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Jon Hedrec L. Benitez Bachelor of Science in Industrial Engineering - 3C Engr. Dennis Abesamis
Overview
Introduction Company History Organizational Chart Our Products SWOT Analysis Mission and Vision Statement PEST analysis Porters five forces model Financial Condition Competitors Company Strategic Plan Issues and their Solution Conclusion Recommendation
I. Introduction
Company Description As a top company in the Cosmetics and Perfumes industry Estee Lauder specialize in manufacturing and marketing of skin care, cosmetics, perfume and hair care products. The Este Lauder Companies Inc. is one of the world's leading manufacturers and marketers of quality skin care, makeup, fragrance and hair care products. The Company's products are sold in over 150 countries and territories under the following brand names: Este Lauder, Aramis, Clinique, Prescriptives, Lab Series, Origins, MAC, Bobbi Brown, Tommy Hilfiger, Kiton, La Mer, Donna Karan, Aveda, Jo Malone, Bumble and bumble, Darphin, Michael Kors, American Beauty, Flirt!, GoodSkin Labs, Grassroots Research Labs, Sean John, Missoni, Tom Ford, Coach, Ojon, Smashbox and Ermenegildo Zegna. For fiscal 2011, net sales were $8.8 billion and net earnings were $701 million. Management The company is still controlled by the Lauder family, which controls about 70% of voting shares, and Este's son Leonard Lauder is Chairman Emeritus of the Board of Directors. William P. Lauder, a grandson, is Chairman of the Board and Executive Chairman. On July 1, 2009, Fabrizio Freda became President and CEO. The Este Lauder Companies annual Breast Cancer Awareness Campaign involves all of the 18 brands that make up The Este Lauder Companies. They collectively represent The Breast Cancer Research Foundations first and largest corporate supporter. Este's daughter-in-law created BCRF's signature pink ribbon. Over $10 million was raised for The Breast Cancer Research Foundation between 1993 and summer 2003. Another $1 million was raised from their retail partners between July 2002 and summer 2003.
On October 28, 2011, Aramis and Designer Fragrances, a division of The Este Lauder Companies Inc., and Tory Burch LLC announced the signing of a multi-year agreement for the exclusive worldwide license of the Tory Burch fragrance business. This partnership marks Tory Burch's first step into the beauty industry. The first Tory Burch fragrance products are expected to be introduced in 2013. Executive Vice President and Chief Financial Officer
Fabrizio Freda
President and Chief Executive Officer
John Demsey
Group President
Evelyn H. Lauder
Senior Corporate Vice President
Amy DiGeso
Executive Vice President, Global Human Resources
Leonard A. Lauder
Chairman Emeritus
Ronald S. Lauder
Chairman, Clinique Laboratories, LLC
Harvey Gedeon
Executive Vice President, Research and Development, Product Innovation and Brand Product Development
Sara E. Moss
Executive Vice President and General Counsel
Richard W. Kunes
Gregory F. Polcer
Executive Vice President, Global Supply Chain
Cedric Prouv
Group President, International
Alexandra C. Trower
Executive Vice President, Global Communications
Estee Lauder Latest Products: Sensuous Sumptuous Bold Volume Lifting Mascara Perfectionist [CP+] Wrinkle Lifting Serum Private Collection Tuberose Gardenia New Pure Color Shades
Lack of concentration regarding customer value (Client.) Profit oriented (loses sight of the customer) Weak Liquidity Position (decline in the firms liquidity in the past few years.) Distribution Networks lack of reach to other viable markets. Declining operating income in various market marks the weak penetration of the products in those specific markets. Opportunities: New markets are emerging in various countries where the firm can inject its products, such as India, China (known to be the 2nd largest cosmetics market in Asia) etc. Markets where wealthy rule is also a good opportunity to tap in because of the tendency of the wealthy to own luxury commodities. Many nations are growing to be beauty conscience every passing day; the firm will do well in order to tap-in without any delay and initiate in order to get customer loyalty attached to its products. Diversification of the distribution channels. Expansion to global markets, worldwide. Threats: Intense competition in cosmetics has increased and market initiators with quality providers are a serious threat to the firm. New entrants, even though the market has considerably mature in the sense that it has captured customer loyalty, but there is always room for improvement in this field. Counterfeit commodities affect the sales of the branded commodities. 9%, according to the Global Congress on Combating Counterfeiting, of all the world trade comprises counterfeit goods. Regulations are increasing due to the voicing of different groups about harmful chemical ingredients in cosmetic products.
