MANAGING GROWTH

@ COTY
ASEBUSS STRATEGIC MANAGEMENT DISSERTATION

Narcisa Camarasoiu
Anton Motoescu
Violeta Biciin
Sorina Gorgonaru
Marius Popescu

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Abstract
The purpose of this work is to analyse the management options of Coty
Romania, trying to identify best and worst practices regarding each of the
elements of a strategic plan, accompanied by specific proposals concerning a
sustainable strategy for future growth.
The paper start with an external environmental analysis going through
details of each of them and proposing specific measure, continue with the
internal one and conclude with short and long terms recommendations and
discussion.
The strategy word itself derives from the Greek word for generalship or
leading the army, a compound of stratos - army and ago - to lead.
In Management Theory is a method or plan for bring about a desired
future and is defined as the determination of the basic long-term goals and
objectives of an enterprise, and the adoption of courses of action and the
allocation of resources necessary for carrying out these goals Chandler (1962).

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Table of Contents
Abstract................................................................................................................. 1
History:.................................................................................................................. 1
External Environment Analysis..............................................................................3
PESTEL:............................................................................................................... 3
Industry Analysis:............................................................................................... 4
Five Forces Analysis:........................................................................................... 6
Key Success Factors in our Industry:...................................................................7
Driving Forces of Change in our Industry:...........................................................9
Internal Environment Analysis............................................................................. 12
Vision:............................................................................................................... 12
Mission:............................................................................................................ 12
Values:.............................................................................................................. 12
Generic Strategy:.............................................................................................. 14
Strategic Group Map: Comparative Market Positions of Rivals:........................15
Complementary Strategies:.............................................................................. 16
Diversification Strategy:................................................................................... 18
After-Diversification Strategies:........................................................................19
Internal Analysis:.............................................................................................. 19
How well the present strategy is working & the Perspectives:......................20
Value Chain & Cost Chain Analysis:...............................................................21
SWOT Analysis: Our....................................................................................... 24
SWOT Analysis: Rivals................................................................................... 25
Strategic Issues to be addressed:........................................................................26
Functional Strategies:....................................................................................... 26
Marketing:..................................................................................................... 26
Logistics:....................................................................................................... 26
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HR & Structure, Leadership, Culture, Motivation & Reward:..........................26

Financial & Budget:....................................................................................... 26
Support Systems & Operations Processes: Continuous Improvement, etc.. . .26
Analysis of Possible Moves: Ours.........................................................................27
Analysis of Possible Moves: Rivals.......................................................................28
Conclusions & Discussion:................................................................................... 29
Short term recommendations...........................................................................29
Long-Term recommendations............................................................................29
References........................................................................................................... 30

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History:
Coty Inc. has emerged as a major success story in the world of beauty. But its
success is not new.
A native of Corsica, 29-year-old Franois Coty founded the fragrance company
that would bear his name, in Paris in 1904. Determined to revolutionize a
fragrance industry that had seen little change during the 19th century, Coty set
about reinventing the perfumer's fragrance palette. He developed Perfume City
in 1909, a residential villa that was transformed into a grand industrial complex.
Over time, Perfume City grew and by 1920, Coty owned and controlled all
aspects of his fragrance production, including flower fields, packaging factories,
print shops and delivery vehicles.
Coty understood that to succeed on a larger scale, he needed to reach a wider
audience. His strategy was simple: offer a product of rich appearance that was
affordable at a variety of price points. To this end, Coty commissioned artists
and manufacturers, such as Ren Lalique and the Glassworks of Baccarat, to
design affordable beauty products imbued with luxurious quality never
previously available to the masses. The strategy worked and perfume quickly
became an international mass-market luxury product.
Coty expanded his company beyond the borders of his native France. In 1912,
he opened subsidiaries in New York and London, an important move for the
company, as at the end of World War I, many soldiers returned home with gifts of
French perfume for their loved ones. This led to a demand for Coty products in
the U.S. During the 1920s, Coty continued to diversify and secured a substantial
hold on the Italian, Swiss, German, Spanish and South American markets. By
1925, an estimated 36 million women in Europe and the Americas used his
products.
Franois Coty continued to direct this empire until his death in 1934. One thing
eluded me, he confessed in the same year. I never managed to capture the
smell of honeysuckle. It's one of the very few things that eluded perfumery's
first genius.

