MBA Strategic Management
Registration no :20221338
Comprehensive Exam: May 2023
MBA-Major: Strategic Management
Group C
Registration no: 20221338
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MBA Strategic Management
Registration no :20221338
Contents
Company Introduction .............................................................................................................................. 4
Company Mission ...................................................................................................................................... 7
Company Vision and Values ...................................................................................................................... 8
A.
External Environment Analysis.............................................................................................................. 9
1.
2.
Remote environment (PESTEL France) .............................................................................................. 9
1.1.
Political factors .......................................................................................................................... 9
1.2.
Economic factors ..................................................................................................................... 12
1.3.
Social factors ........................................................................................................................... 19
1.4.
Technological Factors .............................................................................................................. 21
1.5.
Environmental Factor .............................................................................................................. 21
1.6.
Legal Factor ............................................................................................................................. 22
Industry Environment Scanning ...................................................................................................... 24
2.1.
Porter’s 5 Forces Analysis ........................................................................................................ 24
Competitive Profile Matrix (CPM) ........................................................................................................... 27
3.
B.
EFAS Analysis ................................................................................................................................... 28
Internal Environment Scanning ........................................................................................................... 29
1.
Financial Parameters ....................................................................................................................... 29
Balance Sheet.......................................................................................................................................... 29
Income Statement ................................................................................................................................... 30
2.
Financial Ratios ............................................................................................................................... 31
3.
Value Chain Analysis........................................................................................................................ 33
4.
VRIO Analysis .................................................................................................................................. 35
5.
Value Discipline triad....................................................................................................................... 36
6.
IFAS Analysis .................................................................................................................................... 37
SFAF ......................................................................................................................................................... 38
C.
TOWS Analysis ..................................................................................................................................... 39
Strategic Alternatives .............................................................................................................................. 40
D.
IE Matrix .............................................................................................................................................. 41
E.
QSPM .................................................................................................................................................. 42
F.
Strategic Objectives............................................................................................................................. 43
.................................................................................................................................................................... 43
G.
Internal Policies ................................................................................................................................... 44
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MBA Strategic Management
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H.
Implementation stage (Product Development ) ................................................................................. 45
I.
Evaluation stage (Balance Scorecard) ................................................................................................. 46
SEPHORA Business plan .......................................................................................................................... 47
•
Executive Summary ..................................................................................................................... 47
•
Company description .................................................................................................................. 47
•
Market Analysis ........................................................................................................................... 47
•
Organization & Management ...................................................................................................... 47
•
Service and Product Line ............................................................................................................. 47
•
Marketing & sales ....................................................................................................................... 47
•
Operational plan ......................................................................................................................... 47
•
Financial & Budgeting ................................................................................................................. 47
References .................................................................................................................................................. 66
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MBA Strategic Management
Registration no :20221338
Company Introduction
Sephora is a French multinational retailer of
personal care and beauty products with nearly 340
brands, along with its own private label, Sephora
Collection, and includes beauty products such
as cosmetics, skincare, body, fragrance, nail color,
beauty tools, body lotions and haircare.
The company was founded in Limoges in 1969 and
is currently based in Neuilly-sur-Seine,
France. Sephora is owned
by luxury conglomerate LVMH as of 1997.
With 1,500 m² entirely devoted to diversity of
choices, advice and exclusivity, the Sephora store
on the Champs-Elysées in Paris has been a revered
temple of beauty since it opened in 1995. With 250
brands and over 78,000 products, it provides a vast
selection of on-trend products and innovative concepts, such as "beauty bars" to its
customers.
Sephora's current marketing strategy is focused on blending online and in-store
experiences and promoting brand engagement via social, mobile and web platforms.
Learn what makes Sephora's strategy different when it comes to how the retailer
incorporates data into its omnichannel marketing components.
Sephora Uses Shopper Data to Integrate the Retail and Mobile Experience
Through market research, Sephora discovered that customers often use their
personal smartphones when shopping at the retailer's brick-and-mortar locations. It was
found that these shoppers were often searching for outside recommendations, product
reviews or better prices on the products they were considering purchasing in-store.
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Armed with this data, Sephora developed the Sephora mobile app, which focuses on
providing shoppers with a mobile experience that is catered to their needs. The app is
designed to emulate the knowledge of a personal shopping assistant or a Sephora
sales associate in that it provides product recommendations, reviews, and pricing
information in a simple format which makes it easy for a customer to purchase products.
In addition, the app now comes with an artificial intelligence (AI) feature called Virtual
Artist, which uses facial recognition technology to allow customers to virtually try on
makeup products. The app can then either send customers to purchase the products
online or tell them where they can be found in a store.
In other words, the goal of Sephora's mobile app is to give customers the tools they
need to help them feel confident in making a purchase - whether in-store or online without necessarily needing to speak to a sales representative or research outside
sources as they were doing previously.
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AR and AI
Sephora has also partnered with AR and AI specialists Midface to create an app which
allows customers to "try on" beauty products using their smartphones.
The customer takes a selfie and can then use the Virtual Try-On function in the Sephora
app to get an idea of how they'd look with different products - without the need to apply
and remove makeup.
"The problem of product discovery has been substantial, but it can be addressed
partially with augmented reality-based try-on," said Founder and CEO of
Modiface, Parham Aarabi. "However, using AI to actually match shades and
recommend products before trying is a key step. We have been working on this for
almost five years now, but we felt that the technology was finally accurate enough for
large-scale deployment."
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Company Mission
Sephora Current Mission Statement
Our mission is to create a welcoming beauty shopping experience for all and inspire
fearlessness in our community.
Mission Criticizing
The above mission covers only 2 points where it should cover at minimum 5 of the following
9 components.
Mission Components
#
Included / Not
included
1
Customer
√
2
Products or Service
X
3
Market
X
4
Technology
X
5
Survival, Growth, and profitability
X
6
Philosophy
√
7
Self-Concept
X
8
Public image
X
9
Employees
X
Proposed Mission
Our Mission is to provide the best in cosmetics innovation to women and men around the
world with respect for their diversity. where customers can find and discover anything they might
want to buy online through the latest technologies and highly skilled team to create a welcoming
beauty shopping experience for all and inspire fearlessness in our community.
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Company Vision and Values
Current Vision statement
There isn’t available Vision on the official website.
Proposed Vision
Aims to be the source of beauty where customers can find all their beauty needs anywhere.
Sephora Core Values
➢
➢
➢
➢
➢
➢
➢
Passion
Innovation
Expertise
Balance
Respect for All
Teamwork
Initiative
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A. External Environment Analysis
Remote environment (PESTEL France)
1.1. Political factors
1.1.1.
•
•
Since 2019 France has a good indicator of political stability and estimated to be
increased by the end of this year
Political Stability and Absence of Violence/Terrorism: Percentile Rank, Upper Bound of
90% Confidence Interval in France was reported at 69.81 % in 2021, actual values,
historical data, forecasts and projections were sourced from the World Bank on May of
2023.
Comment:
France has a political stability that supports the investment opportunity.
(Opportunity)
Description
Political Factors - Political
Stability
(Opportunity)
Probability
of
Occurrence
#
Political stability
High
Probability Impact on Corporation
High
Medium
Low
3
Medium
Low
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1.1.2. Taxation
•
•
In France, the sales tax rate is a tax charged to consumers based on the purchase price of certain
goods and services. The benchmark we use for the sales tax rate refers to the highest rate.
Revenues from the Sales Tax Rate are an important source of income for the government of
France.
The Sales Tax Rate in France stands at 20 percent. source: Direction Générale des Finances
Publiques
Comment:
Sales Tax Rate stable but in highest rate which does not support the
investment opportunity (Threat)
Description
Political Factors – Sales Tax
Rate
(Threat)
Probability
of
Occurrence
#
Probability Impact on Corporation
High
Medium
Low
High
Medium
3
Low
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1.1.3. Corruption
•
France is the 21 least corrupt nation out of 180 countries, according to the 2022 Corruption
Perceptions Index reported by Transparency International. source: Transparency International
Comment:
opportunity
Description
Political Factors - Corruption
(Opportunity)
Probability
of
Occurrence
#
France has a good rank for resisting the corruption which lead for investment
(Opportunity)
Probability Impact on Corporation
High
Medium
Low
High
Medium
2
Low
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1.2. Economic factors
1.2.1. GDP
•
•
•
•
The Gross Domestic Product (GDP) in France expanded 0.80 percent in the first quarter of 2023
over the same quarter of the previous year. source: INSEE, France
France is the seventh largest economy in the world and the second largest in the Euro Area.
