Leadership Assignment Name: Apoorva
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INTRODUCTION
French businessman Bernard Arnault is the richest person in Europe. He's worth an estimated
$80.8 billion, according to Bloomberg. As the chairman and CEO of Moet Hennessy Louis
Vuitton known as LVMH, the world's largest maker of luxury goods, Arnault is also the richest
person in the fashion industry. LVMH sells products that include Louis Vuitton handbags, Dom
Perignon Champagne, TAG Heuer watches, and Rimowa luxury suitcases,etc.
1. Early Years
Bernard Jean Étienne Arnault was born on 5 March 1949, in Roubaix, France. His mother,
Marie-Josèphe Savinel, daughter of Étienne Savinel, had a "fascination for Dior". His father,
manufacturer Jean Léon Arnault, a graduate of École Centrale Paris, owned the civil engineering
company Ferret-Savinel.
Arnault was educated at the Lycée Maxence Van Der Meersch in Roubaix, and the Lycée
Faidherbe in Lille. In 1971, he graduated from the École Polytechnique, France's leading
engineering school, and began work for his father's company. Three years later, after he
convinced his father to shift the focus of the company to real estate, Ferret-Savinel sold the
industrial construction division and was renamed Ferinel. Following the acquisition of a textile
company and relocation of their headquarters, the company renamed the real estate branch to
the George V Group. The real estate assets were later sold to Compagnie Générale des Eaux
(CGE), eventually becoming Nexity.
2. Preparation for Leadership
• Starting of career
Arnault began his career in 1971,at Ferret-Savinel, and was its president from 1978 to 1984. In
1984, Arnault, then a young real estate developer, heard that the French government was set to
choose someone to take over the Boussac Saint-Frères empire, a textile and retail conglomerate
that owned Christian Dior.
With the help of Antoine Bernheim, a senior partner of Lazard Frères, Arnault acquired the
Financière Agache, a luxury goods company. He became the CEO of Financière Agache and
subsequently won the bidding war for Boussac Saint-Frères, buying the group for a ceremonial
one franc and effectively took control of Boussac Saint-Frères. Along with Christian Dior,
Boussac's assets included the department store Le Bon Marché, the retail shop Conforama, and
the diapers manufacturer Peaudouce.
• Important life turning anecdotes
The cornerstone of his holding company was Christian Dior, which he single handedly brought
roaring back to life. Eventually, he would sell off the non-luxury assets of the company, and
begin an aggressive acquisition campaign to acquire other luxury brand companies. Eventually,
Arnault would assume control over the leading luxury products group known as LVMH Moët
Hennessy Louis Vuitton. Since this acquisition, he has successfully positioned the company as
the world’s leading luxury brand.
• Mentors
Bernard Arnault in an interview stated that the person who he admires most in business is
Warren Buffett. He is a long-term investor and has brilliant ideas and he sticks to them. The
other person who he happened to have known is Steve Jobs. What he admired about was his
capacity to execute and bring so many innovations to the market. It allowed him to build a
fascinating company. Warren and Steve have in common being very creative.
UNIT 1
a. Meaning of Leadership: Talk about the Leader’s intent, personal responsibility and
integrity, followers, influence over others, purpose and being a change agent
Bernard Arnault’s journey towards becoming the leader of the world’s most prominent brands
contains a lesson we can all benefit from. This lesson being, that our beginnings don’t determine
our destination. And that regardless of our education or lot in life, we can successfully journey,
expand, and thrive outside of our expertise and do extraordinary things.
.He is a self-made man and is called the Pope of Fashion. He built the world’s largest fashion
and luxury goods group and controls Christian Dior and LVMH with nearly 50 highly known
brands, including Marc Jacobs, Louis Vuitton bags and many more. He used hard-nosed tactics
to put his empire together for the last 20 years and clearly understood the worldwide potential
of his goods, when no one else did and he also had the capacity to exploit any situation. His
entrepreneurial background must have helped initially, when he took over the textile
conglomerate. Louis Vuitton was a family run business in those days and in mid Eighties and
he had to fight a bitter battle to gain control of this company.
His appreciators say that he has inborn vision of clever marketing, creative designs and knows
how to keep a tight control over his empire without a single slackening moment. He knows how
to conduct global business with an uncanny ability and stopped further acquisitions when time
was unfavourable.
He says. “What I have in mind every morning is that the desirability of a brand should be as
strong in ten years,” “It’s really the key to our success.”
“Why are brands like Louis Vuitton and Dior so successful?” Arnault asks. “They have these
two aspects, which may be contradictory: They are timeless, [and] they are at the utmost level
of modernity ... It’s like fire and water.”
Also, when it comes to insights related to Bernard Arnault’s success, he has quite clearly laid it
out for us in his own words:
“To be successful, you have to have a combination between modernity and timelessness.”
“The success of the group is made of the quality of the product, and the quality of the product
is a consequence of the extraordinary craftsmen and women that are working with us.”
a. Any examples which can help you differentiate your leader with a manager
Bernard Arnault is considered a leader because of his success in LVMH Company. The
company deals with fashion products, which makes it one of the toughest businesses to operate.
