Hermes SWOT Analysis [Update 2022] ❤️

Hermes SWOT Analysis 2022

Hermes International SA (Hermes), a French designer, manufacturer, and marketer for consumer goods, is Hermes International SA. 

The company’s strengths include its distribution network, geographical presence, liquidity, and liquidity. However, financial performance is still a concern. 

The company is likely to grow through the global jewelry, watches, and accessories market, as well as store expansion. 

Its business operations could be affected by intense competition, changing consumer preferences, and a growing counterfeit goods market.

hermes swot analysis

The Case Study Description Hermes Paris Case Study

This case concerns the options for ownership structure within family-owned businesses. The HermA”s family took the company to the public market in 1993 with the double purpose of allowing members to leave the company by selling shares to the market and also generating money to finance the company’s expansion. 

15 years later as LVMH is preparing a hostile takeover attempt to take control of HermA”s family, they fight to safeguard its ownership by establishing the trust of the family to keep minor ownership rights in check.

About Hermes 

Hermes is a French luxury goods manufacturer and international company created in 1837 by Thierry Hermes in 1837.

The company was initially an establishment selling harnesses in Paris. The logo of the company has featured a Duc carriage and a horse since 1950. 

Hermes is an iconic brand as brand in luxurious products. Hermes has 14 product categories that include accessories, ties, leather as well as women’s and men’s wear perfumes, watches footwear, gloves, and tableware, as well as stationery, decorative arts jewelry, enamel, and wear.

Hermes is managed by two brothers Pierre-Alexis Dumas and Axel Dumas. Both are co-chairmen for Hermes. 

Axel Dumas is the Chief Executive Officer (CEO) Pierre-Alexis is the company’s artistic director.

His father Jean-Louis revolutionized Hermes to become an internationally renowned luxury brand.

Hermes is the most valued luxury brand for years. Presently, Hermes ranks 23rd among the Top Global brand names with a valuation of 18 billion USD.

Strengths In The Swot Analysis Of Hermes

❤️ Strong brand image: Hermes Birkin bags are a high-end luxury item that women can own. They range in price from $12,000 to over $200,000. Interbrand, a global brand valuation firm, listed Hermes on the 32 nd spot in the Best Global Brands. The brand’s products include leather goods, lifestyle, and ready-to-wear. With a rich history, exceptional quality, and impeccable craftsmanship, the company has managed to keep its brand distinct and valuable. Hermes is a luxury fashion house that exudes elegance and innovation.

❤️ Global presence: Hermes, a global brand that has 307 stores around the world, has its flagship store on Madison Avenue. There are more than 13,000 employees and the stores can be found in America, Russia, Asia, and Europe. It has revenues exceeding USD 7 billion and profits exceeding 2.5 billion as of 2018. It has a strong 181-year history. This can be attributed to its drive for creativity, consistency across all global markets, and unwavering commitment to long-term results rather than short-term gains.

❤️ Large product selection: There are many categories of products available by the brand, including furniture, jewelry, and leather goods, as well as wallpaper, tableware, petit, and fragrances. The strategy to diversify has created a strong brand and the brand strategy is consistent in each of its product categories.

❤️ Brand strategy: Hermes doesn’t encourage celebrity endorsements to build its brand image. In fact, it has avoided this type of marketing. Only celebrities who are A-listed and wealthy have access to the most exclusive and high-end products. Hermes doesn’t launch products or collections that are specific to a particular region. All products are uniform across the globe, giving it a consistent look. Their products are not available for sale or at discounted prices.

Weaknesses In The Swot Analysis Of Hermes

❤️ Competition: Louis Vuitton, the main competitor to Hermes, has been focusing its attention on its heritage and has been able to retain its customers. LV charges a lot for its bags and keeps strict control over who can sell them. Chanel has also increased its market share by offering classic, quilted cosmetics, bags, and fragrances. Christian Dior and Hugo Boss are also competitors. H&M, a fast-fashion company like ZARA has also taken over its market shares. Hermes must continue to evolve and differentiate their products in order to be in a better position in the luxury segment.

