Case Study

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Universal Luxury

Overview: Universal Luxury Group is an international group of companies principally engaged in the production and sale of luxury goods including Food and Beverages, Fashion and Leather Goods, Perfumes and Cosmetics, Watches and Jewelry, and other business. Among them, this case is handling Perfumes and Cosmetics business group that accounts for EUR 2,231M, 19% of sales revenue.

* What is the organizational structure of Universal Luxury’s brands and R&D?

ULV Organization: In order to pursue business unit and brands objectives of making savings on product development and encouraging cross-pollination of innovation across brands, Perfumes and Cosmetics division adopted to have both centralized organization for R&D function and decentralized organization structure for brand business units. With its mixed structure, ULV is expecting 1) to give each brand full freedom to develop its markets and product while keeping R&D centralized to make savings on product development and 2) encourage cross-pollination of innovation across brands.

[Exhibit 1]

As shown in Exhibit 1 which tells a brief organization concept, each brand or its marketing team can communicate with R&D team directly for its own purpose. Not shown in Exhibit 1, each brand has largely 3 product lines such as Skincare, Makeup (texture, color/shade), and Ancillaries like fragrance products. In this report, we are mainly take into consideration Development Laboratories for formulation functions in R&D center.

Uncertainty risk management – temporary workers 20% in Skincare and Makeup Pilot

Brands Organization: Under the horizontal structure, each independent brand was structured along product lines. There is a VP of marketing who is the only person responsible for the marketing strategy of the brand across all product lines. Following VP, product line managers, marketing directors, manages either the fragrance, skincare or makeup line. Finally, group and product managers are in charge of entire product development cycle from concept generation to market launch. Each band has little interest in each other.

R&D Organization: With 300 research and technical staff, it centralized its R&D capabilities to reduce costs and create synergies between the research team. The R&D center’s budget was financed by Rio, Queen, and Andanzy. The organization is so flexible that each department report directly to the Paul Fox, head of the R&D center. * What are the goals of the brands?

Rio: As the biggest contributing brand to total sales in Perfume and Cosmetics department, Rio has goals of maintaining its growth potential from innovation and meeting women’s most demanding expectations. In order to achieve this, Rio is retaining its “Cosmetic touch” and formula innovation, which are pretty much close to research and development of products. In the quickly changing market, Rio should follow up the trend and enter the new market with ever innovative product.

Queen: Queen built strong brand equity in the fragrance industry, furthermore try to bring other products to the same level or brand reputation as fragrance product lines has, other cosmetic product lines including skincare and makeup, which are hot in ASIA market and cost a lot of investment in R&D. In this reason, Queen needs to collaborate closely with R&D.

Andanzy: With the brand concept “Beauty is more intense when it intrigues.”, Andanzy try to carry four core values such as Elegance, Audacity, Sensuality, and Intensity. On reflection that Adanzy expanded its cosmetics development with products consisting of makeup and skincare lines, now

* What are the goals of R&D?

R&D center carries three different roles consisting of pure research (account for 35% work load), Development (55%), Regulation advisory (10%) that are likely to be “job shop” work, which means that quality of work is...
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