Strategy Analysis and Choice Essay
Strategy Analysis and Choice
A SWOT analysis is important as a clear basis is provided to examine the performance of a business. It is also very important for the products a company offers, as it is essential in the branding and marketing of the company products. This model helps in the understanding of the ‘firm and its surroundings’.
SWOT analysis for Estee Lauder from four aspects, such as Strengths, Weaknesses, Opportunities, Threats, they belong to Internal and External. At the internal of Estee Lauder also have strong brand name, research and development focus, strong distribution network, robust revenue and profit growth sales, weak liquidity position, customer concentration and weak performance in a few markets. At the external of Estee Lauder also have demographic trends in the United States, cosmetics markets in emerging nations, growing riches- rich getting wealthier, counterfeit products, intense competition and increasing regulations.
Strengths The brand name, ‘’Estee Lauder’’ itself is strength. The name is linked to quality and luxury. The company is also a global licensee for other big brands like; Tommy Hilfiger, Donna Karen, etc. Estee Lauder leads in each market segment in the industry as it develops new products, redesigns existing ones and identifies and considers consumer preferences.
It has a large network of retail. This therefore increases the market penetration opportunities and creates closeness to target customers. It has a strong management strategic perspective, and is also having a great growth. It also has various innovations such as; offering shopping via the internet (it was the first major cosmetic firm to have offered shopping via the internet.)
Weaknesses The company bargaining power could be lowered by it concentrating on a single biggest client. They also have a poor cost structure in some areas, . The company could be exposed to the debt market due to low liquidity levels, and this could thus affect the company growth. It is the Family members that have most of the power over the company. The company’s organisational structure is not easily distinguished. In America, there are particularly lower sales in the fragrance category.
Opportunities Estee Lauder targets aged people and therefore make products to suit these people. Its revenues could be boosted by having a strong and great presence in its segments, thus also increasing growth. The cosmetics markets are doing good in emerging markets like India and China, as there are many beauty contests that take place. This cosmetics market is growing due to younger and middle aged women that are being more style conscious. Estee Lauder is also well positioned in these emerging markets. There is also a demand in the luxury goods. More money is spent on these goods. Therefore, the needs of these wealthy people are also taken into consideration, and products made to meet their needs and wants.
Threats Many fake products are being sold, thus affecting Estee Lauders sales. This can lead to the company losing its exclusivity of the brand. This could thus harm the image of the company. Customers may also be dissatisfied with these products as the fake product may harm them, thus the company would lose out on customers. Many big brands such as; Revlon, L’Oreal, would increase competition in the market. The government may also impose certain rules and regulations on the products saying that the product has high levels of chemicals which are harmful to people. This may thus lead to an increase in the cost of developing the products and also in the launching of the products.