2. Economic Forces The dollar fluctuations would have an impact over the sales as the company has a global presence(E.g. Japan, Australia) Strengthening of U.S. dollar against the Japanese Yen would have negative impact on Estee Lauders Japanese Operations. Price varies from product to product and brand to brand, but tends to be in the mid-high to high range of
3. Social, Cultural, Demographic and Environmental Forces Opportunities arise from increase in aging population and hence there will be increase in income from anti-aging products. Younger consumers (20-30) & Teens investing in preventive cosmetics. Complaints have been received into the use of animals for testing for new products. Estimates show that the 70 million people across the globe will reach an income level in the next20 years that allows purchasing of cosmetic products. Emissions of fluorocarbons and other harmful gases has been an environmental threat. The company must take strict measures to control this. The life expectancy of the aging population will continue to improve with difference between men and women gradually diminishing.
4. Technological Forces Internet (E-commerce) Rapid technological changes in Product Development Technological efforts in Process Development
(HIGH)Due to the presence of large number of brands who cater to different segments of the market, consumers can switch easily and inexpensively from one brand to another.
Period Ending
Total Revenue Cost of Revenue
Gross Profit
6,873,100
5,966,400
5,442,200
Operating Expenses Research Development Selling General and Administrative Non Recurring Others 5,696,700 87,000 5,067,000 109,500 4,883,900 139,900 -
Operating Income or Loss Income from Continuing Operations Total Other Income/Expenses Net Earnings Before Interest And Taxes Interest Expense Income Before Tax Income Tax Expense Minority Interest Net Income From Continuing Ops Non-recurring Events
1,089,400
789,900
418,400
Net Income Preferred Stock And Other Adjustments Net Income Applicable To Common Shares Currency in USD.
700,800 700,800
478,300 478,300
218,400 218,400
Balance Sheet
View: Annual Data | Quarterly Data
All numbers in thousands
Period Ending
Assets Current Assets Cash And Cash Equivalents Short Term Investments Net Receivables Inventory Other Current Assets Total Current Assets Long Term Investments Property Plant and Equipment Goodwill Intangible Assets Accumulated Amortization Other Assets Deferred Long Term Asset Charges Total Assets Liabilities Current Liabilities Accounts Payable Short/Current Long Term Debt
1,253,000 945,600 995,600 492,300 3,686,500 1,143,100 877,300 227,500 339,500 6,273,900
1,120,700 746,200 826,600 427,500 3,121,000 1,023,600 752,500 109,500 329,000 5,335,600
864,500 853,300 795,000 399,700 2,912,500 12,700 1,026,700 759,900 150,100 314,700 156,000 5,176,600
1,805,300 138,000
1,548,800 23,400
1,425,400 33,800
Other Current Liabilities Total Current Liabilities Long Term Debt Other Liabilities Deferred Long Term Liability Charges Minority Interest Negative Goodwill Total Liabilities Stockholders' Equity Misc Stocks Options Warrants Redeemable Preferred Stock Preferred Stock Common Stock Retained Earnings Treasury Stock Capital Surplus Other Stockholder Equity Total Stockholder Equity Net Tangible Assets Currency in USD.
