Luxury and Speed at Louis Vuitton
This activity is important because agile organizations rely on uniquely flexible, organic structures that can respond quickly to customer and market needs. Managers should be aware of this type of structure, as it is increasingly needed in global markets where the time from manufacturing to stores is faster than ever.
The goal of this activity is to demonstrate your understanding of organizational structure by reading a case and answering questions that follow.
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Read the following case about Louis Vuitton and choose the best answer to each question.
Agile production is the application of advanced technology, processes and employee training that allow a company to respond quickly and efficiently to market needs, while maintaining quality.
Louis Vuitton, a private $50 billion company founded in 1854, is a “suborganization” of Louis Vuitton Moët Hennessy (LVMH), a public company. LVMH has a decentralized structure that allows its sub-organizations to operate independently.
Quality is synonymous with Louis Vuitton (LV) luxury leather goods, but certainly not what you think of when hearing “agile production.” However, Louis Vuitton is a leader in luxury goods time-to-market manufacturing, with low production quality defects and work processes that rely on highly skilled workers.
How can it be possible to combine speed, quality, and changing trends? Louis Vuitton credits agile production. With 460 stores in 50 countries in 2018, the newest 2019 manufacturing sites in France have natural light, fewer supervisors and modular workstations. Along with the fast-to-market, high-quality processes, the company reduces waste and meets environmental protection standards.
Hiring highly skilled employees is very important because workers may complete any part of the product. The company states that it hires only 10% of applicants and that they must have “superior skills.” Even then, the new employees take part in six months of training. It’s not just the employees who are highly skilled. The high-tech machines easily switch modes to adapt to the stage of production. The gains are not just in speed but in lower defects and fewer returns.
The parent company LVMH states that its goal is for Louis Vuitton to “strive to master their distribution: in this way, they offer their clientele unique purchasing experiences.”
Question 1: Louis Vuitton would be considered what type of organization?
Question 2: The business environment for Louis Vuitton would be considered ________ and, therefore, needing ________.
a. Stable; low-cost
b. Dynamic; Stability
c. Low-cost; stability
d. Dynamic; Flexibility
e. Stable; Stability
Question 3: A key part of agile work at Louis Vuitton is having employees who are?
a. Not too specialized and can work at different stages of the production process.
b. Able to train other employees in their specialization.
c. From other industries from which they can bring ideas for new products.
d. Able to work in a highly centralized, formalized environment.
e. Highly specialized and experts in one area of production.
Question 4: The Louis Vuitton new manufacturing sites in France are not consolidated into one very large factory, so the smaller size will help?
a. Increase centralization.
b. Decrease organic nature.
c. Increase formalization
d. Lower formalization.
e. Increase span of control.