Today, Coty is the world's largest fragrance company, and a global leader in the
beauty industry. After more than one hundred years in the business, Coty
continues to draw on the creative, entrepreneurial and visionary legacy of its
founder and, more recently Bernd Beetz, Chief Executive Officer of Coty Inc. Both
visionaries have dramatically shaped and re-shaped the future of the company
and the beauty industry itself.

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External Environment Analysis

PESTEL:
Factor
Political

Details
-new elections

Measures:

-globalisation
Economic

-new government
priorities

Social

-new lifestyles

Technology

-ERP need rapid change

-WEB 3.0

Environmental

-ingredients analysis;
disposal

Legal

-new fiscal regulations

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Industry Analysis:
Economic Feature
Market Size, Growth & Industry
position in the Life Cycle

Details:

Measures:

Size:
Growth:
LC:

Number of Rivals

No:
Consolidation:

Scope of Competitive Rivalry

Geographic
area:
Export:

Number of Buyers

Fragmented:
Bargaining
power:

Degree of Product Differentiation

Differentiation:
Elasticity:

Product Innovation

Innovation level:
R&D
importance:

Supply & Demand conditions

Surplus capacity
Margins:
Short supplies:

Pace of technological change

Vertical Integration
Economies of scales

In which
functional area:
Large scale
integration:

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Learning curve effects

Strong/Low
Advantages due
to that:

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Five Forces Analysis:

Substitute Products:
-soaps
-

Rivalry
among
sellers:
Suppliers bargaining
power:

LOreal

-payment terms

-few suppliers for

Buyers bargaining
power:
-the more informed
consumer
-the (online) WOM
-the social networks

Weapons:
-lower prices
-different features
-better product
performance
-higher quality
-stronger brand
-better dealer
network

New Entrants:
-FlorMar
-Colorama
-

-increase
advertising
-customer service
-lower financing
costs

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Key Success Factors in our Industry:

KSF type

Details

Assessment
(Good/Average/Lo
w)

Technology related

-expertise in perfumes & cosmetics

Good

products
-improved production process
Operational related

-economies of scale
-QC
-high utilization of Fixed Assets
-attractive skilled labour
-product design

Logistics related

-customer service

Good

-SLA
-warranties
Distribution related

-strong dealers network:

Low (TT, e-

hypers/distributors/dd

commerce)

-favourable display space

-e-commerce aggregators
Marketing related

-breadth of product line

-brand equity (Awareness, Loyalty,

Low(company
name)

Preference, Availability, Image,

Familiarity, Associations)
-advertising

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Skills & capabilities

related

-talented workforce
-innovation capabilities
-strong supply chain expertise
-e-commerce capabilities

Other

-overall reduced costs

Average

-patent protections

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Driving Forces of Change in our Industry:

Driving Forces

Details

Identification

Impact

Strategy needed

assessment of

to prepare for

the driving

the impact

forces
New Internet

Migration from

Demand:

Developing the

capabilities &

door to door to

Increase/Decrea

digital strategy

applications

online

se
Competition:

commerce and
catalogues

Intense/Mild
Industry
Profitability:

Globalisation

Aoro

Higher/Lower
Demand:

Imports from

Increase/Decrea

other countries

se
Competition:
Intense/Mild
Industry
Profitability:

Changing in industrys

Recession in

Higher/Lower
Demand:

growth rate

Romania still

Increase/Decrea

continue

se
Competition:
Intense/Mild
Industry
Profitability:

Changes in who buy

the product and use it

Higher/Lower
Demand:
Increase/Decreas
e
Competition:
Intense/Mild
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Industry
Profitability:
Product Innovation

Competitors

Higher/Lower
Demand:

innovation is

Increase/Decrea

much stronger

se
Competition:
Intense/Mild
Industry
Profitability:

Technological

Operations &

Higher/Lower
Demand:

change/manufacturing

logistics costs

Increase/Decreas

innovation

are declining

e
Competition:

rapidly in our
industry

Intense/Mild
Industry
Profitability:

Marketing innovation

Low marketing

Higher/Lower
Demand:

budget

Increase/Decrea
se
Competition:
Intense/Mild
Industry
Profitability:

Entry/exit of major

New entry

Higher/Lower
Demand:

firms

companies on

Increase/Decreas

colour

e
Competition:
Intense/Mild
Industry
Profitability:

Changes in cost &

Necessity to

Higher/Lower
Demand:

efficiency

increase GM

Increase/Decreas
e
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Competition:
Intense/Mild
Industry
Profitability:
Changes in Buyer

Higher/Lower
Demand:

preferences

Increase/Decreas

(Standard/commoditie

e
Competition:

s or Differentiated

Intense/Mild

products).

