Estee Lauder Group Case Study – Industry Analysis
150-85 = 65/150 would be your score, but you have no references cited in the body of this paper and no works cited page. Therefore, your grade is zero due to plagiarism! Unless you want your grade to remain a zero, you must cite all your references within each company’s section of each of the five forces and in the appendix and make a works cited page and return it by midnight 4/26/21
In 1946, Estee and Joseph Lauder officially launched their company Estee Lauder, which is know a household name in the cosmetic industry. Headquartered in Manhattan, New York, the company manufactures and markets skin scare, makeup, fragrance, and hair care products all around the world. The company sells its products through department stores, upscale perfumeries, pharmacies, salons, spas, specialty multi brand retailers, e-commerce websites, and freestanding stores. Estee Lauder owns around thirty notable brands which include Clinique, Bobbi Brown, BECCA, Too Faced, La Mer, Michael Kors, M.A.C, Smash box, Tory Burch, DKNY and many more.
Estee Lauder: Give information about this company!
L’Oreal: Give information about this company!
Coty: Give information about this company!
Revlomn: Give information about this company!
You have no references in this whole big paragraph and it sounds/looks like it is a cut and paste from somewhere! This is simply a mess! Notice the rubric I have posted. You were supposed to discuss 4 separate companies.. not mix them all together! -10
Top competitors in the cosmetics business are diversified with many brand names and a wide range of products. Basically, the Companies faced direct and significant competition from L’Oréal, Coty, Beiersdorf and Revlon which targeting the similar market segment and product orientation. Between 2014 and 2018, L’Oréal’s revenue has grown from $28.67 billion to $30.95 billion, a growth of 7.95%. In comparison, Estee Lauder’s revenue has grown from $10.97 billion to $13.69 billion, a 24.8% rise. L’Oréal is the largest cosmetics company in the world, with a range of over 30 global brands, selling products catering to people across all income levels. Estee Lauder, on the other hand, offers more premium products, and is more focused on makeup and skin care, with fragrances and hair care making up less than 20% of their business. This vast difference in growth is due to the more premium product line offered by Estee Lauder, which sells at much higher prices on average, in addition to a number of smart acquisitions made by Estee Lauder, primarily in the skin care and makeup segments. L’Oréal’s fragrance revenue has remained more or less stagnant over the last 5 years, going from $4.11 billion in 2014 to $4.24 billion in 2018. In comparison, Estee Lauder’s fragrance segment has grown 28% over the same period, from $1.43 billion to $1.83 billion. However, with L’Oréal’s larger global presence, its fragrance revenue is about 2.3x that of Estee Lauder’s. L’Oréal’s gross profits are more than double that of Estee Lauder’s, standing at $22.53 billion, versus $10.84 billion for the latter, for FY ’18. However, Estee Lauder’s gross margins stand at around 79.2%, against the 72.8% for L’Oréal for the most recent year. This is due to the higher average selling price for Estee Lauder’s premium range of products. Estee Lauder has grown 3x more than L’Oréal has over the past 5 years, with revenue growth of almost 25%, as compared to around 8% for L’Oréal. L’Oréal is almost 2.3x bigger than Estee Lauder (as of 2018), in terms of revenue, and already has a much more established presence worldwide. Even then, the difference in growth is pretty impressive, and can be mainly attributed to Estee Lauder’s fast expansion into emerging markets, and higher average selling prices across its vast range of premium products. The pandemic has added to the woes of beleaguered beauty giant Coty. The company has been under tremendous pressure since it acquired over 40 beauty brands from Procter & Gamble in 2016. The addition of P&G’s struggling brands dragged down Coty’s performance and the deal also added huge debt to its balance sheet. In fiscal 2019 (ended Jun. 30, 2019), the company recorded asset impairment charges of $3.7 billion mainly related to the acquired brands. Last year, Coty announced a multi-year turnaround plan to optimize its operational model, accelerate its e-commerce growth and deleverage its balance sheet. Coty also aims to reduce its cost base by 25% by the end of FY23. But the pandemic has made the company’s turnaround a difficult task. Coty’s revenue fell 63% Y/Y to $560 million in 4Q FY20 (ended June 30) reflecting the impact of COVID-19, especially on the cosmetic and professional beauty categories. Revenue fell 60% on an organic basis. The company posted an adjusted loss per share of $0.51 in 4Q FY20 compared to adjusted EPS of $0.16 in 4Q FY19. Coty stated that it experienced significant improvement in July and August across its portfolio and expects to return to profitability in 1Q FY21. To lower its debt, Coty has secured a $1 billion direct investment from KKR through convertible preferred shares and inked a deal to divest 60% of its professional beauty and retail hair businesses including the Wella, Clairol, OPI and GHD brands for $2.5 billion. Coty stock has tanked 68.4% year-to-date and Estée Lauder stock has risen 8.7% year-to-date (as of Oct. 11) and the average analyst price target of $225.79 suggests that the stock is fully