedom: Hermès is inspired by a new theme each year, the workers give full rein to their creativity, supported by artisanal know-how.

The creations are the fruit of their creators’ curiosity and of their artisans’ exceptional know-how, and they achieve the house’s goal, namely to accompany customers in their everyday lives, across a diverse range of activities

development is respectful of people and the environment.

High quality jobs: Hermès employys 1,595 people (31 Dec 21).

Hermès objects are manufactured mainly in France, across 52 production sites locates in 11 different regions They are looking to expand its production capacity by opening new sites, each on a human scale and creating 250 jobs on average .

Hermès Strategy

and transmission how manufactures objects in its exclusive 7,634 France pass excellence in to future Certain training hubs transmit ways that adapted for people with a range of disabilities.

Production Sites In France

Production is carried out in France across 52 sites, organised into regional hubs. This network is completed with twelve manufactures in other countries, located in Switzerland, Italy, the UK, the USA, Vietnam and Australia.

Customers at the core of an omnichannel network

The house has created veritable “houses for objects”, both online and in its international network of stores, that differ from one another through their unique offer.

The house brings its exceptional knowhow to 45 countries, through 303 stores that are each a facet of the same resolutely elegant spirit, one that is at once artisanal and innovative, contemporary and timeless.

”

“Houses of objects online… … and across the world

PESTLE

Political

Political regime: Middle East is a region that is full of resources, especially petroleum which makes countries in the region high profitable. Additionally, as years have demonstrated, most of these countries are ruled by authoritarian regimes or monarchies, which can create high social and political controversies. The diversity of cultures and religions causes the region to be constantly tense, conflicts like Shiism and Sunniism

Economic

Exchange rate: Volatile exchange rates might be prejudicial to brands, as they can affect the costs of primary goods, materials and production, which will affect pricing

Pressure on consumer spending: Changes in income levels can affect sales directly, as the impact modifies brand’s demand.

Social Trends: Changes in consumer tastes, preferences and attitude towards the luxury world will impact the demand

The media: they play a key role in influencing many aspects. Hermès can take advantage of this trend to better market and position its products

Leisure interests: Costumers around the world are giving more preference to experiential products over the traditional value proposition in the consumer cyclical sector

Demography: Age, income and gender structure can impact the demand for luxury products.

Social Values: The fashion industry has to constantly be on track of consumer values and attitudes so they can adapt their products and messaging to align with changing social values and trends

Technological

Digitalization: Fashion brands need to have a strong online presence and ecommerce capabilities that deliver an excellent customer experience to stay competitive For Luxury Brands, the same experience offered in stores is expected online. Innovation: Technological advances in materials production methods, design are rapidly changing, and the luxury industry needs to keep up with these advances

Legal

Intellectual property: Luxury Brands need to protect their creations through patents and trademarks. Labor laws: All brands need to comply with labor laws and regulations in the manufacturing process. Consumer protection: All products must meet safety and quality standards, in order to comply with consumer protection laws.

Environmental

Sustainability: It is known the impact that producing clothes and accessories have on the environment. Consumers are increasingly concerned about environmental issues forcing luxury brands to incorporate sustainable practices into their operations and products, to stay relevant and continue appealing to environmentally conscious consumers. Carbon footprint and impact: Luxury brands need to monitor their carbon footprint and take steps to reduce it, in order to comply with environmental regulations Additionally, protected and endangered species have to be taken into consideration when producing any product.

Hofstede’s Cultural Dimensions Theory

France Saudi Arabia

High in power distance, so people accept a hierarchical order in which everybody has a place and which needs no further justification

Is an individualist society. Parents make their children emotionally independent with regard to groups in which they belongs. One is only supposed to take care of oneself and one’s family.

Feminime culture. This may be indicated by factos as its famous welfare system, etc. Upper class scores feminine while the working class scores masculine

Structure and planning are required. Before meetings and negotiations they like to recive all necessary information.

Ability to adapt traditions easily to changed conditions, a strong propensity to save and invest, thrifitness, and perseverance in achieving results

Less relaxed and enjoy life les often tan is commonly assumed

Sightly collectivistic society. This is manifest in a close long-term commitment to the member ’group’,be that a family, extended family, or extended relationships

Is thus a feminine society .

Mantain rigid codes of belief and behaviour and are intolerant of unorthodox behaviour.

Strong concern with establishing the absolute thruth Normative in their thinking

Restrained society. Their actions are restrained by social norms and feel that indulging themselves is somewhat wrong

Porter’s five forces

Power of suppliers

More concentrated than the industry it sells to

No substitute for what the supplier provides Time 0 3 1 3 2 3 2 Time 5 2 1 4 3 2 1

Supplier does not depend heavily on the industry High swtiching costs

The industry’s products are standardized or undifferentiated

Bargaining power of buyers

Low switching costs in changing vendors

Buyers can credibly threaten to integrate backward

The product it purchases represents a significant fraction of its cost structure

Buyer earns low profits, is strapped for cash, or is otherwise under pressure to trim costs

Supplier can credibly threaten to integrate forward into the industry

The quality of buyers’ products is little affected by the industry’s product

Time 0 4 2 2 1 2 2 2 2 Time 5 4 1 2 1 2 2 2 2

Few buyers, or each one purchases large volumes relative to the size of a single vendor

Porter’s five forces

Competitors are numerous or are roughly equal in size and power Industry growth is slow

Threats of new entry

Exit barriers are high

Rivals are highly committed to the business and have aspirations for leadership

Rival offerings are nearly identical and there are few switching costs for buyers

Fixed costs are high, marginal costs are low

must

in large increments to be efficient The product is perishable

Porter´s 5 forces analysis

of substitution Bargaining power of suppliers Bargaining power of buyers

Rivalry among existing competitiors

Rivalry among existing competitiors

Lorem Ipsum dolor sitVrio

SWOT

Opportunities

O1 – Demographics, growing elite in SA

O2 – Digitalization, the metaverse

O3 – Innovation

O4 – Lower threat of new entry

Threats

T1 – Global political focus on sustainability

T2 – Volatile exchange rates

T3 – Labor Laws

T4 – Sustainability

T5 – Consumer protection

T6 – Higher threat of substitution

T7 – Carbon footprint and impact

Strengths

S1 – Exclusive design

S2 – Brand prestige

S3 – Craftmanship

S4 – Supply Chain Management

S5 – High quality materials

O1S2: Brand prestige to win over customers

O4S1S2: differentiate the brand by using prestige, and exclusive, highly sought after designs

O3O5S1:Use new innovations with NFT to protect intellectual rights on exclusive designs

T2S1S5: To keep high prices and margins, focus on added value

T3S3: Keep the values on craftmanship

T5S5: Utilize new standards to bring light on high quality materials

T6S1S3: Make sure to further make the products stand out vs substitutes by using what Hermes is best at

T7S4: Change the supply chain accordingly to minimize carbon footprint

T8S5: Use the pressure on consumers to promote everlasting pieces

Weaknesses

W1 – Reliance on exotic animal skins

W2 – Lacking digital presence

(O2W2: Invest in new innovations (metaverse) to reach customers on new platforms)

O3W1: Pioneer new practices while keeping brand quality

T1T4W1: Use the global focus on sustainability for good, to change own practices and gain more attention amongst customers