The General and Specific Environments of Luxottica

Luxottica Group

Luxottica Group refers to an eyewear company based in Italy. The company is one of the most successful companies in the eyewear industry. Luxottica Company manufactures, distributes and designs various eyewear products. The company aims to expand its processes further in various countries worldwide in order to increase its presence and improve profitability. This report is focused on exploring the general environment, specific environment, Corporate Social Responsibility (CSR) and the organisational culture of Luxottica Group. It further aims to evaluate the personal insight quiz and assesses the focus of Luxottica towards innovation and success.

Figure 1: Luxottica Group (source: Luxottica, 2018)

Task 1

General Environment

The general environment refers to the larger environment in which the environment of task tends to be embedded. It involves macroeconomic forces, legal and political forces, sociocultural forces, demographic forces, international forces, and technological forces. It is critical to consider that all these forces tend to create competition in the industry. The general environment should be considered by organisations for the purpose of outperforming the competitors in the business market.

For Luxottica Group, the economic factor would be analysed related to the high pricing set by the company on its products. This analysis would be beneficial for evaluating the performance of the company and analysing whether the expectations of stakeholders are being met or not. The general environment of Luxottica is crucial to be considered for the purpose of evaluating the success factors for the organisation. Pistellato (2016) pertinently pointed out that revenue of Luxottica slowed down because of lower consumer spending in the region of the United Kingdom and the United States.

Open-Systems Theory

The open-systems theory has been considered which include that organisations tend to be unique due to the unique environment in which they are operated. They must be structured for accommodating unique opportunities and issues (Scott, 2015). For Luxottica Group, economic factor has been analysed. This factor possesses the capability to influence businesses through interest rates, inflation, employment, and consumer confidence.

This theory indicated that traditional organisations seem to fail, which do not adapt to the latest technological advancement. The market is subjected to rapid change due to progress in external factors. There are different environment elements that affect open systems. The economic conditions possess the capability to influence a firm.

Impact of High Pricing

Luxottica has been criticised in 2017/18 for setting high prices on glasses. It charges a considerable amount of money on brands such as Oakley, Rayban and many others (Pollock, 2017). It has been observed that the macroeconomic factor of the general environment is included in this scenario. In response, Luxottica Group had to pay around €32 million for settling the transfer pricing problem that arose. This impact eventually decreased the number of customers and negatively impacted the company’s performance.

Organisation’s Practice and Theory

In order to deal with economic factors, firms can merge with other organisation. It has been analysed that Luxottica dealt with the economic factor and decided to lower down the prices. The company merged with Essilor Group during the year 2017 for the purpose of increasing profitability and improving reputation in the industry (Pollock, 2017). The open-systems theory highlight that recessions and economic upswings can negatively impact an organisation.

Most of the customers complained about Luxottica regarding high prices. McCarthy (2017) reported that the average cost for lenses and frames was around $280 in the year 2015. This aspect further sparked the customers to change the brand and move on to other companies for getting glasses. It is critical to consider that Luxottica adapted the open-systems theory and moved on setting average prices in order to compete effectively in the business market.

Task 2

Specific Environment

The specific environment includes the institutions and forces outside the firm with which a company interfaces for doing business. Such institutions and forces tend to be relevant directly to the attainment of organisational objectives as they have an immediate and direct influence on the actions and decisions of managers.

For Luxottica Group, competitors have been analysed that can offer similar services and products. It is critical to consider that the competitors of Luxottica can come up with a force, which can be a serious threat to the organisation. Further, the new entrants in the business market can come up with unique products that can eventually hamper the profitability of Luxottica Group.

Strategic Conflict

Strategic conflict refers to an effective competition-based theory. This approach complements the strategies of Porter in the sense that it focuses on recognizing the capability an organisation has to manipulate the business environment, hence improving the competitiveness (Holtzhausen and Roberts, 2009). Luxottica Group can utilise the strategic conflict theory by setting average prices and coming up with unique glasses and eyewear products.

The estimated revenue of Luxottica Group in the year 2017 was €9 billion. The company can increase revenue by adopting the theory and gaining consumer trust. This can be achieved through merging with other organisations and outperforming the competitors. Luxottica can further increase its dominance in the industry through considering the social responsibility and meeting expectations of its shareholders.

Impact of Competitors

The major competitors of Luxottica Group are Kering, LVMH, Richemont and Safilo Group. In the previous years, the revenue of the Kering group was approximately €15 billion (Crutchfield, 2012). However, Luxottica group was able to generate revenue of €9 billion. This aspect indicates that Kering dominated the eyewear market as compared to the Luxottica Group. It has been observed that Kering focuses on setting average prices for the consumers, which eventually helps the firm to increase customers and profitability.