France has a large and diversified industrial and agricultural base which includes aircraft, military
equipment, perfumes, pharmaceuticals, wine, beef and wheat production. With at least 82
million foreign tourists per year,
France is the most visited country in the world and maintains the third largest income in the
world from tourism. Services are the biggest sector of the economy (79 percent of total GDP)
while industry accounts for 19 percent.
Comment:
Even that all diversity that France has on the GDP but the indicator effected
from COVID Pandemic and the war between Russia and Ukraine which does not support the
investment opportunity
(Threat)
Description
Economic Factors – GDP
(Threat)
Probability
of
Occurrence
#
Probability Impact on Corporation
High
Medium
Low
High
Medium
2
Low
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1.2.2. Gross National Product (GNP)
GNI (formerly GNP) is the sum of value added by all resident producers plus any
product taxes (less subsidies) not included in the valuation of output plus net receipts
of primary income (compensation of employees and property income) from abroad.
Data are in current U.S. dollars. GNI, calculated in national currency, is usually converted
to U.S. dollars at official exchange rates for comparisons across economies
Comment:
GNP Indicator effected from COVID Pandemic and the war between Russia and
Ukraine which does not support the investment opportunity
(Threat )
Description
Economic Factors – GNP
(Threat)
Probability
of
Occurrence
#
Probability Impact on Corporation
High
Medium
Low
High
Medium
2
Low
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1.2.3. Corporate Tax Rate
•
The Corporate Tax Rate in France stands at 25 percent. source: Direction Générale des
Finances Publiques
Comment:
Starting from 2019 and the corporate tax rate downgrading gradually which good
indication for investment
(Opportunity)
Description
Economic Factors – Corporate
Tax rate
(Opportunity)
Probability
of
Occurrence
#
Probability Impact on Corporation
High
Medium
Low
High
Medium
1.5
Low
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1.2.4. Interest rate
•
The benchmark interest rate in France is set by the European Central
Bank. source: European Central Bank
Comment:
The increase in the interest rate form an obstacle for businessmen to develop
their businesses
(Threat)
Description
Economic Factors – High interest
rate form an obstacle
for business
development
(Threat)
Probability of
Occurrence
#
Probability Impact on Corporation
High
Medium
Low
High
Medium
1.5
Low
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1.2.5. Exchange Rate, LCU Per USD
Official exchange rate refers to the exchange rate determined by national
authorities or to the rate determined in the legally sanctioned exchange market. It is
calculated as an annual average based on monthly averages (local currency units relative
to the U.S. dollar).
•
•
Official exchange rate, LCU per USD, period average in France was reported at 5.9259
LCU in 2020, according to the World Bank collection of development indicators,
compiled from officially recognized sources. France - Official exchange rate, LCU per
USD, period average - actual values, historical data, forecasts and projections were
sourced from the World Bank on May of 2023.
Harmonized inflation rose to 7.3% in February (January: 7.0%) due to stronger food and
housing price pressures. In 2023, inflation should ease but at a softer rate than in
neighboring countries: The phasing-out of government subsidies mean high energy costs
will linger. Factors to watch include commodity price swings and changes to government
subsidies.
Comment:
2023.
Description
Economic Factors – Exchange
Rate
(Threat)
Probability
of
Occurrence
#
Exchange rate not stable due to stronger food and housing price pressures. In
(Threat )
High
Probability Impact on Corporation
High
Medium
Low
1
Medium
Low
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1.2.6. France Inflation rate
Inflation for 1 Year
•
•
Inflation for 5 years
Annual inflation rate in France rose to 5.9% in April of 2023 from 5.7% in March, above
market forecasts of 5.7%, preliminary estimates showed. Cost grew further for energy
(7% vs 4.9% in March) and services (3.2% vs 2.9%).
On the other hand, inflation slowed slightly for food (14.9% vs 15.9%) and manufactured
products (4.7% vs 4.8%). On a monthly basis, the CPI rose 0.6%, following a 0.9%
increase in March. Meanwhile, the harmonized CPI was up 0.7% on the month and
surged 6.9% on the year. source: INSEE, France
Comment: Due to increasing the inflation rate, the purchasing power will reduce that will negatively
affect the investment opportunity
Description
Economic Factors – High
inflation rate reduce
the purchasing
power
(Threat)
Probability of
Occurrence
#
( Threat )
High
Probability Impact on Corporation
High
Medium
Low
1
Medium
Low
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1.2.7. Unemployment Rate
•
•
•
•
•
The unemployment rate in France slightly fell to 7.2% in the fourth quarter of 2022 from
7.3% in the previous quarter, and compared to market forecasts of 7.3%.
This was the lowest level since Q1 2008, except for the sharp fall in Q2 2020 during the
first lockdown.
The number of unemployed people decreased by 45,000 to 2.2 million. At the same
time, the unemployment rate for people aged 15-24 surged 0.1 points to 16.9%.
However, the unemployment rate was stable for those aged 25 to 49 at 6.5% and
decreased for those aged 50 or more to 5% (–0.1 points). Among genders, the jobless
rate was slightly lower for women (at 7.1 percent) than for men (at 7.5 percent).
The employment rate was unchanged at 68.3%, the highest level since INSEE measures it
according to ILO’s definition. Meanwhile, the activity rate edged down by 0.1 points to
73.6% from 73.7%. source: INSEE, France
Comment: The Indicator shows that the economy able to resist the inflation (opportunity)
Description
Economic Factors –
Unemployment
Rate
(Opportunity)
Probability
of
Occurrence
#
Probability Impact on Corporation
High
Medium
Low
High
Medium
Low
1.5
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1.3. Social factors
1.3.1. Households Disposable Income
•
Disposable Personal Income in France increased to 425218 EUR Million in the fourth
quarter of 2022 from 412615 EUR Million in the third quarter of 2022. source: INSEE,
France
Comment: Due to the result of indicator the purchasing power will increased which lead for
opportunity (Opportunity )
Description
Social factors –increase in
purchasing power Disposable
income
(Opportunity)
Probability
of
Occurrence
#
Probability Impact on Corporation
High
Medium
Low
High
Medium
3
Low
1.3.2. Lifestyle
• French people are very cautious about their health and riding a bicycle is their preferred
mode of transportation. The majority of the old school people still love to smoke, and
the others are converting to electronic cigarettes. Many people buy fitness equipment to
get themselves in better shape.
Comment: Lifestyle concentrate on health and better shape which be reflected on purchasing
power through cosmetics products ( Opportunity)
Description
Social factors –Lifestyle
increase the purchasing power
(Opportunity)
Probability
of
Occurrenc
e
#
Probability Impact on Corporation
High
Medium
Low
High
Medium
Low
4
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1.3.3. Population
•
population in France on January 1st, 2023, by age group. In 2023, people aged under 15
accounted for more than 17 percent of the total French population, whereas almost ten
percent of the population were 75 years and older
Comment: Based on the indicator the population segmentation will be good advantage in
cosmetic industry ( Opportunity )
Description
Social factors –Population
increase the purchasing power
(Opportunity)
Probability
of
Occurrenc
e
#
Probability Impact on Corporation
High
Medium
Low
High
Medium
Low
2
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1.4. Technological Factors
•
•
•
France is an increasingly technologically advanced country. Electronic commerce has
gradually taken a key place in the lives of French consumers.
The French government has invested heavily in research and development and has
established a number of technology hubs throughout the country. In addition, the
country is home to a number of tech giants.
The Frenchy rely heavily on the internet. A high-speed connection called ADSL is most
commonly provided by companies. And if you don’t want that, you can pop into any
internet cafe found among the public streets of France. Although, as of 2016, it’d cost
you anywhere from one to five euros and up to use the internet on an hourly basis.
