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Estee Lauder

  2. 2. প্রত্যয়
  3. 3. • The Estée 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 Estée Lauder and her husband Joseph Lauder began producing cosmetics in New York City. They first carried only four products: Super-Rich All Purpose Crème, Crème Pack, Cleansing Oil, and Skin Lotion. Two years later, they established their first department store account with Saks Fifth Avenue in New York.
  4. 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. 5. Mission of The Estée 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. 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. 7. Estee Lauders Internal Assessment Management • Leonard A. Lauder is Chairman Emeritus of The Estée 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. 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. 9. Finance • Estee lauder’s 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 Lauder’s long term debt decreased 4.6 percent to $431 million in 2006.
  10. 10. Production R & D • Estee Lauder’s overall strategy also includes heavily investing in Research and Development. In order to have the most advanced products that consumer’s 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. 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. 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. 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. 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. 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 world’s aging population increasing over 2.5 times next 40 years 33% China and India
  16. 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. 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. 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 company’s products. • Competitive pricing at mega stores.
  19. 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. 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. 21. SPACE MATRIX
  22. 22. SPACE MATRIX Recommended Strategies • Backward, Forward, horizontal Integration. • Market Penetration. • Product Development • Market Development • Diversification
  24. 24. GRAND STRATEGY MATRIX Recommended Strategies • Market development • Market penetration • Product development • Forward integration • Backward integration • Horizontal integration • Related diversification
  25. 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. 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. 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. 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
  29. 29. ANY QUESION