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ANALYZE
Good and BadThe v a lu e of the cosmetics and personal grooming industry and its
.q u e s t io n a b le p r a c t ic e
AllNatural
Intro: Definition And Organization
Defining the cosmetics and personal grooming industries
, Miss Lily Lim Previous Regional DirectorforInternational Education& , Development Estee LauderAsia
Definition: Segmentation
HairOral
Hygiene
Plastic Surger
y
Some of the companies mentioned:
Skeptics first impression:
Define: Value to society
Usefulness of the industries in respect to particular purpose.
Scope of discussion:
Creating Value for stakeholder (Some examples):
IMPROVE SELF-
ESTEEM
Consumers
Government
Community
ECONOMIC DEVELOPMENT
PHILANTHROPICAL
Define: Questionable Practices
Acts deemed unethical or produces negative consequences to specific groups of people.
Scope of discussion:
Questionable practices to stakeholder (Some examples):
Consumers
MISINFORMATION OF PRODUCTCommunity
DISHONEST REPORTINGSharehol
ders
ANIMAL TESTING
Organization
Consumers
Explaining it
Balance
Market Stakeholders
Value: Consumers
HEALTH AND WELL-BEINGSOCIAL AND PROFESSIONAL
DEVELPOMENT
IMPROVE SELF-
ESTEEM
VALUE
Feeling good about themselves- Confidence and Happiness.
Acceptance by friends and family.
The effect on their social and professional life.
Health and well-being of individual
Bad: Consumers
LABELING
ADVERTISINGMISINFORMATION OF PRODUCT
Questionable Practices
1. Labeling
2. Advertising
3. Misinformation of product
Questionable Practices1. Labeling
Customers cannot make informed choices.
Ingredients of product must be made known.
Certain products may be harmful and can cause allergies.
Did you Know: The use of the term “organic” is not regulated by any entity as of yet.
2. AdvertisingMisleads consumers.
(Poll conducted by Saatchi and Saatchi found that ads made women fear being unattractive or old.)
Undue pressure on women and men to focus on their appearance.
Did you know: Survey by Teen People magazine- 27% of the girls felt that the media pressures them to have a perfect body
2. Advertising
oConsideration of physical appearance as a measure of their worth. (Body Image Survey)
oDiscrimination (Garnier, a division of L'Oréal Fine for Fructis Shampoo Ad)
oEnd $9.3 billion on cosmetics and skin products a year...
3. Misinformation of Product
Cosmeceuticals
FDA only recognizes products as drugs, cosmetics or a combination of both
Product claims may be exaggerated. (L'Oreal withdraw a multimillion-pound television advertising campaign starring model Claudia Schiffer)
Did you know: Food and Drug Administration (FDA), does not actively review the inflated claims of cosmeceutical manufacturers.
Value: Employees
PHYSICAL SAFETY
PSYCHOLOGICAL NEEDS
AFFINITY TO THE JOB
INCOME
RESPECT AND SELF ACTUALIZATIONSOCIAL EVENTS
Maslow’s Hierchy of Needs
Necessity of Cosmetic in job application and workplace
1. To remain competitive
- To get a job in the cosmetic industry
Cosmetic value in second level of Maslow’s Hierchy of Needs
2. Physical Safety
a. VPP (voluntary protection program)Providing regular check up
b. Offering mental health educational seminarsc. Opening a mental wellness counseling office
3. Psychological Needs
a. Secure employmentb. Turnover rate=2%c. after 3 years employment
Having training course73 percent of manager (eg L’Oreal)58 percent of all employees
Improving the quality of product
Improving the company’s performance level
Creating stronger affinity to the job
4. Affinity (Love) to the job
5.Respect and self-actualization
Giving responsibility
Remuneration policy( based on the performance and the level of responsibility)
Self-actualization state
Value: Suppliers LOW DISRUPTION
COMMUNITY TRADINGFAIR TRADING
JOINT PARTNERSHIP
TANSAPRENT RELATIONSHIP
Creating Value- Supplier ?