Comment:
Due to the sold information technology infrastructure and the technological
awareness that they have, this factor will be huge advantage on E-commerce and digital
transformation which support the investment through AI ( Opportunity )
Description
Technological factors – Growth by
Using AI through ECommerce
(Opportunity)
Probability
of
Occurrence
#
High
Medium
Probability Impact on Corporation
High
Medium
Low
4
Low
1.5. Environmental Factor
•
•
Unfortunately, France is also one of the most notorious locations for industrial carbon
dioxide. This is something the country has to focus more on, as the millions of metric
tons of carbon dioxide seeping from the country affect the world’s environment as a
whole.
Millions of tourists visit France annually and the French tourism industry adds billions of
dollars into the country’s revenue. Some of her beautiful places are Brittany, Chamonix
Mont Blanc, Provence, Mont Saint Michel, Cote D’Azur, Palace of Versailles, Louvre
Museum, and Eiffel Tower.
Comment: The environmental analyses supporting the cosmetic industry
(Opportunity)
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Description
Environmental Factor – Increase the
purchasing power.
(Opportunity)
Probability Impact on Corporation
High
Medium
Low
High
Medium
1.5
Low
1.6. Legal Factor
France operates under a system of codes (penal, civil, commercial, labour, etc.)
The systems are made to come to the aid of the most disadvantaged, thanks to social
protections, in particular, or to unemployment benefits, pensions, holidays, etc., even if
the country is undergoing reforms on various subjects.
1.6.1.
•
labor law
dictates that the standard workweek in France is 35 hours per week. However, this can
vary based on the industry and is subject to any collective bargaining agreements.
Anything beyond this is considered overtime and should be compensated as such. While
you’re on the job, you’re entitled to at least a 20-minute break for every six hours you
work.
1.6.2. Consumer law
•
Consumer law (article 121-20-1, la Code de la Consummation, le droit de retractation), a
consumer has the right to return a product within seven days, without explaining why
and without penalty (apart from the actual cost of returning the product).
Reimbursement must be made as soon as possible, and within 30 days.
#
Description
Legal factors – increase the
purchasing power -Consumer
protection Law
(Opportunity)
Probability
of
Occurrenc
e
#
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Probability of
Occurrence
MBA Strategic Management
High
Medium
Low
Probability Impact on Corporation
High
Medium
Low
2
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1.6.3. Competition law
•
•
#
Description
Legal factors – Competition Law
offering healthy environment for
competition
(Opportunity)
Probability
of
Occurrenc
e
The Competition Authority in France is the one in charge with ensuring proper market
competitiveness at the same time guaranteeing that the consumers can choose the best
price. The Authority evaluates anti-competitive practices and can decide to impose
sanctions, fines or make the company change its commercial practices and behavior in
the future.
Companies are not allowed to discriminate in business relationships or
impose unreasonable commercial conditions. Prices are to be set in such a manner that
they are not excessively low or high. Firms must not be prohibited to enter the market
because of high prices. The costs of production, processing and marketing must be
established in a manner that observes the regulations for competitive prices. Fines are
applicable for price-fixing.
High
Medium
Low
Probability Impact on Corporation
High
Medium
Low
2.5
1.6.4. Patency Law
•
The French patent law defines two different types of protection for technical inventions,
namely the patent of invention and the utility certificate.
#
Description
Legal factors – Patency Law protect
the E-commerce Industry
(Opportunity)
Probability
of
Occurrenc
e
➢ The patent is granted for a duration of 20 years with a search report
➢ The utility certificate is granted for a duration of 6 years without search
report.
High
Medium
Low
Probability Impact on Corporation
High
Medium
Low
2
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2. Industry Environment Scanning
2.1. Porter’s 5 Forces Analysis
Five Forces Analysis is a strategic
apparatus intended to give a characteristic
diagram instead of a nitty-gritty business
analysis strategy. It helps survey the qualities
of a market position in light of five
fundamental forces. Accordingly, five forces
work best when taking a gander at a whole
market segment instead of your business and
competitors.
2.1.1. Threat of New Entrants: LOW
There is a high expense of entryway in the media and entrainment industry.
The entertainment industry needs a big capital quantity as the business which are
engaged in providing entertainment service have bigger start-up cost
•
•
•
•
Description
Porter’s 5 Forces analysis – Low risk
of New Entrant
(Threat)
Probability
of
Occurrenc
e
#
Important resources in terms of research and development required
Manufacturing Process
Highly competitive with big players such as Avon, Revlon ….
Difficult to leave without achieving the costs for production.
High
Medium
Low
Probability Impact on Corporation
High
Medium
Low
2.5
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2.1.2. Bargaining power of buyers : High
The dynamics of media and show business allows the customers to have high
bargaining power. The revenue and sales produced by business are based on the
customers placed in diverse areas all around the world.
•
•
•
Description
Porter’s 5 Forces analysis –High
Bargaining power of Buyer
(Threat)
Probability
of
Occurrenc
e
#
Increase competition.
High availability of cosmetics products
Buyers can easily switch between various products.
High
Medium
Low
Probability Impact on Corporation
High
Medium
Low
4
2.1.3. Bargaining power of suppliers: Low
•
High number of market players
•
Large supply of diverse products to the market
Description
Porter’s 5 Forces analysis – Low
Burgeoning power of supplier
(Opportunity)
Probability
of
Occurrenc
e
#
High
Medium
Low
Probability Impact on Corporation
High
Medium
Low
3.5
2.1.4. Threat of substitutes: High
The danger of alternatives in the market present moderate risk level in media
and the entertainment industry. The company is facing a strong competitors from
the competitors offering comparable services
•
Many competitors to purchase from
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Large variety of products
Description
Porter’s 5 Forces analysis – High
risk of substitute product
(Threat)
Probability
of
Occurrenc
e
#
High
Medium
Low
Probability Impact on Corporation
High
Medium
Low
4
2.1.5. Rivalry: High
Sephora Direct: Investing In Social Media Video And Mobile Case Help has actually
been operating because its creation has many market gamers with the considerable
market share and increased earnings. There is an intense level of competition or
rivalry in the media and show business, engaging organizations to strive in order to
maintain the present consumers via offering services at economical or reasonable
rates
Shortly, the intensity of competition is strong in the market and it is very important for
the business to come up with distinct and innovative offerings as the audience or
clients are more advanced in such a modern-day technology period.
•
•
•
•
Highly competitive
Quick changes due to consumer preferences and industry trends
Huge investment in advertising, promotion, merchandising and packaging.