Crutchfield (2012) reported that sales strategy set by Kering has been beneficial for the company. The sale of Gucci set by the company in the year 2017 significantly assisted the company to reach the desired sales target at the end of the year. This aspect indicates that Kering group has a strong focus on coming up with a unique sales strategy, which eventually helps the firm to gain desired profitability.

Dealing with Competitors

Luxottica Group has its own name in the luxury business market. The company focused on certain initiatives certain campaigns and techniques for dealing with Kering and other major competitors (Luxottica, 2018). Luxottica has a strong focus on enabling expansion and capture different markets. The company merged with Essilor group for the purpose of increasing profitability and reaching the sales target. There are different eyewear and glasses products being launched by Luxottica Group, which can help to outsell the competitors in the business market.

Brexit also had an impact on Luxottica Group, which attempted to decrease its profitability, as the UK left the European Union. However, the company coped with the event and boosted its sales by gaining the trust of consumers. It has been observed that Luxottica Group invests on digital marketing (pay-per-click). The social media marketing and website marketing further assists the company to reach the global audience and expand its processes in different regions of the world.

Task 3

Corporate Social Responsibility (CSR) and Ethics

CSR refers to a kind of business self-regulation. It is a type of model that assists an organization to be socially accountable to the public, its stakeholders and itself (Schwartz, 2017). By practicing CSR, Luxottica Group may become conscious of the impact they have on different aspects of society including environment, social and economic. There are different approaches to corporate social responsibility.

The Triple bottom line refers to a CSR form, which indicates that leaders tend to tabulate bottom-line findings in economic terms and also in terms of firm influences in the social realm and regarding the environment (Schwartz, 2017). Social sustainability should be considered by Luxottica Group for the purpose of improving profitability.

Ethics is another crucial aspect that should be considered by every organization. Code of ethics refers to different principles, which are utilized for guiding firm in its policies, programs, and decisions. The managers and leaders of Luxottica Group must behave in an ethical manner for the purpose of achieving the desired goals and increasing profitability.

CSR in Luxottica Group

There are different CSR activities initiated by Luxottica Group. One of the events is World Sight Day 2018. It is a global event that was initiated for the purpose of increasing awareness about vision impairment and blindness (Luxottica, 2018a). The employees of Luxottica actively took part in this initiative in order to provide information to people regarding prevention of vision impairment.

Welfare program of Luxottica focuses on enhancing the employee’s wellbeing and supports development and growth within the countries where it operates. The welfare program was initiated in the year 2009 and has actively focused on answering the individuals’ needs (Luxottica, 2018a). This aspect highlights the responsibility level of Luxottica Group. The safety culture is implemented within the Luxottica Group, which focuses on ensuring the safety of all the employees. For motivating safe behaviour and facilitating the prevention of risks, Luxottica developed workplace safety and health culture.

Considering the environment, since the year 2013, the company has continuously invested in certain manufacturing plants, which tend to run on renewable energy. The objective of Luxottica is to reduce its carbon footprint (Luxottica, 2018a). The company installed various solar panels that helped in reducing emissions by 80 t/ CO2 per year. This aspect clearly indicates that Luxottica Group has a strong focus on achieving environmental sustainability.

Ethics

During the past years, it has been observed that Luxottica has set high prices on its products. The stakeholders seem to be affected by the high pricing. The company lost some of its customers due to high prices on sunglasses and other eyewear products (Colombo and Gazolla, 2014). This aspect indicates that the ethical practices were not rigorously followed by the organization. However, certain initiatives highlight that the company has started setting average prices in order to outsell the competitors and increase the number of customers.

The average salary varies from $20,000/ year to $178,000/ year (Colombo and Gazolla, 2014). This element highlights that handsome salary packages are offered to employees, which eventually help the company to retain key employees. It is critical to consider that Luxottica has been actively focusing on setting ethical standards within the company that needs to be followed by all the employees and managers.

Task 4

Organisational Culture

Organisational culture refers to the underlying values, assumptions, beliefs, and way of interaction that constitute the unique psychological and social environment of a company. The organisational culture can impact the way employees may interact, a way of sharing knowledge and resistance towards changes (Green, 2012).

Luxottica Group has maintained the global quality culture. The company has the core goal of providing quality products worldwide in order to outsell the competitors. According to Luxottica (2018b), the culture of Luxottica is open-minded and forward-thinking, inspired by the eyewear future and new opportunity. The company has a strong focus on innovation and it strives to retain key employees and customers.

Vision of Luxottica Group

The CEO of Luxottica Group has the vision to pursue success through the use of innovative techniques and strategies. The core focus is to merge with big organisations and provide users with unique products and services. The company aims to expand its processes in various countries worldwide and focuses on retaining key employees (Luxottica, 2018b). The safety culture is also developed by the company in order to ensure the safety of employees from any harmful processes during working hours.

