3. The Este Lauder Companies Inc is an American manufacturer
and marketer of high-end skincare, makeup, fragrance and hair care
products. The company has its headquarters in Midtown Manhattan,
New York City. The company began in 1946 when Este Lauder and her
husband Joseph Lauder began producing cosmetics in New York City.
They first carried only four products: Super-Rich All Purpose Crme,
Crme Pack, Cleansing Oil, and Skin Lotion. Two years later, they
established their first department store account with Saks Fifth
Avenue in New York.
4. Vision Estee Lauder Companies state their vision is Bringing
the best to everyone we touch Proposed Vision Statement Bringing
the best to everyone we touch and being the best in everything we
do. By the best we mean the best products, the best people and the
best ideas.
5. Mission of The Este Lauder Companies Inc We are a family
company committed to working together with uncompromising ethics
and integrity. We strive always: Provide customers with innovative
cosmetic products of the highest quality. Deliver outstanding
service by treating each individual as we ourselves would like to
be treated. Create an environment that fosters personal growth and
well being. Build partnerships with our suppliers, retailers and
colleagues based on fairness and trust. Enhance our reputation of
image, style and prestige. Pursue profit, but never at the expense
of quality, service or reputation. Eliminate waste and reduce
inefficiencies in order to provide maximum value to our customers.
Be responsible citizens in every community we serve.
6. Objectives They are energetic, innovative and first for
customers Power end devour to do our very best and enhance the
company's leadership throughout the world Building strong global
brands through innovative delivery of products and increase
revenues Look after our people so they can look after our customers
Understand customers better than anyone and Use our strengths to
deliver unbeatable value to our customers Business relationships
Through distribution channels, reaching the customers globally
Trust and respect each other
7. Estee Lauders Internal Assessment Management Leonard A.
Lauder is Chairman Emeritus of The Este Lauder Companies. William
P. Lauder is Chairman of the Board and Executive Chairman. Fabrizio
Freda is President and Chief Executive Officer Marketing Products
Estee lauder companies markets are more than 9000 quality products
under its portfolio of brands. Exhibit 6 summarizes the various
products and date of product launch or acquisition. Estee lauder
was the first major prestige cosmetics firm to offer shopping via
the internet. Department store is the best venue for the high
services and the brands since $7.6 Billion in beauty sales were
generated in U.S. Department stores in 2006, representing 18
percent of the total beauty market in the U.S.
8. Promotion Estee lauder was the first cosmetics company to
offer free samples and gift with purchase and continue the strategy
today. The company also the first in the industry to introduce
consistent brand imagery around the world. For this purpose, the
company uses celebrities as endorsers in testimonial advertising
for commercial on TV, as well as magazines. Price Estee lauder
price vary from product to product and from brand to brand, but
tend to be in the mid high to high range in the industry. Prestige
pricing appears to be an effective strategy given their target
market.
9. Finance Estee lauders 2006 sales increased 3 percent to
$6463.8 million due to growth in their makeup, skin care, and hair
are product categories which were partially offset by lower sales
in the fragrance product category. The net increase reflects sales
growth in all geographic regions. Note that cost of sales as a
percentage of total sales increased to 26.1 percent as compared
with 25.5 percent in the prior year. Operating income decreased 15
percent to $615.6 million and the operating margin was 9.6 percent
of sales in fiscal 2006 as compared with 11.6 percent in the prior
year. Estee Lauders long term debt decreased 4.6 percent to $431
million in 2006.
10. Production R & D Estee Lauders overall strategy also
includes heavily investing in Research and Development. In order to
have the most advanced products that consumers desire they feel
that this is a necessary expense. Additionally the company does not
conduct animal testing or have anyone do so on their behalf. They
test each and every product on a panel before releasing it to the
public. As of June 30, 2011 Estee Lauder had approximately 550
employees engaged in R&D costing 85.7 million dollars.
11. Estee Lauders External Assessment Political factors The
political environment within which an organisation exists has far
reaching consequences. The political environment most obviously
operates at National level, but may also be significant at local
and international levels. Estee Lauder gives direction to countries
through the way they exert control over the economy. Estee Lauder
should not only be cognisant with the politics of a country, but
also with the media, industry and labour leaders. The following
political factors can affect the business environment: Level of
government involvement in business Stability Liberalisation
Taxation Co-operation and integration, e.g. EU
12. Economical factors This is concerned with the nature and
direction of the economy in which a firm operates. Estee Lauder
looks at the interplay of market forces that dictate the state of
the economy and implications on both commercial and non- commercial
organizations. Prices vary from brand to brand and product to
product, but these are usually in the higher ranges of an industry.
