homework help,online homework help,online tutors,online tutoring,research paper help,do my homework, https://www.homeworkping.com/

1. 1
Get Homework/Assignment Done
Homeworkping.com
Homework Help
https://www.homeworkping.com/
Research Paper help
https://www.homeworkping.com/
Online Tutoring
https://www.homeworkping.com/
click here for freelancing tutoring sites
Case Summary
Lipstick, powder, cologne, lotion and hairsprays, these are just few things that a woman cannot live
without. Whatever your status maybe, a student or employee, teenager or adult, as long as you are
concern and conscious aboutyour look,you definitely need these products. Even men cannot escape with
reliance and need of these products. Personal products industry thus is a good business. But a good
choice of business comes with great risk and uncertainty. Just like what happened in the Estee Lauder
Companies, Inc.

2. 2
Like other big companies, Estee Lauder started as a small company without any established
company structure and plans. As time went by, the company started structuring its core values, mission,
vision, organizational structure, objectives and strategies that it chose to implement for the achievement of
its goals. The company has arrived with decisions that greatly affect its operation.
Cosmetic industry is expected to hit in the succeeding years but many social and environmental
issues are waiting to affect companies’ operations. Barriers to entry in the industry is also low, thus,
powerful competitors are expected to arrive with more advanced technology and facilities, good
management team, more diversified products and more financial stable compare to Estee Lauder.
Estee Lauder decided to differentiate their products and to focus on high class customers as their
target market hence prestige pricing is implemented that vary from product to product. Advertisements,
good distribution channels and very good marketing efforts were also implemented in all geographic areas
covered. Finances were stable until such time when it diminishes little by little. An Organizational structure
was also developed to manage the company but there were some unclear matters as to the kind of
structure the company was using. Top management was in to brand acquisition and always gives
significance to selling decisions.
What future awaits the Estee Lauder Companies? Can it overcome all the challenges? Moreover,
what will be the bestmove for the company for achieving its goals and objectives?
Brief Background
Elegance, Luxurious and superior quality beauty products, these factors put Estee Lauder at the
top of beauty industry. They showcased four segments which include: Make Up, Skin Care, Fragrances
and Hair Care. Estee Lauder is known to be the industry leader and a trend setter in beauty and products.

3. 3
Estee Lauder is a U.S based company specializing in manufacturing beauty products and
fragrances. It was established in year 1946 by Estee Lauder and husband, Joseph Lauder. The small home
business ofLauder’s started out because ofEstee’s intereston it and her uncle, John Schotz, expertise to
develop beauty products. They began selling their products directly to their customers. As they failed to
bring it at Madison’s Avenue, They decided to market through outside boutiques and department stores
before they finally acquire their own in year 1948. For the next 15 years, the company continued to
distribute its product on selected U.S stores and by year 1960 it globalized its operation bringing Estee
Lauder’s products in Harrods, London and a year after to Hong Kong Market. Introductory products of the
company include super rich all-purpose cream, cream pack, cleansing oil and skin lotion. In 1964, Estee
launched its Aramis, fragrance and grooming products for men and by year 1968, Clinique, dermatological
tested cosmetic product, is introduced in the market. In 1967, as the company gain observable progress,
the company decided to expand its business by opening Clinique Lab. Inc. and acquiring more brands like
MAC, Tommy Hilfiger, Bobbi Brown, Donna Karan and the like. In 1983, Estee products were introduced in
the Soviet Union. In 1995, Estee Lauder Company became popular in the public because of their beauty
products and fragrances.
In 1998, Estee Lauder Company was the first major cosmetic firm to sell its productvia internet and
the acquisition ofmore brands was made including Jo Malone, Gloss.com, Bumble & Bumble LLC and Stila
cosmetics which, later on, was sold. In 2003, Darphin, Rodan +Fields, and License from Michael Kors
brand. In 2004, the company launched its Beauty, Flirt and Good skin through its beauty bank division. In
2005, it presented Grassroots and Daisy Fuentes, Sean John, Missoni, Donald Trump in 2006. Estee
Lauder Company has 26 brands, sells products in more than 130 countries and employs over 22,000
people across the world. Although Mrs Lauder passed away in April 2004, she witnessed the growth of their
business earning $5 billion annually.

