estee lauder inc. 2011 mriii037-libre

7/26/2019 Estee Lauder Inc. 2011 MRIII037-Libre

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Prepared for: Design Strategic Plan

Assoc. Prof. Dr. Mas Bambang Baroto

Prepared by:

Nazifa Ghani (MR111037)

Estee Lauder Companies, Inc. 2011


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Estee Lauder Companies, Inc.2011

2 Design Strategic Plan/SEM II/ 2012/2013

Table of Contents1.0 Company Profile ............................................................................................................................................................................................................................. 5

2.0 Description of Industry (The Industry Chosen) .............................................................................................................................................................................. 7

3.0 External Assessment ............................................................................................................................................................................................................................ 8

3.1 Positioning Diagram Strategic Group Identification ........................................................................................................................................................................ 8

3.2 The Group Map .............................................................................................................................................................................................................................. 10

3.3 PEST Analysis .................................................................................................................................................................................................................................. 11

3.4 Competitive Analysis ...................................................................................................................................................................................................................... 15

3.5 Opportunities & Threats ................................................................................................................................................................................................................ 22

3.6 EFE matrix ...................................................................................................................................................................................................................................... 25

4.0 Internal Assessment ........................................................................................................................................................................................................................... 26

4.1. Strengths & weaknesses ............................................................................................................................................................................................................... 26

4.2 IFE Matrix ....................................................................................................................................................................................................................................... 28

4.3 Value Chain Analysis (Skin Care Segment) ..................................................................................................................................................................................... 29

4.4 Value Chain Flow Chart (Skin Care Segment) ................................................................................................................................................................................. 31

5.0 Strategy Formulation ................................................................................................................................................................................................................... 32

5.1 IE Matrix ........................................................................................................................................................................................................................................ 32

5.1 SWOT Matrix ............................................................................................................................................................................................................................ 33

5.1. SWOT Matrix ................................................................................................................................................................................................................................. 34

Strategy Formulation Conclusion ......................................................................................................................................................................................................... 36


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6.0 CLS,BLS- Strategy Maps Diagram ...................................................................................................................................................................................................... 37

7.0 Operation Management Process (OMP) ........................................................................................................................................................................................... 39

7.1 The Theme of OMP: ....................................................................................................................................................................................................................... 39

7.1.1 Define the objectives in Supply Processes .............................................................................................................................................................................. 40

7.1.2 Define the objectives in Production Processes ..................................................................................................................................................................... 46

7.1.3 Define the objectives in Distribution Processes ...................................................................................................................................................................... 52

7.1.4 Define the objectives in Risk Management Process ............................................................................................................................................................... 57

8.0 Customer Management Process (CMP) ............................................................................................................................................................................................ 75

8.1 The Theme of CMP: ........................................................................................................................................................................................................................ 75

8.2 Customer Selection Process .......................................................................................................................................................................................................... 75

8.3 Customer Acquisition Process ....................................................................................................................................................................................................... 80

8.4 Customer Retention Process ......................................................................................................................................................................................................... 85

8.5 Customer Growth Process ............................................................................................................................................................................................................ 89

9.0 Innovation Process (IP) ...................................................................................................................................................................................................................... 99

9.1 The Theme of IP: ............................................................................................................................................................................................................................ 99

9.1.1 Identify the Opportunities .................................................................................................................................................................................................... 100

9.1.2 Manage the Portfolio ........................................................................................................................................................................................................... 103

9.1.3 Design and Develop............................................................................................................................................................................................................... 106

9.1.4 Launch ................................................................................................................................................................................................................................... 109

10.0 Regulatory and social process ....................................................................................................................................................................................................... 114


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10.1 The Theme of Regulatory and social process: ........................................................................................................................................................................... 114

10.1.1 Environmental practices ..................................................................................................................................................................................................... 115

10.1.2 Safety and Health practices ................................................................................................................................................................................................. 118

10.1.3 Employment Perspective .................................................................................................................................................................................................... 121

10.1.4 Community Perspective ...................................................................................................................................................................................................... 124

Strategy map: ................................................................................................................................................................................................................................. 128

Strategy map with all linkages: ...................................................................................................................................................................................................... 129


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1.0Company Profile

Founder Mrs. Estee Lauder and her husband Joseph Lauder, Founded in 1946Division Personel Care Industry

Skin Care segmentMakeup segmentFragrance segmentHair Care segment

Estee Lauder Inc. is one of the worldsleading manufacturer composed offour divisions: 1) Skin Care 2) Makeup 3) Fragrance and 4) Hair careEstee Lauder brands include:Estee Lauder, Aveda, Bobbi Brown, Bumble and Bumble, Clinique, Donald Trump,Flirt! Good Skin, Grassroots, Jo Malone, La Mer , Michael Kors, Missoni, Sean John,Stila, Tommy Hilfiger, Tom Ford, Prescriptive, lab series skincare for Men, Origins, M.A.C,Kiton, Darphin. Rodan+Fields, Daisy Fuentes and SmashBox.

The company's products are sold in over 150 countries across the world.Estee Lauder is a licensee of several brands and markets its cosmetics andother products under these brand names as well.

Sales revenue 2008$

(million)

2009$

(million)

2010$

(million)7,9108 7,331.9 7,811.5

Sales revenue by division 2,996.8 2,886.0 3,227.1 Skin Care


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3,000.4 2,830.9 2,978.2 Make Up1,432.0 1,150.9 1,1369 Fragrance

427.1 402.4 413.9 Hair Care54.5 61.7 55.4 Other

Mission & vision

Mission statement:Estee Lauder does not have a written mission statement

Vision statement: Bringing the best to everyone we touch and being thebest in everything we do. By the best we mean the best products, the bestpeople and the best ideas.

Furthermore the company is committed to uncompromised ethics and integrity.For all employees domestically and globally, and the board of directors, thehighest standards of ethics is a condition of employment. The full officialhomepage elaborates by stating the following:The Estee Lauder Companies, Inc. is committed to the highest standard ofprofesional and personel conduct. All employees of the company are expected toconduct themselves at all times within the letter and spirit of the Code.. A fulldescription of the code can be found at http://www.elcompaies .com/pdfs/code-of-conduct-2010.pdf.


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2.0

Description of Industry (The Industry Chosen)

Name of the industry Skin Care Industry

Industry Market Cap -Industry Net Income -Main competitors inthe industry

1. Estee Lauder2. Procter & Gamble (P&G)3. LOreal4. Avon5. Revlon

Industry productsand services

Estee Lauder: Skincare (moisturizers, creams, lotions, cleansers, sunscreens, and self tanningproducts)Clinique, Repairwear Laser Focus, Estee Lauder Advanced Night Repair Eye Recovery Complex, La MerRegenerating Serum and Origins Plantscription;Procter & Gamble (P&G): OlayLOreal: LOreal Paris, LOreal Profesional, Lancme, Maybelline New York, GarnierAvon: Avon Color, Anew, Skin-So-Soft, Avon Solutions, Advance Techniques, Avon Natural, Mark andAvon Wellness.Revlon : Offers variety of cosmetic and beauty products under may brands.


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3.0 External Assessment

3.1 Positioning Diagram Strategic Group Identification

*Because of lack of information on Skin Care product segment this analysis will be based on personel care industry . This evaluation also

will be based on major competitors in the industry due to the limitation of information given.

Case facts of X axis - Number of Operation in different countries

LOreal distributes products in 130 countries (Page37,para5)

P& G distribution of consumer products in 140 countries (Page37,para6)

Avon market its products in over 100 countries through over 5 million independent sales representatives (Page38,para2)

Today Estee Lauder has 28 brands, sell products in over 150 countries (Page30, para5)


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Case facts of Y axisThe Latest Revenue achieved by the company2010 (million)Revenue achieved by Avon Company (2010) = $10,862.8 (Refer Exhibit 7, page38)

Revenue achieved by Estee Lauder (2010) = $7,795.8 (Refer Exhibit 7, page38)

Revenue achieved by P&G Company (2010) = $78,938.0 (Refer Exhibit 7, page38)

Revenue achieved by LOreal Company (2010) = $ 34,166.38 (Refer Exhibit 7, page38)

Note that Estee Lauder is small compared to some of its rival firms (Page37,para4).

