The political risks vary from sudden changes in existing political regimes to civil unrest to major decisions taken by the government. The integrity of the politicians and their likelihood to take part in acts of corruption, as the resulting repercussions may lead to possible impeachments or resignations of high level government employees. The laws that the country enforces, especially with regards to business, such as contract law, as they dictate what The Estee Lauder Companies Inc is and is not allowed to do. Some countries, for example, prohibit alcohol or have certain conditions that must be fulfilled, while some government systems have inefficient amounts of red tape that discourage business. For example, a country that has no policies for IP protection would mean that entrepreneurs may find it too risky to invest in The Estee Lauder Companies Inc The trade barriers that the host country has would protect The Estee Lauder Companies Inc; however, trade barriers that countries with potential trade partners would harm companies by preventing potential exports.
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These strengths not only help it to protect the market share in existing markets but also help in penetrating new markets. Based on Fern Fort University extensive research — some of the strengths of Estee Lauder are — Successful track record of developing new products — product innovation.
Superb Performance in New Markets — Estee Lauder has built expertise at entering new markets and making success of them. The expansion has helped the organization to build new revenue stream and diversify the economic cycle risk in the markets it operates in. Highly successful at Go To Market strategies for its products. Reliable suppliers — It has a strong base of reliable supplier of raw material thus enabling the company to overcome any supply chain bottlenecks.
Automation of activities brought consistency of quality to Estee Lauder products and has enabled the company to scale up and scale down based on the demand conditions in the market.
Strong distribution network — Over the years Estee Lauder has built a reliable distribution network that can reach majority of its potential market.
It has successfully integrated number of technology companies in the past few years to streamline its operations and to build a reliable supply chain.
Strategy is about making choices and weakness are the areas where an organization can improve using SWOT analysis and build on its competitive advantage and strategic positioning. Days inventory is high compare to the competitors — making the company raise more capital to invest in the channel. This can impact the long term growth of Estee Lauder High attrition rate in work force — compare to other organizations in the industry Estee Lauder has a higher attrition rate and have to spend a lot more compare to its competitors on training and development of its employees.
Financial planning is not done properly and efficiently. The current asset ratio and liquid asset ratios suggest that the company can use the cash more efficiently than what it is doing at present. There are gaps in the product range sold by the company. This lack of choice can give a new competitor a foothold in the market.
The company has not being able to tackle the challenges present by the new entrants in the segment and has lost small market share in the niche categories. Estee Lauder has to build internal feedback mechanism directly from sales team on ground to counter these challenges.
Limited success outside core business — Even though Estee Lauder is one of the leading organizations in its industry it has faced challenges in moving to other product segments with its present culture. Opportunities for Estee Lauder — External Strategic Factors The new technology provides an opportunity to Estee Lauder to practices differentiated pricing strategy in the new market.
It will enable the firm to maintain its loyal customers with great service and lure new customers through other value oriented propositions. Government green drive also opens an opportunity for procurement of Estee Lauder products by the state as well as federal government contractors. Lower inflation rate — The low inflation rate bring more stability in the market, enable credit at lower interest rate to the customers of Estee Lauder.
New environmental policies — The new opportunities will create a level playing field for all the players in the industry. It represent a great opportunity for Estee Lauder to drive home its advantage in new technology and gain market share in the new product category.
New customers from online channel — Over the past few years the company has invested vast sum of money into the online platform. This investment has opened new sales channel for Estee Lauder.
In the next few years the company can leverage this opportunity by knowing its customer better and serving their needs using big data analytics. A comparative example could be - GE healthcare research helped it in developing better Oil drilling machines. Economic uptick and increase in customer spending, after years of recession and slow growth rate in the industry, is an opportunity for Estee Lauder to capture new customers and increase its market share.
Threats Estee Lauder Facing - External Strategic Factors Growing strengths of local distributors also presents a threat in some markets as the competition is paying higher margins to the local distributors. Increasing trend toward isolationism in the American economy can lead to similar reaction from other government thus negatively impacting the international sales. The demand of the highly profitable products is seasonal in nature and any unlikely event during the peak season may impact the profitability of the company in short to medium term.
