High Fashion Fights Recession The Great Recession Essay

High Fashion Fights Recession The cause of the Great Recession created challenges for the high end of the fashion industry within the luxury goods industry. Some of the items include fancy clothing, handbags, jewelry, perfumes, and watches. The total luxury goods industry sales fell by 20% in 2009 (Parks, 2016). This is when Porter’s Five Forces come into play when understanding where power lies in a business situation (Team, 1996). Discussion The Great Recession is a term that represents the sharp decline in economic activity during the late 2000s, which is generally considered the largest downturn since the Great Depression (Investopedia , n.d.). During the Great Recession many firms cut prices, but quietly. The only firm that stood rock solid was the industry leader LVMH, which claimed that it never puts its products on sales at a discount (Parks, 2016). The bloodbath in the Great Recession forced the weaker players such as Christian Lacroix and Escada to file for bankruptcy. However, it made stronger players such as LVMH even more formidable. They benefitted from an established pattern in high fashion, the flight to quality (Parks, 2016). In other words, when people have less money, they spend it on the best. As the recession became worse, many middle-class customers in economically depressed, developed economies began to hunt for value instead of triviality and showing off (Parks, 2016). Rivalry â€Å"In addition to managing interfirm rivalry, how to manage the fickleShow MoreRelatedGlobal Strategy High Fashion Fights Recession Essay1097 Words   |  5 Pages4.1 – High Fashion Fights Recession Consider the following question: 1. Using the Five Forces Framework, how would you characterize the competition in the luxury goods industry? 2. Why was discounting looked down upon by industry peers, all of which were differentiated or focus competitors? 3. What would be the likely challenges in emerging markets for luxury goods firms? 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