Discount pricing strategies by competitors
Description
Porter’s 5 Forces analysis – High
risk Rivals among the existing
competitors
(Threat)
Probability
of
Occurrence
#
Probability Impact on Corporation
High
Medium
Low
High
Medium
3
Low
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Competitive Profile Matrix (CPM)
Critical
Success Factor
Weight
Sephora
Score
Urban-D Cosmetic
Weighted
Score
score
Price
0.25
competitiveness
Customer
Loyalty NPS
Advertising
Product Quality
Process &
Culture
Portfolio
diversification
Physical
Evedince
Total Score
Weighted
MAC Cosmetics
Score
score
Weighted
Nordstrom
Score
Score
Weighted
Ulta Beauty
Score
score
Weighted
score
3.5
0.875
2.5
0.625
3
0.75
2
0.5
1.5
0.375
0.15
0.5
0.075
3.8
0.57
1
0.15
1.5
0.225
1
0.15
0.1
3
0.3
3.5
0.35
2
0.2
2.5
0.25
1.5
0.15
0.1
3.5
0.35
3
0.3
4
0.4
2.5
0.25
2
0.2
0.15
3.5
0.525
3.8
0.57
2.4
0.36
2.8
0.42
2.3
0.345
0.1
2.6
0.26
0.5
0.05
3.6
0.36
3.5
0.35
2.9
0.29
0.15
3
0.45
2.8
0.42
2
0.3
1.5
0.225
1.8
0.27
1
2.84
2.89
2.52
2.22
As shown in CPM results, Sephora has advantageous position between competitors, the
weighted score of competitive advantage of Sephora is 2.84 , However, the other
competitors also have a good condition that put the company in risk
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EFAS Analysis
#
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
Factors
Opportunity
Political Factors - Political Stability
Political Factors - Corruption
Economic Factors – Corporate Tax rate
Economic Factors –Unemployment Rate
Social factors –increase in purchasing power Disposable income
Social factors –Lifestyle increase the purchasing power
Social factors –Population increase the purchasing power
Technological factors – Encourage Digital Transformation
Environmental Factor – Increase the purchasing power
Legal factors – increase the purchasing power -Consumer
protection Law
Legal factors – Competition Law offering healthy environment for
competition
Legal factors – Patency Law protect the E-commerce Industry
Porter’s 5 Forces analysis – Low Bargaining power of supplier
Threat
Political Factors – Sales Tax Rate
Economic Factors – GDP
Economic Factors – GNP
Economic Factors – High interest rate form an obstacle for
business development
Economic Factors – Exchange Rate
Economic Factors – High inflation rate reduce the purchasing
power
Porter’s 5 Forces analysis – Low risk of New Entrant
Porter’s 5 Forces analysis –High Bargaining power of Buyer
Porter’s 5 Forces analysis – High risk of substitute product
Porter’s 5 Forces analysis – High risk Rivals among the existing
competitors
Total Score
Weight
Rating
Weighted
score
Comment
0.05
0.02
0.04
0.01
0.02
0.02
0.035
0.05
0.075
3
2
1.5
1.5
3
4
2
4
1.5
0.15
0.04
0.06
0.015
0.06
0.08
0.07
0.2
0.1125
H-O3
M
H
L
H-O4
H-O1
L
H-O2
L
0.05
2
0.1
H-O5
0.05
2.5
0.125
H
0.075
0.03
2
3.5
0.15
0.105
M-O6
M
0.05
0.05
0.075
3
2
2
0.15
0.1
0.15
H-T5
M
M
0.035
1.5
0.0525
M
0.02
1
0.02
H-T1
0.02
1
0.02
H-T2
0.075
0.05
0.05
2.5
4
3
0.1875
0.2
0.15
M
H
H-T4
0.05
3
0.15
H-T3
1
2.4475
Weighted Score is less 2.45 which mean the external environment is
aggressive and not Favorable.
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B. Internal Environment Scanning
1. Financial Parameters
Balance Sheet
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Income Statement
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2. Financial Ratios
Financial ratio
FY2022
FY202
1
FY202
0
FY201
9
CrossSection
alwith
industr
y
202
2
Industr
y
Averag
e2022
Performanc
eTimeSeries
1.94
Fair
Fair
Values tends not increase enough, current
liquidity will cover short-term obligations with
few buffer on liquidity
Fair
Fair
Values tends to decline, indicate that
Manytypes of inventories cannot
be easily sold.
Overall Evaluation
A- Liquidity Ratios
Current Ratio
(Current Assets/
Current Liabilities)
1.26
Quick Liquidity Ratio
(Current AssetsInventory) / Current
Liabilities
Cash Ratio
( Cash + Marketable
securities ) / Current
Liabilities
0.62
1.23
0.63
1.58
1.06
1.17
0.57
1.17
0.23
0.29
0.79
Fair
-
0.25
Values tends to Low; Firm may have difficulty
meeting current obligations
B- Financial Leverage (Solvency) Ratios
Debt Ratio
Total Debt / Total
Assets
0.58
Debt-to-equity ratio
(Total Long Term
Liabilities /
Shareholders' Equity
0.41
0.62
0.51
0.66
-
Good
-
74.94
Good
Good
0.62
0.66
0.42
64%
66%
Values tends to decline, the decline this
ratio,the less the firm’s use of financial
leverage through Equity, it's indication that
a companyis not taking sufficient advantage
of financial
leverage to increase profits.
Values tends to decline, it’s indication that the
company able to generate enough cash to
satisfy its debt obligations.
C-Profitability Ratio
Gross profit margin
Gross Profit /
Revenue
Operating Profit
margin (Return on
sales)
Operating Income
(EBIT) / Revenue
68%
68%
Good
Good
Good
Good
69.02%
25%
27%
16%
20%
Values tends to increase; Firm may have
better thoughtto control costs, increase
efficiency during the
production process
Values tends to increase; Firm may have
better thoughtto control operation
expenses
30.25%
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Return on Asset
(ROA)
Net Profit/ Total
Assets
Return on Equity
(ROE)
Net Profit /Common
stock equity
Registration no :20221338
13.92%
10%
10%
4%
7%
93
79
31
47
Good
Good
Good
Good
Good
Good
Fair
-
Fair
-
Good
Fair
29.52
Values tends to increase, the higher the firm’s
return on
total assets, the better, indicate the overall
effectiveness of management in generating
profits withits available assets.
Values tends to increase, the owners are
better off thehigher is this return, it measures
the return earned on
the common stockholders’ investment in the
firm
D- Asset Management (Activity) Ratio
Asset turnover
Sales/total Assets
Average Payment
Period Payable
turnover
(days)
(Accounts Payable
/(Sales for year/365)
Average Collection
Period
- Receivable
turnover (days)
(Accounts
receivable/(sales for
year/365)
Inventory turnover
( Net sales
/Inventory)
0.59
0.51
0.41
0.56
0.65
295
245
90
331
143
0.69
131
0.73
49
0.36
Values tend to increase, the higher a firm’s
total asset
turnover, the more efficiently its assets have
been used
Values tend to increase; an analyst would
give the firm a low credit rating because it
was taking too long to payits bills
Values tend to increase, indicate a credit
department not Managed well, collection
department needed enhancement.
197
0.52
1.54
increase value indicate that Many types of
inventories can be easily sold.
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3. Value Chain Analysis
6.1 Primary Activities
1.1.1 Inbound Logistic
#
1
2
Activity
S/W
products from a wide range of suppliers located in different parts of the world. This can make it W
challenging to ensure consistent quality and timely delivery of products.
The company also uses technology ERP to manage its inventory and supply chain
S
2.1.1
#
1
2
3
Activity
providing a unique in-store experience to its customers, with knowledgeable sales
associates, interactive displays, and a wide range of products
invests heavily in technology, with features like augmented reality and other digital tools to
enhance the customer experience
Sephora operates in multiple countries and regions, which can make transportation and
logistics a complicated process
3.1.1
#
1
Operations
S/W
S
S
W
Outbound Logistic
Activity
well-developed logistics system to ensure the timely delivery of products to its customers
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S
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2
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offers a variety of shipping options to meet customer needs and preferences
4.1.1
#
1
2
S
Marketing & Sales
Activity
S/W
offering high-quality products and personalized customer service
S
using a variety of channels, including social media, email marketing, and in-store promotions, to S
reach its target audience
6.2 Support Activities
1.2.1
#
1
Activity
exceptional customer service, with trained associates who are knowledgeable about the
products and can assist customers in finding the right products for their needs
2.2.1
#
1
2
1
2
1
Procurement
Research& Technology
Activity
S/W
using technology to enhance its retail operations and improve the customer experience. This
S
includes mobile apps, augmented reality, and digital signage Through AI
infrastructure includes its stores, distribution centers, and technology systems. The company
S
invests in these areas to ensure that it can provide a seamless customer experience both online
and in-store
4.2.1
#
S/W
S
Activity
S/W
Evaluates potential suppliers based on a variety of factors, including their product quality,
S
price, delivery times, and social and environmental responsibility.
Sephora is committed to sustainability and works with its suppliers to ensure that they meet its S
standards for social and environmental responsibility
3.2.1
#
General Administration
Human Resource
Activity
invests heavily in training its staff to provide excellent customer service. The company also
offers attractive compensation packages to attract and retain top talent
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S
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4. VRIO Analysis
#
Value
Activity
Rarenes
InOrganiz
s
Imitable ation
Comment
1
using technology to manage its inventory and supply
chain
√
X
X
√
2
Coping with the digital transformation and using AI on
the E-commerce
√
√
X
√
3
Strong brand reputation with loyalty program,
√
√
X
√
Temporary distinctive
Advantage
4
Know-how of high-quality products and produced it
√
√
√
√
Distinctive
Competitive
advantage
5
Innovation - augmented reality technology in its mobile
app.