Despite the numerous changes that keep on arising in the fashion industry, Bernard is able to
keep pace with the changes (Givhan 2002).
Fashion business requires a leader who is able to identify what to modify or drop to enhance its
performance. Arnault is one such leader who accentuates success in LVMH. Under Arnault’s
enormous merchandise dexterities, LVMH has managed to rise into one of the biggest
companies in the manufacture and sale of cosmetics, jewellery, and perfumes.
Through his leadership, brands like Fendi, Vuitton, and Christian Dior gained popularity thus
becoming the most preferred perfumes. By comparing Arnault’s background and his success in
LVMH, one would not doubt that he is one the leaders that are rare to find. After graduating
with an engineering degree, he assisted his father in a construction company (Givhan 2002).
He always wished to trade in luxury products, a dream that led to him purchasing Boussac.
Later, he sold Boussac and purchased part of LVMH. In spite of having limited knowledge in
fashion industry, Arnault had leadership traits, which helped him gain control of the company
gradually. His ability to manage a business and creativity are some of the factors that make him
a great leader.
b. Has there been an instance of flaws in his leadership or leadership derailment
Nevertheless, his leadership has had several limitations. For instance, in his effort to expand his
conglomerate, Arnault ends up harming the young companies thus making it hard for them to
grow. In other words, his management style discourages competition, which is of great value to
customers.
Arnault has not succeeded at every conquest. In 2001 he lost what the media called the “handbag
war” for control of fabled Italian fashion house Gucci, to his French luxury rival, François
Pinault. Over the next decade, LVMH used a stealth tactic common among hedge funds—cash-
settled equity swaps—to secretly acquire 17% of Hermès, the 182-year-old maker of fine silk
scarves and the iconic Birkin bag. Hermès fought Arnault off in a protracted battle that ended
in 2017 with LVMH relinquishing most of its Hermès shares.
Some of the acquisitions did fail to generate income but the failures were too small to bring his
empire down. He had setbacks due to decline in tourism in the year 2004. But a leader always
knows how to pull through in good and bad situations and his ever-surfacing optimism stood by
his stead.
UNIT 2
His leadership style is highly appreciated in the Corporate world. Entry into luxury marketing
needs powerful backing and he received it from the French government which was looking for
someone to take over the textile empire. It is said that the sale of his Mediterranean home made
him exclaim that "When something has to be done, do it! In France we are full of good ideas,
but we rarely put them into practice" (Forbes, June 2, 1997)
His powerful friend Antoine Bernheim, MD of investment firm Lazard Freres arranged finance
and family arranged $15 million of their own money and the total was used to buy Dior, which
he said was the potential cornerstone of ‘luxury-goods supermarket’. Also it is believed to be a
brutal rise to power with opportunistic leadership strategies in which Henry Racamier, the
former chairman of LVMH’s Louis Vuitton was eliminated along with all top executives. His
decision making is ruthless, almost vicious and full of calculated risk taking. He knew how to
balance commerce and artistry by involving both sound management practices with creativity.
He was careful to be choosy when it came to picking his managers.
“He believed that to raise creative energy, a company must have managers with a certain love
for and understanding of artists” and he hired John Galliano, who could create unusually
melodramatic unconventional designs”
The old business house changed its profile overnight to display the most brilliant artistry. A
trained pianist, Arnault always maintained a creative eye and created a name for himself as the
most unique CEO of the world. He insisted on financial discipline without curbing artistic
innovation because he thought creativity counterbalances the commerce. He could be an
autocrat and showed it when he terminated services of Dior perfumes heads to replace them
with new US executives who became unpopular while company financially gained and this
move resulted in some of the timeless most enduring ‘star brands’ which he explained:
"Our strategy is to have some stars—and there are not many stars in the luxury business. What
is a star? It's a name that is the very best. It's a name that is very profitable. But the number of
true stars is less than I can count on both of my hands" (New York Times, March 25, 2001).
He insisted on financial discipline without curbing artistic innovation because he thought
creativity counterbalances the commerce. He could be an autocrat and showed it when he
terminated services of Dior perfumes heads to replace them with new US executives who
became unpopular while company financially gained and this move resulted in some of the
timeless most enduring ‘star brands’.
UNIT 3:
LVMH has successfully preserved a family spirit that places priority on long-term vision. The
Group’s vocation is to ensure the development of each of its Houses while respecting their
identities and their autonomy, providing the resources needed to create, produce and market
their products and services through carefully selected channels.
The four fundamental values articulated by Bernard Arnault are shared by every member of
LVMH. These four imperatives inspire excellence and constitute the pillars of our performance
and long-term success.
• Be creative and innovative. Creativity and innovation are part of our DNA. ...
• Deliver excellence. At LVMH, we never compromise on quality. ...
