Source: http://www.bbc.co.uk/news/business-17479818
Hermes, as we all know, is a French multinational luxury goods company. According to Porter’s Generic Strategies, Hermes is adopting a differentiation strategy. The unique, highly delicate handbags are valued by customers as they are different or better than other handbags. The highly-priced products will more than cover its cost (at least more than 20 times!!) and generate immense profit.
Hermes is family controlled and therefore, their business ethnics and attitude to product quality is consistent. Reputation for the brand is high too.
As developing countries have high demand for Hermes bags due to an average increase in income, Hermes is even planning build two new leather factories in France. Its profit has increased immensely.