ANALYZE

Good and BadThe v a lu e of the cosmetics and personal grooming industry and its

.q u e s t io n a b le p r a c t ic e

AllNatural

Intro: Definition And Organization

Defining the cosmetics and personal grooming industries

, Miss Lily Lim Previous Regional DirectorforInternational Education& , Development Estee LauderAsia

Definition: Segmentation

HairOral

Hygiene

Plastic Surger

y

Some of the companies mentioned:

Skeptics first impression:

Define: Value to society

Usefulness of the industries in respect to particular purpose.

Scope of discussion:

Creating Value for stakeholder (Some examples):

IMPROVE SELF-

ESTEEM

Consumers

Government

Community

ECONOMIC DEVELOPMENT

PHILANTHROPICAL

Define: Questionable Practices

Acts deemed unethical or produces negative consequences to specific groups of people.

Scope of discussion:

Questionable practices to stakeholder (Some examples):

Consumers

MISINFORMATION OF PRODUCTCommunity

DISHONEST REPORTINGSharehol

ders

ANIMAL TESTING

Organization

Consumers

Explaining it

Balance

Market Stakeholders

Value: Consumers

HEALTH AND WELL-BEINGSOCIAL AND PROFESSIONAL

DEVELPOMENT

IMPROVE SELF-

ESTEEM

VALUE

Feeling good about themselves- Confidence and Happiness.

Acceptance by friends and family.

The effect on their social and professional life.

Health and well-being of individual

Bad: Consumers

LABELING

ADVERTISINGMISINFORMATION OF PRODUCT

Questionable Practices

1. Labeling

2. Advertising

3. Misinformation of product

Questionable Practices1. Labeling

Customers cannot make informed choices.

Ingredients of product must be made known.

Certain products may be harmful and can cause allergies.

Did you Know: The use of the term “organic” is not regulated by any entity as of yet.

2. AdvertisingMisleads consumers.

(Poll conducted by Saatchi and Saatchi found that ads made women fear being unattractive or old.)

Undue pressure on women and men to focus on their appearance.

Did you know: Survey by Teen People magazine- 27% of the girls felt that the media pressures them to have a perfect body

2. Advertising

oConsideration of physical appearance as a measure of their worth. (Body Image Survey)

oDiscrimination (Garnier, a division of L'Oréal Fine for Fructis Shampoo Ad)

oEnd $9.3 billion on cosmetics and skin products a year...

3. Misinformation of Product

Cosmeceuticals

FDA only recognizes products as drugs, cosmetics or a combination of both

Product claims may be exaggerated. (L'Oreal withdraw a multimillion-pound television advertising campaign starring model Claudia Schiffer)

Did you know: Food and Drug Administration (FDA), does not actively review the inflated claims of cosmeceutical manufacturers.

Value: Employees

PHYSICAL SAFETY

PSYCHOLOGICAL NEEDS

AFFINITY TO THE JOB

INCOME

RESPECT AND SELF ACTUALIZATIONSOCIAL EVENTS

Maslow’s Hierchy of Needs

Necessity of Cosmetic in job application and workplace

1. To remain competitive

- To get a job in the cosmetic industry

Cosmetic value in second level of Maslow’s Hierchy of Needs

2. Physical Safety

a. VPP (voluntary protection program)Providing regular check up

b. Offering mental health educational seminarsc. Opening a mental wellness counseling office

3. Psychological Needs

a. Secure employmentb. Turnover rate=2%c. after 3 years employment

Having training course73 percent of manager (eg L’Oreal)58 percent of all employees

Improving the quality of product

Improving the company’s performance level

Creating stronger affinity to the job

4. Affinity (Love) to the job

5.Respect and self-actualization

Giving responsibility

Remuneration policy( based on the performance and the level of responsibility)

Self-actualization state

Value: Suppliers LOW DISRUPTION

COMMUNITY TRADINGFAIR TRADING

JOINT PARTNERSHIP

TANSAPRENT RELATIONSHIP

Creating Value- Supplier ?

Establish basis. And what is considered creating value for supplier

: Lo n g t e rm g a in s Lo w, D is r u p t io n

,Tr a n s p a r e n c y J o in t E f f o r t

P a r t n e r s h ip

Im m e d ia t e: e x p e c t a t io n G o o d

– S a le s P r ic e F a ir a n d

C o m m u n it y t r a d in g

1. Immediate Gains – Fair Trading

Fair Prices Fair wages, sustained source of income especially for countries with little bargaining power

Not always about the highest profits

Do Not EXPLOIT

ETHICAL TRADING

2. Immediate Gains – Community Trading

1. It is a part of fair trading2. Target Marginalized Societies3. Create Value: Market access for economically

disadvantaged suppliers.4. Supplier’s community benefit as well –

Sustained Source of income5. The Body Shop: Engage in Community

Trading for 20 years.

The Body Shop

1. Inform: Supplier sign letter of ethical commitment

2. Third Party Audit

1. Long Term Gain: Joint Effort Partnership

How do they promote social responsibility?

3. Monitoring Corrective Action Plan

1. Long Term Gain: Joint Effort Partnership

How do they promote social responsibility?