4. 4
The Lauder legacy continues to stand as their successors handle iteffectively. “Bringing the bestin
everyone we touch”, this is the vision that lead them to be an industry leader and trend setter.
Mission Statement
The employees of the Estée Lauder Companies are committed to working together with
uncompromising ethics and integrity. They strive to always:
 Being responsible citizens in every community we serve
 Understanding that we are part of a larger whole and that our actions have consequences
 Striving to continuously look for new and better ways to do things to constantly raise our standards
 Providing consumers with innovative cosmetic products ofthe highest quality and safety standards
 Delivering outstanding service by treating each individual as we ourselves would like to be treated
 Building partnerships with our stakeholders based on fairness and trust
 Pursuing profit-but never at the expense of quality, service or reputation
 Eliminate waste and reduce inefficiencies in order to provide maximum value to our customer
 Enhance our reputation of image, style and prestige
 Create an environment that fosters personal growth and well being
 Mostof all, staying committed to working safely together with uncompromising ethics and integrity
Proposed Mission Statement:
Estee Lauder Company aims to cater beauty and fragrance needs of high profile individuals,
bringing in them the company’s passion of making eminent branded products.
Vision Statement
“Bringing the best in everyone we touch”

5. 5
By "The best", Estée Lauder means the bestproducts, the best people and the best ideas. These
three pillars have been the hallmarks of the Companies since itwas founded by Mrs. Estee Lauder in 1946.
Proposed Vision Statement:
In year 2017, The Estee Lauder Companies Inc., envisions itselfto become the leading cosmetics and
fragrance company worldwide, known for its prestige brand collections and highly competitive prices.
I. Time Context
July 1, 2007 (Fiscal Year)
II. Viewpoint
The whole case analysis would be on the viewpoint of the Executive chairman of the Board – Mr.
Leonard Lauder.
III. Statement of the problem
How will Estee Lauder Companies, Inc. sustain its continuous growth internationally, especially in
India and China?
IV. Statement of Objectives
a. Long-term objectives
 To make Estee Lauder achieve a better competitive position in industry.
b. Short-term Objectives

6. 6
 To achieve a 10% increase on the return on sales of fragrance products.
 To select appropriate distribution channels especially for fragrance products.
 To restate the organizational structure that guides them in one direction and can
be clearly recognized by everyone.

V. Areas of Consideration
a. SWOT Analysis

7. 7
b. SWOT Matrix
1
Industry Recognition – Conformance to ISO
14001 (globally recognized)
1 Lack of product diversification
2
Wide scope of the high-end cosmetic
industry
2
Family members are the largest
shareholders which can affect the decision
making processes
3 Implementation of Gift With Purchase 3 The company lacks clear vision
4
One of the first cosmetic companies to
offer products online.
4
The company has confusing organizational
structure whether traditional, functional or
divisional
5 Globalized Organization 5
Decreasing ratio of operating income for
fragrances products
6 Brand name is of high value
7
Industry leaders in innovation and
customer service
8
40% increase of revenue within 2003 to 2007
from 5million to 7 million
9
Continuing purchase of new start up
businesses like Bumble and bumble
products in 2007 by the company
STRENGTHS WEAKNESSES
1
Internet provides a huge market place for
sales
1
FDA and other organizations worldwide
are increasing regulations and policies
2
QVC is a huge channel in which some ELC
brands have been featured on
2 Difficult Retail Environment
3
Modernization in the work place may
increase capacity
3 Many customers tend to be brand loyal
4 New markets - Globally 4
Diversification of many products and
brand names in the cosmetics industry by
top competitors
5
Increasing no of men who are becoming
concerned with their looks
5
Creation of newly started companies that
produces specialty products
6
Increasing no of customers who are
becoming more interested in herbal
products derived from natural resources
6
Sections of population that desire a more
natural look and reduces use of cosmetic
products
7
Developing skin care products to open
market for Aging population.
OPPORTUNITIES THREATS

