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Organizational Culture: Louis Vuitton, Chanel, and Gucci

Introduction

Organizational behavior is a combination of various essential factors, ranging from individual perspectives and actions, theories of motivation, communication strategies to every business’s overall composition and culture. A company is a complex unit that is not only designed to generate profits but to create an atmosphere that stimulates workers to operate successfully and efficiently. Thus, understanding the organizational culture of luxury high-class fashion brands is vital, as these are highly profitable and well-established companies that exist over a long period, constantly develop, and currently affect people all over the world even if they are not involved in the fashion industry. Overall, research indicates that such brands as Louis Vuitton, Chanel, and Gucci utilize the people-oriented organizational culture as their central approach.

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Background of the “Major Component” Area

One of the major components of the Organizational Behavior Theory is organizational culture. Literature suggests that it is especially valuable since it can be the company’s “strongest assets, as well as its biggest liability” (The Saylor Foundation, 2017, p. 644). Organizational culture refers to the principles, expectations, and beliefs members of a company share when executing their tasks. It is a non-specific term that includes everything from the dress code to the acceptance of unpaid overtime. Managers can guide and shape their organization’s culture to increase performance through rewarding aggressive, competitive behavior, or fostering a happy employee base (The Saylor Foundation, 2017). At its core, it deals with the assumptions shared and communicated by employees’ interactions in a company. Organizational culture can even include physical aspects of a company, such as how they set up their workspace and decorations as well as the size of senior employee offices.

The successful creation and communication of organizational culture directly depend on business leaders. Although a two-sided relationship between culture and leadership is required, competent leaders may be regarded as the main architects of the corporate culture. In turn, an established culture subsequently has a substantial impact on an appropriate kind of leadership, as well. In general, the significant role of leaders in maintaining organizational culture is determined by the fact that a deeply and properly embedded culture illustrates how employees should behave to increase productivity and achieve corporate goals. At the same time, the company’s behavioral framework ensures workers’ job satisfaction – employees are frequently more motivated when they feel the leader’s support. From this perspective job satisfaction, leadership, and organizational culture are inextricably connected.

All three luxury brands being analyzed focus on being people-oriented, meaning respect and dignity is at the core of how each organization treats its workers. Studies comparing people-oriented organizations to companies with other priorities found that the former managed to retain workers for approximately a year longer (The Saylor Foundation, 2017). Louis Vuitton, Chanel, and Gucci are companies that rely on expertise and creativity to compete in the luxury market, and all seek to hold on to their highly skilled workforce. The technical expertise required to produce and innovate in the cosmetics, perfume, and clothing industries are rare, particularly in regards to high-end products. Thus, retaining experts capable of such work is vital to any luxury brand. Furthermore, the fashion industry requires able and creative workers to design and set trends, another category of employees that must be maintained.

Background of the Companies

The phrases luxury brands or luxury goods in English are utilized to describe excellent products and items. Research suggests various additional connotations that luxury goods provide, which include craftsmanship, culture, character, rarity worth, and price (Choi & Lee, 2016). Traditionally, people tend to associate luxury brands with elegance instead of building the negative implications of items’ costs due to the different companies’ image and business models. Moreover, luxury fashion products are a symbol of premium and high-class life to people worldwide. Importantly, customers tend to not only purchase bags or clothing items for their enjoyment, but it also became a manifestation of a specific image, which is an essential function of luxury fashion (Choi & Lee, 2016). In addition, working for a luxury brand tends to be associated with prestige, as the fashion industry is known for various exceptional possibilities. Working for a fashion luxury company is linked with cultural importance, chic, opportunities, and good-quality organizational culture.

First, one of the most prominent luxury fashion brands that ever exist is Louis Vuitton (LV). It was initially established as a business in 1854, notorious for inventing a unique bag for a long journey on a carriage (Choi & Lee, 2016). At first, Louis Vuitton’s production was focused on leather goods, including expensive luggage, but it started expanding by developing various accessories in 1986 (Donzé & Wubs, 2018). At the beginning of the 1980s, LV’s growth was outstanding, as the gross sales grew from “€51.7 million in 1981 to €213.4 million in 1985, and extraordinarily high profitability” (Donzé & Wubs, 2018, p. 67). The company’s management decided to invest the money collected to acquire other companies, including Parfums Givenchy.

After the series of purchases, the business Moët Hennessy and Louis Vuitton decided to join and form LVMH in 1987. The decision to merge was made because the two companies found a limit to their future development. Additionally, they saw economic potential in investing in other French brands and expanding their outputs to eventually “dominate the consumer goods luxury sector” (Donzé & Wubs, 2018, p. 67). LV alone, by 2014, had declared ownership of seventeen different production plants worldwide, which focused on producing bags, accessories, and shoes. Lastly, various influential people, including Marc Jacobs, were essential for the company’s growth and branding.