The factors include Exchange rates Interest rates Spending power
Inflation and employment
13. Legal Factors Estee Lauder functions within a structure of
Government regulations and legislations. These laws and regulations
should be considered when running businesses: Labor laws and
industrial relations Municipal licenses Formation Taxation
Competition Copyright and patent laws Minimum wages laws and
Employment law
14. Demographic Factors These factors may also exist under the
macro-environmental factors. Following factors must are considered
with regard to the key Demographic trends by Estee Lauder: World
population growth Changing household Geographic population shifts
Better-educated, more white-collar workforce Increasing Diversity
Changing age structure Population consists of generational groups.
Distinct segments typically exist within these generational
groups.
15. Strategy Formulation External Factor Evaluation (EFE) List
of Opportunities Scope for anti aging products. Americans over 65
years(1/5th of the population) spend a substantial income on anti
aging products. Life expectancy of the aging population will
continue to improve. Youngsters and teenagers purchase age
preventive cosmetic items to battle effects of aging. The worlds
aging population increasing over 2.5 times next 40 years 33% China
and India
16. . EFE Contd 70 million people across the globe will reach
an income level in the next 20 years. Rising demand from emerging
and developing markets for personal products industry. The
Europeans buying pattern was changing from buying skincare products
from mall-based specialty stores to pharmacies. Concentrate on
selling skin care products through pharmacies and through skin care
clinics in the Europe
17. List of Threats Top competitors in the cosmetics business
Currency fluctuation risks Consumer complaints and inquiries due to
animal testing for new products and many personal care companies
are dropping this form of product testing. The company will loose
its brand image if it receives complaints that it has been using
animals to test new products. FDA regulations Increase in damaging
environmental pollutions due to the use of aerosol and
fluorocarbons. Restrictions on products that can be carried
in-flight will affect travel retail business
18. Changes in the distribution policy and a difficult retail
environment particularly in fragrance category. The sale of the
product is dependant on the disposable income of the consumers, a
fall in their incomes would result to a fall in the sales of the
companys products. Competitive pricing at mega stores.
19. List of Strengths Estee Lauder companies have 26 brands,
selling in over 130 countries. Each of the brands has a single
global image which is promoted with consistent logos, packaging,
and advertising designed to differentiate it from other brands.
Estee Lauder was awarded one of ten Outstanding Women in Business
in the US by business and financial editors in 1967. This helped in
building their brand.
20. List of Weaknesses Indistinguishable organizational
structure Lower sales in Fragrance product category. As a result of
this the company is struggling particularly in American region.
Most of the powers in the company were with the family members. It
is not clear whether even the four presidents have authority over
the 4 product lines.
21. SPACE MATRIX
22. SPACE MATRIX Recommended Strategies Backward, Forward,
horizontal Integration. Market Penetration. Product Development
Market Development Diversification
23. GRAND STRATEGY MATRIX
24. GRAND STRATEGY MATRIX Recommended Strategies Market
development Market penetration Product development Forward
integration Backward integration Horizontal integration Related
diversification
25. SWOT MATRIX SO Strategies Expand product offerings in
foreign nations (S1,S8,O1) Continue to acquire interest in start up
companies. (S6,S7,O2,O4,O5) WO Strategies Continues to expand the
respective brand website offer incentives to customers. (W!,W3)
Introduce new fragrance products for men and boys (W5, O4)
26. ST Strategies Offer rebate to customers to compete with the
black and gray market distributors (S7,S8, T5,T8) Market new soaps
and skin care product that tailor to the natural look (S7, S8, T7)
WT Strategies Draft new vision and mission statement along with new
clearer corporate structure to compete with competition
(W3,W4,T3,T5,T6) Create a new line of products tailored to customer
on smaller budgets (W6,T8)
27. IFE matrix shows the information related to strategy
formulation Estee Lauder company. Estee Lauder achieved an overall
of total weighted score.3.22 indicates that the business of Estee
Lauder on this skin care segment is internally strong because of
Estee Lauder has an ability to respond to internal factors of the
organization. Formulation Of strategy
28. Businesses are different in many ways; therefore every
organization needs to have a business plan, which needs to be
reviewed in order to keep it up to date. The plan at Estee Lauder
is articulated by corporate leaders, who give the organization
direction, so as to avoid a strategic drift. They create a vision
of a possible future that allows both the managers and others to
see clearly the direction to take, building upon the company's
current capacity and strength. To gain competitive edge and analyze
the external environment, Estee Lauder could further use the Value
chain, BCG growth model and scenario analysis for its strategic
analysis. Recommended strategies that Estee Lauder could use are;
Forward, backward, horizontal integration, product and market
development, market penetration and more diversification. Estee
Lauder took the approach of providing great customer service, great
quality and staff ownership, hence making it different from the
rest
