Sa Sa cosmetics
1 Situation Analysis
Most big companies have faced a crisis period after 10-20 years of their induction. A few examples of this are Apple Inc and IBM. They all came back by bringing in changes in their corporate strategy and business approach. After this they both showed a positive turnaround in their fortunes.
We believe that Sa Sa Cosmetics is passing through a similar phase as these big companies. They lost their core competency in discounted retail stores as many new competitors came up with similar models looking at Sa Sa 's success in this field. Lack of professionalism in the top management also contributed to their crisis period. They have already taken some steps to face this crisis period. The changes in management and corporate restructuring have helped them to show some positive signs in balance sheets.
Sa Sa cosmetics started on April 1st, 1978 in Hong Kong as a simple cosmetic retailer. Soon they realized that discounted store concept had greater possibilities in cosmetic segment and started selling products at a lower margin than its competitors. The increased sales and volume helped them to offset the loss due to lower margins. They also used the parallel imports to get the products at a lower price than other retailers.
Sa Sa had four product categories skin care, fragrances, cosmetics, hair care and accessories with respective order of percentage sales. More than 50% of the sales came through the skin care products.
They developed a unique training program for sales agents which gave them a competitive edge. The training was so effective that the competitors were trying to get sales agents from Sa Sa by lucrative offers.
In 1997 Sa Sa went public. The initial public offering was a huge success with an over subscription of 560 times. The money raised was used to fund its expansion in overseas markets.
The prolonged economic crisis in Asia in late 1990’s affected the growth