valued at the current levels. the average analyst price target of $4.54 indicates a recovery of about 28% from the current levels. Estée Lauder has fared better than Coty amid the pandemic and is well-positioned to recover faster from the COVID-led slowdown. Coty is implementing several transformational measures, but it might take a long time for the company to get back on the sales growth track. In a challenging market, Beiersdorf met its goals in Consumer Skincare, strengthening its global positioning and expanding the business to new regions—resulting in a 1.6% increase in sales over the previous year, to $6.7 billion in 2018. Known for its expertise in skincare, in 2018, Beiersdorf launched a new patented active ingredient called Thiamidol, which treats hyperpigmentation of the skin, and is the basis for new consumer skincare products including Eucerin Anti-Pigment. Luxe brand La Prairie increased organic sales by an impressive 38.5%, due mostly to Travel Retail and the Skin Caviar Collection, which sold well in China, Hong Kong, Australia, and North America. Beiersdorf is also committed to its sustainability efforts, and says that by 2020, they “aim to generate 50% of our global sales from products with an improved environmental impact compared to the base year of 2011.” In 2018, they nearly reached their target, with a minimum of 49% of sales. Just last month Beiersdorf announced that they will launch their first new brand in more than 30 years. The manufacturer of Nivea’s new business unit, Oscar & Paul, will reveal Skin Stories – Performance Cosmetics, which was developed to provide a care system for tattooed skin. First Half 2019: In the first half of 2019, Beiersdorf announced continued growth, reaching $3.6 billion in Consumer product sales. Nivea achieved growth of 3.2%. The Derma business unit, which includes the Eucerin and Aquaphor brands, achieved an increase in sales of 6.0%. The La Prairie brand continued the previous year’s excellent results and achieved sales growth of 26.8%. The new structure comes as Revlon looks at alternative ways to win against its larger competitors L’Oréal and Estee Lauder. Last September it acquired Elizabeth Arden in the hopes of leveraging the $3bn company’s diverse portfolio that includes beauty tools and men’s grooming products. Despite diversifying out of colour cosmetics in 2013 into perfume and other beauty products Revlon has struggled to reap the rewards of its investments just yet. The company did however see a 28% increase in sales for the third quarter of 2016 to $604.8m but failed to turn a profit. Revlon is up against tough competition in the beauty industry. Estee Lauder being much larger company as compared to Revlon, also possess greater resources for research and marketing, which gives them the scope to explore newer products and expand into newer geographies and channels. The company reported that its fourth-quarter net loss widened to as much as $80 million, from $36.5 million a year earlier sales slipped to $785 million during the period, compared with $801 million the prior year. Still, that figure was better than the $743 million predicted by analysts. The shares gained 2.7% to $22.60 in extended trading after the announcement.
Adjusted earnings before interest, taxes, depreciation, and amortization amounted to $110 million to $115 million in the fourth quarter. Analysts were estimating a number at the high end of that range. For the full year, Revlon expects a net loss of about $165 million to $185 million. That includes a roughly $11 million write-down tied to the company’s Global Color Brands division. The number of competitors in the industry in which Estee Lauder operates are very few. Most of these are also large in size. This means that firms in the industry will not make moves without being unnoticed. This makes the rivalry among existing firms a weaker force within the industry. The very few competitors have a large market share. This means that these will engage in competitive actions to gain position and become market leaders. This makes the rivalry among existing firms a stronger force within the industry. The industry in which Estee Lauder is growing every year and is expected to continue to do this for a few years ahead. A positive Industry growth means that competitors are less likely to engage in completive actions because they do not need to capture market share from each other. This makes the rivalry among existing firms a weaker force within the industry. The fixed costs are high within the industry in which Estee Lauder operates. This makes the companies within the industry to push to full capacity. This also means these companies to reduce their prices when demand slackens. This makes the rivalry among existing firms a stronger force within the industry. The products produced within the industry in which Estee Lauder operates are highly differentiated. As a result, it is difficult for competing firms to win the customers of each other because of each of their products in unique. This makes the rivalry among existing firms a weaker force within the industry. The production of products within the industry requires an increase in capacity by large increments. This makes the industry prone to disruptions in the supply-demand balance, often leading to overproduction. Overproduction means that companies must cut down prices to ensure that its products sell. This makes the rivalry among existing firms a stronger force within the industry.