Size of circleCompany Net Income (2010)

Net Income achieved by Avon Company (2010) = $606.30 (Refer Exhibit 7, page38)

Net Income achieved by Estee Lauder (2010) = $478.3 (Refer Exhibit 7, page38)

Net Income achieved by P&G Company (2010) = $12,736.0 (Refer Exhibit 7, page38)

Net Income achieved by LOreal Company (2010) = $ 3925.01 (Refer Exhibit 7, page38)


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3.2 The Group Map

Personal Care Industry Strategy Group Map

Based on information given, it can be concluded that P&G, LOreal, Avon are the closest competitors for Estee Lauder in the personal care industry.

Need to take note that Colgate-Palmolive also is one of the closest competitors in the industry. But due to the lack of information given in the case

study, the position of Colgate-Palmolive in the industry could not be illustrated here. In terms of financial position, Estee Lauder Company seems a bit

No. of operation in different countries

ThelatestRevenueach

ieved

bythecompany(2010)

EL

50

High

100 HighLow

Low

150

LOREAL

Avon

P&G


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behind compared to its major competitors. Nevertheless, Estee Lauder successfully achieved the highest number of operation in different countries

compared to the other rivals. In fact, EL must be sensitive to its nearest competitors strategies in order to ensure its success in the industry.

3.3 PEST Analysis

Case Facts Opportunity Threat

Political, Legal , and governmental forces

The impact that rising energy prices can inflict on the personel care sector

(Page36,para7)

The Federal Food and Drug Administration does not require testing ofcosmetics(Page37,para3)

Economic forces

U.S stock market droppedmore than 1,000 points in the 10 days prior tothe companys August 15, 2011 release (Page29, Para3).


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During 2010, the value of the U.S dollar relative to the internationalcurrencies was volatile, which impacts companies with international

operations (Page36, Para4).

Although economic conditions have improved from 2009, the UnitedStates still is suffering from high unemployment, which has translatedinto increase levels of jobs insecurityamong the working population(Page36,para6).

Social , Cultural , and Demographic forces

Demand for premium goods and services in the U.S is expected to rise 8

percent this year (Page29, Para2)

Much of the expected growth in the personel products industry will befueled by the rising demand from emerging and developing markets(Page36, Para4).

Beauty, youth and forever young are common themes in the personelproducts industry (Page29, Para4).

Turkey is a fast-growing emerging market in the European region(Page29, Para2).


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Developing markets such as Brazil and India are showing signs of

potential gains (Page 33, Para2).

The whole continent of Africa is coming online (Page36, Para4)

Consumers spending may be down in many parts of the world (Page36,,Para5).

By 2015, global womens purchasing power is expected to increase by $5trillion and beauty is the category these consumers are most likely tospend money on after food and clothing (Page36, para5)

The U.S Cencus Bureau predicts that by the year 2030, Americans overthe age of 65 will represent one-fifth of the population, which is expectedto devote a substantial part of their discretionary income to anti-agingproductsteens are thinking about and spending money on these types ofproducts (Page36,para5)

The worlds aging populationwill multiple by 2.5 times in the next40year.including high growth countries such as China and India(Page36,para5)

Green products appear to be maintaining their position. With the personelcare sector experiencing an increase in the number of green products(Page36,para8).


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There have been consumer complaints and inquires into the use of

animal testing for new products (Page37,para2)

Companies are now focusing on the untapped male market(Page37,para4)

All of the top competitors in the personel products are diversified, withmany brand names and wide range of products (Page37,para4)

Technological forces

Innovation in product development will also remain an extremelyimportant factor in the industry (Page37,para2)

Total 14 6

Conclusion:

From the above PEST analysis, shows the presence of many opportunities occurred from Political, economic, social as well as Technology point ofview. In order to stay success in this industry, Estee Lauder should grab all the opportunities revealed and since threat cannot be controlled, the

company who want to invest in this industry really need to be aware of the threats in order to continuously sustain in the industry. As a matter of fact,

Estee Lauder company cannot avoid from facing this threat but it can control to reduce the threat.


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3.4 Competitive Analysis

*Because of lack of information onSkin Care segments competitors, the competitive analysis focused on the evaluation based on personal care

industry as a whole.

Key Variables Case Facts Opportunity ThreatCompetitors

strength

LOreal

Procter & Gamble (P&G)

LOreal is one of the worldwide leaders in cosmetics

and with 17 global brands, 66,619 employees and

offices in 58 countries (Page37,para5).

Consistently pursued globalization, with over 127,000

employees working in over 80 countries offices

(Page37,para6)


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Colgate-Palmolive

Avon

Revlon

Marked its 200thyear in 2006, markets a variety of

products in the oral, personel and home care segments

(Page37,para7).

Avon as the world largest direct seller of personal

products (Page38,para2).

Revlon is one of the best known brand names in the

world and the company excels at mass marketing

(Page38,para3)

CompetitorsWeakness

N/A N/A - -


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Competitorsobjective and

strategy

LOreal


Colgate-Palmolive

They embrace responsibility for their employees,

consumers, environment and the communities in whichthey operate and though production and technology

strive for consistent quality worldwide, workplace

safety, high environmental standards, localization and

innovation (Page37,para5)

The most diversifiedwith a greater depth of product

lines, P&G continues to show strong growth and

profitability (Page 37,para6)

In 2004, the company initiated a massive restructuring

program that appears to be progressing on schedule

(Page38,para1)

CompetitorsCapabilities

LOreal owns many brands of consumers products,


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LOreal


Colgate-Palmolive

profesional products, and luxury products, Garnier,

LOreal Paris, and Maybelline New York are all

consumers productsLuxury products are brands suchas Lancome, Ralph Lauren and Giorgio Armani

(Page37,para5).

The P&G brand portfolio includes Pampers, Tide,Ariel,

Always, Pantene Bounty, Folgers, Pringlers, Charmin,

Downy, Iams, Crest, Actonel and Olay (Page37, para6)

Has a strong and supportive relationshipwith the

profesional and trade groups that has increased with the

introduction of new dental products (Page38,para1).

Its top selling product includes brand names such as

Avon Color, Anew, Skin-So-Soft, Avon Solution,Advance Techniques, Avon Naturals, Mark and Avon

Wellness (Page38,para2)


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AvonCompetitorsDistribution

Channels

LOreal


Avon

Distributes products in 130 countries (Page37,para5)

Distribution of consumer products in 140 countries(Page37,para6)

Market its products in over 100 countries through over

5 million independent sales representatives(Page38,para2)


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CompetitorsFinancial Position

LOreal


Colgate-Palmolive

In 2010, the company has EUR 19.5 billion in

consolidated sales and operating profits of EUR

2.2billion (Page37,para5)

For the 2010 fiscal year, the company saw another

consecutives and free cash flow profitability. P&G

reported $78.9billion of revenues with a net income of$19.1 billion at the end of the 2010 fiscal year

(Page37,para6).

The company had industry revenues of $15,564 million

in 2010 with a gross margin of 59.4 percent and a price

earnings ratio of 19.73. Reported a net income of

$2,203.0 million in 2010. (Page37,para7)

In 2010 total revenue of $10,862.8 million, with a gross

margin of 62.80 percent, a price earnings ratio of 18.10


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Avon

Revlon

and net income of $606.3 million. Avon continues to

be a formidable competitor. (Page38,para2).

Revlon Worldwide has $2,167.0 million in total

revenues in 2010, with a gross margin of 66.51 percent.

The companys net income was $94.6 million in

2010(Page38,para3).