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Furthermore, the luxury fashion brand Chanel was initially created as a small business by Gabrielle Bonheur Chanel, also known as Coco Chanel. Founded in 1910, the brand, as was recalled by the company members, “was built around her rather than being built by her” (Verwey, 2018, p. 8). Currently, the brand Chanel is known for being a French fashion house with a specialization in bags, accessories, beauty products, couture, and jewelry. Overall, the business is considered one of the most highly valued and archetypal fashion labels in the industry. This robust reputation symbolizes its outstanding performance, quality, and overall value, as the company’s net worth has reached 7.3 billion dollars in May of 2017 (Verwey, 2018). Young people, including Millennials, consider Chanel to be the most exemplary luxury brand, followed by Dior and other companies (Verwey, 2018). Overall, Chanel heritage’s persistence and progression have remained core to its branding and business approach.

Lastly, Gucci is a luxury fashion brand that focuses on apparel and leather products and is a portion of the Gucci Group currently controlled by a business called Kering. The company’s original creator is a man named Guccio Gucci in 1921, who lived in the Italian city of Florence (Kasztalska, 2018). Notably, Guccio Gucci, the founder of one of the most reputable companies designing opulent leather accessories, originally migrated to France to work in upscale resorts in Paris (Kasztalska, 2018). As a fashion brand, Gucci was relatively successful until the 1980s; however, the founders’ family’s subsequent disagreements eventually led to the company filing for bankruptcy.

Thus, the French concern Kering had obtained control over 60 percent of Gucci Group in the early 2000s. As of now, Gucci is worth “4.2 billion euro worldwide, it is on the 51st position of the most profitable brands according to the 2017 Interbrand ranking” (Kasztalska, 2018, p. 221). It is also one of the most reputable Italian fashion brands overall, as it possesses 278 stores worldwide, multiple warehouses, and exclusive department stores. In 2017, Gucci accumulated over 9 billion dollars of net worth, making it a multi-billion dollar business (Kasztalska, 2018). Overall, Louis Vuitton, Chanel, and Gucci are exceptionally successful companies that have done a lot for the fashion industry as a whole.

Implications of Organizational Culture

Louis Vuitton, sometimes referred to as Moët Hennessy Louis Vuitton (LVMH), since the two companies’ merger, is a French corporation specializing in luxury goods. It has communicated its commitment to putting its employees first by stating that respect for people in the center of its organizational approach (LVMH, 2017). This indicates a thorough emphasis on a people-oriented culture at Louis Vuitton. Practically, this is achieved by maintaining dignity and respect for their entire workforce through progressive pay increases for older employees. Younger workers are compensated with training programs that develop their technical and professional skills (LVMH, 2017). Internal training is a large part of Louis Vuitton’s organizational culture, allowing employees to develop and progress at the company continually. This approach also communicates respect to its staff, as they are not obligated to stay at Louis Vuitton because of the complimentary training. Instead, employees feel like the company values their self-improvement, regardless of their long-term career plans. In addition, the company categorically prohibits any discrimination regarding work hours and break times, recruiting, compensation, training, performance appraisal, job security, eligibility for maternity leave, vacation leave, workplace health and safety, assignment of positions, and career advancement (Talent & perspective, n.d.).

Creativity is one of the most essential elements of LVMH’s corporate culture. “Creative passion” may be regarded as the tagline of Louis Vuitton (Donzé & Wubs, 2018). However, the definition and perception of the process of creativity differ in luxury and mass-market fashion businesses. In the luxury fashion industry, creativity is not supposed to be “a matter of providing novelty and usefulness” (Donzé & Wubs, 2018, p. 64). It is related to the concept of uniqueness and the idea that “luxury goods are handcrafted or ‘created’ by artisans rather than being designed by anonymous factory art directors and manufactured in industrial plants” (Donzé & Wubs, 2018, p. 64). However, this definition of creativity by the luxury industry is a widespread myth largely maintained by business school professors and consultants.

At the same time, high-end brands regard artisans as artists whose creativity is inextricably linked with traditions. For Louis Vuitton, creativity is “a way to emphasize the historical continuity of traditional know-how and the closeness with art” (Donzé & Wubs, 2018, p. 64). For mass-market fashion brands, novelty is a highly significant element and part of the designers’ general creation context. In turn, for the luxury segment of fashion, a deep historical context is immeasurably important. That is why it is possible to state that respect for the company’s traditions as the basis of employees’ creativity is an essential element of LVMH’s organizational culture that ensures its success throughout history.

Chanel is a French luxury brand that focuses on high-class fashion for women. Chanel may be defined as a profoundly human-driven and customer-oriented company committed to the creation of long-term values for society and the brand. Even though Chanel inevitably follows its founder’s legacy, it defines innovation, reinvention, and modernity expressed through creativity as the essential elements of the company’s culture. Chanel’s internal mission is “to maintain the conditions in which creation thrives, believing that creativity and beauty are essential drivers of progress” (Chanel, 2018, p. 2). In addition, the company emphasizes the significance of its employees and believes that the provision of an appropriate environment stimulates their creativity.

