Part A - Luxottica Monopoly Analysis

Luxottica is an Italian eyewear company founded in 1961 by Leonardo Del Vecchio. Luxottica is

a prominent figure within the eyewear industry that outranks the majority of its competitors due to how it

manages and distributes a wide range of eyewear products, including glasses, sunglasses, and prescription

frames. Luxottica had a total revenue of $5.6 Billion in their 2022 fiscal year, with a current market cap of

$79.58 Billion. Luxottica manufactures and distributes high-quality products, which the majority of the

market chooses to use despite many other options. Luxottica has a reputation for being a monopoly due to

its high market share in the eyewear industry, its vertical integration, its brand portfolio, and its retail

presence. These allowed Luxottica to grow to the size it is today and restricted other competitors to get

ahold of more market share.

Luxottica has the dominant position in terms of market share in the eyewear industry, with control

of approximately 80% of the market. With this high level of control, it is often an accurate indicator that it

is a monopoly since it suggests that the company distributes more products to the market than its

competitors. Brands such as Rayban, Oakley, and Oliver Peoples, as well as licensed brands such as

Giorgio Armani, Burberry, Chanel, Ralph Lauren, and more, allow Luxottica to have majority control

over the luxury eyewear sector. With high-end brands known to show off wealth, Luxottica can easily

raise their price, as shown with their brand, Rayban, with their cheaper products ranging from $150 to

$200. With the rise of pop culture and showing off people's wealth, brands such as Giorgio Armani,

Burberry, and Chanel are on the rise. Luxottica has licenses for these brands and is the main distributor of

these brands which is one of the main reasons why they have a large market share in this industry.

Additionally, Luxottica's main business model is vertical integration. It is one of their competitive

advantages that accounts for their past and future successes. Luxottica understood the potential success of

vertical integration early on and chose to begin producing entire frames rather than just components of the

eyewear. Eventually, Luxottica's vertical integration of manufacturing also expanded into distribution

which first started with wholesale, and later on retail. Luxottica is in charge of creating the idea for the
glasses such as sketching the idea, style, and other designs. After finalizing the concept, it is

manufactured in either Italy, China, the United States, Brazil, Japan, and India. Italy has six plants, five in

the Northeastern region and one near Turin. These plants are at the center of Luxottica’s luxury eyewear

production which represents 43% of their global production output. After the manufacturing process, it

would te sent into the group’s distribution system wcomprising13 distribution centers. It is considered to

be one of the most advanced and efficient in the industry. The distribution centers serve both the retail and

wholesale businesses which are linked with the production facilities which monitor global sales

performance and inventory levels to meet local market demand. Lastly, the wholesale distribution network

covers more than 150 countries, with about 50 commercial subsidiaries in major markets and

approximately 50 independent distributors in other less developed markets. On the other hand, Luxottica’s

retail distribution consists of its portfolio of retail brands, with its retail businesses consisting of 7,164

stores and 1,963 franchised locations. As you can see, Luxottica has full control over its entire supply

chain which gives them a competitive edge over its competitors to cut costs when needed. Controlling the

supply chain also allows Luxottica to have major control over the quality of its products Luxottica is

known for having high-quality eyewear that attracts customers. Additionally, having full control over its

supply chain, which it allows to become more efficient would result in better turnaround times during

manufacturing and distribution, giving them a clear competitive edge over its competitors.

Furthermore, Luxottica’s phenomenal brand portfolio allows them to have a variety of products

that ranges from sports eyewear to extremely high-end eyewear. Luxottica owns a plethora of the most

well-known eyewear brands, including Ray-ban, Oakley, Vogue eyewear, and Persol. Additionally,

Luxottica owns the licensing for other brands of eyewear such as Burberry. Ralph Lauren, Armani, Prada,

Polo, Valentino, Versace, and more. With such a huge range of highly demanded luxurious brands,

Luxottica can hold a lot of the world's demand for high-end eyewear, giving it more price control over its

competitors. Furthermore, the brands just listed have a significant amount of popularity to it compared to

their competitors due to their brand recognition. With more influencers making these brands more

popular, it also drives other consumers to purchase their brands over Luxottica’s competitors such as
Safilo. With their popularity being greater than their competitors, it is inevitable for Luxottica to have

greater control over the market, and the majority of the market share. Additionally, Luxottica offers its

products on numerous platforms including e-commerce and physical stores. Luxottica’s reach spans 150

countries with retail and wholesale subsidiaries. Luxottica approximately has 9,200 retail stores ranging

from Rayban, Oakley, Oliver peoples, and along with retail store locations such as Lenscrafters, sunglass

hut, sears optical, and more.

All these components in Luxottica are the reason why it is considered a monopoly. Its massive

control over the market, its vertical integration, its brand portfolio, and its retail presence grant it a

massive competitive advantage over its competitors, which grants Luxottica huge control over the price of

the eyewear industry. In my opinion, I would say Luxottica is very close to becoming a pure monopoly as

it already can control a lot of the major fashion brands that are currently trending in the market, alongside

its large capital reserve, it can easily acquire other fashion brands. Their impressive control over its

supply chain allows them to be more efficient than anything else in the market, meaning it is only a matter

of time before Luxottica outperforms its competitors.