Total 2 18

Based on the competitive analysis, LOreal, P&G, Avon, Colgate-Palmolive and Revlon have been found as the competitors for Estee Lauder in the

industry. There are 2 opportunities with 18 threats have been found in this analysis.


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3.5 Opportunities & Threats

To choose opportunities and threats I tried to select those that are critical and able to give greatest impact on Estee Lauder. The selection proses will be

based on PEST analysis consideration as well as from competitive advantage analysis.

No. Opportunities

1. Innovationin product developmentwill also remain an extremelyimportant factor in the industry (Page37,para2)

2. Developing markets such as Brazil and India are showing signs of potential gains (Page 33, Para2).

3.

The worlds aging populationwill multiple by 2.5 times in the next 40year.including high growth countries such as China and India(Page36,para5

Opportunities Probability Impact Justification

O1:Innovation in product development willalso remain an extremely important factor inthe industry (Page37,para2)

Almost certain Extraordinary Perform highest impact to Estee Lauder in conjunction to cater

consumers-changing needs and preferences in the industry.

O2: Developing markets such as Brazil andIndia are showing signs of potential gains

(Page 33, Para2).

Possible Moderate

Expanding business on these countries might help to increase Estee

Lauder revenues and its global market share.

O3: The worlds agingpopulation will multipleby 2.5 times in the next 40years.includinghigh growth countries such as China and India(Page36,para5

Likely Major This target group able to give impact on Estee Lauder revenues and

growth in future since the demands from the worlds agig populatio

is getting increase from time to time.


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Probability

Insignificant Minor Moderate Major Extraordinary

Almost certain Low Medium High High High

Likely Low Medium Medium High High

Possible Low Low Medium High High

Unlikely Low Low Low Medium Medium

Rare Low Low Low Medium Medium

No. Threats

1. The most diversifiedwith a greater depth of product lines, P&G continues to show strong growth and profitability(Page 37,para6)

2. All of the top competitors in the personel products are diversified, with many brand names and wide range of products (Page37,para4)

3. Avon as the world largest direct sellerof personal products(Page38,para2).

O2

O3

1


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Threats Probability Impact

T1: The most diversified with a greater depthof product lines, P&G continues to showstrong growth and profitability (Page37,para6)

Likely Major P&G possess strong position in terms of its financial position compare

to Estee Lauder. This achievement is due to P&G diversification

strategy which able to reduce Estee Lauder market share, sales and

revenues since the consumers have an ability to switch to the other

brand.

T2: All of the top competitors in the personelproducts are diversified, with many brandnames and wide range of products(Page37,para4

Almost certain Extraordinary As to retain loyal consumer, the company should fast responsive to

the consumer preferences, be innovative and able to offer diversify

products.

T3: Avon as the world largest direct seller ofpersonal products (Page38,para2). Possible Moderate Able to give major impact towards Estee Lauders usiess, growth

and position in the industry. Avon has a strong brand reputation and

ale to redue Estee Lauders arket share i the idustry.

Probability Consequences

Insignificant Minor Moderate Major Extraordinary

Almost certain Low Medium High High High

Likely Low Medium Medium High High

Possible Low Low Medium High High

Unlikely Low Low Low Medium Medium

T2

T1

T3


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Rare Low Low Low Medium Medium

3.6 EFE matrix

EFE Weight Ratings Weighted score

No. Opportunities

1. Innovationin product developmentwill also remain an extremelyimportant factorin the industry (Page37,para2)

0.21 4 0.84

2. Developing markets such as Brazil and India are showing signs of potential gains(Page 33, Para2).

0.10 3 0.30

3. The worlds aging population will multiple by 2.5 times in the next

40years.including high growth countries such as China and India (Page36,para5

0.11 3 0.33

No Threats

1. The most diversified with a greater depth of product lines, P&G continues to showstrong growth and profitability(Page 37,para6)

0.17 3 0.51

2. All of the top competitors in the personel products are diversified, with manybrand names and wide range of products(Page37,para4

0.22 3 0.66

3. Avon as the world largest direct sellerof personal products(Page38,para2). 0.11 2 0.22

Total1 2.86


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Conclusion

Based on External Factor Evaluation Analysis, Estee Lauder achieved 2.86 for skin care segment. As a matter of fact, I can clearly see that Estee

Lauder should maximize its external strategies and able to take advantage of existing opportunities and at the same time struggle to reduce the threats

since there are many large companies involved in the industry. Estee Lauder operates highly in a competitive market. The company face strong

competition from established international as well as regional and local players in the industry.

4.0 Internal Assessment

4.1. Strengths & weaknesses

In order to choose the Strengths and weaknesses, I have classified the strength level into three significant categories (Competence, Core Competence

and Distinctive Competence). In this case, Distinctive Competence will be chosen for further assessmentas this category shows that Estee Lauder

able to perform unique capabilities that distinguish the organisation from its competitors .

No. Strengths

Competence

1. Estee Lauder began selling a variety of products over the internet and was one of the first major prestige firms to offer online shopping

(Page30, Para3).2.

Today Estee Lauder has 28 brands sell products in over 150 countries and territories and employs over 31,200people worldwide (Page30,Para3).

3. The first cosmetics company to offer free samples and gift-with-purchase plansconsistent brand imaginary around the world

(Page36,para2)

Core Competence

4. Estee Lauder remains the top-ranked Prestige brandin its distribution in China and pleased with our progress in Brazil (Page29, Para2)5.

The first in the industry to introduce consistent brand imagery around the world.uses celebrities as endorses in testimonial advertising


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for commercials on TV, as well as in magazines (Page36,para2).6.

Distinctive Competence7. Acquisitionsincluding Jo Malone, Stila Cosmetics, Gloss.comThe same year also licence agreements with Sean John, Missoni, and

Donald Trump (Page30, Para3).8.

Estee Lauder markets more than 9,000 products under many brands names such as Estee Lauder, Aranis, Clinique, Prescriptives, M.A.C,Bumble.and its new acquisition Smashbox (Page34,para2)

9. Strong increases in all regions, recent technologically-advanced innovationsinclude Clinique, Estee LauderWe are pleased with the

success of these new products (Page29,para2)

No. Weaknesses Justification

1. In nutshell, Estee Lauder is doing well for

now, However, much larger firms such asAvon, LOreal, P&Gare working hard toeveryday to take market share from EsteeLauder(Page39,para3).

Most Incompetence

Estee Lauder needs to be aware with itsclosest competitors since they all have the

capabilities to reduce Estee Lauders marketshare in the industry.

2.

Estee Lauder does not have a writtenmission statement

Most Incompetence

As having a clear written mission is crucialfor Estee Lauder success and future direction

in the industry.

3. Estee Lauder is smallcompared to some ofits rivals firms (Page37,para4)

Most Incompetence Estee Lauder is internally success but amongother major competitors Estee Lauder is stillsmall which this affect its market share and

revenues in the industry as well.


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4.2 IFE Matrix

IFE Weight

Ratings Weighted score

No. Strengths

1. Acquisitionsincluding Jo Malone, Stila Cosmetics, Gloss.comThe same year also licenceagreements with Sean John, Missoni, and Donald Trump (Page30, Para3).

0.22 4 0.88

2. Estee Lauder markets more than 9,000 products under many brands names such as Estee Lauder,Aranis, Clinique, Prescriptives, M.A.C, Bumble.and its new acquisition Smashbox (Page34,para2)

0.19 4 0.76

3. Strong increases in all regions, recent technologically-advanced innovationsinclude Clinique,

Estee LauderWe are pleased with the success of these new products (Page29,para2)

0.20 4 0.80

No. Weaknesses

1. In nutshell, Estee Lauder is doing well for now, However, much larger firms such as Avon, LOreal,P&Gare working hard to everyday to take market share from Estee Lauder(Page39,para3).