The exit barriers within the industry are particularly high due to high investment required in capital and assets to operate. The exit barriers are also high due to government regulations and restrictions. This makes firms within the industry reluctant to leave the business, and these continue to produce even at low profits. This makes the rivalry among existing firms a stronger force within the industry. The strategies of the firms within the industry are diverse, which means they are unique to each other in terms of strategy. This results in them running head-on into each other regarding strategy. This makes the rivalry among existing firms a strong force within the industry.
Suppliers can affect the quality and availability of their products that Estee Lauder sales. Estee lauder is comprised of multiple different segments within the cosmetics industry.
Estee lauder has skin care, make up, hair care and fragrance. Therefore, the suppliers of the different segments vary in what they produce. Within the Estee Lauder supply line are manufacturers, vendors, and distributors.
Four of the many suppliers Bioamber Inc, Flotek Industries Inc, Synalloy Corporation, and Chemtura Corp. Switching costs of suppliers is low due to large volume of available suppliers worldwide. The two metrics for measuring the suppliers and Estee Lauder are revenue and net income.
Bioamber Inc’ revenue for 2017 was $11,824(million) and cash flow was 1,249(million) need asset values and a discussion about the company and what the company supplies to the industry
, Flotek Industries Inc revenue for 2017 was $12.1 (million) and cash flow was -10 (million), need asset values and a discussion about the company and what the company supplies to the industry
Synalloy Corporation revenue for 2017 was $55.9 (million) and cash flow was .07 (million), need asset values and a discussion about the company and what the company supplies to the industry
Chemtura Corp revenue for 2017 was $74 (million) and net income was -21 (million). need asset values and a discussion about the company and what the company supplies to the industry
them at notable stores such as Discuss each of these companies, the products they carry, their asset$$ and $$ revenue.
make a separate section for each one!!
Kylie Cosmetics whose revenue for 2017 was $307 (million). Discuss this company, the products it makes and sells, and its asset$$ and $$ revenue.
Huda Beauty Cosmetics whose revenue for 2017 was $250 (million), Discuss this company, the products it makes and sells, and its asset$$ and $$ revenue.
Fenty Beauty whose revenue for 2018 was $570 (million), Discuss this company, the products it makes and sells, and its asset$$ and $$ revenue.
KKW Beauty whose revenue for 2017 was $230 (million). Discuss this company, the products it makes and sells, and its asset$$ and $$ revenue.
This needs to be in the appendis. You are supposed to discuss substitutes here and the company that makes each of them. -25
There are very few substitutes available for the products that are produced in the industry in which Estee Lauder operates. The very few substitutes that are available are also produced by low profit earning industries. This means that there is no ceiling on the maximum profit that firms can earn in the industry in which Estee Lauder operates. All of these factors make the threat of substitute products a weaker force within the industry. The very few substitutes available are of high quality but are way more expensive. Comparatively, firms producing within the industry in which Estee Lauder operates sell at a lower price than substitutes, with adequate quality. This means that buyers are less likely to switch to substitute products. This means that the threat of substitute products is weak within the industry. The company can focus on providing greater quality in its products. As a result, buyers would choose its products, which provide greater quality at a lower price as compared to substitute products that provide greater quality but at a higher price. The company can also focus on differentiating its products. This will ensure that buyers see its products as unique and do not shift easily to substitute products that do not provide these unique benefits. It can provide such unique benefits to its customers by better understanding their needs through market research and providing what the customer wants.
Type each question and give an answer to it. You have put a lot of stuff up top where you were supposed to discuss individual companies that should be used here!
+ Competitors are numerous and roughly equal in size of power in the industry
+ Industry growth is happening at a high-speed rate and will continue to grow
+ Exit barriers are high as inventory is costly and ready buyers would be hard to find
+ Switching costs of suppliers is low due to large volume of available suppliers worldwide.
+/- Depending on the suppliers to sale to a particular buyer
+ Forward Integration is high within the company
+ The number of suppliers is significantly higher relative to the buyers
+ Experimenting with product design by using different materials so that they can easily shift to new materials if prices go up.
– Purchases are in small volumes as products are bought on an as needed basis
+ Product purchases are standard as they can be purchased in most department stores and online
– Industry product is unimportant to the quality of the buyer’s product as they manufacture their own products
+ Innovative new products and services bring new customers and bring in former customers
+ Economies of scale, being able to have lower fixed cost
+ Research and development that can be discouraging to new entrants in the industry
-Buyer loyalty is strong meaning customers are dedicated to the brand
– Spending less on similar products means sacrificing the quality that the premium market expects
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