Estee Case Analysis

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  • Topic: Cosmetics, Estée Lauder Companies, Personal care
  • Pages : 56 (14463 words )
  • Download(s) : 127
  • Published : March 27, 2011
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ESTEE LAUDER
COMPANY ANALYSIS

WITH
BENCHMARK EVALUATION
OF

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DEAR DR. ASHRAF MAHATE,

Enclosed is the company analysis of Estee Lauder as per your request as it’s an integral part of our course requirement. Estee Lauder was selected on the basis of its vast business profile and complex nature of its annual report, which were dealt by us with an exigent attitude. Estee Lauder’s performance was compared to our chosen benchmark company Avon because of it being Lauder’s largest competitor globally.

The analysis conducted were a team effort as individual members contributed in accordance with their best mental and physical capacity. The in depth analysis served as the basis to learn about how financial ratios and forecasting depict company status and are significant in making critical business decisions.

We are greatly obliged to you for giving us this opportunity to enhance our analytical and decision-making skills and giving us a clear understanding of these topics in your lectures and lastly thanking you in advance for taking out your time to evaluate our report on Estee Lauder.

Best Regards,
Yours Truly,

Sumaiya Nathani
Kamal Salim Al Yamahi
Humaid –Ur- Rehman  
Dhanya Issac
Mousa Milhem
topic page no
EXECUTIVE SUMMARY
introduction
Estee lauder
Avon
industry overview
swot analysis
Introduction
Estee lauder
Avon
ceo statement analysis
Estee lauder
Avon
Ratio Analysis
Introduction
Trend analysis
Comparative analysis
Financial forecasts
Estee Lauder
Avon
Financial leverage
Estee Lauder
Avon
Recommendations
Conclusions
Appendix
bibliography

THE MAIN OBJECTIVE OF CONDUCTING A COMPANY ANALYSIS IS TO OFFER A GUIDELINE TO POTENTIAL INVESTORS AND CREDITORS DECISION-MAKING PROCESS. ESTEE LAUDER, IN COMPARISON TO THE BENCHMARK COMPANY AVON HAS BEEN FINANCIALLY ANALYZED FOR THE YEARS 2004 AND 2003. BOTH THE FIRMS EXIST IN COSMETIC AND PERSONAL CARE INDUSTRY WHICH CURRENTLY IS TRANSFORMING INTO A HIGHLY COMPETITIVE AND FRAGMENTED.

ESTEE LAUDER BEING A RETAIL BRAND FOR LUXURIOUS COSMETICS, SKIN CARE AND FRAGRANCE PRODUCTS, IS SOLD OVER 130 TERRITORIES AND IS EXPERIENCING INCREASED REPUTATION, PROFITS AND TECHNOLOGY ADVANCEMENTS. ALTHOUGH THE BENCHMARK COMPANY, AVON, IN THE HIGH-END COSMETICS INDUSTRY IS NOT BEHIND WITH ACCELERATING PROFITS OVER THE LAST FEW YEARS, HENCE ACTING AS MAJOR COMPETITORS IN US MARKET OF PERSONAL CARE.

INITIALLY THIS REPORT ASSESSES THE OVERALL PROFILE AND HISTORY OF BOTH FIRMS WITH BRIEF ANALYSIS OF THE COSMETIC AND PERSONAL CARE INDUSTRY AS THE FUTURE FORECAST DEPENDS ON PAST AND PRESENT ATTITUDE. THE REPORT FURTHER CONTINUES TO ANALYZE THE FINANCIAL RATIOS, WHICH ARE FURTHER CATEGORIZED INTO FOUR MAJOR GROUPS SUCH AS PROFITABILITY, ACTIVITY, LIQUIDITY AND LEVERAGE. IN ORDER TO ACHIEVE A CLEARER PICTURE OF PECUNIARY PERFORMANCE OF THE FIRMS, WE FURTHER EXAMINED THE FINANCIAL STATEMENTS BY COMPUTING LEVERAGE AND ESTIMATING FIRMS REQUIREMENT FOR NEW FUNDS.

THE OVERALL FINANCIAL SCENARIO OF BOTH THE FIRMS IS OPTIMISTIC, BUT THE INCREASING AWARENESS OF BEAUTY IN THE SOCIETY DEMANDS BOTH THE COMPANIES TO RE-ESTABLISH A CLEAR IMAGE, REDESIGN A NEW PRODUCT PORTFOLIO, ADJUST THEIR NETWORK DISTRIBUTION CHANNELS AND INTRODUCE NEW PRODUCTS, WHICH TAKE GEOGRAPHICAL DISTRIBUTION INTO ACCOUNT. ON THE FINANCIAL SIDE, ESTEE LAUDER REQUIRES EFFICIENT CREDIT CONTROL SYSTEMS WHEREAS AVON IS REQUIRED TO EMPHASIZE COST EFFECTIVE CONTROL MECHANISMS TO IMPROVE RETURN ON EQUITY, WHICH HAS DECREASED.

THE FOCUS OF ATTENTION FOR ANALYZING FINANCIAL STATEMENTS HAS GONE THROUGH A NUMBER OF PHASES. THE BALANCE SHEET WAS A PROMINENT INTEREST WHEN SOLVENCY WAS A PRIMARY CONCERN. THEN, AS PERFORMANCE, IN TERMS OF PROFIT, BECAME MORE IMPORTANT THE INCOME STATEMENT WAS A FOCAL POINT. HOWEVER THE STATEMENT OF CASH FLOWS HAS BECOME THE CURRENT FOCAL PINT DUE TO THE ADVENT OF HIGHLY LEVERAGED TRANSACTION. KEY COMPONENTS OF ALL THE THREE...
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