8. 8
c. Poster’s Five Forces Analysis
Threat of the New Entrant
 Low
The threat of new entrant in the industry is low because Estee Lauder Company already
created a strong brand loyalty that builds Estee Lauder’s confident and maintains trust of its
patroniser. Estee Lauder Company will not also be threatened of new beauty product launches in
the market because its brand is widely known for quality and prestige.
Threat of Substitutes
 Low
1
Expansion of Estee Lauder's
product offerings to other
foreign countries (S5, O4)
1
Continually expand product
promotions thru advertisements
(W5, O1, O2)
2
Developing products, intended
for men, women and aging
people, made up of herbal
products from natural resources
(S8, O4, O6)
2
Development of new cosmetic
products for men and women
(W1, W5, O5)
1
Offer more promotions and
discounts to customers to
encourage further sales (S3, S4,
T3)
1
Developing a clearer Vision
statement in order for the firm to
be competitive in dealing with
its competitors (W3, W4, T4, T5)
2
Development of soaps and
other natural products that
promote natural looks (S7, T6)
2
Strengthen the means of
distribution thru increasing
channels like mall-based
specialty stores (W5, T2, T4)
STRENGTHS WEAKNESSES
THREATS
OPPORTUNITIES

9. 9
Estee Lauder have established loyalty from their customer and when someone starts
using the products and see good improvement, trying another product is almost set aside unless
there is a promising technology available that promises permanent improvement.
Bargaining power of suppliers
 Low
The suppliers of Estee Lauder has little bargaining power in the market because the
company has its own in- house developed ingredients used in manufacturing their beauty products
and fragrances. What is being outsourced in the market represents only a little component of the
whole product like basic and non-value chemicals and packaging.
Bargaining power of buyers
 Low
The buying power of the customers of Estee Lauder is weak. Their buyer belongs to the
high end market or those who are price insensitive meaning even Estee Lauder chooses to raise
their prices for same products its customers will just overlook it or it cannot pressure the seller,
Estee Lauder, the same way it wants to happen. In this kind of market the main competition is on
product quality, brand recognition and product differentiation.
Intensity Rivalry among Competitors
 High
Estee Lauder’s major competitors are Avon, L’Oreal, P&G, Max Factor, Revlon, etc. ELC
therefore needs to have continuous growth and innovation for its products for them to stay ahead

10. 10
of competition. There are various brands under the company so it is important that the range of
price is good and they can differentiate their products well without customers facing high switching
costs. In 1976, Estee Lauder created the line designed for men. It was called ‘’skin supplies for
men’’ (Estee Lauder 2003a). Avon, Max Factor and Revlon did not have men lines.
PESTEL ANALYSIS
Political factors
The political environmentwithin which an organization exists has far reaching consequences. The
political environmentmostobviously operates atNational level, butmay also be significantat local and
international levels. Estee Lauder gives direction to countries through the way they exertcontrol over the
economy. Estee Lauder should notonly be aware with the politics ofa country, but also with the media,
industry and labour leaders. In addition, Estee Lauder should also consider policies in differentcountries
that promote social welfare. The following political factors can affect the business environment:
 Level ofgovernmentinvolvementin business
 Stability
 Taxation
Economic factors
Estee Lauder looks atthe interplay ofmarket forces that dictate the state of the economy and
implications on both commercial and non-commercial organizations. Prices vary from brand to brand and
productto product, butthese are usually in the higher ranges ofan industry. Moreover, there is unstable
economic condition that causes the rise ofunemploymentrates, lessening the consumers’ spending power.
The factors include:

11. 11
 Exchange rates
 Interest rates
 Spending power
 Inflation and employment
Socio, Cultural Factors
The socio cultural influences on businesses vary internationally. These affect a society’s basic
values, perceptions, preferences and behaviours. Itis vital that such factors are considered ifan
organization wants to achieve its proposed objectives. Its population demographics include various age
groups ranging from teenagers to veterans. Factors include:
 Education and belief
 Why do customers buy
 When do customers have time for shopping
 The roles ofmen and women within society and depending upon thatthe products should be
launched
 Estee Lauder has received customer complaints regarding the fact that new products are being
tested on animals first. They have to look into this matter as it can pose serious issues with the
customers.
 They also launched BreastCancer Awareness (BCA)
Technological factors
More and more businesses are affected by technology. Technological factors affect the operations
of the firm since technological advancements serve to avoid obsolescence and to promote innovation of