0.16 2 0.32

2.Estee Lauder does not have a written mission statement

0.12 2 0.24

3. Estee Lauder is smallcompared to some of its rivals firms (Page37,para4) 0.11 2 0.22

Total 1 3.22

Conclusion

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 organisation.


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4.3 Value Chain Analysis (Skin Care Segment)

Value Chain provides a model of how Estee Lauder, makes revenue and profit from the raw materials. The facts in Value chain is the critical facts

based on an internal assessment.


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Culture The Estee Lauder Companies, Inc. is committed to the highest standard of profesional and personel conduct. All employees of

the company are expected to conduct themselves at all times within the letter and spirit of the Code A full description of the

code can be found at http://www.elcompaies .com/pdfs/code-of-conduct-2010.pdf.(Estee Lauders Ethics, Page30). Estee

Lauder strongly advocates corporate social responsibility to its customers and community in which it operates (Page33, Para3) .Management Bumble and Bumble had expanded to all stand alone Sephora doors in the U.S.(Page29,Para2). Launched its first ever print

and campaign for its new texture cream in North America in April followed by the U.K. this month. (Page 29, Para2). Turkey

We also gained share in South Africa . In Rusia our salesevery-day remains strong rising more than 20 percent which is about

double the overall Prestige beauty growth (Page29, Para2). Continue to acquire more brand licensing..Aveda (Page 30,

Para1). Utilizes a strategic business unit-type and others maybe family members (Page30, Para8).

FinanceEstee Lauder releases its fourth quarter and fiscal year financial resultin mid-August of each year (Page29,Para3). Sales of

skin care products account for 41 percent or 44 billion of net sales. See exhibit 5 (Page 31, para2) Net sales increased 6 percent

or to a record gross margin 76.5 percent.$478million (Page31, Para2).

Production The first products sold were Super Rich All Purpose Crme, Crme Pack, Cleansing oil,, and skin LotionClinique (the first

dermatologist-guided, allergy tested, fragrance free cosmetics brand launched in 1968) (Page30,Para1). The company has

manufacturing facilitiesnearly every continent, see exhibit 2 (Page30, Para8) Estee Lauder manufacturing operations arecertified by an independent third party to conform to the ISO14001 standardssafely initiatives (Page34, Para1)

R&D/ MIS The company expanded again by opening Clinique Laboratories, Inc. (Page30, Para2). Launched multiple product linesincluding Grassroots Research Labs(Page30, Para3). The company has R&D operations nearly every continent, see exhibit2 (Page30, Para8). A new division called ELC Online was created to manage all online strategies and activities for all of itsbrands (Page30, Para3).

Raw Material Production/Operation Product/Service Marketing Distribution

N/A

13 Factories for manufacturing.

See Exhibit 2 (Page 31) Estee

Lauder established its first

department store.at Harrods in

London, with the Hong Kong

market opening the following year

(Page30, Para1). Launched

Beauty Flirt and Good Skin

through its Beauty Bank

division..and Donald

Trump(Page30, Para3).

Recent technologically-advanced

innovations include Clinique,

Repairwear Laser Focus, Estee

Lauder Advanced Night Repair Eye

Recovery Complex, La Mer

Regenerating Serum and Origins

Plantscription (Page29,Para2) . Service

and individualized attention is offered to

customers via brand websites, toll free

phone numbers and six global

Consumers Care Centres

(Page35, Para1).

Launches social media marketing

channels (Page35, Para2). Launce

large scale social networking and

online campaign(Page35, Para3).

Offer free samples and giftthe

company use celebrity as endorses in

testimonial advertisi ng for

commercials in TV (Page36,para2).

Prestige pricing appears to be an

effective strategy (Page36,para3).

Presence in department stores,

freestanding stores and Sephora in

38 cities in China (Page29, Para2).

Online initiative in the countries

extends our reach to more than 346

cities (Page29, Para2). Estee Lauder

remains the top-ranked Prestige

brand in its distribution in China

(Page29, Para2).The channel consist

primarily of upscale department

storeand the internet (Page35,

Para2).


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4.4 Value Chain Flow Chart (Skin Care Segment)

EL Market research purposes /Skin care New products

Consumers Feedbacks

Received raw

materials from

supplier (For Skin

Care Raw material)

Manufacturing/Production

Skin CareFinished products

Research and

Development

(R&D)

Online

shopping

Distributor

Business

TravelRetail

Upscale

Department

Store

Duty

Free

Shops

in

Airport

Stores

in

Cruise

Ships

In

Flight

Specialty

retailers

Customer-1

Customer-3

Custo

mer-

2

MarketingEffort-1

Marketing

Effort-3

Marketing Effort-2

Pharmacies

Freestanding

CompanyEnd Users/Individual/Consumers

Marketing

Effort-4

Marketing Effort = M.E1+M.E2+M.E3+M.E4


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5.0

Strategy Formulation

5.1 IE Matrix

The IFE Total Weighted Score

4.0

Strong

3.0

Average

2.0

Weak

1.0

High

3.0

Grow and Build

Medium

2.0

Low

1.0

EFE IFE

2.86 3.22

The division falls into cell IV which can be described as grow and build. Intensive strategies such as product development can be most appropriate for this division.

TheEFETotalWeightedScore


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5.1 SWOT Matrix

According to IE matrix, Estee Lauder positioned in cell IV which can be described as aggressive (grow and build), so I will chose S/O strategies from SWOT

analysis.

SWOT

Turnaround (W/O) Aggressive (S/O)

Defensive (W/T) Diversification (S/T)

IE

Grow & Build Grow & Build Hold &Maintain

Grow & Build Hold & Maintain Harvest or Divest

Hold & Maintain Harvest or Divest Harvest or Divest

Aggressive


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5.1. SWOT Matrix

SWOT Matrix Opportunities Threats

1. Innovation in product development will alsoremain an extremely important factor in theindustry (Page37,para2)

1. The most diversifiedwith a greater depth ofproduct lines, P&G continues to show stronggrowth and profitability(Page 37,para6)

2. Developing markets such as Brazil and India areshowing signs of potential gains (Page 33, Para2).

2.All of the top competitors in the personelproducts are diversified, with many brand namesand wide range of products (Page37,para4)

3. The worlds aging populationwill multiple by2.5 times in the next 40year.including highgrowth countries such as China and India(Page36,para5.

3. Avon as the world largest direct sellerofpersonal products(Page38,para2).

Strengths SO Matches ST Matches

1.Acquisitions including Jo Malone, Stila Cosmetics,Gloss.comThe same year also licence agreements with SeanJohn, Missoni, and Donald Trump (Page30, Para3).

SO1: Introduce high qualityEL anti-wrinklecream productsin target market of China, Indiaand Brazil (S2,S3,O1, O2,03)

ST1: Take the opportunity to continue implementstrategic focus, acquire interest in start-upcompanies and expanding skin care productsthrough innovative approach.( S1,S2,T3)

2. Estee Lauder markets more than 9,000 products under manybrands names such as Estee Lauder, Aranis, Clinique,Prescriptives, M.A.C, Bumble.and its new acquisition Smashbox(Page34,para2).

SO2: Target EL anti-wrinkle creamproducts inanti-aging market, range in age from 38 to 47 years

old (S3,O3)

ST2: Effort to continuously produce high-innovative and diversify skincare products (S3,

T2,T3)


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3.Strong increases in all regions, recent technologically-advancedinnovations include Clinique, Estee LauderWe are pleased with

the success of these new products (Page29,para2)(ELs distinctive Competence).

Weaknesses WO Matches WT Matches1.In nutshell, Estee Lauder is doing well for now, However, muchlarger firms such as Avon, LOreal, P&Gare working hard toeveryday to take market share from Estee Lauder (Page39,para3).