Personal Insight Quiz

I took the “WHAT’S THE RIGHT ORGANIZATIONAL CULTURE FOR ME?” and evaluated my results. The overall score is found to be 22, which indicate that I can easily fit in innovative and flexible cultures. It has been observed that I am focused on coming up with innovative ideas and concepts in order to attain success. I tend to have a preference for humanistic and informal culture. This aspect clearly indicates that I can fit in the culture of Luxottica Group in an effective way. The quiz proved beneficial for me as it indicated that I am capable of implementing unique ideas into practice. The score highlights my motivation towards adjusting in innovative culture and dealing with people successfully. Moreover, I am confident that I can be an asset to Luxottica Group in a short time period due to my creative and innovative skills.

Dimensions of Organisational Culture

Considering the organisational culture of Luxottica Group, it has been observed that the company has an open system. According to this theory, the organisation is focused on innovation and focus on hiring young talented employees who can contribute to the success of the organisation. In this type of culture, it is said that every type of employee may fit well (Hofstede, 2011).

Another dimension which has been observed includes that the organisation is goal-oriented. The company has a strong focus on achieving the desired goals and leaders do not hesitate to take massive risks. This aspect highlights that Luxottica Group strives to attain the desired objectives by applying innovative techniques and methods.

Do I Fit in Luxottica Group’s Culture?

Based on the quiz analysis, it has been observed that I can fit in the culture of Luxottica Group. The dimensions discussed are that Luxottica Group has implemented an open-system and the company is goal-oriented. This type of company requires innovation and flexibility. The quiz revealed that I possess these qualities and can fit well in the company. My creativity and innovative skills can eventually benefit the company in producing quality products. The analysis further highlighted that I am capable of taking on risky tasks within the company in order to achieve maximum profitability.

Conclusion

This report discussed different aspects of Luxottica Group. The analysis of the company’s general environment revealed that Luxottica has been criticised in 2017/18 for setting high prices on glasses. This impact eventually decreased the number of customers and negatively impacted the company’s performance. It is critical to consider that Luxottica adapted the open-systems theory and moved on setting average prices in order to compete effectively in the business market. Considering the specific environment, Luxottica Group can utilise the strategic conflict theory by setting average prices and coming up with unique glasses and eyewear products. The major competitors of Luxottica Group are Kering, LVMH, Richemont and Safilo Group. The company merged with Essilor group for the purpose of increasing profitability and reaching the sales target. There are different eyewear and glasses products being launched by Luxottica Group, which can help to outsell the competitors in the business market. The CSR activities initiated by the Luxottica Group are World Sight Day 2018, Luxottica’s Welfare Program and environmental sustainability programs. The average salary varies from $20,000/ year to $178,000/ year. The managers behave ethically and focus on providing maximum benefit to the company. The personal insight quiz was taken and it was revealed that my score is 22. It can be concluded that I can easily fit into the Luxottica Group, as I have a creative mind and I strive to produce innovative ideas. This aspect can be considered positive and can help me achieve success in the company within a short time period.

References

Colombo, G., and Gazzola, P. (2014). Aesthetics and ethics of the sustainable organizations. European Scientific Journal, ESJ, 9(10).

Crutchfield, D. (2012). Luxottica sees itself as king, raising questions about brand authenticity. Forbes, November, 27.

Green, T. J. (2012). TQM and organisational culture: how do they link?. Total Quality Management & Business Excellence, 23(2), pp.141-157.

Hofstede, G. (2011). Dimensionalizing cultures: The Hofstede model in context. Online readings in psychology and culture, 2(1), p.8.

Holtzhausen, D. R., and Roberts, G. F. (2009). An investigation into the role of image repair theory in strategic conflict management. Journal of Public Relations Research, 21(2), pp.165-186.

Luxottica (2018). Company Profile. [Online] Available at http://www.luxottica.com/en/about-us/company-profile

Luxottica (2018a). Sustainability. [Online] Available at http://www.luxottica.com/en/sustainability/see-beauty-life

Luxottica (2018b). Vision. [Online] Available at http://www.luxottica.com/en/about-us/innovation?p=innovation/culture

McCarthy, C. E. (2017). How the Essilor-Luxottica deal will affect optometry. Optometry Times, 9(2), p.1.

Pistellato, B. (2016). The Business Model and evolution of Luxottica Group Spa An Insight into the comparison between the main competitors (Bachelor’s thesis, Università Ca’Foscari Venezia).

Pollock, I. (2017). Why the merger of Essilor and Luxottica matters. [Online] Available at https://www.bbc.com/news/business-38899892

Schwartz, M. S. (2017). Corporate social responsibility. United Kingdom: Routledge.

Scott, W. R. (2015). Organizations and organizing: Rational, natural and open systems perspectives. United Kingdom: Routledge.