12. 12
relevanttechniques in the industry. Estee Lauder has rapid technological changes in its products, and
these products can be accessed online via the internet. Some technological factors are:
 Information Technology (IT) rapid growth
 Innovation
 Governmentspending on research
 New discoveries and developments
 Productlife cycle
Environmental Factors
These factors are also known as the Natural factors. These factors help Estee Lauder in showing
strategic doubts and their worth in the predicting and planning processes using environmental aspects.
There have been emissions ofharmful gases and fluorocarbons, which Estee Lauder musttake care ofas
it is an environmental threat. It increases the significance ofthe following factors:
 Shortage of raw material opportunity
 Increased pollution
 Increased governmental intervention
Legal Factors
Estee Lauder functions within a structure ofGovernmentregulations and legislations. These laws
and regulations should be considered when running businesses:
 Labour laws and industrial relations
 Policies and Regulations
 Municipal licenses

13. 13
 Formation
 Taxation
 Competition
 Copyrightand patent laws
 Minimum wages laws and Employmentlaw
CPM – Competitive Profile Matrix
The CPM above proves that ELC Companies Inc., is still one of the leading companies in the
cosmetics industry. Using product quality as the base, we can say that ELC and L’Oreal lead the
competition. From the computations in the matrix, it is shown that L’Oreal dominated the other three
companies with an overall score of 3.40.
CRITICAL SUCCESS
FACTORS
WEIGHT RATING
WEIGHTED
SCORE
RATING
WEIGHTED
SCORE
RATING
WEIGHTED
SCORE
RATING
WEIGHTED
SCORE
MARKET SHARE 0.05 3 0.15 4 0.20 3 0.15 2 0.10
PRICE 0.15 3 0.45 3 0.45 4 0.60 2 0.30
PRODUCT QUALITY 0.20 4 0.80 4 0.80 3 0.60 3 0.60
PRODUCT LINES 0.15 2 0.30 3 0.45 2 0.30 4 0.60
FINANCIAL POSITION 0.10 3 0.30 4 0.40 4 0.40 3 0.30
EMPLOYEES 0.10 3 0.30 2 0.20 2 0.20 4 0.40
CUSTOMER LOYALTY 0.10 2 0.20 3 0.30 4 0.40 3 0.30
INNOVATIVE CULTURE 0.15 3 0.45 4 0.60 3 0.45 2 0.30
TOTAL 1.00 2.95 3.40 3.10 2.90
ESTEE LAUDER LOREAL P&G AVON

14. 14
Financial Analysis
As we can see in the above table, Current Ratio shows that the capacity of Estee Lauder to pay its
short term obligations decreased .02 from year 2006 to 2007. However, this doesn’t mean that the
organization is already at a losing state because a ratio that is greater than 1 means that there is more than
enough liquid assets to pay off the maturing debts.
The company’s ability to meetits short-term obligations using its mostliquid assets decreased from
0.98 to 0.92. A quick ratio lower than 1 means that the company’s assets that are ready sources of
immediate cash are not enough to cover their maturing debts.
From year 2006, Estee Lauder Companies, Inc. has become more levered there becoming more
dependent on borrowings for its financing operations. The increase of 1.11 on the Debt-to-Equity Ratio
means that the funds that were used to finance operations from borrowings increased. We can see from
the ratios how the company increased its borrowings from outside creditors as source of financing.
Ratio Formula Year 2007 Year 2006
Current Assets
Current Liabilities
Currrent Ass. - Inv.
Current Liabilities
Liquidity Ratios
Current Ratio 1.49 1.51
Quick Ratio 0.92 0.98
Ratio Formula Year 2007 Year 2006
Total Debt
Total Assets
Total Debt
Total Stockholder's Equity
Long term Debt
Total Stockholder's Equity
Long term Debt-to-
Equity Ratio
0.86 0.27
Leverage Ratios
Debt-to-Total
Assets Ratio
0.71 0.57
Debt-to-Equity
Ratio
2.44 1.33

