Read case attached and answer following questions
1. Competitive Advantage
a. How did Gucci strategically reposition itself (from a value-cost profile standpoint) from the late 1980s under Maurizio Gucci and Dawn Mello’s leadership to the 1990s under Domenico De Sole and Tom Ford’s leadership? What were Gucci’s key value drivers and cost drivers during De Sole and Ford’s era?
b. During De Sole and Ford’s era, how did Gucci sustain their competitive advantage – that is, what were their isolating mechanisms?
2. The Luxury Goods Industry
a. How did firms create value for their customers? That is, what are the most important value drivers (list at least two) in this industry? Briefly explain.
b. What drives production and sales costs? That is, what are the most important cost drivers (list at least two) in this industry? Briefly explain.
c. What isolating mechanisms help firms in this industry retain customers and prevent imitation by each other? Briefly explain.
d. Using information from the case, conduct a brief Industry Five Force analysis to evaluate the attractiveness of the luxury goods industry.
e. How had the industry changed over time in terms of customers’ preferences during the 1980s-90s and how did Gucci-Mello’s response and De Sole-Ford’s response differ? How did this affect Gucci’s performance? (Relate your answer with our discussion on what happened to Blockbuster and Netflix in the late 1990s and early 2000s).
Vertical integration and outsourcing
a. Which activities in the supply chain did Gucci perform in-house and which did they outsource? Explain their logic behind these decisions using strategic sourcing framework.