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• The Estée Lauder Companies Inc is an American
manufacturer and marketer of high-end skincare,
makeup, fragrance and hair care products. The
company has its headquarters in Midtown
Manhattan, New York City.
• The company began in 1946 when Estée Lauder
and her husband Joseph Lauder began producing
cosmetics in New York City. They first carried only
four products: Super-Rich All Purpose Crème,
Crème Pack, Cleansing Oil, and Skin Lotion. Two
years later, they established their first department
store account with Saks Fifth Avenue in New York.
Estee Lauder Companies state
their vision is ‘’Bringing the best to
everyone we touch’’
Proposed Vision Statement
“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.”
Mission of The Estée Lauder
• We are a family company committed to working
together with uncompromising ethics and integrity.
We strive 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 our 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.
• Eliminate waste and reduce inefficiencies in order
to provide maximum value to our customers.
• Be responsible citizens in every community we
They are energetic, innovative and first for customers
Power end devour to do our very best and enhance the company's leadership
throughout the world
Building strong global brands through innovative delivery of products and
Look after our people so they can look after our customers
Understand customers better than anyone and Use our strengths to deliver
unbeatable value to our customers
Through distribution channels, reaching the customers globally
Trust and respect each other
Estee Lauders Internal Assessment
• Leonard A. Lauder is Chairman Emeritus of The Estée Lauder
Companies. William P. Lauder is Chairman of the Board and
Executive Chairman. Fabrizio Freda is President and Chief Executive
• Estee lauder companies markets are more than 9000 quality
products under its portfolio of brands. Exhibit 6 summarizes the
various products and date of product launch or acquisition. Estee
lauder was the first major prestige cosmetics firm to offer shopping
via the internet. Department store is the best venue for the high
services and the brands since $7.6 Billion in beauty sales were
generated in U.S. Department stores in 2006, representing 18
percent of the total beauty market in the U.S.
• Estee lauder was the first cosmetics company to offer
free samples and gift with purchase and continue the
strategy today. The company also the first in the
industry to introduce consistent brand imagery around
the world. For this purpose, the company uses
celebrities as endorsers in testimonial advertising for
commercial on TV, as well as magazines.
• Estee lauder price vary from product to product and
from brand to brand, but tend to be in the mid high to
high range in the industry. Prestige pricing appears to
be an effective strategy given their target market.
• Estee lauder’s 2006 sales increased 3 percent to $6463.8
million due to growth in their makeup, skin care, and hair
are product categories which were partially offset by lower
sales in the fragrance product category. The net increase
reflects sales growth in all geographic regions. Note that
cost of sales as a percentage of total sales increased to 26.1
percent as compared with 25.5 percent in the prior year.
Operating income decreased 15 percent to $615.6 million
and the operating margin was 9.6 percent of sales in fiscal
2006 as compared with 11.6 percent in the prior year. Estee
Lauder’s long term debt decreased 4.6 percent to $431
million in 2006.
R & D
• Estee Lauder’s overall strategy also includes heavily
investing in Research and Development. In order to
have the most advanced products that consumer’s
desire they feel that this is a necessary expense.
Additionally the company does not conduct animal
testing or have anyone do so on their behalf. They test
each and every product on a panel before releasing it
to the public. As of June 30, 2011 Estee Lauder had
approximately 550 employees engaged in R&D costing
85.7 million dollars.
Estee Lauders External Assessment
• The political environment within which an organisation exists has
far reaching consequences. The political environment most
obviously operates at National level, but may also be significant at
local and international levels. Estee Lauder gives direction to
countries through the way they exert control over the economy.
Estee Lauder should not only be cognisant with the politics of a
country, but also with the media, industry and labour leaders. The
following political factors can affect the business environment:
• Level of government involvement in business
• Co-operation and integration, e.g. EU
• This is concerned with the nature and direction of the
economy in which a firm operates. Estee Lauder looks at
the interplay of market forces that dictate the state of the
economy and implications on both commercial and non-
commercial organizations. Prices vary from brand to brand
and product to product, but these are usually in the higher
ranges of an industry. The factors include
• Exchange rates
• Interest rates
• Spending power
• Inflation and employment
• Estee Lauder functions within a structure of
Government regulations and legislations. These laws
and regulations should be considered when running
• Labor laws and industrial relations
• Municipal licenses
• Copyright and patent laws
• Minimum wages laws and Employment law
• These factors may also exist under the macro-environmental
factors. Following factors must are considered with regard to
the key Demographic trends by Estee Lauder:
• World population growth
• Changing household
• Geographic population shifts
• Better-educated, more white-collar workforce
• Increasing Diversity
• Changing age structure
• Population consists of generational groups.
