Strategic Management

Topics: Strategic management, Cosmetics, SWOT analysis Pages: 7 (1748 words) Published: March 2, 2013
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1. INTRODUCTION

In this time of great uncertainty, many organizations are wondering which changes will have the greatest impact on their businesses in the years ahead. What is certain is that the threats and opportunities facing any company as a result of change and uncertainty in the environment can have an impact on its profitability and even the very survival of the organization. A strategy is the direction and scope of an organization over the long term. It matches its resources to its changing environment and particular its markets, consumers so as to meet stakeholder's expectations (Johnson G et al. 2011).

In this essay, the strategic management process will be looked at for Sacha's cosmetics including an analysis of the macro environment, using the PESTLE framework, a SWOT analysis and Porter's five forces.

2. BACKGROUND

Sacha Cosmetics was founded in 1979 by Kama Maharaj. Its core activities comprise of the development, manufacturing and marketing of cosmetics. It is the number one selling brand ons throughout the Caribbean market, and after three years in Wal-Mart Puerto Rico, Sacha is Wal-Mart's fastest growing brand of cosmetics. From inception the vision was to build the Caribbean's first ever truly global brand. The vision is of a brand that would compete worldwide, head to head, with the American mega brands.

3. THE MACRO ENVIRONMENT

A company cannot develop an effective strategy without first analysing the environment in which the company operates (Bartol K. 2006). It is suggested that environmental scanning of both the internal and external environment is a necessary pre requisite stage to strategic formulation. The PESTLE framework below evaluates the dynamic and unpredictable environment in which Sacha cosmetics operates by identifying the forces that have the most impact on the company's performance.

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3.1 POLITICAL/LEGAL FACTORS

In keeping with the strategic objective of Sacha cosmetics of becoming the Caribbean's first ever truly global brand, Sacha's strategy was to expand outside the region by exporting to the Latin American countries. However, this became an exercise of frustration for Sacha particularly with the restrictive non-tariff barriers of these countries. For example, there was a cost to register every simple shade of foundation, lipstick and nail polish. The company also had to get health registration, trademark registration and distributor registration before a single product was allowed to be shipped into these countries. Apart from the cost, the process was lengthy and by the time approvals were received, styles would have changed and the process of getting these new products had to be started again.

3.2 SOCIAL FACTORS

The culture of countries in which business operates can be of particular importance. The culture of a country consists of the values, attitudes and beliefs of its people (Worthington I. & Britton C. 2009). For example, with modern standard of living continues to improve and the level education get higher and higher, consumers now are demanding value for their money. Therefore, the demand for quality and effectiveness of cosmetics become higher and higher, especially with the availability of so many other brands.

3.3 TECHNOLOGICAL

The revolutionary platform we focused on to build global brand awareness was the Internet. Unlike the big guns with deep pockets, who could afford mass advertising, Sacha saw the Internet as the ideal vehicle to build global brand awareness on a shoestring. Today, www.sachacosmetics.com is one of the most powerful cosmetics sites on the Net, attracting over 3,000 visitors a day. The site is professionally designed, loads quickly, is easy to navigate and ranks impressively in the search engines. Search for "cosmetics" on the #1 search engine Google and you get 18 million results. Our website is ranked #6 in the world, ahead of multi-million dollar brands such as Revlon, Maybelline, L'Oreal, Estee Lauder...

References: Barney, J.B. 1995, 'Looking Inside for Competitive Advantage ' Academy of Management Executive Vol. 9 No. 4 pp. 49-61
Johnson, G., Whittington, R. & Scholes, K. 2011 Exploring Strategy 9th edition, Ft Prentice Hall, Harlow
Kotler, P. & Armstrong, G. 2012 Principles of Marketing (Global Edition) (14th edition) Pearson Education, Upper saddle River New Jersey
Lynch, R. 2009 Strategic Management (5th edition) FT Prentice Hall, Harlow
Porter, M.E. 1979 'How Competitive Forces Shape Strategy ' Harvard Business Review Vol.57 No. 2 pp. 137-145
Worthington, I. & Britton, C 2009 The Business Environment (6th edition) FT Prentice Hall, Harlow.
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