April 11, 2011
Dr. Richard Rowlett
External and Internal Environmental Factors Analysis
Cosmetics industry has been one of the most profitable industries for decades. Women desire for beauty traced back to ancient Egypt, Rome and Greece has led to development of
many cosmetic company all over the world . The cosmetic, beauty supply, and perfume store generating $10 billion dollars revenue every year (Hoovers.com) with average 5.4% growth rate annually through 2010 (freedoniagroup.com). Hairdressing services have proven to be recession-proof as for many customers have to maintain their hair style repeatedly throughout the year. For most women and men especially in Metropolitan area using beauty product and hair services consider necessity as it enhances their appearances for personal satisfaction and maintaining a professional appearance in a business setting.
Chantel Beauty Center is a specialty retailer of high-end hair care, skin care, cosmetics and related accessories such as Redken, Sebastian, L’oreal, Ecloy, Wella and many other popular brands. In addition we provide services such as: 1- Hair services including hair cut, coloring, highlight, perm, hair extension and hair design 2- European facial with most advance facial equipment
3- Swedish massage therapy
4- Laser hair removal
5- Semi permanent make up
7- Make up application for special event
8- Makeup and hair design consultation
Executing a successful strategic planning requires management detail analysis of internal and external factors that may affect company’s profitability. In analyzing internal and external factors Chantel’s management has decided to perform the following analysis to assess it strength, weaknesses, opportunities and treats: 1- SWOT analysis: To review the company’s available resources and capabilities 2- Comparison Analysis: To review competitor weakness and strengths SWOT Analysis:
SWOT analysis is most commonly method of analyzing internal (strength and weakness) and external (opportunities and treats) issues to formulate an strategies that maximize company’s strength and opportunities and minimized treats and weakness ( Pearce & Robinson, 2011). External Environmental Factor
In analyzing the existing and future environmental factors that may affect company’s profitability we review the remote environmental factors that present opportunities as well as treats and constraints such as ( Pearce & Robinsons): 1- Economic
Change in economic condition has direct effect in companies profitably because it affect consumer purchasing power. Increase or decrease in interest rate and inflation can shift the demand curve and cause a demand for product increase or decrease. However, the economic downturn only slightly effect the sales in beauty business because woman desire for beauty does not stop because of bad economy. Julia Bearwood , principal at Proctor & Gamble said “"Women have a basic belief that they save on the things they have to buy in order to spend on the things they want to buy “cosmetics". As she says the economy has not stopped men from consumption of Alcohol that is how they relax, for women cosmetic play the same role (brandweek.com). Although, during the recession the demand for high price product may decrease however the demand for lower price will increase. Company’s flexibility to carry different product at different economic condition will provide great advantage to diminish the effect of economy down turn. Social Factor:
Change in customer beliefs, opinion, attitude, values, and life style can affect demand for product and services. The first important social changeswas women entering to workforce. This change has created new demand for product and services, such as day care...