• Distinct segments typically exist within these generational
External Factor Evaluation (EFE)
List of Opportunities
Scope for anti aging products.
Americans over 65 years(1/5th of the population) spend
a substantial income on anti aging products.
Life expectancy of the aging population will continue to
Youngsters and teenagers purchase age preventive
cosmetic items to battle effects of aging.
The world’s aging population increasing over 2.5 times
next 40 years 33% China and India
. EFE Contd…
• 70 million people across the globe
will reach an income level in the
next 20 years.
• Rising demand from emerging and
developing markets for personal
• The Europeans buying pattern was
changing from buying skincare
products from mall-based specialty
stores to pharmacies. Concentrate
on selling skin care products
through pharmacies and through
skin care clinics in the Europe
List of Threats Top competitors in the
• Currency fluctuation risks
• Consumer complaints and inquiries due to
animal testing for new products and many
personal care companies are dropping this
form of product testing. The company will
loose its brand image if it receives
complaints that it has been using animals
to test new products.
• FDA regulations
• Increase in damaging environmental
pollutions due to the use of aerosol and
• Restrictions on products that can be
carried in-flight will affect travel retail
• Changes in the distribution
policy and a difficult retail
environment particularly in
• The sale of the product is
dependant on the disposable
income of the consumers, a fall
in their incomes would result
to a fall in the sales of the
• Competitive pricing at mega
List of Strengths
• Estee Lauder companies have 26
brands, selling in over 130
• Each of the brands has a single
global image which is promoted
with consistent logos, packaging,
and advertising designed to
differentiate it from other brands.
• Estee Lauder was awarded one of
ten Outstanding Women in
Business in the US by business and
financial editors in 1967. This
helped in building their brand.
List of Weaknesses
• Lower sales in Fragrance
product category. As a result of
this the company is struggling
particularly in American region.
• Most of the powers in the
company were with the family
• It is not clear whether even the
four presidents have authority
over the 4 product lines.
GRAND STRATEGY MATRIX
• Market development
• Market penetration
• Product development
• Forward integration
• Backward integration
• Horizontal integration
• Related diversification
•Expand product offerings in foreign nations
•Continue to acquire interest in start up
•Continues to expand the respective brand website
offer incentives to customers. (W!,W3)
•Introduce new fragrance products for men and
boys (W5, O4)
• Offer rebate to customers to compete with the black
and gray market distributors (S7,S8, T5,T8)
• Market new soaps and skin care product that tailor to
the natural look (S7, S8, T7)
• Draft new vision and mission statement along with
new clearer corporate structure to compete with
• Create a new line of products tailored to customer on
smaller budgets (W6,T8)
IFE matrix shows the information related to
strategy formulation Estee Lauder company.
Estee Lauder achieved an overall of total
weighted score.3.22 indicates that the business
of Estee Lauder on this skin care segment is
internally strong because of Estee Lauder has an
ability to respond to internal factors of the
Formulation Of strategy
• Businesses are different in many ways; therefore every
organization needs to have a business plan, which needs to
be reviewed in order to keep it up to date. The plan at Estee
Lauder is articulated by corporate leaders, who give the
organization direction, so as to avoid a strategic drift. They
create a vision of a possible future that allows both the
managers and others to see clearly the direction to take,
building upon the company's current capacity and strength.
• To gain competitive edge and analyze the external
environment, Estee Lauder could further use the Value
chain, BCG growth model and scenario analysis for its
strategic analysis. Recommended strategies that Estee
Lauder could use are; Forward, backward, horizontal
integration, product and market development, market
penetration and more diversification. Estee Lauder took the
approach of providing great customer service, great quality
and staff ownership, hence making it different from the rest