√
√
X
√
6
Well Trained staff for excellent customer service
√
X
X
√
Temporary distinctive
Advantage
Not Competitive
advantage
7
Solid Technology Infrastructure for potential expantion
√
√
X
√
•
Not Competitive
advantage
Temporary
distinctive
Advantage
Temporary
Competitive
Advantage
Select the completive advantage factor to be included in IFAS.
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5. Value Discipline triad
• Sephora is the leader in Operation Excellence with a good rank on product
leadership between the competitors.
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6. IFAS Analysis
#
Factors
Weight
Rating
Weighted
comment
score
Strength
1
Know-how of high-quality products
0.1
4
0.4
S1
2
Strong brand reputation with loyalty
program
0.075
4
0.3
S2
3
Innovation-Coping with the digital
transformation and using AI on the Ecommerce
0.2
4
0.8
S3
4
Excellent Indicator in Profitability &
Solvency Ratios for Growth
0.075
3
0.225
S4
5
well-developed logistics system ERP to
ensure the timely delivery of products to its
customers
0.1
2.5
0.25
S6
6
Leader in Operational Excellence beside the
competitors
0.1
3
0.3
S5
Weakness
6
Premium pricing deters price-sensitive
customers
0.1
1.5
0.15
W1
7
Limited physical footprint in some regions
0.1
1.5
0.15
W2
8
Human resource needs to Focus on
Customer Intimacy
0.05
2
0.1
W3
9
Financial Liquidity Ratios
0.1
1
0.1
W4
Total Score
1
•
2.775
The IFAS showing Score higher than 2.5, Which mean that the business is in a
stable position.
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SFAF
Weight
Rating
Weighted
score
O1
Opportunity
Social factors –Lifestyle increase the purchasing power
0.05
4
0.2
O2
Technological factors – Encourage Digital Transformation
0.05
4
0.2
O3
Political Factors - Political Stability
0.05
3
0.15
O4
Social factors –increase in purchasing power Disposable income
Legal factors – increase the purchasing power -Consumer protection
Law
Legal factors – Patency Law protect the E-commerce Industry
Threat
Economic Factors – Exchange Rate
0.01
3
0.03
0.03
2
0.06
0.03
2
0.06
0.06
1
0.06
Economic Factors – High inflation rate reduce the purchasing power
Porter’s 5 Forces analysis – High risk Rivals among the existing
competitors
Porter’s 5 Forces analysis – High risk of substitute product
0.06
1
0.06
0.06
3
0.18
0.04
3
0.12
0.04
3
0.12
S1
Political Factors – Sales Tax Rate
Strength
Know-how of high-quality products
0.04
4
0.16
S2
Strong brand reputation with loyalty program
0.03
4
0.12
S3
Innovation-Coping with the digital transformation and using AI on the Ecommerce
0.06
4
0.24
S4
Excellent Indicator in Profitability & Solvency Ratios for Growth
0.04
3
0.12
S5
Leader in Operational Excellence beside the competitors
0.14
3
0.42
well-developed logistics system ERP
Weakness
W1 Premium pricing deters price-sensitive customers
0.03
2.5
0.075
0.06
1.5
0.09
W2 Limited physical footprint in some regions
0.06
1.5
0.09
W3 Human resource needs to Focus on Customer Intimacy
0.03
2
0.06
W4 Financial Liquidity Ratios
0.03
1
0.03
#
O5
O6
T1
T2
T3
T4
T5
Factors
S6
Total Score
•
1
2.645
The SFAS showing Score higher than 2.5, Which mean that the business is good
Position.
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C. TOWS Analysis
TOWS Analysis
Strengths
Weaknesses
S1
Know-how of high-quality products
W1
S2
Strong brand reputation with loyalty program
W2
S3
S4
S5
S6
Opportunities
O1
Social factors –Lifestyle increase the purchasing power
O2
Technological factors – Encourage Digital
Transformation
O3
Innovation-Coping with the digital
transformation and using AI on the Ecommerce
Excellent Indicator in Profitability & Solvency
Ratios for Growth
Leader in Operational Excellence beside the
competitors
well-developed logistics system ERP
Premium pricing deters pricesensitive customers
Limited physical footprint in some
regions
W3
Human resource needs to Focus on
Customer Intimacy
W4
Financial Liquidity Ratios
W5
W6
Max-Max
Min-Max
●
(S1-O1-O2-O5) Product Development
●
(W1-O4) Diversification
●
●
(S2-O2 )Market Penetration
(S4-O5-O6) Market Development
●
(W2-O2) Market Penetration
Political Factors - Political Stability
O4
Social factors –increase in purchasing power
Disposable income
●
(S4-O3 )Market Development
O5
Legal factors – increase the purchasing power Consumer protection Law
●
(S3-O1)Market Development
O6
Legal factors – Patency Law protect the E-commerce
Industry
Threats
T1
Economic Factors – Exchange Rate
T2
Economic Factors – High inflation rate reduce the
purchasing power
T3
T4
T5
Max - Min
●
(S1-S2-T3 ) Product Development
●
Min-Min
(W4-T3-T4) DefensiveLiquidation
●
(S3-T2) Market Penetration
●
(W4-T1) Profit Strategy
Porter’s 5 Forces analysis – High risk Rivals among the
existing competitors
Porter’s 5 Forces analysis – High risk of substitute
product
Political Factors – Sales Tax Rate
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Strategic Alternatives
•
{(S1-O1-O2-O5)-(S1-S2-T3)}
With Our Distinctive competitive advantage of the know-how of high-quality product
will be advantage for covering the lifestyle and create new product, also the digital
transformation factor will support this approach. Then we can cover the rivals risk by applying
Product Development Strategy
•
{(S2-O2 )- (S3-T2)- (W2-O2)}
With our brand reputation we can penetrate the market especially with encourage the
digital transformation on the country and using AI through our E-commerce website and cover
physical footprint issue
Market Penetration Strategy
•
{(S4-O5-O6)-(S4-O3 )- (S3-O1)}
Our Profitability ratios supporting us for entering new market specially that the country
has good political stability and we can use the digital transformation approach with this
strategy
Market Development Strategy
•
(W1-O4)
Increasing the purchasing power of the Disposable income will support on solving
Premium pricing issue.
Diversification strategy
•
(W4-T3-T4)
Due to financial liquidity ratio we are face change to cover our liabilities beside the risk
of the Rivals among the existing competitors and substitute ,so we can defense by liquidation
Defensive-Liquidation strategy
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D.
IE Matrix
Where IF and EF score are 2.8 & 2.4 respectively which means
that the point will fall in V square that mean we should Hold and
maintain that limiting the strategies to Market penetration and
Product development
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E. QSPM
#
Factors
Weight
Opportunity
Market
Penetration
Product
Development
Market
Development
AS
AS
TAS
AS
TAS
TAS
O1
Social factors –Lifestyle increase the purchasing power
0.05
2
0.1
3
0.15
3.5
0.175
O2
Technological factors – Encourage Digital Transformation
0.05
4
0.2
4
0.2
4
0.2
O3
Political Factors - Political Stability
0.05
2.5
0.125
3
0.15
3.5
0.175
0.01
2
0.02
3
0.03
2.5
0.025
0.03
2
0.06
3.5
0.105
2
0.06
0.03
2
0.06
3
0.09
2.5
0.075
0.06
2.5
0.15
3.5
0.21
2.5
0.15
0.06
3
0.18
3.5
0.21
3
0.18
0.06
3
0.18
3
0.18
2.5
0.15
O4
O5
O6
T1
T2
T3
Social factors –increase in purchasing power Disposable
income
Legal factors – increase the purchasing power -Consumer
protection Law
Legal factors – Patency Law protect the E-commerce
Industry
Threat
Economic Factors – Exchange Rate
Economic Factors – High inflation rate reduce the
purchasing power
Porter’s 5 Forces analysis – High risk Rivals among the
existing competitors
T4
Porter’s 5 Forces analysis – High risk of substitute product
0.04
3.5
0.14
3
0.12
3.5
0.14
T5
Political Factors – Sales Tax Rate
0.04
2
0.08
2
0.08
2
0.08
Strength
S1
Know-how of high-quality products
0.04
3
0.12
2.5
0.1
3
0.12
S2
Strong brand reputation with loyalty program
0.03
2.5
0.075
3
0.09
2.5
0.075
0.06
3
0.18
3
0.18
2.5
0.15
0.04
2
0.08
3.5
0.14
3
0.12
S3
S4
Innovation-Coping with the digital transformation and
using AI on the E-commerce
Excellent Indicator in Profitability & Solvency Ratios for
Growth
S5
Leader in Operational Excellence beside the competitors
0.14
3
0.42
3
0.42
3
0.42
S6
well-developed logistics system ERP
0.03
3
0.09
3.5
0.105
3
0.09
Weakness
W1
Premium pricing deters price-sensitive customers
0.06
3
0.18
2.5
0.15
2.5
0.15
W2
Limited physical footprint in some regions
0.06
3
0.18
2
0.12
2
0.12
W3
Human resource needs to Focus on Customer Intimacy
0.03
2.5
0.075
2
0.06
2
0.06
W4
Financial Liquidity Ratios
0.03
1.5
0.045
1.5
0.045
1
0.03
Total Score
•
1
2.7
2.9
2.7
According to the QSPM & IE analysis the most important strategy is Product Development with (
Score : 2.9)to achieve the firm strategic objectives
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F. Strategic Objectives
• Invest in R&D department to reach the highest level of digital
transformation and implement omnichannel strategies during the next 3
years.
