Estée Lauder – 2008

Abstract
Estée Lauder produces a diverse line of shampoo, perfumes, lip gloss and other skin care products. A small sampling of the brand names marketed by Estée Lauder include: Estée Lauder, Clinique, American Beauty, and Flirt. The products are sold through various distribution channels, including specialty stores, department stores, pharmacies, the and Web. Estée Lauder operates in the Americas, Europe, Middle East, Asia, and Africa. The company has over 28,000 employees and is led by CEO William Lauder whose base pay was over $3.5M in 2007. The firm’s two major competitors are consumer-products giant Procter & Gamble and L’Oreal, a French company.

Mission Statement (actual)
Bringing the best to everyone we touch. (proposed) Our mission is to deliver the highest quality skin care products, fragrance, cosmetics, and hair care products (2) for men and women of all ages and nationalities (1) around the world (3). By using the latest technology (4) in cosmetic design, we are able to ensure our customers’ high demand for superior and safe products will be met or exceeded in each and every product purchased (7). Providing the best products possible to our customers will enable our philosophy (6) of improving the sprit of our customers’ mind, body and soul to continue from generation to generation (5). By hiring the most experienced chemists (9) to design new products that are safe and effective, we strive to continue growing our product line. We strive to be socially conscious by providing products that are environmentally safe and free from animal testing (8). 1. Customer 2. Products or services Markets Technology Concern for survival, profitability, growth Philosophy Self-concept

Customers are becoming more interested in herbal products that are derived from natural sources. In 2006. Aging US population opens new markets for developing skin care products for the elderly. China experienced a 15 percent growth in professional skin care sales. The Hispanic population in the US is rapidly growing.” Many new start up companies with specialty products are created each year. and confidentiality. Products can be purchased at significantly lower cost over the Internet. fluorocarbons and other chemicals in the production of cosmetic products. cost savings. External Factor Evaluation (EFE) Matrix . Concerns about the use of aerosols.Concern for public image Concern for employees External Audit Opportunities Weak US Dollar makes US based products more affordable to customers in Canada and Europe. Top competitors in the cosmetics industry are diversified with many brand names and a wide range of products. Threats Consumer complaints and inquires into the use of animal testing for new products. Interest rates remain low in the US. FDA plans to require cosmetic corporations to add a label stating “the safety of this product has not been determined. Increasing numbers of people are buying products online for convenience. Many new start up companies with specialty products are created each year. Customers are demanding products not tested on animals and which are environmentally friendly. Men are increasingly becoming more concerned with their looks and stereotypes of men using skin care products are diminishing. Customers tend to be extremely brand loyal. Growing trend among sections of the population for a more natural look and reduction in their use of make up and related products. harming revenues and traditional distributors.

15 TOTAL 1.12 Customers tend to be extremely brand loyal.05 4 0.Key External Factors Weight Rating Weighted Score Opportunities Weak US Dollar makes US based products more affordable to customers in Canada and Europe. .12 1 0.03 4 0. 0.20 Products can be purchased at significantly lower cost over the Internet cutting into revenues and harming traditional distributors. cost savings.04 3 0.05 4 0. 0.03 4 0.15 Customers are demanding products not tested on animals and which are environmentally friendly. 0.20 In 2006.24 Increasing numbers of people are buying products online for convenience. 0.10 Threats Consumer complaints and inquires into the use of animal testing for new products.02 Many new start up companies with specialty products are created each year.10 2 0.02 1 0.12 Aging US population opens new markets for developing skin care products for the elderly.12 3 0. 0.15 Many new start up companies with specialty products are created each year.08 3 0. 0. 0. fluorocarbons and other chemicals in the production of cosmetic products. 0.09 Customers are becoming more interested in herbal products that are derived from natural sources.68 Internal Audit Strengths Wholly owned and operated offices in 43 countries and territories and products sold in over 135 countries.36 Men are increasing becoming more concerned with their looks and the stereotypes of men using skin care products are diminishing. 0.05 3 0.05 2 0.” 0.05 3 0. and confidentiality.09 FDA plans to enforce cosmetic corporations to add a label stating “the safety of this product has not been determined.10 Concerns about the use of aerosols.05 3 0.05 2 0. 0. 0. 0.03 3 0. 0.05 3 0. 0.20 Hispanic population in the US is rapidly growing.15 Interest rates remain low in the US. 0. 0. China experienced a 15 percent growth in professional skin care sales.03 3 0. 0.12 Top competitors in the cosmetics industry are diversified with many brand names and a wide range of products.12 Growing trend among sections of the population for a more natural look and reduction in their use of make up and related products.00 2.

Company does not offer enough brand names tailored to lower budget consumers. Donna Karan.Test products on animals only when required by law. today that number is only 17. markets over 9. Origins. Missoni. Company specializes in mid-level and upper end cosmetics products. Analysis of company data Year 2007 2007 ($ in millions) Estée Lauder P&G . 2007. Net sales of fragrance products decreased 4 percent to $1. Company continues to purchase interest in start up and established companies such as Bumble and Bumble Products LLC in June 30. Stock price has been stuck between $25 and $50 trading range since 1996. Weaknesses In 1990. Detailed succession plan in place for Fabrizio Freda to take over as CEO in March of 2010. Estée Lauder lacks a clear mission and vision statements.000 products. Confusing organizational structure. Flirt! among others. The company has global rights to products sold under several name brands including Tommy Hilfiger. Revenue has increased 40 percent from $5 billion to $7 billion in the five year period dating fiscal years 2003-2007.2B as the company continues to struggle in this segment. and Sean John. Bobbi Brown. it is unclear whether group presidents have control over the product lines or geographic areas. Estée Lauder operates under numerous brand names including Clinique. 75 nameplate department stores sold Estée Lauder.