Increase Estee Lauder market share by respondingtowards the growing demands of anti-aging skincare

products (W1,W3,O3)

Prepare a new version of Estee Lauder mission andvision to clearly direct company success with

consideration of current competitors (W2,T1,T2)

2.Estee Lauder does not have a written mission statement (Page30, para7)

Actively increase involvement in Internationalmarket and expand Estee Lauder skincare product

in developing market such as China, India andBrazil in order to improve Estee Lauder profitable

growth in the industry (W3,O2,03)

-

3.Estee Lauder is small compared to some of its rivals firms

(Page37,para4)

SWOT conclusion:

Based on the SWOT analysis the corporate level and business level strategies are as follows:


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Corporate Level Strategy

No Type of strategy

1. ProductDevelopment

Introduce High quality of EL anti-wrinkle cream products in

target market of China, India and Brazil

(S2,S3,O1, O2,03)

Business Level Strategy

No Type of strategy

1. Focus- BestValue (Type 5)

SO2: Target EL anti-wrinkle creamproducts in anti-agingmarket, range in age from 38 to 47 years old (S3,O3)

Strategy Formulation Conclusion

IE matrix results, shows that Estee Lauder should Grow and Build its position.This means intensive and aggressive tactical strategies should be done.

Therefore, product development is the best chosen strategy of Estee Lauder as it is positioned in aggressive area. Therefore, the S/O strategies shouldbe implemented in order to develop new product of EL anti-wrinkle cream responding from the growing global population of aging group.


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6.0 CLS,BLS- Strategy Maps Diagram


(Focus-Best Value)

Target EL anti-wrinkle

creamproducts in anti-aging

market, range in age from 38

to 47 years old.

+ +

Long-Term shareholder value

Productivity

StrategyGrowth Strategy

Improve Cost

Structure

Increase Asset

Utilisation

Expand Revenue

Opprtunities

Enhance Customer

Value

Price Quality Availability Selection Function Service PartnershipBrand

Operation Management

Processes

Customer

Management

Processes

Innovation

process

Regulatory and

Social Processes

Productivity Productivity Productivity


(PD)

Introduce High quality of

EL anti-wrinkle cream

products in target market of

China, India and Brazil.


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Operation Management Processes

SupplyProduction

Distribution

Risk Management

Customer Management Processes

Selection

Acquisition

Retention

Growth

Innovation Processes

Opportunity ID

R&D Portfolio

Design/Develop

Launch

Regulatory and Social Processes

Environment

Safety and Health

Employment

Community


(PD)

Introduce High quality of EL anti-wrinkle cream

products in target market of China, India and Brazil


(Focus-Best Value)

Target EL anti-wrinkle creamproducts in

anti-aging market, range in age from 38 to 47

years old.


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7.0 Operation Management Process (OMP)

7.1 The Theme of OMP:

From CLS : Introduce High quality of EL anti-wrinkle cream products in target market of China, India and Brazil.

From BLS: Making EL anti-wrinkle cream products with strategic focus on anti-aging market by range

of age from 38 to 47 years old.

From CLS:

Introduce High quality of EL anti-wrinkle

cream products in target market of China,

India and Brazil

From BLS: Making EL anti-wrinkle

cream products with strategic focus on

anti-aging market by range of age from38 to 47 years old

INNOVATION PROCESS

CUSTOMER MANAGEMENT

PROCESS


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7.1.1 Define the objectives in Supply Processes

Develop High quality supplier capability for EL anti-wrinkle cream products.

Use new ideas from suppliers.

Objective Balance Scorecard (BSC)

Measure Target

Use New ideas fromsupplies

Number of innovations fromsuppliers

Support to 100%encouragement for supplierson sharing innovations ideas

Develop High qualitysupplier capability for EL

anti-wrinkle creamproducts.

Supplier performance survey,Percent of perfect orders

received

100% satisfaction on supplier

performance,

99% targeted for perfectorder received


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Linkage to Production

Operation Management Processes (Supply) Production

Objectives

Use New ideas from supplies None

Develop High quality supplier capability for EL anti-wrinklecream products.

ECC&AFNPLELAWCP

Note:

1.

ECC&AFNPLELAWCP = Ensure Quality Control & Assurance for New Production Line of EL Anti-Wrinkle cream products


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Linkage to Risk Management

Operation Management Processes (Supply) Risk Management

Objectives

Use New ideas from supplies MRSISR

Develop High quality supplier capability for EL anti-wrinkle creamproducts.

MRCSQAWC

Note (Supply)

MRCSQAWC = Manage the risk on the consistency of supplying quality anti-wrinkle compounds

MRSISR = Manage Risk Sharing in Supplier Relations


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Linkage to Customer Perspective

Operation Management Processes (Supply) Customer Perspective

(Customer Value Proposition)

Price Quality Availability Selection *Brand

Objectives

Use New ideas from supplies None EQ None LELAWC None

Develop High quality supplier capabilityfor EL anti-wrinkle cream products.

None EQ None LELAWC *EELBIFHQAWC

Note: (CVP)

EQ = Enhance Quality

LELAWC = Limited EL Anti-wrinkle creams (Day cream, Night cream)

EELBIFHQAWC = Enhance Estee Lauder Brand Image for High Quality Anti-Wrinkle cream


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Linkage to Financial Perspective

Operation Management Processes (Supply) Financial Perspective

Improve Cost

Structure

Increase Assets

Utilization

Expand Revenue

Opportunities

Enhance

Customer Value

Objectives

Use New ideas from supplies None None None None

Develop High quality supplier capability for EL anti-wrinkle cream products.

SPC TDORMUIPELAWC CNSORNP None

Note (Supply)

TDORMUIPELAWC = Timely Deliveries on Raw Materials Used in Producing EL Anti-Wrinkle CreamsSPC = Save Production CostsCNSORNP = Create New Source of Revenue from New Product

Those objectives should later be carried out to the Financial Pers. accumulatively


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Linkage to Learning & Growth

Operation Management Processes (Supply) Learning & Growth

Objectives

Human Capital Information Capital Organizational Capital

Use New ideas from supplies DSCEIT None ECA

Develop High quality supplier capability for EL anti-wrinkle cream products. DES&CC&AQT QP&CAWCP CQCC

Note:

DSCEIT = Develop Strategic Competencies for Employees Innovative Thinking

DES&CCA QT= Develop Employees Skills & Competencies on Quality & Assurance through Quality Training

ECA = Enhance Competitive Advantage

QP&CAWCP = Quality Policies & Conformity on Anti-Wrinkle Cream Products

CQCC = Create Quality-Centric Culture


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7.1.2 Define the objectives in Production Processes

Ensure Quality Control & Assurance for New Product Line of EL-Anti Wrinkle Cream Products. (Linkage from Supply Process)

Target production of EL Anti-wrinkle Cream Products to China, India and Brazil(New Objective).

Objective Balance Scorecard (BSC)Measure Target

Ensure Quality Control &Assurance for New Product Line ofEL-Anti Wrinkle Cream Products.

(Linkage from Supply Process)

Percent of shipments returned dueto poor quality

Target to produce 99% ofHigh quality of EL-Antiwrinkle cream products

Target production of EL Anti-

wrinkle Cream Products to China,

India and Brazil (New Objective).

Market ShareTarget to increase 15% ofmarket share in Skin Care

segment


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Linkage to Distribution

Operation Management Processes (Production) Distribution

Objectives

Ensure Quality Control & Assurance for New Product Line of EL-Anti Wrinkle Cream Products.(Linkage from Supply Process)

DELWCPMQS

Target production of EL Anti-wrinkle Cream Products to China,


DEDSICIB

Note:

DELWCPMQS = Distribution of EL Anti-Wrinkle Cream Products Meet Quality Specification

DEDSICB = Develop Effective Distribution system in India, China and Brazil


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Operation Management Processes (Production) Risk Management

Objectives

Ensure Quality Control & Assurance for New Product Line of EL-Anti Wrinkle Cream Products.(Linkage from Supply Process)

MRCPHQELAWCP



MRMELAWCPPAPP

Note (Production)

MRCPHQELAWCP = Manage the risk on the consistency of producing High quality of EL anti-wrinkle cream Products

MRMELAWCPPAPP= Manage Risk of maintaining EL Anti-Wrinkle Cream Physical Perfection and Appearance after Production Process


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Operation Management Processes (Production) Customer Perspective(Customer Value Proposition)

Objectives

Price Quality Availability Selection Brand

Ensure Quality Control & Assurance for NewProduct Line of EL-Anti Wrinkle CreamProducts.(Linkage from Supply Process)

None EQELAWC None LELAWC(DC,NC)

AAM

EELBIVAASB

Target production of EL Anti-wrinkle Cream

Products to China, India and Brazil (New

Objective).