15. 15
Estee Lauder Companies, Inc. has high inventory turnover for the 2007 and 2006 periods. This
implies that they were having strong sales that time even though the ratio decreased.The other ratio shows
that efficiency of the company in converting its assets to generate revenues remains constant.
The percentage increase of the Net Profit Margin shows that Sales, which is converted to Income
after considering the costs, has increased. This also means that the company has better control on the
cost. The increase in ROA and ROE shows that the management is efficient at using its investments to
generate profit. Moreover, the increase in ROE reveals that the company generates more profit using the
investments of the shareholders.
Ratio Formula Year 2007 Year 2006
Sales
Inventories
Sales
Total Assets
Total Assets
Turnover
1.71 1.71
Activity Ratios
Inventory Turnover 8.22 8.44
Ratio Formula Year 2007 Year 2006
Net Income
Sales
Net Income
Total Assets
Net Income
Total Stockholder's Equity
Net Income
No. of Common Shares
Outstanding
37.46 15.05
Earnings per Share - 1.14
Net Profit Margin 6.38 3.78
Return on Assets 10.89 6.45
Return on Equity
Profitability Ratios (in percentage%)

16. 16
Having this trend of increasing sales is favorable for the company. As we can see in the table, even
though the increase in 2006 fiscal year dropped from 9.38 to 2.93, still, the company was able to cope up
and was able to lift the increase to 8.88. The downfall of percentage change in year 2006 was caused,
maybe, by the decreased sales on fragrances products and other factors like difficult retail environment.
As evidenced by the Sales Growth Ratios, there’s a decrease in sales specifically in the year 2006
and that is one reason for the negative change in net sales for the 2006 period. Another factor is the value
of discontinued operation, net of tax, in that period that amounts to $80,300,000. Despite all of that, the
company is showing greatefforts ofovercoming the problems. Estee Lauder’s 2007 percentage change in
net income displays a remarkable performance. The company’s focus and efficiency should be consistent
to have a favorable impact on the financial success for the succeeding years to come.
Year Sales % Percentage Change in Net Sales
2007 7,037.50 8.88
2006 6,463.80 2.93
2005 6,280.00 9.38
2004 5,741.50 -
Net Sales Growth (in millions)
Year Sales % Percentage Change in Net Sales
2007 449.20 31.31
2006 244.20 (28.62)
2005 406.10 18.71
2004 342.10 -
Net Income Growth (in millions)

17. 17
Industry Analysis
1. What is/are the product/s or service/s?
The cosmetics industry offers different products under four major product lines.
A. Skin Care
1. Moisturizer
2. Cream
3. Lotion
4. Cleansers
5. Sunscreens
6. Self-tanning products
B. Make Up
1. Lipstick
2. Lip gloss
3. Mascaras
4. Foundations
5. Eye shadows
6. Nail polishes
7. Powders
8. Compacts
9. Brushes
C. Fragrances

18. 18
1. Perfume sprays
2. Colognes
3. Lotions
4. Powders
5. Creams
6. Soaps
D. Hair Care
1. Hair Color
2. Shampoos
3. Conditioner
4. Finishing Spray
A. What function does it serve?
These products, basically, help consumers to attain a level of confidence by satisfying their needs
to look good and feel good.
B. What are the channels of distribution?
The players in the industry sell their products principally through limited channels to complement
the images associated with their branches. These channels reach across the globe through upscale
departmentstore, specialty retailers, upscale perfumeries and pharmacies and prestige stores and spas.
Their products may also be sold in free standing company owned stores and spas; also, in their own
authorized retailers website. Cosmetic products seem to geteverywhere for you can also find their product
at cruise shops, on television marketing channels and in flight duty-free products. It has also expanded its
channels over the internet that reached its customer worldwide.

