The Battle Over Gucci Group - Essay Example

To enable Gucci to regain its position in the market, Domenico De Sole – Gucci’s president and CEO lead, and Tom Ford – Gucci’s creative director combined their individual talents.  Eventually, the company started selling its shares to the public market.

Strategic Problem

The Ability of Ford to Design and Create a Brand Image for Gucci

The problem with heavily relying on a single designer is the fact that business opportunity for Gucci decreases as soon as Ford left the company.

Going into Public Market

Since Gucci was financially performing well at the time the company announced its initial public offering; well-known companies such as LVMH and PPR were fighting over who gets the biggest share in Gucci.  The problem with selling the company’s shares to the public market is the fact that shareholders who have the highest percentage of

shares could have the benefit to rule over the company. 

Another problem with going into the public market is related to its vulnerability to the U.S. economic performance including the financial crisis that may occur around the world.  Once the economy becomes unstable, there is a huge possibility that the stock value of company shares will go down.

Tactical Problem

Gucci’s Designer

Throughout Gucci’s success in the global market, the company heavily relied on Ford without training other designers with regard to Gucci’s fashion ideas and its target market.  The absence of well-trained and competitive designers could place the company in danger as soon as Ford decided to leave the company.

Going into Public Market

Aggressively selling Gucci’s shares in the stock market without controlling the number of shares issued in the public market may cause the company owner (s) to lose their power to manage the business operations of the company.

Alternative Strategy

In order to become a conglomerate multi-branded global company, Gucci should have entered into a business partnership or joint venture with other related companies instead of heavily relying on the selling of the company’s shares.

Recommendations

Gucci could promote a global design competition to enable the company to locate highly

competitive young designers. Through this type of competition, the company can identify the unique talents of each young designer.  To win a long-term commitment from selected designers, Gucci could negotiate the packages and benefits which will be given to them in exchange for their service.

With regards to selling stocks, the company should carefully monitor the company shares they issue to the public. As soon as the company has recovered excess revenue, the company should buy back some of the shares the company has sold in the past.