❤️ Imitation: Design pirates can now create fake products faster and more accurately online. Detail shots of products are uploaded within minutes of their launch. Half-billion dollars worth of counterfeit luxury goods were seized by the New York federal government. Hermes could combat counterfeit products by using on-demand manufacturing. The blockchain network allows machines to create designs in a specific number of units.

Opportunities In The Swot Analysis Of Hermes

❤️ Global expansion: Hermes’ strategy of global expansion is important to address the cyclical turndowns in some categories, wider economic, fluctuating consumer preferences, and changing demand. Although Hermes products such as jewelry and perfumes are increasing in sales and volume and contributing to the company’s revenue, they still have to match the success of its leather and saddlery divisions. The exclusivity-marketing model of Hermes could be a challenge in the global expansion of the various product ranges.

❤️ Increase brand equity: The brand is well-known for its expertise in the field of silk and ultra-luxury products made from leather. Hermes has expanded its product offerings into different categories, but the brand equity for those products is not as high as leather and silk. Watches are experiencing a slow growth process and only 3 percent of Hermes’ 5.2 billion annual revenue in 2016. Hermes must improve its brand equity and broad product lines.

Threats In The Swot Analysis Of Hermes

  • Brand Takeover: LVMH holds 22.3% of Hermes, and the company is taking every step to stop that percentage from increasing. In 2010, LVMH purchased a large stake in Hermes. Since then, the brand has been worried about a hostile takeover of LVMH. Hermes views this as more of a cultural battle than a financial one. Hermes created a separate family holding corporation that holds 50% of the shares to prevent LVMH from taking over.
  • Economic instability: Although the effects of the protectionist measures taken by the largest economies in the world have had a dampening effect, the brand is doing relatively well, with global trade rising by 5%. Trade was an important factor. Now, a lot depends on countries’ ability to withstand uncertainty and global liquidity shocks that are originating from the United States. However, the chief economist of the brand said that the company could be subject to payment risks if the trend continues.

Limitations of the SWOT Analysis for Hermes Pacific Investments Plc

While SWOT analysis is a popular tool for strategic planning, SWOT analysis is extensively used to plan strategic strategies However, the analysis has its fair share of drawbacks.

  • Certain aspects or capabilities of an organization can be both strengths and weaknesses at the same time. This is among the main drawbacks that SWOT analysis has. For instance, changing environmental regulations could be an opportunity and a threat to the company. However, however it could also be an opportunity in the sense that it allows the company to compete on the same level or even gain an advantage over competitors when it can develop its products more quickly than its competitors.
  • SWOT doesn’t provide a way to gain competitive advantages It is not a strategy to gain competitive advantage, therefore it should not be considered a solution in and of itself.
  • The matrix serves as an initial point of reference for discussions on how the suggested strategies can be implemented. It offered an evaluation window but did not provide an implementation plan that is based on the strategic competitiveness of Hermes Pacific Investments Plc.
  • The SWOT model is a static analysis that analyzes the existing conditions and a small number of potential modifications. As the environment, circumstances threats, strategies, and circumstances evolve, the dynamic of a competitive setting will not be apparent through a single matrix.
  • SWOT analysis can make a firm overemphasize the importance of a single external or internal aspect when formulating strategies. There are interrelations between the important external and internal aspects that SWOT cannot reveal that could be crucial in determining strategies.

The SWOT Analysis for Hermes is weighted. Pacific Investments Plc

Given the above-stated weaknesses of the SWOT analysis/ matrix, the corporate management determined to give an appropriate amount of weightage to every internal strength and weakness of the business. 

Companies also evaluate the probability of future events happening in the near future, and the impact they can be on the performance of the company.

This technique is known as a weighted SWOT analysis. It’s better than a simple SWOT analysis since with the Weighted SWOT Analysis Hermes Pacific Investments Plc managers are able to focus on the most important aspects and eliminate the less important ones. 

This also helps solve the problem of a long list which is when organizations make an extensive list, but none is considered to be important.

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