19. 19
2. What is the industry size in units or in dollars?
The industry size in dollars is $156,162.1 (in millions).
A. How fast is it growing?
Due to modernization and fast technological advancements, the industry is continuously moving
forward through vast research and improvements.
B. Are products differentiated?
The products are differentiated because each product component varies, comes under different
categories and brand names and distinguishable among others.
C. Are there high exit barriers?
Yes, there are high exit barriers for the companies have invested specialized equipment that is
used in producing beauty products and fragrances that needs to be sold. Also, they spent large amount of
money for fixed costsuch as research and development, selling and general administrative expense – not
easy to let go and put into nothing. The liquidation of their companies also takes a span of time settling all
things.
D. Are there high fixed costs?
Yes, the Industry spent so much on fixed costs such as Research and Development costs, and
Selling, general and Administrative costs.
3. Who are the major competitors?
Estee Lauder major competitors are L’Oreal, Proctor & Gamble, Unilever, Colgate – Palmolive,
Avon, Alberto Culver, Revlon and many other competitors that are competing worldwide.

20. 20
A. What are their market shares?
The table above shows the companies’ respective marketshares based on revenues in the
cosmetics industry. These values are stated in millions.
B. Is the industry consolidated or fragmented?
It is a consolidated industry; an industry wherein few large firms dominate the market and in
position to set prices for its products.
4. Who are the major customers of the industry?
The main target consumers ofthe industry are men and women, who are in middle to high level of
the society aging around 20-30 years of age around the world.
A. Are they powerful?
No, because they don’thave control over the pricing of the companies who belong in the industry.
B. What gives them power?
5. Who are the major suppliers of the industry?
Company Revenues
Alberto-Culver 3,772.00 2.42 7
Avon Products 8,763.90 5.61 5
Colgate-Palmolive 12,237.70 7.84 4
Estee Lauder 6,463.80 4.14 6
L'Oreal (Euros) 15,729.30 10.07 3
Procter & Gamble 68,222.00 43.69 1
Revlon 1,331.40 0.85 8
Unilever (Euros) 39,642.00 25.39 2
TOTAL 156,162.10
Market Share based
on Revenues

21. 21
The industry has no major supplier because the companies themselves own most of the ingredient
and material used in making the product. Only those who are non-value adding chemicals and some
packaging are purchase outside.
A. Are they powerful?
No, suppliers do not have any power in the industry because they do not provide the majority of
supplies needed.
B. What gives them power?
6. Do significant entry barriers exist?
Yes, significant entry barriers exist in this industry.
A. What are they?
Different governmental and non-government organizations and agencies, together with other law
making body that regulates businesses, imposes policies and regulations to be strictly followed by the well
established companies in the industry. Moreover, having high capitalization is a major requirement.
B. Are they effective in protecting existing competitors, thus enhancing profits?
Yes, they are effective in protecting existing competitors like the government its agencies, policies
and standards. Those regulate the illegal and unregistered business practices and as well as using other
products secured with intellectual property rights, patent and the like.
7. Are there any close substitutes for the industry products or services?
No substitutes are available for the industry products and services.

22. 22
A. Do they provide pressure on price change in the industry?
8. What are the basic strategies of competitors?
Competitors in the same industry are diversified with many brand names and wide range of
products. Massive marketing efforts such as direct selling, advertisement through internet, and sending
sales representatives to different geographic areas are employed. In addition, competitors are also
implementing market development and brand innovation strategies.
B. How successful are they?
They are successful in implementing their marketing strategies and the company was able to
successively increase its net sales and its geographic revenue analysis.
9. To what extent is the industry global?
They are competing globally to an extent that they are promoting and selling their product
worldwide; and are able to maintain their position in the industry. Moreover, they have acquired a different
brand name which has a capacity to compete in the continuously growing industry.
A. Are there any apparent advantages to being involved in more than one country?
Yes, because itwill be well known to all customers for users and not users of cosmetics products.
It also helps to increase their market share and promote the brand.
10. Is the industry regulated?
Yes, it is regulated by Foods and Drugs Administration (FDA).
A. What influence do regulations have on industry competitiveness?