• increasing the number of new products launched by 25%. during the next 3
years.
• Increase the market share from 5 to 10% during the next 3 years by
Develop new products.
• implement a customer feedback system and respond to all customer
inquiries within 24 hours to improve overall customer satisfaction. To raise
the NPS 30% during the next 3 years
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G. Internal Policies
Internal policies are important to ensure that strategic objectives are
implemented effectively and efficiently.
•
Implement a performance management system to track progress
towards strategic objectives and provide ongoing feedback and coaching to
employees. This could involve setting individual and team goals, conducting
regular performance reviews, and providing rewards and recognition for
achieving objectives.
•
Implement a risk management framework to identify and mitigate
potential risks that could impact the achievement of strategic objectives.
•
Implement a change management process to ensure that strategic
objectives are implemented effectively and efficiently. This could involve
communicating changes to employees, providing training and development
to support changes, and monitoring and evaluating the effectiveness of
changes over time.
•
Implement ethics and compliance policies to ensure that the
company operates in an ethical and transparent manner. This could involve
developing a code of conduct, providing ethics training to employees, and
implementing processes to monitor and report on compliance with ethical
and legal requirements.
• Improve the R&D department and provide the R&D team with the best training
and development programs to provides exposure to every major area of the
business.
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H. Implementation stage (Product Development)
Functional area
Function
Objective
Production
Develop new
products
launched by 25%.
during the next 3
years.
R&D
Apply
Omnichannel
strategies during
the next 3 years
Procedures,
Action & Polices
Implement a
performance
management
system
provide the R&D
team with the best
training and
development
programs
Hire 10 additional
R&D expertise
Marketing /
Sales
Human
Resource
Sales volume of
the new products
shall form 20%%
from total sales
revenue till 2025
Hire 10 R&D
Expert
Hire 5 IT
Engineers
Implement ethics
and compliance
policies
Hire 15 Salesman
Hire 3 production
Engineers
Finance
6 Marketing
campaigns for the
new products
Increase the
working capital
by 18 % during
the next 3 years
10 training
programs
Funding 15 Million
$ from the surplus
available fund
Required Resources
People
: Creative
employee
Cost
: 5 million $
Time
: 3 years
Info
: R&D
: Expert Trainers
- Engineers &
Technicians.
People
Cost
: 0.2 million $
Time
: 3 years
Info
: Stick with the
company SOPs
People
: Qualified
marketing team
Cost
: 7 million $
Time
: 3 years
Info
: Marketing Plan
People
: HR team
Cost
: 1 million $
Time
: 3 years
Info
: Recruitment
SOPs
People
cost control and
financial team
Cost
Self-financing
Time
3 years
Info
KPI
Time
Y1
No. of product
Y2
20
%
Y3
50
%
100
%
No. Approved
projects
No. of the Hired
employee
3
Sales volume of
the new product /
total sales volume
5%
No. of market
campaigns
2
Job Satisfaction
Index
6
10
%
4
85
90
10
20%
6
95%
%
%
Current ratio
1.8
2.2
2.5
Quick ratio
0.9
1.2
1.5
ROA
12%
15%
17%
ROE
95
97
99
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I. Evaluation stage (Balance Scorecard)
Time Frame / Year
Time Frame / Year
Objectives
KPI
Y1
Y2
Target
KPI
Y3
Y1
Y2
Y3
Actual Market Share /
Target Market share
1%
2.50%
5%
➢ Financial Perspective
Increase our market share by 5
% over the coming 3 years
Increase Sephora market
share by 5 % over the
coming 3 years
Actual Market Share / Target Market share
➢ Customer Perspective
Maintain Product quality &
branding
Maintain Sephora market
position as market leader
Market Position survey
1st
1st
1st
Provide the product with
affordable price
1% less than the direct
competitors
Benchmarking with other
suppliers’ prices
1%
3%
5%
Wide variety of products
Customer Satisfaction higher
than 96%
Customer Satisfaction
survey
92%
94%
96%
Increase the number of
clients by 10%
No. of client
3%
6%
10%
Avoid potential risk
No. of accepted risk
2%
1%
0%
Implement a performance
management system
track progress towards
strategic objectives to
achieve 80% in the next 3
years
Track the percentage during
the 2 years
20%
50%
80%
Increase marketing campaigns
Develop 6 market Campaign
No. of marketing Campaign
2
4
6
Ease of obtaining the product
1%
3%
5%
➢ Internal Process Perspective
Implement a risk management
framework
➢ Learning and growth perspective
Develop training programs for
the employees to ensure their
commitment to Sephora
quality
10 No.
No. of training programs
5
8
10
Hire additional R&D expertise
10 No.
No. of the Hired employee
3
6
10
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SEPHORA Business plan
• Executive Summary
• Company description
• Market Analysis
• Organization & Management
• Service and Product Line
• Marketing & sales
• Operational plan
• Financial & Budgeting
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1. Executive Summary
• Sephora is a leading global retailer of beauty
products, offering a wide selection of cosmetics,
skincare, fragrance, and haircare products in over
2,600 stores across 35 countries worldwide.
• The company's mission is to inspire and
empower customers to express their unique beauty, with a focus on
providing a personalized shopping experience and innovative products.
• Sephora's business model is based on offering high-quality products at
competitive prices, with a strong emphasis on customer service and
innovation. The company has invested heavily in its e-commerce
capabilities, with a focus on creating a seamless and personalized online
shopping experience for customers.
• Sephora has also developed a range of digital tools and services, such as
virtual try-on technology and personalized skincare consultations.
The company's key priorities include expanding its global footprint,
particularly in the Asia-Pacific region, investing in digital capabilities, and
driving sustainability across its business.
• Sephora has made a commitment to reducing waste,
promoting responsible sourcing, and supporting social and environmental
causes.
• Sephora's success is driven by its strong brand, innovative product
offerings, and personalized customer experience.
• The company has a highly engaged and loyal customer base, with a strong
presence across both physical and digital channels. As Sephora continues to
expand its global footprint and invest in digital capabilities, the company is
well-positioned to continue driving growth and innovation in the beauty
industry.
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2. Company Description
Sephora is a French multinational
retailer of personal care and beauty
products with nearly 340 brands, along
with its own private label, Sephora
Collection, and includes beauty
products such
as cosmetics, skincare, body, fragrance,
nail color, beauty tools, body lotions
and haircare.
The company was founded in Limoges in 1969 and is currently based in Neuillysur-Seine, France. Sephora is owned by luxury conglomerate LVMH as of 1997.
With 1,500 m² entirely devoted to diversity of choices, advice and exclusivity, the
Sephora store on the Champs-Elysées in Paris has been a revered temple of
beauty since it opened in 1995. With 250 brands and over 78,000 products, it
provides a vast selection of on-trend products and innovative concepts, such as
"beauty bars" to its customers.
