caseisfromthe book."Kering SA: Probing the Performance Gap with LVMH", pages459-471.(R. M. Grant, Contemporary Strategy Analysis: TextandCases,9th edn, Wiley,2016).

KeringLVMH

ROCE14.59% 24.96%

Op Margin 15.46% 17.73%

Labor Cost/ Sales 37.28% 35.25%

Dep /sales 2.80% 3.53%

Other Costs/ Sales 15.39% 46.08%

Sales/Cap Employed 0.94 1.41

Inventory turnover 4.49 3.23

PPE turnover 5.32 2.95

Creditor turnover 8.59 11.66

cash turnover 0.21 0.22

ROE 4.97% 25.95%

ROA 0.07 0.10

Gross Margin 0.63 0.65

Operating Margin 0.15 0.18

Net Margin 5.27% 18.43%

1) Apply financial analysis to identify the sources of the performance gap