• Cultivate an entrepreneurial spirit. LVMH has an agile and decentralized organization that
encourages efficiency and responsiveness. ...
• BE COMMITTED TO POSITIVE IMPACT.
LVMH’s leadership has been sustained by a drumbeat of new-product launches, store openings
and an increased investment in communications. A key to his success is his personal view of
what makes an appropriate management style in this industry. His secret is to remain deeply
involved in the creative process -- far more than his peers -- convinced that the ability to match
effective executives with temperamental designers can make the difference between a star and
a failure in the luxury goods business.
Some elements of his management style result in “constrained freedom”. For example a
manager for Céline could recruit a person himself, independent of the central LVMH Human
Resources department, but he has to send a copy of the CV of the person he hired so that the
head office is kept aware of the new development. Though his managers are given autonomy,
they know they are being watched and they know who has the final word in case of any conflict.
Another concern is the ruthless pursuit of the bottom line. Managers are supported as long as
they make their numbers. Says one: “You have the freedom as long as you exceed your targets.
Once you do not…there is no freedom anymore.” The emphasis is on profit and any division or
company does not deliver is in danger of being be sold off. This approach contrasts with the
traditional and creative view of haute couture, which tolerates losses while the market-place
accepts its designs over a period of time. Managing star brands The central pillar of the LVMH
strategy is “star brands” coupled with innovation and creativity.
Strengths and weaknesses
Situational theories of leadership suppose, “Leaders choose the best course of action based upon
situational variables” . Prior to making any decision, leaders evaluate the situation to determine
the appropriate course to take. The same happens with Arnault. One of the Arnault’s strengths
is his ability to evaluate business environment and change his operation style to cope with the
prevailing situation.
For instance, Arnault started with purchasing majority of the luxury brands, which helped him
grow his financial base, as well as, expand his business. However, economic changes in the
early 21st century led to many people ceasing to use many luxury goods. To make sure that
LVMH continues to do well in the market, Barnard embarked on a quality improvement
strategy. His ability to maintain the brand quality is what has helped the company remain
competitive across the globe.
One of Arnault’s weaknesses is his ambition to establish a business conglomerate that
encompasses all luxury products. On one side, the ambition might be of significant benefit since
it helps to reinforce the financial base of the business. The problem arises when it comes to
managing all the brands.
Despite Arnault having leadership skills, he is unable to manage many brands leading to some
of his brands encountering financial challenges (McKee, Kemp & Spence 2013). In the early
2000, Barnard was forced to scale back some of his brands because he could not sustain them.
Arnault’s inability to manage many brands is what made him focus on a few brands
UNIT 4
He has human resource management ability, excellent taste, unflinching decision making, and
calculated risk taking. An autocratic leader, but capable of leaning on others when necessary,
and has great uncompromising vision which could energise others, and his entrepreneurial
initiatives have helped management theory because he could take his followers to an
emotionally spiritual level with his leadership. His is a focussed, centralised, decision oriented,
intrinsic leadership style of power, influence and position, with motivation, psychological
rapport, and he has taken personal leadership of management to a new height.
Arnault believes that innovation is the ultimate driver of growth and profitability. “Our whole
business is based on giving our artists and designers complete freedom to invent without limits,”
he says. LVHM allows each brand to run itself, headed by a creative director. Only 250 of the
over 56,000 employees are based at the Paris headquarters. The essence of the strategy is to
identify the right creative people and trust their instincts.
In the findings, it is clear LVMH has a well executed and progressive Human Resources
department and strategy, and “Human resources managers at LVMH operate at four levels:
corporate, regional, business group, and company. Corporate human resources managers mainly
provide adaptable guidelines and procedures to be adopted by the business groups and
companies” . In some areas, LVMH is already using best practices, but there are areas that the
company can improve on. LVMH needs to diversify their target demographics because the
younger generation, which has the most buying power, demands equality and prefers to interact
with companies they deem relatable.
They give high priority to collective intelligence, which is stimulated by internal development
programs designed to challenge their most audacious managers to transform their innovative
ideas into business plans. thet also foster an entrepreneurial spirit by identifying and supporting
the career growth of talents within our Maisons, ensuring their life-long success.
By being entrepreneurial and openly engaging with the world in an environment where different
generations collaborate and contribute their respective visions of the future, They are working
together to build the LVMH group of tomorrow.
References
Givhan, R 2002, ‘The French Connection: Bernard Arnault Built a Fashion Empire, but Don’t
Expect Any Air Kisses’, Washington Post, vol. 1 no. 1, pp. 13-19.
Vecchio, R 1987, ‘Situational Leadership Theory: An examination of a perspective
theory’, Journal of Applied Psychology, vol. 72 no. 3, pp. 444-451.
Wetlaufer, S 2001, ‘The Perfect Paradox of Star Brands: An Interview with Bernard Arnault of
LVMH’, Harvard Business Review, vol. 1 no. 1, p. 116.
http://www.answers.com/topic/bernard-arnault
Wikipedia
www.google.com
www. Forbes.com
