Mhegan T.

Manarang
BsAct1H

Este Lauder Companies, Inc.

2008

SUMMARY:

Este Lauder is a major American corporation based in New York City. Este
Lauder is one of the worlds leading manufacturer and marketer of quality 1) skin care,
2) makeup, 3) fragrance and 4) hair care products. The company was founded in 1946
by Este Lauder and her husband Joseph Lauder. Este was always interested in
beauty and began her business selling the skin care products her chemist uncle, John
Schotz, developed. Unlike any other companies, Este Lauder sells its products mainly
through upscale department store, specialty retailers, upscale perfumeries and
pharmacies, and prestige salons and spas. They have also a wide variety of skincare
products like moisturizers, creams, lotions, cleansers, sunscreens and self-tanning
products not just for women but also for men.

In the early years, Este was unable to convince Madison Avenue to carry her
products. Instead of seeing this happening as a downfall, Este faced this rejection and
she began to market her products directly to customers. Her idea become a success,
the Lauders began targeting high-class customers by selling products exclusively
through boutiques and department stores. In 1948, Este Lauder established their first
department store account with Saks Fifth Avenue in New York. During the next 15
years, the products were selectively distributed in other stores in the United States. In
1960 the company globalized their operations with the introduction of Este Lauder
products at Harrods in London, with the Hong Kong market opening the following year.

Mission

We are a family company committed to working together with uncompromising ethics

and integrity. We strive to 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 other 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.

Vision
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.

I. Objectives

1. To be known as a leader in prestige beauty around the world.

2. To measure Este Lauder Companies, Inc. competitiveness.
3. To minimize Este Lauder Companies, Inc. losses incurred.

II. Central Problem

Will Este Lauder Company enhance leadership in prestige beauty around

the world?

III. Areas of Consideration

STRENGTHS
Icon of reputable upscale cosmetic products.
Excellent promotional strategies (discount, free samples, and celebrities
as endorsers).
Wide variety of products available.
Este Lauder currently has 26 brands selling in over 130 countries.
Global licenses and globalized operations.
Defined, numerous, and wide channels of distribution.

WEAKNESSES

Low sales in the companys fragrance product category.

A continuing increase of total liabilities.
Low net income growth.

OPPORTUNITIES

International expansion reaching other parts of the world.

 Growing population of teenagers which are nowadays the primary
customer of makeup products.
Enhancing the market of the cosmetics for men.

THREATS

Aggressive competition from the competitors in the same market.

Changes in customers taste and preference in choosing products suitable
to their needs.
Competitive pricing of other similar products which may appear to be
cheaper than the companys offering.
Increasing price of raw materials.

IV. Alternative Courses of Action

1. Strengthening and expansion for global markets.

- ADVANTAGE
o The business becomes less vulnerable to changing trends - An
international business is guarded against the changing trends of
business because there is more access to markets within their
targeted demographics.
o The visibility of the business brand will increase - When a
companys market is able to expand, the visibility of its brand
expands along with it.
o There is actually less overall competition - Although it seems
like it would be the opposite of this, there is less competition for
a business that can expand internationally. This is because a
good product that sells well will actually deflate local-level
competition.

- DISADVANTAGE
o You cant do business somewhere when you dont know the
market - Even if this is partnership or franchise, without seeing
the market personally, an authentic presentation can never
really be developed.
o International businesses are going to have timing issues -
Delivery of product is a constant challenge for the international
business.
o Currency fluctuations can completely eliminate profits -
Anticipated profits suddenly disappear based on the fluctuations
of value in international currencies.
 2. Innovation of new product categories that is affordable.

- ADVANTAGE
o Not only customers in the high class will come, but also
customers from the middle class.
o It helps to drive a higher value proposition - Higher value
propositions create more repeat buyers and positive word-of-
mouth marketing, which can lead to higher revenues.
o Additional products for the company.

- DISADVANTAGE
o It will require additional capital.
o Products can fail unexpectedly.
o Time consuming, and will result to more additional funds
needed.
o Evolving and changing customers wants and needs.

3. Market Penetration.

- ADVANTAGE
o Fast Growth - If your business and marketing objective is to
enlarge your consumer base, then market penetration is the
most effective way to act.
o Economic Advantages - Definitely, its a responsible call, but
market penetration can bring cost advantages if your business
development goes the way you predicted and hoped.
o Combat Competitors - One of the best parts of the market
penetration strategy is combating your competitors.

- DISADVANTAGE
o Unmet Production Costs - Its not always possible to lower the
product price as you will. It becomes more complex when
competing with large firms.
o Missed Opportunities - Brands that produce luxury products
often make mistakes like marketing it as a cheap item.
o Poor Company Image - If the company has several product
lines (that includes a luxury line), then using market penetration
strategy might be harmful.

V. Strategy Formulation/Recommendation
 I therefore conclude that the best solution to the problem is alternative course of
action number 1 which is strengthening and expansion for global markets because it is
a fuel for financial growth. Foreign markets offer new sources for revenue and profit
margin expansion. There are many benefits of expanding your business internationally,
such as: business expansion can help the company increase revenue, offer more job
opportunities, aid the financial situation of the foreign country, build good relationships
with partners overseas, which helps create more business and many more. What is
important, however, once you decide to pursue international expansion, is that you
commit to it in your mind and introduce it into your organizations culture. Thats when
things will start to happen, and youll begin to see overseas business opportunities.
Eliminate unscrupulous buyers and tire kickers, and thoroughly understand the
proposed transaction while accurately managing expectations of all parties involved.

VI. Plan of Action

1. Look for some investors in investing a capital on building new branch
internationally.
2. Make a plan on how the business will be build.
3. Choose the proper place where it will be convenient and in demand to
customers.
4. Hire people who will construct the building.
5. Hire employees that will work on the new Este Lauder international
branch.
6. Open the new Este Lauder branch.

VII. Potential Problems

1. What if the expansion took so long?

2. What if budget fall short of?
3. What if the people are not familiarize to the products we offer?

VIII. Contingency plans

1. Double the man power needed for the expansion.

2. Before starting, the company should prepare a budget above the target
cost so that they will not fall short of.
3. Marketing strategies such as sampling and testing for them to experience
our products.