Industry
Profitability:
Uncertainty &

Uncertainty

Higher/Lower
Demand:

Business Risks

increased in Ro

Increase/Decrea
se
Competition:
Intense/Mild
Industry
Profitability:

Regulatory or

Higher/Lower
Demand:

Government

Increase/Decreas

influences

e
Competition:
Intense/Mild
Industry
Profitability:

Changing in society

Higher/Lower
Demand:

concerns, attitudes &

Increase/Decreas

lifestyle

e
Competition:
Intense/Mild
Industry
Profitability:
Higher/Lower

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Internal Environment Analysis

Vision:
Our vision is to uphold Franois Coty's spirit of innovation - not just in terms of
product, but also in retail methods and experience creation. An adventurous
mindset and passion for beauty are what will drive Coty successfully from today
into tomorrow.

Mission:
For more than one hundred years, Coty has helped people look and feel more
beautiful. It is founder Franois Coty's creative spirit that inspires the innovation
that defines Coty as an industry leader today.
Our mission is to deliver extraordinary fragrance and beauty products to
consumers worldwide. As an organization, and as individuals, we value honesty,
integrity, empowerment and openness. By consistently aiming for breakthrough
excellence in creation, design and experience, we believe we will stay close to
our consumers and communities.

Values:
Coty is founded on values of excellence, innovation and entrepreneurship. These
values are relevant to all areas of our business from research and development
to marketing and manufacturing to retailing.

Excellence

Excellence is central to who we are, and what we do. We pay close attention to
every detail to ensure perfection in our products. Our aesthetically pleasing and
high quality products are designed to not only enhance the beauty and wellbeing of our consumers, but also provide the vital element of surprise that sets
our brands apart, wherever they are sold.
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Innovation

We are determined to cultivate creativity and innovation from within. Coty's longterm success is embedded in a fusion of artistic creativity and technological
innovation. The success of Coty's new products lies with our talented and
dedicated research and development teams. This dual value creativity/innovation - is the story of our past and the promise of our future.

Entrepreneurship

Coty is an entrepreneurial and dynamic Company, which fosters efficacy,

productivity, and creativity. We attract forward-thinkers and builders, each driven
to reach his or her own personal potential. We encourage individual initiative and
offer real responsibilities. This entrepreneurial spirit requires hard work,
pragmatism, efficiency, and the ability to motivate people in the pursuit of
ambitious goals.

Slogan Principles: Faster, Further, Freer

To further grow our market share and continue to bring the latest innovations to
market, we embrace the principles of being faster, going further and thinking
more freely, than our competitors.

By acting faster, we capture trends sooner, thereby creating enduring brands

that speak to the aspirations and lifestyles of today's consumers.
By going further, we push ideas beyond traditional boundaries, guiding them
toward extraordinary and sustainable success.
By thinking more freely, we embrace creativity from our teams around the
world, providing a multicultural perspective to our business thinking.
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Generic Strategy:
The Five Generic Competitive Strategies:
Pe brandurile noastre si ale competitiei

Broad
Differentiation

Low Cost
Strategy

Strategy:

-Adidas

-Chloe

-Miss Sporty

-Balenciaga

Best Cost
Provider
Strategy

Focused Low-Cost
Strategy

Focused
Differentiation
Strategy
-Celebrity Endorsed
Brands (Celine, HK, JLO)

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Price/Quality

Strategic Group Map: Comparative Market Positions of

Rivals:

High

LOreal

COT
Y
Low

Few

Many
Geographic Coverage

Note: circles are drawn proportional with the turnover

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Complementary Strategies:

Collaborative
Strategies:
Alliances/Partners
hips:

Merger &
Acquisition
Strategies:

Vertical
integration
Strategies:
-Backward:

Outsourcing
Strategies:
-Celebrity Endorsed
Brands (Celine, HK, JLO)

