Strategic implementation for Oprah cosmetics international market expansion

Iman Adibazad

Strategic Planning & Implementation

STR/581

Mahesh Singh, MBA, PMP

Week 5-Implementation, Strategic Controls, and Contingency Plans

Cosmetics, toiletries and perfumes are an important of everyone's daily life, from use of deodorant and shampoo to make-up, skin care products and fine fragrances. Personal hygiene and beauty products are considered essentials today as are the use of products such as sunscreens and decay-fighting toothpaste.

One strategy for Oprah company, to which the management of the company looking for is internalization or extending its market. Following this decision company can export raw materials and beauty products outside of the U.S.

Strategic Management

Cosmetics and cosmetic raw materials produced for export outside the U.S. must meet the requirements imposed by each country in which they will be sold. When a product is to be sold in several countries, the most stringent requirements must be met. Therefore, products sold in foreign countries in addition to the U.S. must meet much more stringent requirements than products manufactured and sold only in the U.S. The most obvious difference is the requirement many countries have for pre-market approval or registration of product formulas.

Among the important differences between requirements for cosmetics in the U.S. And various other countries are the legal definitions of drugs and cosmetics and cosmetic product formula ted registration and approval requirements. Differences also exist among countries regarding prohibited and restricted ingredients, particularly color additives. So it is necessary for Oprah company management to first analyze the regulations of the country to which they want to extend their products and then plan to launch products accordingly.

Marketing Strategy

The second step of extension is to prepare the marketing strategy for the foreign country. For this purpose company needs to get information about the cosmetics demands and scope of their products. For example, there is an ever increasing demand for anti-aging products like anti-wrinkle creams as well as hair care and beauty products. Particularly in Asian countries, there is demand of whitening products. So the company can focus a quality anti-aging product.

External and Internal Environmental Analysis

Cosmetics industry has been one of the most profitable industries for decades. Women desire for beauty traced back to ancient Egypt, Rome and Greece has led to development of many cosmetic companies all over the world. The cosmetic, beauty supply, and perfume store generating $10 billion dollars revenue every year (Hoovers.com) with average 5.4% growth rate annually through 2010 (freedoniagroup.com). Hairdressing services have proven to be recession-proof as for many customers have to maintain their hair style repeatedly throughout the year. For most women and men especially in the U.S., using beauty product and hair services consider necessity as it enhances their appearances for personal satisfaction and maintaining a professional appearance in a business setting.

The receiving department of the cosmetic manufacturer must ensure that the delievered goods are of the quality specified by the purchase contract. This is done through various inspection and testing policies. In the incoming raw material is of high quality, extensive inspection and testing is not necessary.

Change Management

The company will be facing several types of changes like, change in consumer's perception and preferences as the foreign country consumer choices and requirement will not be the same as of U.S. consumer. Secondly regulations will be different. To succeed, planned change advocates such as Bennis, Peters and Addison (1993) indicate that leaders increasingly need to be attuned to the effort required to effect significant organizational culture change. They challenge management to understand that "Cultures don't turn sharply with the pages of the calendar, they evolve" (p.88). From this, the researcher further posits a number of important issues.

First, as with many broad organizational changes, this evolutionary shift will necessitate (1) strong CEO leadership and (2) enthusiastic support by his/her management team as key success elements. To effectively implement such a transition likely requires that the CEO act as a key 'change agent'. Importantly, his or her role would be to help guarantee the transition from an existing organizational structure and culture to a more appropriate one that is carefully conditioned to accept change…without losing the POs unique image and the ability to deliver new/existing constituent services.

Organizations evolving into the highly competitive era of the 20th century were typically and strenuously challenged to change their modus operandi…which had been generally dictated by the economic conditions of the 19th century. This 'modernization' of production-type companies was further influenced by the great depression of the 1930s, and World Wars I & II. Bell (1976) states; "The concept of structural differentiation, as derived from Durkheim and Max Weber, and elaborated by Talcott Parsons and his students, is probably the key sociological concept today in the analysis of coercive social change." Bell further elaborates that; "just as one found a differentiation between ownership and management, so one found a differentiation in the tasks of management, so that production, finance, marketing, research, personnel, and the like, each became the subject of new and professionalized vocations" (pp.173-174). By studying these evolving subsystems it can be postulated that much of the early growth of organizations in the post-modern era has portended the present drive for continuous analysis and change at a rapid rate as the basis for staying competitive.

As argued by Lawrence & Lorsch (1967, p.157); "the more diverse the environment, the more differentiated the organization." The structure of organizations has systematically evolved and has been studied by a bevy of modern social scientists. Inquiry into this arena is replete with comprehensive reviews of a myriad of organizations that are categorized by their type of endeavor, such as manufacturing, transportation, food, or service providers. For example, Pugh (1968) discusses organizational profiles and the dimension of structure; Woodward (1980) delves into the technological imperative and organizational structure; and Scott (1998) captures the historical aspects of organizational structure from the rational and open systems perspective. Robbins (2001) notes that such organizations have evolved from a simpler entrepreneur-led organization to more complex structural forms better able to capitalize on improved economies of scale and a more sophisticated utilization of labor.