분야
docx1.1 What is LVMH?
1.2 LVMH’s five main business segments
1.2.1. Wines and Spirits
1.2.2. Fashion and Leather Goods
1.2.3. Perfumes and Cosmetics
1.2.4. Watches and Jewelry
1.2.5. Selective Retailing
1.3 Contribution of each segment to LVMH
2.Implementation of LVMH’s segment reporting
2.1.Traceable and common fixed costs
-Traceable fixed cost
1)Wine and Spirits segment
2)Fashion and Leather goods segment
3)Perfumes and Cosmetics
4)Watches and Jewelry segment
5)Selective Retailing
-Common Costs
2.1.3. Fixed costs that can be traceable or common depending on how LVMH defines its business segments.
2.2. LVMH’s investment, cost and profit centers
2.3. Segment reporting
2.3.1. Net Operating Income (NOI)
2.3.2. Average operating assets
2.3.3. Margin and Turnover
2.3.4. ROI (Return On Investment) & RI (Residual Income)
3.Suggestion
- Designer’s salary
Fashion and leather goods business segment has distinct kinds of fashion brands, such as Louis Vuitton, Fendi, Donna Karan, Marc Jacobs and so on. These brands are always required to present new models every year to fulfill customers’ rapidly changing needs. By hiring innovative and creative designers, LVMH creates apparels and accessories appealing to upscale segment of customers. Those costs for recruiting and retaining designers are not directly associated with unit production but they never arise if LVMH does not hire any designers.
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- Cost to get ISO 14001 certification
In 2008, Louis Vuitton just attained ISO 14001 certification for its Point-Neuf headquarters in Paris. To earn ISO 14001 certification, external audit is necessary. All the relevant costs including commission fee to audit agency, are traceable fixed costs because they will not be made without fashion and leather goods segment.
3) Perfumes and Cosmetics
- Set up cost for department of Quality and Sustainable Development
Parfums Christian Dior, one of Perfumes and Cosmetics business segment’s brands, set up its own department of Quality and Sustainable Development. The incurred cost is not really related to unit production but can be traceable fixed cost of Parfums Christian Dior. Since the department exists only for Parfums Christian Dior, without Christian Dior, any costs relevant to the department would not be incurred.
- Launching cost for new perfume and mascara
Parfums Givenchy launched the perfume Play, represented by Justin Timberlake, and the brand new mascara Phenomen`Eye and Soin Noir. All the costs for launching these goods are traceable fixed costs.
4) Watches and Jewelry segment
- Cost to hire a super model: Sophie Marceau
Sophie Marceau, one of the most famous actresses, became the face of Chaumet, symbolizing the brand in its new advertising campaign. The cost arisen by hiring Sophie Marceau is not connected with unit production and it can be traceable to watches and jewelry business segment.
- Costs of training skillful timepiece craftsmen
Certain part of high end watch should be hand assembled since it requires precise and sophisticated skills. Thus, training employees for years perfecting their talents is very crucial for success in the industry. The training cost is not lineally related to unit production but traceable fixed cost.
5) Selective Retailing
-Cost to open new shopping malls
DFS, which is so-called duty free shop, opened its Macao Galleria at the Four Seasons Shopping mall and it is also inaugurated in the Middle East at the Abu Dhabi airport. The relevant costs used for opening the new shopping malls are the fixed cost which is not related to sales of products. The costs are the traceable fixed cost of both DFS and Selective retailing business segment.
-Cost to build new website: treeslbm.com
Le Bon Marche, which runs a department store, launched its new internet website, treeslbm.com. Through this web site, E-shopping becomes available to customers and much information about the company can be offered. The launching cost is traceable for Le Bon Marche and Selective Retailing business segment.
- Common Costs
-Cost for the LVMH headquarter building maintenance
LVMH is the enterprise which consists of five business group. So the cost of the LVMH headquarter building for maintenance is fixed cost but not traceable.
-Cost to make LVMH’s annual report
To make an annual report of LVMH, each business group should get audited and financial statements of each business segment should be collected. The cost incurred during this procedure is fixed cost but not traceable.
2.1.3. Fixed costs that can be traceable or common depending on how LVMH defines its business segments.
- Advertising cost for every operation region
Under the current segmentation, the advertisement cost for each business category in LVMH enterprise is traceable fixed cost. For example, each business segment makes its own advertisements such as picture and video and posts them on magazine, newspaper and so on. However, since LVMH uses the common image and other advertising materials to its geographical markets, if LVMH categorizes its business by its geographical markets, the advertising cost would not be regarded as traceable fixed cost, but common fixed cost.
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