-Forward:

Offensive
Strategies:

Defensive
Strategies:

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Digital Strategies:
-ecommerce:

Functional
Strategies:

-digital advertising:

-Marketing:

-company web-site

-Finance:

-social networks

-Logistics:

-the online mix (8Ps to be

detailed)

-HR:

-the 6 steps of a strategic

plan

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New Business Entry

Diversification Strategy:

Acquisition

Internal
Start-Up
-after-shaves
-shampoos

Joint
Venture

Related

Unrelated

The Path

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After-Diversification Strategies:

AfterDiversification
Strategies:
- Broaden
- Divest (Selling,
Spinning)
- Restructure
-Multinational
Diversification

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Internal Analysis:

How well the present strategy is working & the Perspectives:

De detaliat si discutat din Industry Analysis, KSF si Driving Forces pentru

rubricile:

Customer: details sales & growth; image and reputation with customers;
Processes: is a best-practices references point? What about P&G and Unilever?
Continuous improvement? Lean? Six-Sigma?
Financial: achieved its financial objectives; details
Learning & Growth: is an above industry performer?

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Value Chain & Cost Chain Analysis:

Elements

The value chain of the

The value chain of the

The value chain of the

Company

Rivals

Industry

% in cost
structure

Activities

Beat
option:
by

Supply Chain

Proficiency

Management
Operations

Proficiency

Distribution

Proficiency

Sales & Marketing

Proficiency

Customer Service

Proficiency

Finance(Profit

Cheaply

Margin)
Systems

Proficiency

HR &

Proficiency

Administration

% in
cost
structur
e

Activitie
s

Beat
option:

% in cost
structure

Activitie

Challeng

es

SWOT Analysis: Our

Strengths:

Measure
s:

-large & solid portfolio

Weaknesses:

Measure
s:

-limited reasons for people

to grow

-leadership on Xmas

-low GTM

-enthusiastic team

-limited investments

-improved inventory

- forecast accuracy

-flexible logistics

-transportation costs

- good cash-flow
-good DSO

Opportunities:

Measure
s:

Threats:

-extension of distribution

- very competitive

centre

environment

-digital & duty free

-exchange rate

-drug store channels

-lower purchasing power

- prestige

- KA development
-pricing

SWOT Analysis: Rivals

Measure
s:

Strengths:

Measure
s:

Opportunities:
-

Weaknesses:

Measure
s:

Measure
s:

Threats:

Measure
s:

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Issues to be addressed for each Functional

Strategy:

De detaliat din ce am descris la Complementary strategies pentru rubricile de

mai jos:

Marketing:
Logistics:

HR & Structure, Leadership, Culture, Motivation & Reward:

Financial & Budget:
Support Systems & Operations Processes: Continuous
Improvement, etc.

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Analysis of Possible Moves: Ours

Possible
move

Pro

Cons

Timing:

Recommendations

(First-Mover
Fast-Follower
Late-Mover)
Increase sales
& market share

Lower/increase prices;
adding new products in
portfolio; expanding dealer
network in; boosting
advertising; improve brand
equity; direct sales; websales.

Moving to a
different
position on
Strategic Group
Map

Re-conquer the TT

Merger &
Acquisitions
Enter new
Geographic
Markets

New geographies: Turcia

Extend product
lines & New
Product
Development

Prestige

Diversification

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Analysis of Possible Moves: Rivals

Possible move

Pro

Cons

Timing:

(First-Mover

Probabilit
y
%

Counter
Attack
Action

FastFollower
Late-Mover)
Increase sales &
market share
Moving to a
different position
on Strategic
Group Map
Merger &
Acquisitions
Enter new
Geographic
Markets
Extend product
lines & New
Product
Development
Diversification

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Conclusions & Discussion:

Short-Term recommendations

Long-Term recommendations

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References
Chandler, A. (1962) Strategy and Structure, MIT Press, MA

Thompson, et al. (2010) Crafting and Executing Strategy: The Quest for
Competitive Advantage - Concepts and Cases, 17 th Ed., McGraw-Hill, NY

Coty (2012) [online]. Available from http://dev.coty.com/ [Accessed 29

September 2012].

Coty (2012a) Coty Beauty Business Summary, unpublished internal report

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