ORP EQELAWC None LELAWC(DC,NC)

AAM

EELBIVAASB

Note:

LELAWC (DC,NC) = Limited EL Anti-Wrinkle Creams (Day, Cream, Night Cream) for Anti-Aging Market

ORP = Offer Reasonable Price

EQELAWC, DOT = Excellence Quality EL Anti-Wrinkle Creams, Deliver On Time

EBV = Enhance Brand ValueEELBIVAASB = Enhance Estee Lauder Brand Image Via its Anti-Aging Skincare Brand

*

Those objectives should later be carried out to Customer Pers. Accumulatively.


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Operation Management Processes (Production) Financial Perspective

Objectives

Improve Cost Structure Increase AssetsUtilization

Expand RevenueOpportunities

Enhance CustomerValue

Ensure Quality Control & Assurance forNew Product Line of EL-Anti WrinkleCream Products. (Linkage from SupplyProcess)

RD, RWC None IRMCE ICP, ICS

Target production of EL Anti-wrinkle

Cream Products to China, India and Brazil

(New Objective).

None MPAUTPP GRFNC None

*Those objectives should later be carried out to the Financial Pers. Accumulatively

Note

RD, RWC = Reduce Defects, Reduce Waste CostsIRMCE = Increase Revenue for Meeting Customer ExpectationICP, ICS = Increase Customers Profitability, Increase Customer Satisfaction

MPAUTPP = Maximize Physical Assets Utilization Throughout Production ProcessGRFNC = Generate Revenues from New Customers


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Linkage to Learning & Growth Perspective

Operation Management Processes (Production) Learning & Growth

Objectives

Human Capital Information Capital Organizational Capital

Ensure Quality Control & Assurance for New Product Line of EL-Anti Wrinkle Cream Products.(Linkage from Supply Process) EETIQCAAPANPL DQD,QP&SAPA

IQMS, Q-CC



RCEFCIAPA ITTFNPL GCATHQELAWCP,PELAWCP

Note:

EETIQAAPANPL = Efficient Employees Training in Quality Control & Assurance at Production Area for New Product LineDQD,QP&SAPA = Develop Quality Documentation, Quality Policies & Standards at Production AreaRCEFCIAPA = Retain Competence Employees for Continuously Improvement at Production AreaIQMS,Q-CC = Improve Quality Management System, Quality-Centric Culture

ITTFNPL = Improve Technology to Facilitate New Production Line

GCATHQELAWCP, PELAWCP = Gain Competitive Advantage through High Quality of EL Anti Wrinkle Cream Products, Patent for EL Anti Wrinkle CreamProducts

*Those Objectives should be carried out to the Learning &Growth Perspective accumulatively


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7.1.3 Define the objectives in Distribution Processes

Distribution of EL Anti-wrinkle Cream Products meet Quality specification (Linkage from Production)

Develop Effective Distribution System in India, China and Brazil (Linkage from Production)

Deliver EL Anti-Wrinkle Creams Products responsively to customers (New Objective)

Objective Balance Scorecard (BSC)Measure Target

Distribution of EL Anti-wrinkle Cream Products

meet Quality specification (Linkage fromProduction)

Percent of EL Anti-wrinkle creamproducts delivered with no defects

Target to 95% for meetingquality specification

Develop Effective Distribution System in India,

China and Brazil (Linkage from Production)

Customers Feedbacks Target to 100% of customersatisfaction

Deliver EL Anti-Wrinkle Creams Productsresponsively to customers (New Objective)

On-Time Delivery percentage Increase On-Time Deliveryfor EL Anti-Wrinkle cream

products to 99%


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Operation Management Processes(Distribution)

Risk Management

Objectives


meet Quality specification (Linkage from

Production)

MQRDS



MRPLCICB


MRELAWCPAT

Those objectives should later be carried out to the Risk Management as accumulative Objectives.

Note (Distribution)

MQRDS = Manage quality risk of delivery service

MRPLCICB= Manage the risk of product lost in countries of India, China

and Brazil

MRELAWCPAT = Manage the Risk of EL Anti-wrinkle cream Products

acceptance Time


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Customer Perspective (Customer Value Proposition)Price Quality Availability Selection

ObjectivesDistribution of EL Anti-wrinkle Cream Products meet

Quality specification (Linkage from Production)

None EQ None LELAWC(DC,NC)

Develop Effective Distribution System in India, China

and Brazil (Linkage from Production)

ORP EQ OAUDS&TR LELAWC

(DC,NC)


ORP EQ DELAWCPOT LELAWC

(DC,NC)

Those objectives should later be carried out to Customer Pers. Cumulatively.

Note:OAUDS&TR = Only Available at Upscale Department Stores & Travel RetailsLELAWC (DC,NC) = Limited EL Anti-Wrinkle Creams (Day, Cream, Night Cream)DELAWCPOT = Deliver EL Anti-Wrinkle Cream Products on TimeORP = Offer Reasonable PriceEQ = Excellence Quality


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Financial PerspectiveImprove Cost

StructureIncreaseAssets

Utilization

ExpandRevenue

Opportunities

EnhanceCustomer

Value

ObjectivesDistribution of EL Anti-wrinkle Cream Products meet

Quality specification (Linkage from Production)

RDCWRELAWC RECDU None ICS

Develop Effective Distribution System in India, China

and Brazil (Linkage from Production)

LTCDBFL MWCE IRFNC None


None MTAUTDP None ICS

Those objectives should later be carried out to the Financial Pers. Cumulatively

NoteRDCWRELAWC = Reduce the costs from Waste reduction for EL Anti-Wrinkle CreamsRECDU = Reduction in Excess Capacity of a distribution unitLTCDBFL = Lower Total Costs of Distribution benchmarking for logisticsMWCE = Maximize Workforce Cooperative EffortsIRFNC Increase Revenue from New CustomersMTAUTDP = Maximize technology Assets utilisation throughout distribution process

ICS = Increase Customer Satisfaction


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Linkage to Learning & Growth Perspective


Learning & Growth

Human

Capital

Information

Capital

Organizational

CapitalObjectives


meet Quality specification (Linkage from

Production)

CEIQDP DQTDFELAWCPDS

IQMSIDA



CEDPI DMP&P IDMS


ECFDIDP LTFDIIDP FIIELDS

Those Objectives should be carried out to the Learning &Growth Perspective cumulatively.

NoteCEIQDP = Competence Employees in Quality Control throughout Distribution ProcessDQTDFELAWCPDS = Develop quality training documentation for EL Anti-Wrinkle Cream Productsdistribution systemIQMSIDP = Improve Quality Management System in Distribution ProcessCEDPI = Competence Employees in Distribution Process ImprovementIDMS = Improve Distribution Management SystemDMP&P = Distribution Management Policies and ProceduresECFDIDP = Employees Skills for Fast Delivery in Distribution Process

LTFDIIDP = Logistics Technology that facilitates delivery Improvement in Distribution ProcessFIIELDS = Facilities Improvement in EL Distribution System


57/129



7.1.4 Define the objectives in Risk Management Process

=

Competitive Advantage on EL Anti-Wrinkle Cream Products to serve better than Rivals

Note: (Supply)

1.

