building and sustaining hidden monopoly through organizational design: luxottica oakley merger,a...
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R I S E A N D F A L L
A AY U S H I G U P TA K R I T I D O N E R I A N E H A S I N G H
R E H A N AT I Q U L L A S U P R E E T AG RAWA L
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Evolution of Oakley
1975
1984
1986
1995
1998
2001
2007
Handgrips Sunglasses Tour de France
Enlisted asPublic
company
Athletic Shoe Retail stores Merger
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Oakley’s Strategy
Niche market
Quality products
PatentsSelective distributi
on
Endorsements
320 patents 249 trademarks
Andre AgassiMichael JordanGreg Le Mond
Fox RacingOliver PeoplesPaul Smith Spectacles
O –frameFrogskinPRIZM
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Chairman,
President
CEO
SVP, Mfg. & Sourcin
g
VP, Finance
VP, US Sales
VP, International
SalesVP, R&D Senior
Advisor
Oakley’s Structure
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James Jannard
$4.1 billion net worth
#142 on Forbes 400
Aggressive, headstrong, “mad scientist”
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September, 1997
• Link Newcomb
April, 1999
• William D. Schmidt
October, 1999 • Jim Jannard
September. 2005
• Scott Olivet
August, 2009
• Colin Baden
Changes in Strategy
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LUXOTTICA
Product and operations
CEO
CIPOFoothill ranch
R&D, Manufacturing
VP, R&DSVP,
Manufacturing
Marketing CEO
Marketing,Milan
Retail,Ohio
Oakley’s “O”
stores
Wholesale,
New York
Oakley under Luxottica
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Luxottica is a global leader in the design, manufacture and distribution of fashion,
luxury and sports eyewear with high technical and stylistic quality.
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1961 - Agordo, ItalyLeonardo del Vecchio
150 countries
7,400 stores79,000 employees
€8.837 billion (2015)
€1.861 billion (2015)
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THE ILLUSION OF CHOICE
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Leonardo del VecchioUS$17.3 billion
Source: http://www.forbes.com/global/2002/0204/028.html
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Product Development• 2000 designs each year
Manufacturing• Italy, China, India, Brazil
Logistics• 18 DCs worldwide
Distribution• 6,589 stores
Customer
Vertically
Integrated
BusinessModel
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2003Versace
OPSM Australia
Prada
2005DKNY
Xueliang Optical
Burberry
Ming Long Optical
D&G
2006Polo Ralph
LaurenShopper’s
OpticalModern Sight
Optics
D.O.C. Optics
Tiffany
2007Oakley
2008Stella
McCartneyDiethelm Keller
Ltd.Sunglass Hut launched in
India
2009Tory Burch
Multiopticas Internacional
Myer
Meera Enterprises
Macy’s
2010Essilor
Coach
2011Grupo Tecnol
2012Grupo Tecnol
Sun Planet stores
Alain Mikli
2013 2014Glasses.com
Michael Kors
2015Miu Miu
Licenses, Mergers and Acquisitions
Source: Financial reports, ‘03 to ‘15
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Country Manager
Sales Head
Channels of Trade
Marketing Head
Brands
FinanceHR Legal Logistics Production
Luxottica in India
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THE MERGER
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Price Cut
• 10 agreed
Oakley
• 25% sales
Cut by 2/3
• Goodbye
2001
25 % MARKET SHARE
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EBITDA- Oakley
2000 2001 2002 2003 2004 2005 20060
20
40
60
80
100
120
140
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TOTAL REVENUE
2000 2001 2002 2003 2004 2005 20060
100200300400500600700800
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Source: http://www.luxottica.com/en/information-related-departure-adil-mehboob-khan
Source: https://www.ft.com/content/ee1cc24e-cf1e-11e5-92a1-c5e23ef99c77