The Estee Lauder Company is a family business that was formed by a husband and his wife in 1946. Over the years since its formation, the company has been dealing with the manufacture and distribution of cosmetic products. The range of products the company has in its portfolio ranges from skin care, fragrances, hair products,and makeup accessories. Although it trades under the official business name, the company operates under several other brand names like Michael Kors, MAC,and Tommy Hilfiger among others. With the variety of brand names and licenses to various other brands, the company has a global footprint in more than 130 countries. The operations of the company are majorly steered by the members of the family except for a few industrial sectors like accounting, design,and marketing.
The company aims to bring the best experience to everyone that comes into contact with its products (Daft, 2007). However, the mission of the company is more like a vision as it is broad and does not express the goals and purpose of the company. Just like in many other businesses, the mission statement should bring out the key elements that the company focusses on like customer satisfaction, superior products and a commitment to be consistent in their offerings. Apart from the factors that should constitute a mission statement, a decision has to be made whether a company is going to be customer or product oriented. However, because of the varied nature of the type of products and services the company offers, it can decide to include all the elements in its mission statement. Having the factors mentioned being communicated well to the relevant stakeholders in the company is crucial in highlighting the plans and goals of the company. The employees also have to understand the elements and work towards a common goal of achieving the goals set. For this assignment, an analysis of the strategic business units of the company together with a BCG matrix is done and analyzed to determine the current status and what needs to be done going into the future. Below is a table presenting the various SBUs and the relevant data on performance(Griffin, 2008).
Table of Strategic Business Units in terms of market share and market growth rate
|Divisions||Revenues (millions)||% of Revenues||Profit (Millions)||% of Profits||% Market Share||% Growth Rate|
The table above presents the different data sets of the recent performance of the company across the various SBUs. The above data was obtained from the annual financial report of the company that can be accessed at their site (Line, 2012). The information was used to determine the relative performance of the different products of the company in the market and the corresponding income they are generating for the company.
BCG Matrix chart
Strategies; cash injection, product development, integration and penetrating new markets
Strategy; market development
Strategies; product development, diversification
Procedures; divestiture, liquidation
Market share (Relative position)
BCG Matrix analysis
The use of the BCG matrix (a name derived from the Boston consulting group)is aimed at determining how strategically important a product in the portfolio of a company is through the potential for growth it exhibits (Line, 2012). From the chart above it is clear that the makeup division is the shining star in the portfolio. The department of skin care products is the questions while the hair care department is showing the least potential hence falls under the dog section. The fragrance department is the real money maker for the company as it falls under the cash cow section. However, in the fragrance division,there are high levels of income being generated alongside having a large share of the market,but the slow is still dismal. A variety of products in the skincare department like the anti-aging cream have come under recent scrutiny with people questioning their effectiveness. The future for such products is in limbo,and urgent actions need to be taken to salvage the situation.
Through grouping the different SBUs into the BCG matrix as done above, it is easier to determine the necessary action to be taken. As indicated in the chart, the different strategies should be applied to the various products to maximize the benefits that are being accrued to the company and reduce the expenditure on products that are not generating income. Divestments should be made in the dog section of the chart and the extra money be spent in increasing the market penetration of fragrances. Before embarking on any severe strategy, there is a need to develop inroads into new markets so that there will be enough demand to take up the improved or diversified nature of the products.
Daft, R. L. (2007). A new era of management. Mason, Ohio [u.a: Thomson/South-Western.
Griffin, R. W. (2008). Fundamentals of management. Boston, Mass: Houghton Mifflin.
Line, M. (2012). Retrieved from http://www.alacra.com/acm/2123_sample.pdf
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