Tuesday, February 2, 2010

Strategic Management:: Case Study 1 (2) - (Estee Lauder – External Environment Analysis)

D. External Audit

Opportunities

  1. Weak US Dollar makes US based products more affordable to customers in Canada and Europe.
  2. Interest rates remain low in the US.
  3. Increasing numbers of people are buying products online for convenience, cost savings, and confidentiality.
  4. Men are increasingly becoming more concerned with their looks and stereotypes of men using skin care products are diminishing.
  5. In 2006, China experienced a 15 percent growth in professional skin care sales.
  6. The Hispanic population in the US is rapidly growing.
  7. Customers are demanding products not tested on animals and which are environmentally friendly.
  8. Customers are becoming more interested in herbal products that are derived from natural sources.
  9. Aging US population opens new markets for developing skin care products for the elderly.
  10. Many new start up companies with specialty products are created each year.

Threats

  1. Consumer complaints and inquires into the use of animal testing for new products.
  2. FDA plans to require cosmetic corporations to add a label stating “the safety of this product has not been determined.”
  3. Many new start up companies with specialty products are created each year.
  4. Concerns about the use of aerosols, fluorocarbons and other chemicals in the production of cosmetic products.
  5. Top competitors in the cosmetics industry are diversified with many brand names and a wide range of products.
  6. Products can be purchased at significantly lower cost over the Internet, harming revenues and traditional distributors.
  7. Growing trend among sections of the population for a more natural look and reduction in their use of make up and related products.
  8. Customers tend to be extremely brand loyal.


CPM – Competitive Profile Matrix
* Estimates for Procter & Gamble focused on similar product lines they share with Estée Lauder not the company as a whole.


Estée Lauder

Revlon

Procter & Gamble

Critical Success Factors

Weight

Rating

Weighted Score

Rating

Weighted Score

Rating

Weighted Score


Market Share

Price

Financial Position

Product Quality

Product Lines

Consumer Loyalty

Employees

0.20

0.10

0.20

0.15

0.10

0.20

0.05

4

2

3

4

4

4

4

0.80

0.20

0.60

0.60

0.40

0.80

0.20

4

3

1

2

3

3

4

0.80

0.30

0.20

0.30

0.30

0.60

0.20

3

4

4

2

4

2

4

0.60

0.40

0.80

0.30

0.40

0.40

0.20


TOTAL

1.00

3.60

2.70

3.10




External Factor Evaluation (EFE) Matrix


Key External Factors

Weight

Rating

Weighted Score

Opportunities

1. Weak US Dollar makes US based products more affordable to customers in Canada and Europe.

0.05

3

0.15

2. Interest rates remain low in the US.

0.08

3

0.24

3. Increasing numbers of people are buying products online for convenience, cost savings, and confidentiality.

0.12

3

0.36

4. Men are increasing becoming more concerned with their looks and the stereotypes of men using skin care products are diminishing.

0.05

4

0.20

5. In 2006, China experienced a 15 percent growth in professional skin care sales.

0.05

4

0.20

6. Hispanic population in the US is rapidly growing.

0.05

3

0.15

7. Customers are demanding products not tested on animals and which are environmentally friendly.

0.03

3

0.09

8. Customers are becoming more interested in herbal products that are derived from natural sources.

0.03

4

0.12

9. Aging US population opens new markets for developing skin care products for the elderly.

0.05

3

0.15

10. Many new start up companies with specialty products are created each year.

0.05

2

0.10

Threats

1. Consumer complaints and inquires into the use of animal testing for new products.

0.03

3

0.09

2. FDA plans to enforce cosmetic corporations to add a label stating “the safety of this product has not been determined.”

0.02

1

0.02

3. Many new start up companies with specialty products are created each year.

0.05

2

0.10

4. Concerns about the use of aerosols, fluorocarbons and other chemicals in the production of cosmetic products.

0.03

4

0.12

5. Top competitors in the cosmetics industry are diversified with many brand names and a wide range of products.

0.10

2

0.20

6. Products can be purchased at significantly lower cost over the Internet cutting into revenues and harming traditional distributors.

0.12

1

0.12

7. Growing trend among sections of the population for a more natural look and reduction in their use of make up and related products.

0.04

3

0.12

8. Customers tend to be extremely brand loyal.

0.05

3

0.15

TOTAL

1.00


2.68




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