Liability laws in different countries are different and Estee Lauder may be exposed to various liability claims given change in policies in those markets. As the company is operating in numerous countries it is exposed to currency fluctuations especially given the volatile political climate in number of markets across the world. Intense competition — Stable profitability has increased the number of players in the industry over last two years which has put downward pressure on not only profitability but also on overall sales.
Changing consumer buying behavior from online channel could be a threat to the existing physical infrastructure driven supply chain model. Certain capabilities or factors of an organization can be both a strength and weakness at the same time.
This is one of the major limitations of SWOT analysis. For example changing environmental regulations can be both a threat to company it can also be an opportunity in a sense that it will enable the company to be on a level playing field or at advantage to competitors if it able to develop the products faster than the competitors.
SWOT does not show how to achieve a competitive advantage, so it must not be an end in itself. The matrix is only a starting point for a discussion on how proposed strategies could be implemented. It provided an evaluation window but not an implementation plan based on strategic competitiveness of Estee Lauder SWOT is a static assessment - analysis of status quo with few prospective changes.
As circumstances, capabilities, threats, and strategies change, the dynamics of a competitive environment may not be revealed in a single matrix. SWOT analysis may lead the firm to overemphasize a single internal or external factor in formulating strategies.
There are interrelationships among the key internal and external factors that SWOT does not reveal that may be important in devising strategies. It also solves the long list problem where organizations ends up making a long list but none of the factors deemed too critical.
Limitation of Weighted SWOT analysis of Estee Lauder This approach also suffers from one major drawback - it focus on individual importance of factor rather than how they are collectively important and impact the business holistically. Chandler, Strategy and Structure Cambridge, Mass.
Estee Lauder SWOT Analysis / Matrix
Strong brand equity: Estee Lauder has been a leading American brand ever since when it was started by the Lauder couple in Manhattan. Once started as a brand with only 4 products has expanded into various product lines wherein Estee Lauder has established itself as the gold standard of cosmetics in America. Additionally Estee Lauder has roped in brand influencers like Gwyneth Paltrow, Elizabeth Hurley, leading names in the industry of showbiz for long times, who have ended up as brand influencers and faces of the brand, giving Estee Lauder a wider appeal in the minds of the masses as a brand of premium cosmetics. In addition to that the brand has taken part in various movements of a widespread social dimension like the Breast Cancer campaigns ever since , accumulating a huge fund as off date , which have endeared it all the more creating a strong brand legacy and corresponding recall factor.
The Estee Lauder Companies Inc. SWOT Analysis / Matrix
SWOT Analysis of Estee Lauder Strengths of Estee Lauder Distribution and Reach: Estee Lauder has a large number of outlets in almost every state, supported by a strong distribution network that makes sure that its products are available easily to a large number of customers in a timely manner. Financial Position: Estee Lauder has a strong financial position with consecutive profits in the past 5 years, along with accumulated profit reserves that can be used to finance future capital expenditures. Estee Lauder has a large asset base, which provides it with better solvency. Return on Capital Expenditure: Estee Lauder has been successfully able to generate positive returns on the capital expenditure it has incurred on various projects in the past. Automation: of various stages of production has allowed the more efficient use of resources and reducing costs. It also allows for consistency in quality of its products and provides the ability to scale up and scale down production as per the demand in the market. Skilled Labor force: Estee Lauder has invested extensively in the training of its employees that has resulted in it employing a large number of skilled and motivated employees.
The Estee Lauder Companies Inc PESTEL Analysis & Environment Analysis
The company manufactures and distributes cosmetic products in the skin care, make up, fragrances and hair products. Estee Lauder has about 29 brands with presence in over countries. Estee Lauder has acquired some other businesses such as Smashbox Beauty Cosmetics and created partnerships with Aramis and designer fragrances and Tory Burch fragrances. This mission statement is broad and does not get to the detail of what the business is about. A mission statement is not a broad as the vision and shows the purpose of the company and its goals Coulter,
Estee Lauder SWOT Analysis
These strengths not only help it to protect the market share in existing markets but also help in penetrating new markets. The Estee Lauder Companies Inc. The expansion has helped the organization to build new revenue stream and diversify the economic cycle risk in the markets it operates in. Successful track record of developing new products — product innovation. This brand portfolio can be extremely useful if the organization wants to expand into new product categories. Strategy is about making choices and weakness are the areas where an organization can improve using SWOT analysis and build on its competitive advantage and strategic positioning.
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