Okonkwo Prelims

Figure 9.2 shows some of the identified features that could appear on this

level of the business strategy model of a luxury brand.

Level 2: identify the strategic challenge

This level of analysis features the existing and/or potential problems the

company is facing or is likely to face in the future. A luxury company

should normally have a set of current business problems or potential prob-

lems that act as a challenge. Some of these problems would have been

uncovered during the current situation analysis in Level 1. Others might be

spotted through identifying what competitors have missed in their strategy

development.

In order to spot a luxury company’s major strategic challenge, it is wise

to list all the identified problems or potential problems and analyse them

singularly. This exercise will usually provide an insight into other hidden

problems, however minor. It might also lead to the identification of a new set

of problems. In this case, the set of problems should be prioritized accord-

ing to their impact on the business. It usually reveals a major strategic prob-

lem with connected features to other minor problems. The major problem is

summed up as the Strategic Challenge. For example, a luxury brand might

discover that it is losing its market share, while not necessarily declining in

sales or profitability. The reason for the loss of market share might be that

the brand’s competitors have adopted new channels of distribution like e-

retail, thereby tapping a new extended market of luxury consumers. In this

case, the strategic challenge of the brand would be the adoption of e-

commerce.

Figure 9.3 provides a graphical representation of some features of the

strategic challenge.

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luxury fashion branding

Level 1: current situation

Core

competences

Luxury

consumer

Luxury

competition

Brand equity

Individualistic

Tradition &

Craftsmanship heritage

Innovative &

creative talent

Intelligent Demanding Ethical

Globalization Diversification E-commerce Democratization

Figure 9.2 The current situation analysis level of the luxury fashion business

model