23. 23
The regulations set by the Food and Drugs Administration ensures that products being offered in
the market are not harmful. It influences the industry competitiveness by ensuring the quality and safety of
the consumers.
VI. Alternative Courses of Action
a. Advantages and Disadvantages
ACA 1: Strengthen the means of distribution thru increasing channels like mall-
based specialty stores.
Advantages
 The company will be exposed to new markets and will reach a wide range of potential
customers that will supply more revenue and therefore produce greater profit.
 Consumers will have more choices on how to acquire products thatprovides best
convenience for them.
Disadvantages
 Additional expenses will be incurred.The company will have to purchase additional
assets, hire personnel and pay flotation costs and other expenses.
 Exchange rates and Economic stability ofthe country that is subjectto expansion is
uncontrollable.

24. 24
ACA 2: Continually expand product promotions thru advertisements.
Advantages
 Fragrance products may attract more markets that will eventually improve revenues of
such products and improve the company’s overall profitability.
 It will reach a wide range of potential customers with their catchy advertisements, thus
increasing its market share.
 Can make positive impacts on the company’s products.
 Well executed and targeted promotions can trigger quick sales.
Disadvantages
 It will yield to higher General, selling and administrative expenses that includes
Advertising and promotion costs.
 Promotions have shorter impacton the customers.
 There is risk regarding the investments and costs employed,and also uncertainty as
to effects and impacts on customer’s perception on the products.
ACA 3: Development of new cosmetic products for men and women
Advantages
 Consumers will have more choices on products thatsuite with their preferences.
 This strategy may result to developmentofnew productthat may be a potential
solution to solve the declining sales offragrances.

25. 25
Disadvantages
 Another setofexpenses will be incurred by the company specifically in research and
developmentcosts ofnew fragrance product.
 There is a possibility that consumer’s preferences on fragrance will not be achieved by
the company.
b. Decision Matrix
*note: 1=not favourable, 2=reasonably favourable, 3=highly favourable
WEIGHT RATING* SCORE RATING* SCORE RATING* SCORE
1 Ease of Implementation 0.15 2 0.30 2 0.30 1 0.15
2 Cost-Benefit Criterion 0.20 2 0.40 3 0.60 2 0.40
3 Short-term Affectivity 0.10 2 0.20 3 0.30 1 0.10
4 Long-term Affectivity 0.10 3 0.30 1 0.10 3 0.30
5 Building Competitive Advantage 0.15 3 0.45 2 0.30 3 0.45
6
Impact on company's
performance
0.15 2 0.30 2 0.30 3 0.45
7 Potential impact on Customers 0.15 3 0.45 3 0.45 2 0.30
1.00 2.40 2.35 2.15
CRITERIA
TOTAL
DECISION MATRIX
STRATEGIC ALTERNATIVES
Strengthen the
means of
distribution thru
increasing
channels like mall-
based specialty
stores.
Continually
expand product
promotions thru
advertisements.
Development of
new cosmetic
products for men
and women

26. 26
VII. Recommendation
The Three Alternative Courses ofAction indicated market penetration, forward integration, product
development, diversification, or combination strategies are the most appropriate strategies for the
company, thus the ACA1 are convincingly suitable strategy for the company.Strengthen the means of
distribution thru increasing channels like mall-based specialty stores. may directthem to become the
leading manufacturing company as they will be exposed to more markets that will eventually have positive
impacts like having improved revenues.
VIII. Detailed Action Plan
Activity
Department/Person
Responsible
Timetable Expected Results
Implementing various
promotions and
advertisements
Jul-Sept
Increase in
Revenues and
Customer Loyalty
Do a market research Jul-Aug
Know customer
preferences
Product Development
Research and
Development
Aug-Sept
Ensuring the quality
and design of the
new product
Create a prototype of the
product developed
Production and
Operations
Oct -
Market testing for the new
product
Sales Department Nov-Dec Product Evaluation
Intensify Marketing Efforts
for Christmas Season
Marketing
Department
Dec
Increase in
Revenues
Cost Analysis
Finance and
Accounting
Dec
Determination of a
sound investment
and financing
decisions.
Marketing
Department