Inglot Cosmetics has created a new innovative way for consumers to mix different make-up colors to suit their preferences. The company realized that there is potential in offering consumers the option to mix colors, instead of developing all color ranges. Consumers being health conscious has led to many restrictions within the different markets the company operates. Leveraging on its production facilitates the company has met the European Union regulations. There is potential for the company to expand in markets that it had earlier restricted itself. The South American market especially Brazil is considered to be a high consumer of cosmetic products, and opening a store in that location would be beneficial for the company. However, the market there is highly competitive, as other companies have already setup their stores. Within the next one year, Inglot will have opened a store in France and Brazil. Plans will then be started for setting up another production facility, which will ensure that the company can mitigate the risks of having such a facility in one location. In case of any production fault, the company will not manage to meet its supply requirements. This makes it a priority to build another facility, preferably in South America. The final decision regarding development of a production facility will be reached after the store is opened.
The company has a strong management team. Inglot has been a family-owned company from the onset, and this has ensured that each sibling can flexibly take over another's responsibilities. The management team will get overstretched if the company reaches its projected 500 stores within 2014. This means that Inglot will be forced to hire outside managers, because they will be overwhelmed with the franchise partners. Being a family owned company, Inglot has preferred to reinvest its profits for increasing production and expansion. This has allowed the company to have minimal long-term debt and make it a viable business to investors. The company currently needs to invest on its R&D in order to fight off its rivals who have started to copy its product model.
Inglot cosmetic was founded in Poland and has been operating for the past thirty years. The company started with a vision to offer affordable cosmetics with high quality ingredients. The company has made tremendous innovations in the cosmetics industry. Launching the make-up color palette, which allowed customers to customize their own make-up, gave the company some industry leadership recognition. With such innovations and been an industry leader, Inglot was able to gain a strong foothold within the industry. To boost expansion, the Inglot employed the franchise model, which enabled the company to expand its operations worldwide. Formulating a simple franchising model has ensured that the company is able to attract potential franchisees and expand internationally. To expand in certain markets, the company has alliances with other cosmetic companies that offer complimentary products. This alliance is beneficial to the consumers as they have comprehensive offerings. With all the expansion, one thing has remained constant for the company: it still offers affordable prices for the highest possible quality. This philosophy has attracted a wide array of customers. The company policy in regards to its franchise stores is that most of the employees should be make-up artists. This policy ensures that the customer will receive on-site advice and will not be overwhelmed with different products and color choices.
Inglot cosmetics has invested heavily on research and development, which is carried out in Przemysl. R&D has allowed the company to innovate continuously on its products and consumer needs. Innovations like the breathable nail enamel gave rise to some unexpected customer benefits. Inglot has maintained its production and R&D facilities in Przemysl, which has proved beneficial to the company as it gets highly qualified laborers at a lower cost. The location also favored the company in terms of replenishing stocks anywhere in the world. Having both production and R&D located in the same location also offers the company the opportunity to make changes to its product mix as per the latest fashion trends. The company has concentrated fully on face, nails, lips, body, and eye cosmetics for women. There is potential for the company to diversify its product portfolio and include male, baby, and anti-ageing products. Product diversification will allow the company to capture other markets and increase its consumer base. The company has minimal long-term debt because it has solely based its expansion on retained earnings. This model has enabled the company to expand in markets that lenders considered risky like Greece, and overpriced locations like London.
There is potential for Inglot to enter the biggest cosmetic markets. The company has received numerous viable applications for franchise in South America, which would be beneficial in the company's expansion strategy. Targeting the huge cosmetics markets is a risky, but highly profitable venture, which would provide the company with necessary growth and market dominance. In the next five years, the company intends to have setup a minimum of 5 stores in South America. The Chinese market is attractive, but it has many challenges when compared to the South American market. Brazil is the hub for cosmetics in South America and establishing its presence there is vital for the company's strategic growth.
The micro-level factors that contributed to the company's development are its production and R&D facility location, products, pricing model, store layout, financing, management, distribution, and promotion. These factors are all controlled by the company (Kumar et al., 2011), Which gives Inglot some competitive advantage over its competitors. The macro-level factors are political situation in Poland, economy of Poland, technology, and demographic location. Inglot started when there was political unrest in Poland, which meant the company had to base its operations away from the communist regime. When democracy was restored, Inglot had identified itself and was able to expand across Poland. The country had highly skilled workers, but the lack of opportunities resulted in cheap labor. This was advantageous as the company got the best, but paid minimal for their services. The geographic location of Przemysl is favorable for the company as it is able to ship its products to any location in the world easily. The company products arrive at their destination on time, and this ensures that it does not have stock outages.
The above situations allowed the company to focus on innovation. This innovation resulted in different products that met consumer needs. The company was able to achieve differentiation advantages as it offered consumers the option to customize their own make-up. Differentiation advantage is achieved when the company is able to offer a unique product that adds value to the consumers (Fosfuri et al., 2013), but charges for it beyond the nominal price. Inglot achieved cost advantages by offering consumers high quality products are lower prices. Cost advantage is described as selling a similar product as the competitors, but at a lower price (Afanasyev and Mendelson, 2010).
The target consumers for Inglot are women, but recent fashion trends have created a potential in the male cosmetic category. The company currently deals with facial and nail cosmetics for women. This is an important market because women are the biggest consumers of cosmetics. When it comes to expansion, the company is more favored if it has female products than other products. Diversification of its product portfolio is inevitable, and the company will have to create new products in order for it to remain competitive. The main barriers faced in regards to market entry are limited knowledge of consumer needs, work cultures, and geographical distance (Bhattacharyya and Nain, 2011). These barriers forced the company to adopt the franchising model to boost its expansion in international markets. The Asian market especially China is attractive, but the complicated regulations have made Inglot hesitant to enter the market. With such a scenario, Inglot cosmetics is now focusing on entering the South American market, which has less restrictions and the regulatory environment is friendly. The number of viable proposals received by the company indicate that the potential for growth in immense in this market.
Inglot is facing expansion challenges because its production facilities might not cater for over 500 stores. By the end of 2013, Inglot had achieved its planned expansion of 450 stores, which means that the company is left with only 50 stores before capacity is reached. This is huge dilemma because the company will have to increase its production facilities or open new facilities in another country. Expansion to South America, which is considered one of the biggest markets for cosmetics, will necessitate the development of a new factory. The factory will be located in South America and will have the same quality standards. This will ensure that the company still maintains its labor costs to a minimum. South America has a huge potential in terms of labor, and the laws there are more relaxed.
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