Cash Flow
All numbers in thousands View: Annual Data | Quarterly Data Period Ending Net Income Operating Activities, Cash Flows Provided By or Used In Depreciation Adjustments To Net Income Changes In Accounts Receivables Changes In Liabilities Changes In Inventories Changes In Other Operating Activities Total Cash Flow From Operating Activities Investing Activities, Cash Flows Provided By or Used In Capital Expenditures Investments Other Cash flows from Investing Activities Total Cash Flows From Investing Activities (351,000) 200 (256,100) (606,900) (270,600) (100) (10,700) (281,400) (279,800) 8,800 (68,500) (339,500) 294,400 62,400 (124,700) 238,700 (95,100) (52,500) 1,027,000 263,700 53,200 79,200 109,700 (60,800) 29,300 956,700 254,000 10,500 103,800 47,400 125,700 (72,200) 696,000 Jun 30, 2011 700,800 Jun 30, 2010 478,300 Jun 30, 2009 218,400
Financing Activities, Cash Flows Provided By or Used In Dividends Paid Sale Purchase of Stock Net Borrowings Other Cash Flows from Financing Activities Total Cash Flows From Financing Activities Effect Of Exchange Rate Changes Change In Cash and Cash Equivalents (148,000) (246,100) (16,100) (313,100) 25,300 132,300 (109,100) (73,100) (234,700) (406,100) (13,000) 256,200 (108,400) 38,700 194,100 1,400 125,800 (19,500) 462,800
X. Competitors
Top 10 Competitors for Estee Lauder Cos Inc Estee Lauder Cos Inc faces competition from: 1. LRLCY : L Oreal Co 2. CL : Colgate-Palmolive Co 3. KMB : Kimberly-Clark Corp 4. KCRPY : Kao Corp 5. AVP : Avon Products Inc 6. SSDOY : Shiseido 7. SVCBY : Svenska Cellulosa Aktiebolaget 8. KCDMY : Kimberly Clrk De Mex Sab De Cv 9. ACV : Alberto-Culver Co 10. CHTT : Chattem Inc
advisors and makeup artists, but weve successfully adapted it for online, direct response television and self-assisted formats, as well. 03 Local Relevance We strive to be locally relevant to all our consumers wherever they live. We do this by creating certain products for specific markets and by altering our marketing depending on the region, to speak to consumers in more culturally relevant ways. 04 Enhancing Digital Capabilities We are deeply immersed in the online world and continue to invest greater resources in all things digital. Many of our brands interact with their consumers through Facebook, Twitter and YouTube, have established global e-commerce sites and created powerful viral marketing campaigns. We are committed to being on the cutting edge of the evolving digital experience.
Solution:
The company apologized for the ad, and the video was removed from the official site, although it is still available on YouTube.
XIII. Conclusion
Intensive strategies include Market Penetration, Market Development and Product Development. These strategies will require intensive efforts as Estee Lauder needs to improve its competitive position with existing products. Intensive Strategies will help Estee Lauder achieve the following longterm imperatives: Optimization of Brand Portfolio Strengthening of Product Categories Strengthening and Expansion of Global Markets Diversification and strengthening of channels of distribution Operational and Cost Excellence
XIV. Recommendation
1. Proposed Mission Statement:
I believe that the current mission statement of Estee Lauder Companies is well-crafted and would rather like to add the following to the existing framework: Expand operations to all markets including Africa and become the global cosmetics leading brand
2.
3. Other Recommendation
Rely on the global brand awareness and build it further by endorsing celebrities from the local markets Have tie-ups with beauty salons, clinics etc to push their brands. Using market research, find the brands that have been doing poorly and makes strategies to either improve it or close its operations. Having an idle brand will add on as a burden to the company. Do not have too many brands for the same product category since it will lead to cannibalization. Innovation is the key. Identify new customer needs like anti aging products and bring in products that suit the customers better. Focus more on selling over the internet. It would be the best channel to attract the youth with so much happening over the internet. Introduce new brands that are priced more economically. Formulate new strategies for testing.