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Since its foundation, Chanel has been fully committed to the development of the brand’s long-term value. In the present day, this value is directly connected with business sustainability and the company’s contribution to the social and environmental ecosystems of its operation. In addition, Chanel’s long-term value is reflected in its organizational culture. As a matter of fact, culture is based on three major components – committed luxury leaders, a creation-driven performance, and a human-driven operation (Chanel, 2018). The company identifies creation following the experience received throughout history as its top priority. In order to preserve creation, Chanel invests in the development of its employees’ skills and support of modern technologies.

Similar to Louis Vuitton, Chanel operates on a people-oriented strategy, with a focus on family and philanthropy. Chanel has generous parental-leave benefits for both new mothers and fathers (Chanel, 2018). This parental leave covers more than just childbirth and includes the adoption of a child or becoming surrogate parents. Additionally, Chanel has a foundation that pledges to match the charitable donations of its workers. Similar to Louis Vuitton, there is an emphasis on employee development, including training programs and compensation packages for employees that seek to expand their skills (Chanel, 2018). Chanel designs its workplaces to reduce hierarchy and allow a free exchange of ideas, vital to creative work. Together, these programs communicate respect for the workforce and create a sense of dignity, as an employee can feel like their company respects their decisions. Trust is an essential part of a people-oriented strategy, which is achieved by allowing employees to self-develop and freely interact in an open workplace.

Lastly, the company Gucci is an Italian luxury brand with a focus on handbags and fashion accessories. Employee happiness is important to their organizational culture and is created through fairness and camaraderie (Gucci, n.d.). This approach is described on their Equilibrium webpage that details their beliefs as a company. Gucci attempts to be egalitarian, allowing employees to voice opinions and concerns. Ideas are judged on their own merit and not the seniority of the speaker. This reinforces the respect and dignity of each worker and is designed to lead to a happier, more productive workplace (Gucci, n.d.). However, in contrast to the other two companies, Gucci’s organizational culture report is significantly smaller and less detailed.

Gucci defines its employees’ equality, diversity, and inclusion as the main components that currently form its organizational culture and business strategies. The company’s overarching target implies the achievement of gender parity at all levels by 2025, and this goal’s achievement is constantly monitored (“Diversity at Gucci,” n.d.). Moreover, Gucci has signed the “UN LGBT Business Conduct Standards,” the new standards of the United Nations developed for companies to protect the LGBTI individuals’ human rights (“Diversity at Gucci,” n.d). These standards include the elimination of all kinds of workplace discrimination. In addition, they guarantee that the company’s business operations do not lead to discrimination against suppliers, customers, or public members. For the cultivation of diversity and equality, Gucci launched multiple programs related to the company’s partnership with fashion schools in different countries across the globe. Moreover, these programs aim to promote people’s participation in collective communities across borders and generations.

Conclusion

In conclusion, comprehending organizational culture is an integral part of understanding a company’s behavior. In the case of the luxury brands Louis Vuitton, Chanel, and Gucci, there is a people-oriented strategy in place to create a culture of respect and dignity. All three brands have succeeded due to creating a work environment where skilled and creative professionals want to stay. These companies utilize development programs and generous benefits packages to promote employee happiness and loyalty. As a result of such an organizational culture, workers in all three companies benefit and are made to feel like valued members of the corporation. However, there are several differences in the corporate cultures of the three companies. Louis Vuitton, Chanel, and Gucci emphasize the significance of their employees’ job satisfaction. At the same time, there are additional focuses that vary – while Louis Vuitton values its historical heritage, Chanel defines innovation, reinvention, and modernity expressed through creativity as the essential elements of the company’s culture. In turn, for Gucci, the happiness of its employees and their inclusion, diversity, and equality is immeasurably essential.

References

Chanel. (2018). Report to society [PDF document]. Web.

Choi, J., & Lee, M. (2016). A study on the design changes and the acceptance of identity on luxury brand bags. Journal of Fashion Business, 20(6), 114-134. Web.

Diversity at Gucci. (n.d.). Gucci. 2020, Web.

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Donzé, P., & Wubs, B. (2018). LVMH: Storytelling and organizing creativity in luxury and fashion. In R. L. Blaszczyk & V. Pouillard (Eds.), European fashion: The creation of a global industry (pp. 63-85). Manchester University Press.

Gucci. (n.d.). Our corporate culture. Equilibrium. Web.

Kasztalska, A. (Ed.) (2018). Proceedings of the CBU international conference on innovations in science and education. Open Journal Systems. Web.

LVMH. 2017 social responsibility report [PDF document]. Web.

Talent & perspective. (n.d.). LVMH. 2020, Web.

The Saylor Foundation. (2017). Organizational behavior. University of Minnesota Libraries Publishing.

Verwey, S. (2018). A case study: Chanel or Gabrielle? Authenticity and iconic branding. Journal of Management and World Business Research, 14(1), 1-23. Web.

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