05 1 0.10 2 0.7 $37785 Net profit $449.213B. today that number is only 17.05 1 0.5% Number of employees 28500 138000 Number of shareholders 3332 2220000 15.05 Confusing organizational structure.60 Company specializes in mid level and upper end cosmetics products.Sales $7037.05 Estée Lauder lacks clear mission and vision statements. 2007.20 Stock price has been stuck between $25 and $50 trading range since 1996.0.000 products.05 1 0. O1).10 4 0. Bobbi Brown.4% 13.48 Test products on animals only when required by law.05 4 0.05 Company does not offer enough brand names tailored to lower budget consumers. 0.0 66760 Return on assets (ROA) 10.05 1 0.03 4 0. Origins.15 4 0. 0. 0. it is unclear whether group presidents have control over product lines or geographic areas.20 Revenue has increased 40 percent from $5 billion to $7 billion in the five year period dating fiscal years 2003-2007. 0. 0.05 4 0.8% 50. Continue to acquire interest in start up companies (S6. 75 nameplate department stores sold Estée Lauder.5 $74476 Cost of sales $1774. 0.7% Net profit margin 6.7 138014 Total stockholders’ equity $1199.20 The company as global rights to products sold under several name brands including Tommy Hilfiger. 0.12 4 0. O4.5% Internal Factor Evaluation (IFE) Matrix Key Internal Factors Weight Rating Weighted Score Strengths Wholly owned and operated offices in 43 countries and territories and sold in over 135 countries.5% Return on stockholders’ equity (ROE) 37. Donna Karan. and Sean John.10 4 0.05 F. company continues to struggle in this segment.05 TOTAL 1. Missoni. 0. Flirt! among others. markets over 9. .05 4 0. 0.8 $36686 Gross profit $5262. S7. 0.2 $10340 Gross profit margin 74.05 Net sales of fragrance products decreased 4 percent to $1. SWOT Strategies SO Strategies Expand product offerings in foreign nations (S1. S8.9% 7.12 Estée Lauder operates under numerous brand names including Clinique. 0. O2. 0.40 Detailed succession plan in place for Fabrizio Freda to take over as CEO in March of 2010.05 1 0.9% Total assets $4125.00 3.40 Company continues to purchase interest in start up and established companies such as Bumble and Bumble Products LLC in June 30. 0.20 Weaknesses In 1990.

WO Strategies Continue to expand the respective brand name websites and offer incentives to customers (W1. S8. WT Strategies Draft new vision and mission statements along with a new clearer corporate structure to compete with current competition (W3. Market development: Expand further into China. Product development: Further develop a line of natural skin care products and exfoliaters under a new catchy brand name. T5. Build new factories. have prospects of joining the European Union. Market new soaps and skin care products that tailor to the natural look (S7. Also. T6). T6). W4. O4). Create a new line of products tailored to customers on smaller budgets (W6. These nations are rapidly growing. Product development: Develop new products and initiate an aggressive advertising campaign to target men in the United States. T5. W3). ST Strategies Offer rebates to customers to compete with black and gray market distributors (S7. open new retail stores in shopping malls. T7). S8. Target these products to older customers and customers who are into the natural craze look. T8). and the people appreciate fashion. Recommendations Market development: Expand further into Eastern Europe in the former communist block nations. T3.O5). Appendix Analysis of company data . Introduce new fragrance products for men and boys (W5.

Indicates how effectively assets are being used to produce profit. Net profit margin equals net profit divided by sales.6% Number of employees 28500 42000 Number of shareholders 3332 18399 Note: Dollar amounts are in millions.5 Net profit $449. since such companies are generally subject to similar business conditions. divide gross profit by sales.2 Gross profit $5262. a 20% gross profit margin means that for every dollar generated in sales.8% 60. the company has 20 cents left over to cover basic operating costs and profit. This number is an indication of how effective a company is at cost control.3% Net profit margin 6.2 Total stockholders’ equity $1199.7 Cost of sales $1774.3% Return on stockholders’ equity (ROE)37. Indicates how effectively the shareholders’ . Toilet preparation manufacturing 325620. To obtain gross profit margin (a percentage).9% 9.Year 2007 2007 Estée Lauder Avon NAICS code 325620. The higher the net profit margin is. Gross profit margin: Gross profit is what remains from sales after a company pays out the cost of goods sold.2 $530.5% 74.8 $3941.6 Return on assets (ROA) 10.7 Gross profit margin 74. The net profit margin is a good way of comparing companies in the same industry. Market cap: Market cap is the consensus opinion of what the market thinks the company is worth.5 $9938.3% Total assets $4125. the more effective the company is at converting revenue into actual profit.7 $5997.0 $711.4% 5. Return on assets: Net income expressed as a percentage of total assets. For example.7 $5716. Net profit margin: Net profit is what remains after all expenses are subtracted from total sales revenue. Toilet preparation manufacturing Market cap $7547564970$12110952810 Sales $7037. Return on equity: Net income expressed as a percentage of shareholders’ equity.

investment is being used to produce a profit. .

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