Sephora's current marketing strategy is focused on blending online and instore experiences and promoting brand engagement via social, mobile and web
platforms.
Learn what makes Sephora's strategy different when it comes to how the retailer
incorporates data into its omnichannel marketing components.
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3. Market Analysis
A. Market Volume
According to Statista, a leading provider of market and consumer data,
the cosmetics market volume in France was valued at approximately 13.8 billion
euros in 2020. This represents a decline from the previous year, which saw a
market volume of approximately 14.3 billion euros, likely due to the impact of the
COVID-19 pandemic on consumer spending.
Despite this decline, the cosmetics market in France remains one of the largest
and most important in the world. France is widely regarded as a global leader in
the cosmetics industry, with a strong tradition of innovation and expertise in
areas such as skincare, fragrance, and haircare.
B. Market share
Market share
1.2%
0.4%
1.2%
0.9%
4.7%
1.8%
1.3%
1.4%
SEPHORA
Ulta Beauty
L'Oreal
Estée Lauder Companies
Shiseido
Nordstrom
urban decay cosmetics
MAC Cosmetics
C. Situational Analysis
•
•
•
PESTLE Analysis – please refer back to the previous pages at strategic plan.
Porters’ 5 Forces model - please refer back to the previous pages at strategic plan.
SWOT Analysis - please refer back to the previous pages at strategic plan.
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4. Organization and Management
Sephora is a global beauty retailer that
operates as a subsidiary of LVMH Moët Hennessy
Louis Vuitton, a luxury goods conglomerate based
in France.
Sephora has its own organizational structure,
which is designed to support the company's focus
on innovation, customer service, and
sustainability.
At the top of Sephora's organizational structure is
the CEO, who is responsible for the overall
strategy and direction of the company. The CEO is supported by a team of senior
executives, who oversee different functional areas such as marketing,
merchandising, operations, and e-commerce.
Sephora's organizational structure is organized into several different business
units, including:
D.
Retail: Sephora operates over 2,600 stores in 35 countries
worldwide. The retail business unit is responsible for managing Sephora's
physical stores and ensuring that they provide a high level of customer
service. This includes hiring and training sales associates, managing
inventory, and creating a welcoming and engaging in-store experience for
customers.
E.
E-commerce: Sephora has a robust online platform that allows
customers to shop for beauty products from anywhere in the world. The ecommerce business unit is responsible for managing Sephora's online
presence and ensuring that the company's digital offerings are innovative,
user-friendly, and personalized. This includes developing and maintaining
the company's website and mobile app, as well as managing social media
and other digital marketing channels.
F.
Private Label: Sephora offers a range of private label products,
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including cosmetics, skincare, and haircare products. The private label
business unit is responsible for developing and promoting these products,
as well as ensuring that they meet high standards of quality and innovation.
G.
Sustainability: Sephora has a strong commitment to sustainability
and has established a dedicated business unit to oversee these efforts. The
sustainability team is responsible for developing and implementing
initiatives to reduce the company's environmental impact, promote ethical
sourcing practices, and support social responsibility initiatives.
Overall, Sephora's organizational structure is designed to support the
company's focus on innovation, customer service, and sustainability, and to help
the company maintain its position as a leading player in the global beauty
industry.
Sephora functional structure.
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5. Service and Product Line
Sephora is a global beauty retailer that offers a wide range of products
and services to its customers. The company's product line includes cosmetics,
skincare, fragrance, haircare, and personal care products from a variety of
different brands, as well as its own private label products. Sephora also offers a
range of services to help customers find
the right products for their needs,
including personalized consultations,
makeup and skincare tutorials, and
beauty classes.
a.
Cosmetics: Sephora offers
a wide range of cosmetics
products, including
foundations, concealers, powders, blushes, eyeliners, eyeshadows,
lipsticks, and more. These products come from a variety of different
brands, including both high-end and more affordable options.
b.
Skincare: Sephora offers a wide range of skincare products, including
cleansers, moisturizers, serums, masks, and more. These products are
designed to address a range of different skin concerns, including acne,
aging, dryness, and sensitivity.
c.
Fragrance: Sephora offers a wide range of fragrances for both men
and women, from popular brands like Chanel, Dior, and Gucci to more
niche and exclusive options.
d.
Haircare: Sephora offers a wide range of haircare products, including
shampoos, conditioners, styling products, and hair tools like curling irons
and hair dryers. These products come from a variety of different brands,
including both professional salon brands and more affordable options.
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e.
Personal Care: Sephora also offers a range of personal care products,
including body washes, lotions, and deodorants, as well as products for
oral care and personal grooming.
f.
Services: Sephora offers a range of services to help customers find
the right products for their needs, including personalized consultations
with beauty advisors, makeup and skincare tutorials, and beauty classes.
Sephora also offers a loyalty program, called Beauty Insider, which
rewards customers for their purchases and provides access to exclusive
products and events.
Overall, Sephora's product line and services are designed to help
customers find the right beauty products for their needs and preferences, and to
provide a personalized and engaging shopping experience both in-store and
online.
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6. Marketing & sales
6.1.1
•
•
Increase Customer satisfaction by 10%
during 2024-2025.
Increase the E-commerce sales by 15%
over the coming 3 years.
6.2.1
•
Marketing Strategy
Competitive Strategy: Differentiation by using competitive advantage.
6.3.1
•
Marketing Objectives
Situational analysis
As stated, before by PESTEL, Porter’s 5 Forces & SWOT analysis
6.4.1
Segmentation
Sephora uses a variety of different marketing segmentation strategies to reach and engage
with its target customers. Here are some key segmentation strategies that Sephora uses.
•
•
Demographic Segmentation: Sephora targets customers based on their
▪ Age
▪ Gender
▪ Income
Psychographic Segmentation: Sephora also targets customers based on their
▪
▪
Lifestyle
interests,
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▪
•
Registration no :20221338
values
Geographic Segmentation: Sephora targets customers based on their
▪
▪
Geographic location
Marketing campaigns
•
Behavioral Segmentation: Sephora targets customers based on their past
behaviors and preferences. For example, the company may offer personalized
product recommendations based on a customer's purchase history,
•
Occasion-Based Segmentation: Sephora also targets customers based on specific
occasions or events, such as weddings, holidays, or special occasions.
6.5.1
Targeting
Sephora uses a combination of different targeting strategies to reach and engage with its
target customers.
•
Beauty Enthusiasts: Sephora targets customers who are passionate about beauty
and makeup, and who are interested in trying out new products and trends.
•
Millennials and Gen Z: Sephora targets younger customers, particularly
millennials and Gen Z, through social media and influencer marketing campaigns.
•
High-End Shoppers: Sephora targets customers who are willing to spend more on
high-end beauty products, and who value quality and luxury.
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•
Eco-Conscious Consumers: Sephora targets customers who are interested in clean
beauty products and who place a strong emphasis on sustainability and ethical
sourcing practices.
•
Existing Customers: Sephora targets its existing customers through its loyalty
program, Beauty Insider, which rewards customers for their purchases and
provides access to exclusive products and events. This helps to incentivize repeat
purchases and encourage customer loyalty.
6.6.1
Positioning
Sephora has established a strong market positioning as a leading global beauty retailer
that offers high-quality and innovative products, personalized services, and engaging shopping
experiences.
•
•
•
•
Quality and Innovation: Sephora is known for its high-quality and innovative
beauty products, which come from a variety of different brands as well as the
company's own private label line.
Personalized Services: Sephora is also known for its personalized services,
including makeup and skincare consultations, personalized product
recommendations, and a range of other services that help customers find the right
products for their needs.
Engaging Shopping Experience: Sephora has established a strong brand identity
and a loyal customer base through its engaging shopping experiences, both instore and online.
Sustainability and Social Responsibility: Sephora has a strong commitment to
sustainability and social responsibility and has launched several initiatives to
reduce its environmental impact and promote ethical sourcing practices.
6.7.1
6.8.1
Competitive advantage
Know-how of high-quality products & Strong brand reputation
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6.8.1
Registration no :20221338
Marketing Mix Strategy
Sephora's marketing mix strategy includes a
combination of different elements, including product, price,
promotion, and place, which are designed to support the company's
core strengths and values
6.8.2 Product: Sephora offers a wide range of beauty
products from a variety of different brands
 Cosmetics
 Skincare
 Fragrance
 Haircare
 Personal Care
6.8.3 Price: Sephora offers a range of products at different price points, pricing
strategies, including dynamic pricing and promotions, to attract and retain
customers.