MRCPHQEELAWCP = Manage the Risk of Consistency of Supplying Quality

Anti-Wrinkle Compounds .

2.

MRSISR = Manage Risk Sharing in Supplier Relations.

Note:(Production)

1.MTRCPHQELAWCP = Manage the risk on the consistency of producing High quality of EL

anti-wrinkle cream Products.

2. MRMELAWCPPAPP= Manage Risk of maintaining EL Anti-Wrinkle Cream Physical Perfection

and Appearance after Production Process.

Note (Distribution)

1.

MQRDS = Manage quality risk of delivery service

2.

MRPLCICB= Manage the risk of product lost in countries of India, China

and Brazil

3.

MRELAWCPAT = Manage the Risk of EL Anti-wrinkle cream Products

acceptance Time


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Define the objectives in Risk Management Processes (New)

MFRELNPLELAWCP= Manage Financial Risk for EL New Production Line of EL Anti-Wrinkle Cream Products (New Objective)&AFNPLELAWCP = EnsureQuality Control & Assurance for New Production Line of EL Anti-Wrinkle cream products

Define the objectives in Risk Management Processes

1.

MRCPHQEELAWCP = Manage the Risk of Consistency of Supplying Quality Anti-Wrinkle Compounds from Supply ;

2.

MTRCPHQELAWCP = Manage the risk on the consistency of producing High quality of EL anti-wrinkle cream Products from production ;

3. MQRDS = Manage quality risk of delivery service from distribution ;

4.

MRSISR = Manage Risk Sharing in Supplier Relations from Supply ;

5. MRMELAWCPPAPP= Manage Risk of maintaining EL Anti-Wrinkle Cream Physical Perfection and Appearance after Production Process

from production ;

6. MRPLCICB= Manage the risk of product lost in countries of India, China and Brazil from distribution ;

7. MRELAWCPAT = Manage the Risk of EL Anti-Wrinkle Cream Products Acceptance Time from distribution ;

8.

MFRELNPLELAWCP= Manage Financial Risk for EL New Production Line of EL Anti-Wrinkle Cream Products (New Objective).


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Linkages to Customer Perspective

Operation managementprocess

Customer Perspective (Customer Value Proposition)

Objectives Price Quality Availability Selection Service Partnership Brand

Manage the Risk of

Consistency of Supplying

Quality Anti-Wrinkle

Compounds from Supply

None EnhanceQuality fromreceiving highquality of raw

materials(EQHGRM)

None None Lesser product returnfor EL Anti-Wrinkle

Cream (LPRELAWC)

None Increasereputation ofEL Skincare

Brand

(IRELSB)

Manage the risk on the

consistency of producing

High quality of EL anti-

wrinkle cream Products

from production

OfferReasonablePrice (ORP)

EnhanceQuality fromHigh QualityInspection inProduction(EQHQIP)

None Limited EL Anti

Wrinkle Cream

Products

LELAWC (DC,NC)

Lesser product returnfor EL Anti-Wrinkle

Cream (LPRELAWC)


Brand(IRELSB)

Manage quality risk of

delivery service fromdistribution

NoneEnhanceQuality

compliancesduring delivery

service(EQCDS)

Available only atUpscale

DepartmentStores and Travel

Retails(IRPDOTUD&TR

)

Limited EL Anti

Wrinkle Cream

Products

LELAWC (DC,NC)

Lesser customers

complaint (LCC)

None Increase

reputation ofEL Skincare

Brand(IRELSB)


60/129



Manage Risk Sharing in

Supplier Relations from

Supply

None None None None None None None

Manage Risk of

maintaining EL Anti-

Wrinkle Cream Physical

Perfection and

Appearance after

Production Process from

production

None Enhance Qualityof EL-Anti

Wrinkle CreamProducts

(EQELAWCP)

None None Lesser product returnfor EL Anti-Wrinkle

Cream (LPRELAWC)


Brand(IRELSB)

Manage the risk of

product lost in countries

of India, China and Brazil

from distribution

None None Enhanced Productssecured throughoutdistribution process

(EPSTDS)

Limited EL Anti-Wrinkle Cream

Products (Day Cream,Night Cream)

LELAWC (DC,NC)

None Improvingcommunication andbetter cooperation

(ICBC)

None

Manage the Risk of EL

Anti-Wrinkle Cream

Products Acceptance

Time from distribution

None

Increase the rate of

EL Anti-WrinkleCream to be

delivered on timeavailable only at

UpscaleDepartment Stores

Limited EL Anti-Wrinkle Cream

Products (Day Cream,Night Cream)

LELAWC (DC,NC)

Lesser customerscomplaint (LCC)

Improvingcommunication andbetter cooperation

(ICBC)

Increase

reputation ofEL Skincare

Brand(IRELSB)


61/129



and Travel Retails(IRPDOTUD&TR)

Manage Financial Riskfor EL New ProductionLine of EL Anti-WrinkleCream Products

ORP None None None None None None

Those objectives should later be carried out to Customer Pers. Accumulatively.


Operation management process Financial Perspective

Objectives Improve Cost Structure Increase AssetsUtilization

Expand RevenueOpportunities

Enhance Customer Value

Manage the Risk of

Consistency of Supplying

Quality Anti-Wrinkle

Compounds from Supply

Reduce Wastage Costs

(RWC)

None None None


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consistency of producing High

quality of EL anti-wrinkle

cream Products from

production

Less Operating Costs Optimize energyconsumption

throughout productionprocess (OECTPP)

None Increase Customer Satisfaction(ICS)

Manage quality risk of

delivery service from

distribution

Less delivery costs fromdistribution process

Optimize energyconsumption

throughout distributionprocess (OECTPP)

Revenue Increase fromHigh Quality EL Anti-

Wrinkle Cream Products(RIHQELAWCP)

Increase Customer Satisfaction(ICS)

Manage Risk Sharing in

Supplier Relations fromSupply

None None None None

Manage Risk of maintaining

EL Anti-Wrinkle Cream

Physical Perfection and

Appearance after Production

Process from production

Less Costs of ReturnedProducts for EL Anti-

Wrinkle Cream(LCOFRPELAWC)

Maximise productionoutput (MPO)

Increase Sales andprofitability (IS&P)

None

Manage the risk of productlost in countries of India,

China and Brazil from

None None Increase Sales andprofitability (IS&P)

None


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distribution

Manage the Risk of EL Anti-

Wrinkle Cream Products

Acceptance Time from

distribution

None Better use ofTechnology Fromdistribution system

(BUTFDS)

None Increase Customer Satisfaction(ICS)

Manage Financial Risk for ELNew Production Line of ELAnti-Wrinkle CreamProducts

None Better use of financialassets (BUFA)

None None

*Those objectives should later be carried out to the Financial Pers. Accumulatively

Linkage to Learning &Growth Perspective

Operation management

process

Learning & Growth

Objectives Human Capital Information Capital Organizational Capital

Manage the Risk of Consistency

of Supplying Quality Anti-

Wrinkle Compounds from

Supply

Enhance Employees Skills in supplier

Quality Control (EESISQC)

Supplier Quality Requirement Manual (SQRM) Improve Supply Chain System (ISPCS)


consistency of producing High

quality of EL anti-wrinkle cream

Employees Optimum Skills Level in

Technical and production area

El anti-Wrinkle Cream Products specifications

(ELAWCPS)

Improve Quality Management

System (IQMS)


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Products from production (EOSLT&PA)

Manage quality risk of delivery

service from distribution

Enhance Employees Skills in delivery

Service (EESIDS)

Technology improvement to facilitate delivery

service (TITFDS)

Infrastructure delivering

Improvement (IDI)

Manage Risk Sharing in Supplier

Relations from Supply

Increase Employees

Intellectual Capital (EIC) Knowledge Management (KM)

Innovation Culture and Openness in

sharing ideas (ICONSI)

Manage Risk of maintaining EL

Anti-Wrinkle Cream Physical

Perfection and Appearance after

Production Process from

production

Enhance Employees Skills in delivery

Service (EESIDS Standards and conformity Assessment

(S&CA)

None

Manage the risk of product lost in

countries of India, China and

Brazil from distribution

None None None

Manage the Risk of EL Anti-

Wrinkle Cream Products

Acceptance Time from

distribution

None None Improve Distribution Management

System (IDMS)

Manage Financial Risk for ELNew Production Line of EL Anti-Wrinkle Cream Products

Enhance Employees Skills in

Accounting and Finance (EESIAF)

None Improve Financial Management

System


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Summarizing the objectives Operation Management Processes

No Operation Management

Processes Objectives Measure Target

1

Supply

Use New ideas from supplies Number of innovations from suppliers Support to 100%encouragement for

suppliers on sharinginnovations ideas

2 Develop High quality suppliercapability for EL anti-wrinkle cream

products.