1. Inform: Supplier sign letter of ethical commitment

3. Monitoring Corrective Action Plan

1. Long Term Gain: Joint Effort Partnership

How do they promote social responsibility?

2. Third Party Audit

1. Inform: Supplier sign letter of ethical commitment

3 . M o n it o r in g C o r r e c t iv e Ac t io n P la n

Thoughts about creatingvalue for supplier

, Miss Lily Lim Previous Regional DirectorforInternational Education&

Development forEstee Lauder

1. Firms should not only work to establish good labour and

environmental standards within the firm

2.Look at the supply-chain 3.Prevent finger pointing

Create essential value

Value: Shareholders

HIGH DIVIDENDS RETURN

CAPITAL APPRECIATION

Creating Value- Shareholder?Establish basis. And what is considered creating value for supplier

1. Creating Value- Capital Appreciation

Market Analysis:

Industries experienced a lucrative value growth of 27% between 2001 and 2006

Oral Hygiene, Baby Care, Men’s grooming, Sun Care

In the future: Healthcare and Cosmetics commodities is to rise 5.7% annually through 2012

Demographic changes in develop countries

Rise in affluence in developing countries

New Consumer focuses: Organic make up, male grooming and anti ageing

1. Creating Value- Capital Appreciation

Bad: Shareholders

DISHONEST REPORTING

Questionable Practices- Shareholder1.Dishonest Reporting

• Common stock owner of ULTA filed class action lawsuit against it.

• Undisclosed increased advertising expenses

Did not reveal any significant information about third quarter 2007 earnings

Company lacked adequate internal and financial control

Non- Market Stakeholders

Value: Government

ECONOMIC DEVELOPMENT

PROMOTING EMPLOYMENT

Values for Government

• Economic development

• Promoting employment

1. http://www.ctfa-cosmeticjobs.org/

1. Economic Development

• Contribute to the economic growth of the country

Global market > $ 270 billion in 2006

One of the fastest growing industries at the global extent

1. Economic Development

• Sustainable development of cosmetics industry

• Average annual growth - 4.3%

2. Promoting Employment

• Employment is one of the important figures concerned with the government

Industrial growth > Promote Employment

2.Promoting Employment

63,358

2007

60,851

2006

52,403

2005

16%

4%

L’Oreal hired more employees

Bad:Governmnet

LIMITED TESTING

1.Questionable Practices• New products tested to a limited extent

Consumer safety

Analysis of US market - among 23,000 products:– 3.3 % fail to meet safety standards

98 % contain one or more ingredients – not conducted safety standards by FDA or any other accountable institution

Value: Community

SOCIAL INTIATIVESETHICAL

PHILANTROPHY

CHARITY FOUNDATION

1 . E t h ic a lIn it ia t iv e s

AG AIN S T AN IM AL.TE S TIN G .

Refrain from entering markets where animal testing of their products is legally required

Comply with the Humane Cosmetics Standards

– Label their products Against Animal Testing

ALTERNATIVE TESTINGSGrowing of human skin in a laboratory dish

– Expected to dramatically reduce the need to test cosmetics and chemicals on animals.

– Activists say tens of thousands of creatures a year will be spared from the misery of laboratory trials.

2. Social Initiatives

•Awareness Campaigns

•Philanthropy

Awareness Campaigns

• Aids Awareness

Breast Cancer Awareness

Aids Awareness• Te a m e d

u p w it h MTV t o

la u n c h t h e

“ M o v e Yo u r Lip s

c a m p a ig n ” in

2 0 0 8

• R a is e f u n d s f o r

Th e S t a y in g

A liv eF o u n d a t io n

• Estée Lauder Companies' Breast Cancer Awareness Campaign was established in 1992

Dedicated to spreading awareness about breast cancer and the message that early detection saves lives.

C H AR ITYFO U N D ATIO N S

• L’Oreal Corporate Foundation – €40 million has been pledged for its corporate

mission

• The Body Shop Foundation– Donated over £11 million in grants

• Proctor & Gamble Fund– In 2007, the fund contributed more than $125

million , improving life for more than 50 million children around the world.

Bad: Community

ANIMAL TESTING HARMFUL SUBSTANCES

WASTE GENERATION

BEFOREAFTER

Enlarged Picture of the infected eye

1 . An im a lTe s t in g

2. Waste Generation

3 . E n v ir o n m e n t a l Im p a c t o f P la s t ic s

• -N o n B io d e g r a d a b le

• C o n s is t s t o x ic s u b s t a n c e s

Harmful SubstancesCosmetics contain harmful chemicals such as volatile organic compounds (VOCs)

VOCs and Smog

Summary and Conclusion

Summary

Questionable practices: Who’s at fault for all this?

Suggestion to strike the balance:G o v e r n

:m e n t La w s

a n dR e g u la t

io n( )K o r e a

E d u c a t in g t h e

- p u b lic C h a n g in g

t h e.d e m a n d s

3. D O VE-S e lf

e s t e e mf u n d

2 . A l g o r e a n d Liv e

E a r t h .

Educating the public -Beauty

Conclusion

• Cosmetic and personal grooming industries values and questionable practices to each stakeholder (Market and Non-market Stakeholder)

• Who is at fault?

Suggestion for change

THANK YOU

XOXOAll Natural