6.8.4 Place: ( Brick & Click )
Sephora operates over 2,600 stores in 35 countries worldwide, as well as a robust
online platform that allows customers to shop for beauty products from anywhere in
the world. The company places a strong emphasis on creating engaging and
personalized shopping experiences both in-store and online.
6.8.5 Promotion: Sephora uses a variety of promotional strategies to reach and engage
with its customers
• Advertising
•
•
•
A4 Flyers
TV & Radio Advertising
Online Advertising
• Sales Promotions
•
•
B2B: Develop Loyalty
programs and bonus
programs.
B2C: Develop loyalty Programs & gift with purchase.
• Public Relation
•
Develop awareness programs about protecting the
environment .
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7. Operational Plan
Sephora's operational plan is designed to
support the company's overall business strategy and to
ensure that the company can provide high-quality
products, personalized services, and engaging shopping
experiences to its customers.
1. Supply Chain Management: Sephora has a
complex supply chain that involves working with a
variety of different brands and suppliers to ensure
that it has a wide range of products available for
its customers. The company places a strong
emphasis on supply chain management, including
inventory management, logistics, and distribution,
to ensure that it can meet customer demand and
maintain high levels of product availability.
2. Technology: Sephora uses a range of different technologies to support its operations,
including point of sale systems, customer relationship management software, and
inventory management systems. The company also uses data analytics and machine
learning to personalize the customer experience and optimize its operations.
3. Store Operations: Sephora places a strong emphasis on creating engaging and
personalized shopping experiences in its stores and has a variety of different operational
processes in place to support this goal. This includes hiring and training beauty advisors
and makeup artists, creating engaging store displays and experiences, and providing
personalized product recommendations and consultations.
4. Online Operations: Sephora also places a strong emphasis on its online operations,
which allow customers to shop for beauty products from anywhere in the world. The
company has a robust e-commerce platform that includes features like personalized
product recommendations and a virtual try-on tool, as well as a range of different
logistics and fulfillment processes to ensure that online orders are delivered quickly and
efficiently.
5. Corporate Social Responsibility: Sephora has a strong commitment to corporate social
responsibility and has launched several initiatives to reduce its environmental impact
and promote ethical business practices. This includes initiatives like sustainable
packaging, recycling programs, and partnerships with organizations that promote social
responsibility.
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8. Financial Projection
Sephora is in a strong financial position. According to the reports, the company
generated over $9 billion in revenue, which represents a 6% increase from the previous year.
Sephora's growth was driven by strong performance in both its physical stores and its ecommerce platform. The company also reported strong gross margins and operating income,
which suggests that it has been able to manage its costs effectively. Sephora is a subsidiary of
LVMH Moët Hennessy Louis Vuitton, a leading luxury goods conglomerate, which provides the
company with additional financial strength and resources. Overall, Sephora's financial position
appears to be strong, which bodes well for the company's ability to continue to innovate and
grow in the highly competitive beauty industry.
According to LVMH's 2020 annual report, Sephora generated €12.5 billion
(approximately $14.8 billion USD) in revenue for the year, which represented a 4% increase from
the previous year. The company also reported strong gross margins and operating income,
which suggests that it has been able to manage its costs effectively.
Sephora's strong financial position has allowed the company to continue to invest in new
products, services, and technologies to enhance the customer experience. For example, the
company has launched a range of new digital tools and features, including a virtual try-on tool,
personalized product recommendations, and a mobile app that allows customers to shop for
beauty products from anywhere.
Market capitalization of LVMH (MC.PA)
Market cap: $483.20 Billion
As of May 2023 LVMH has a market cap
of $483.20 Billion. This makes LVMH
the world's 10th most valuable
company by market cap
Earning Per Share for LVMH
(MC.PA)
EPS in 2021: $27.07
According to LVMH's latest financial reports
the company's current EPS (TTM) is $27.07.
In 2021 the company made an earnings per
share (EPS) of $27.07 an increase over its 2020 EPS that were of $11.48.
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Profitability Ratio
Gross profit margin
Operating Profit margin
(Return on sales)
68%
30%
66%
20%
RATIO
RATIO
70%
64%
10%
62%
2019
2020
2021
0%
2022
2019
2020
YEAR
100
10%
80
8%
6%
10%
10%
RATIO
RATIO
Return on Equity (ROE)
12%
7%
60
40
20
4%
2%
2022
YEAR
Return on Asset (ROA)
4%
2021
0%
0
2019
2020
2021
2022
2019
2020
YEAR
2021
2022
YEAR
Financial Leverage (Solvency) Ratios
Debt-to-equity ratio
Debt Ratio
AXIS TITLE
Ratio
0.80
0.66
0.62
0.62
0.58
0.66
0.60
0.40
0.51
0.42
0.41
0.20
0.00
2019
2020
2021
Year
2022
2019
2020
2021
YEAR
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Income Statement by Q FY2022
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Balance sheet by Q FY2022
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Cash Flow Statement by Q FY2022
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Financial forecast
In Millions of EUR
Budgeting 4 Years
2026
2025
2024
Actual
2023
2022
2021
2020
2019
31/12
31/12
31/12
31/12
Period Ending:
Total Revenue
172532
141419
116876
97396
79184
64215
44651
53670
Revenue
172532
141419
116876
97396
79184
64215
44651
53670
-
-
-
-
-
-
-
-
Cost of Revenue, Total
54446
44628
36882
30735
24988
20355
15871
18123
Gross Profit
118086
96792
79993
66661
54196
43860
28780
35547
Total Operating Expenses
126736
103882
85853
71544
58166
47060
36304
42397
Selling/General/Admin. Expenses, Total
72291
59255
48971
40809
33178
26722
20433
24071
Research & Development
375
307
254
212
172
147
139
-
Depreciation / Amortization
2240
1836
1517
1264
1028
-
1287
-
Interest Expense (Income) - Net Operating
-832
-682
-564
-470
-382
-132
42
-28
-
-
-
-
-
98
298
128
-1782
-1461
-1207
-1006
-818
-621
-1060
103
45796
37537
31023
25852
21018
17155
7972
11273
-
-
-
-
-
102
-570
-537
Gain (Loss) on Sale of Assets
-442
-363
-300
-250
-203
-
-
-
Other, Net
2414
1979
1635
1363
1108
-49
-38
-22
Net Income Before Taxes
43824
35921
29687
24739
20113
17208
7364
10714
Provision for Income Taxes
11683
9576
7914
6595
5362
4510
2409
2932
Net Income After Taxes
32141
26345
21772
18144
14751
12698
4955
7782
Minority Interest
3253
2666
2204
1836
1493
-662
-253
-611
Equity In Affiliates
-
-
-
-
-
-
-
-
U.S GAAP Adjustment
-
-
-
-
-
-
-
-
30687
25153
20788
17323
14084
12036
4702
7171
-
-
-
-
-
-
-
-
30687
25153
20788
17323
14084
12036
4702
7171
-
-
-
-
-
-
-
-
30687
25153
20788
17323
14084
12036
4702
7171
Dilution Adjustment
-1
-1
-1
-1
-0.517
-2.07
2.76
-
Diluted Net Income
30688
25154
20789
17324
14084.52
12038.07
4699.24
7171
Diluted Weighted Average Shares
1095
897
742
618
502.48
503.9
504.21
503.84
Diluted EPS Excluding Extraordinary Items
61
50
41
34
28.03
23.89
9.33
14.23
DPS - Common Stock Primary Issue
-
-
-
-
-
10
6
4.8
Diluted Normalized EPS
52
43
35
30
24.04
19.41
9.98
14.42
Other Revenue, Total
Unusual Expense (Income)
Other Operating Expenses, Total
Operating Income
Interest Income (Expense), Net Non-Operating
Net Income Before Extraordinary Items
Total Extraordinary Items
Net Income
Total Adjustments to Net Income
Income Available to Common Excluding
Extraordinary Items
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