Supplier performance survey,Percent of perfect orders received

100% satisfaction on

supplier performance,

99% targeted for perfectorder received

3

Operation andProduction

Ensure Quality Control & Assurancefor New Product Line of EL-AntiWrinkle Cream Products.

Percent of shipments returned due to poor quality Target to produce 100% ofHigh quality of EL-Antiwrinkle cream products

4 Target production of EL Anti-wrinkle

Cream Products to China, India and

Brazil.

Market ShareTarget to increase 15% ofmarket share in Skin Care

segment

5

Distribution

Distribution of EL Anti-wrinkle Cream

Products meet Quality specification

(Linkage from Production)

Percent of EL Anti-wrinkle cream productsdelivered with no defects

Target to 99% for meetingquality specification

6 Develop Effective Distribution System in

India, China and Brazil (Linkage from

Customers Feedbacks Target to 100% of customersatisfaction


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Production)

7 Deliver EL Anti-Wrinkle Creams Productsresponsively to customers (New Objective)

On-Time Delivery percentage Increase On-Time Deliveryfor EL Anti-Wrinkle cream

products to 99%

Summarizing the objectives Operation Management Processes Linkages

No Processes Objectives Measure Target

FinancialPerspective

SUPPLY:

1 TDORMUIPELAWC = Timely Deliveries on Raw Materials Usedin Producing EL Anti-Wrinkle Creams

on-time delivery from supplier 95%

2 SPC = Save Production Costs Production costs 15% decrease3 CNSORNP = Create New Source of Revenue from New Product Revenue growth 20% increase

4PRODUCTION:

5 RD, RWC = Reduce Defects, Reduce Waste Costs Percent of defects, waste costs 1-3%, 15%decrease

6 IRMCE = Increase Revenue for Meeting Customer Expectation revenue growth 20% increase

7 ICP, ICS = Increase Customers Profitability, Increase CustomerSatisfaction

Profit per customer, customersurvey for level of satisfaction

5% increase,100% ofsatisfied

customer8 MPAUTPP = Maximize Physical Assets Utilization Throughout

Production Process- 90% increase

9 GRFNC = Generate Revenues from New Customers Revenues gained from newcustomers

20% increase


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DISTRIBUTION:

10 RDCWRELAWC = Reduce the costs from Waste reduction forEL Anti-Wrinkle Creams

Wastages costs 15%decrease

11 RECDU = Reduction in Excess Capacity of a distribution unit Excess capacity reduced 20%decrease

12 LTCDBFL = Lower Total Costs of Distribution benchmarking forlogistics

Cost of distribution 15% decrease

13 MWCE = Maximize Workforce Cooperative Efforts - -

14 IRFNC Increase Revenue from New Customers Revenue growth 20% increase

15 MTAUTDP = Maximize technology Assets utilisation throughoutdistribution process

- 90%of assetsutilization

16 ICS = Increase Customer Satisfaction Customer feedback (survey) forlevel of satisfaction

100% satisfiedcustomer

17 RISK MANAGEMENT:

18 Reduce Wastage Costs (RWC) Wastages costs 15% decrease

19Less Operating Costs Operating costs

15% decrease

20 Optimize energy consumption throughout production process(OECTPP)

Energy consumed in production 95%of energyoptimization

21 Increase Customer Satisfaction (ICS) Customer survey for satisfactionlevel

100%ofsatisfiedcustomer


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22 Less delivery costs from distribution process Delivery cost 10% decrease

23 Optimize energy consumption throughout distribution process(OECTPP)

Energy consumed in distributionprocess

95%of energyoptimization

24 Revenue Increase from High Quality EL Anti-Wrinkle CreamProducts (RIHQELAWCP)

revenue 20% increase

25

26 Less Costs of Returned Products for EL Anti-Wrinkle Cream(LCOFRPELAWC)

Products returned costs 15% decrease

27 Maximise production output (MPO) Production output 100% of outputmaximization

28 Increase Sales and profitability (IS&P) Sales and profit gained 20% increase inrevenue growth,15% increase ingaining profit

29 Better use of Technology From distribution system (BUTFDS) - -30 Better use of financial assets (BUFA) - -

31

CustomerPerspective

SUPPLY:

32 EQ = Enhance Quality - -

33 EELBIFHQAWC = Enhance Estee Lauder Brand Image for HighQuality Anti-Wrinkle cream

EL competitive position inindustry compare with the

competitors

Top leader

among other

competitors in

the industry

34 LELAWC = Limited EL Anti-wrinkle creams (Day cream, Nightcream)

- -

35PRODUCTION:

36 LELAWC (DC,NC) = Limited EL Anti-Wrinkle Creams (Day, - -


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Cream, Night Cream) for Anti-Aging Market

37 ORP = Offer Reasonable Price Price/product unit $79.99/set

38 EQELAWC, DOT = Excellence Quality EL Anti-Wrinkle

Creams, Deliver On Time

Percent of stock outs, Percent on-

time deliver

80% of stock

outs,95%39 EBV = Enhance Brand Value Company position in the industry

compare with competitorsTop leader

among other

competitor in

the industry

40 EELBIVAASB = Enhance Estee Lauder Brand Image Via itsAnti-Aging Skincare Brand

Company position in the industrycompare with competitors

Top leader

among other

competitor in

the industry

41DISTRIBUTION :

42 OAUDS&TR = Only Available at Upscale Department Stores &Travel Retails

Revenues 20%increase

43 LELAWC (DC,NC) = Limited EL Anti-Wrinkle Creams (Day,Cream, Night Cream)

-

44 DELAWCPOT = Deliver EL Anti-Wrinkle Cream Products onTime

Percent deliver on-time 95%

45 ORP = Offer Reasonable Price Price/product unit $79.99/set46 EQ = Excellence Quality Percent stock outs 80%

47 RISK MANAGEMENT

48 Enhance Quality from receiving high quality of raw materials(EQHGRM)

Quality attributes measurement forsupplier

-


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49 Lesser product return for EL Anti-Wrinkle Cream (LPRELAWC) Percent of products defect 1-3%

50 Increase reputation of EL Skincare Brand (IRELSB) -

51 Offer Reasonable Price (ORP) Price/product unit $79.99/set

52 Enhance Quality from High Quality Inspection in Production(EQHQIP) Quality attributes measurement forend products -

53Lesser product return for EL Anti-Wrinkle Cream (LPRELAWC)

percent of products returned 4%

54 Increase reputation of EL Skincare Brand (IRELSB) Revenue growth 20%increase

55 Enhance Quality compliances during delivery service(EQCDS)

Quality attributes in deliveryservices

-

56 Lesser customers complaint (LCC) Percent of customers complaints 3-5%

57 Enhance Quality of EL-Anti Wrinkle Cream Products(EQELAWCP)

Percent of customers complaints 3-5%

58 Enhanced Products secured

estee lauder inc. 2011 mriii037-libre

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