Part B - Monopoly game reflection

With my experience of playing Monopoly in Mrs. Minichillo’s economics class, I learned that

there are many tactics and traits to winning the game. I learned that strategic planning and managing your

finance well is important in the game. Planning strategically on what properties to own, and the use of my

resources allows me to get a bigger advantage over my opponents. If I chose the right properties such as

the ones with high rent or resale value would give me a better outcome than those properties that offer

low rent or resale value. Furthermore, managing my money wisely and then deciding to save my money

or when to take the risk gives me a competitive advantage as it allows me to invest my money more

wisely, instead of just buying all of the properties I would land on which may lead me to bankruptcy. It

shows the consequences of being greedy as the players who focus only on acquiring as many properties as

possible may either end up in debt or bankrupt, while those who take a more balanced approach may be
more successful in the long run. I learned this the hard way as my strategy going into the game was to

acquire as many properties as possible, thinking that if I occupy more squares in the board, it would give

me a higher chance of my opponents landing in my properties. This would inevitably lead to my doom as

this strategy led me to lose all my money. All though I own a large portion of the properties on the board,

there are still a larger number of non-properties squares. Due to probability and unfortunate

circumstances, my opponents did not land on my squares as much as I expected, while I on the other hand

would consistently land on my opponents' properties. This led me to have the second least amount of

money in our game. If I were to compete in this game again, I would change the way my mindset. During

the game, I mainly was greedy and impatient so I would purchase all the properties I would land on, but

now playing it, it would be best not to buy the low-value properties as they are hard to sell and don’t

profit as much as the other properties. Furthermore, I would try to negotiate with my opponents more such

as when buying their properties. I had the mindset of why would I negotiate and help my opponents when

I am against them, but now thinking about it, it would have benefited me so much if I were to negotiate

with them.

I would say some lessons learned from the game that could be implemented in real life are to

always keep cash on hand and be patient. Always keeping cash on hand allows you to be liquid when

there is an emergency. For example, I used up the majority of my money on buying properties and when

no one landed on my properties, I ended up losing more money than I first started with. Always having

money saved in a separate account, would help you ease out financial troubles when you require money

such as in any emergency or other factors. Additionally, being patient in the game allows you to be more

mindful of your risk going into your investment, and have the money come to you instead of you going to

the money. This is the same in real life as being patient in real life allows your investment to compound,

leaving you with a more riskless and greater return over time, which leads to money coming to you

instead of you working hard for the money.

ADVANTAGES OF BEING A MONOPOLY IN THE SUPPLIER POV

 ● Being a monopoly means that the supplier has no direct competition. In this case, the supplier has

a great deal of control over the market they deal with. They can set the price and dictate the terms

to customers, and distributors, giving them a large amount of bargaining power.

● Being a monopoly also means that the supplier can charge higher prices for their products since

there are no competitors to compete with. This would result in higher profit margins which would

allow the supplier to reinvest the capital into research and development or expand the business.

DISADVANTAGES OF BEING A MONOPOLY IN THE SUPPLIER POV

● By being a monopoly and having no other competition, there is no incentive for the supplier to

innovate and improve their products or services. This may harm the company’s reputation as they

are keeping their products the same while still charging a higher price, giving them the image of

being greedy, which would potentially lead to a loss in market share in the long run.

● Monopolies are also subjected to many regulatory scrutinies as shown with companies such as

Standard Oil where the government intervened and split up the company. This is especially shown

in industries where there are concerns about fair competition and the need for consumer

protection. Regulators can also impose restrictions on the pricing or business practices which may

limit their ability to maximize profits or grow the business.

ADVANTAGES OF BEING A MONOPOLY IN THE CONSUMER POV

● Having a monopoly in the eyes of a consumer can be beneficial as since there is only one

company offering a particular product or service, the choice is simplified for consumers.

Consumers no longer have to browse through many brands and compare them, which saves time

and effort.

● With only one company offering the same product or service, consumers can expect a consistent

level of quality. This is true since the company has a reputation for having to produce high-quality

products or services. If this wasn’t the case, then competition would pop off to fill the void of

making higher quality products or services.

DISADVANTAGES OF MONOPOLIES IN THE CONSUMER POV

 ● With monopolies, it is normal for the prices to be higher than usual. For example, McCarthy has a

monopoly on the distribution of school uniforms, leading them to heavily inflate their prices. This

means that consumers would have to pay more than what they should be paying for the same

product or service.

● Since monopolies no longer have to compete with any competitors, they have no incentive to

innovate their products or service, which leads to inferior products. In this case, even with

consumers having to pay more than usual, they would also be paying for something that either has

low quality or lacks the innovation needed for the price they are paying.

Work Cite:

● https://www.luxottica.com/en/about-us/company-profile/luxottica-world

● https://www.televisory.com/blogs/-/blogs/luxottica-how-vertical-integration-has-made-it-the-worl

d-leader-in-eyewe-1

● https://www.luxottica.com/en/eyewear-brands

● https://en.wikipedia.org/wiki/Luxottica

● https://www.cascade.app/strategy-factory/studies/luxottica-strategy-study