Establish basis. And what is considered creating value for supplier
: Lo n g t e rm g a in s Lo w, D is r u p t io n
,Tr a n s p a r e n c y J o in t E f f o r t
P a r t n e r s h ip
Im m e d ia t e: e x p e c t a t io n G o o d
– S a le s P r ic e F a ir a n d
C o m m u n it y t r a d in g
1. Immediate Gains – Fair Trading
Fair Prices Fair wages, sustained source of income especially for countries with little bargaining power
Not always about the highest profits
Do Not EXPLOIT
ETHICAL TRADING
2. Immediate Gains – Community Trading
1. It is a part of fair trading2. Target Marginalized Societies3. Create Value: Market access for economically
disadvantaged suppliers.4. Supplier’s community benefit as well –
Sustained Source of income5. The Body Shop: Engage in Community
Trading for 20 years.
The Body Shop
1. Inform: Supplier sign letter of ethical commitment
2. Third Party Audit
1. Long Term Gain: Joint Effort Partnership
How do they promote social responsibility?
3. Monitoring Corrective Action Plan
1. Long Term Gain: Joint Effort Partnership
How do they promote social responsibility?
1. Inform: Supplier sign letter of ethical commitment
3. Monitoring Corrective Action Plan
1. Long Term Gain: Joint Effort Partnership
How do they promote social responsibility?
2. Third Party Audit
1. Inform: Supplier sign letter of ethical commitment
3 . M o n it o r in g C o r r e c t iv e Ac t io n P la n
Thoughts about creatingvalue for supplier
, Miss Lily Lim Previous Regional DirectorforInternational Education&
Development forEstee Lauder
1. Firms should not only work to establish good labour and
environmental standards within the firm
2.Look at the supply-chain 3.Prevent finger pointing
Create essential value
Value: Shareholders
HIGH DIVIDENDS RETURN
CAPITAL APPRECIATION
Creating Value- Shareholder?Establish basis. And what is considered creating value for supplier
1. Creating Value- Capital Appreciation
Market Analysis:
Industries experienced a lucrative value growth of 27% between 2001 and 2006
Oral Hygiene, Baby Care, Men’s grooming, Sun Care
In the future: Healthcare and Cosmetics commodities is to rise 5.7% annually through 2012
Demographic changes in develop countries
Rise in affluence in developing countries
New Consumer focuses: Organic make up, male grooming and anti ageing
1. Creating Value- Capital Appreciation
Bad: Shareholders
DISHONEST REPORTING
Questionable Practices- Shareholder1.Dishonest Reporting
• Common stock owner of ULTA filed class action lawsuit against it.
• Undisclosed increased advertising expenses
Did not reveal any significant information about third quarter 2007 earnings
Company lacked adequate internal and financial control
Non- Market Stakeholders
Value: Government
ECONOMIC DEVELOPMENT
PROMOTING EMPLOYMENT
Values for Government
• Economic development
• Promoting employment
1. http://www.ctfa-cosmeticjobs.org/
1. Economic Development
• Contribute to the economic growth of the country
Global market > $ 270 billion in 2006
One of the fastest growing industries at the global extent
1. Economic Development
• Sustainable development of cosmetics industry
• Average annual growth - 4.3%
2. Promoting Employment
• Employment is one of the important figures concerned with the government
Industrial growth > Promote Employment
2.Promoting Employment
63,358
2007
60,851
2006
52,403
2005
16%
4%
L’Oreal hired more employees
Bad:Governmnet
LIMITED TESTING
1.Questionable Practices• New products tested to a limited extent
Consumer safety
Analysis of US market - among 23,000 products:– 3.3 % fail to meet safety standards
98 % contain one or more ingredients – not conducted safety standards by FDA or any other accountable institution
Value: Community
SOCIAL INTIATIVESETHICAL
PHILANTROPHY
CHARITY FOUNDATION
1 . E t h ic a lIn it ia t iv e s
AG AIN S T AN IM AL.TE S TIN G .
Refrain from entering markets where animal testing of their products is legally required
Comply with the Humane Cosmetics Standards
– Label their products Against Animal Testing
ALTERNATIVE TESTINGSGrowing of human skin in a laboratory dish
– Expected to dramatically reduce the need to test cosmetics and chemicals on animals.
– Activists say tens of thousands of creatures a year will be spared from the misery of laboratory trials.
2. Social Initiatives
•Awareness Campaigns
•Philanthropy
Awareness Campaigns
• Aids Awareness
Breast Cancer Awareness
Aids Awareness• Te a m e d
u p w it h MTV t o
la u n c h t h e
“ M o v e Yo u r Lip s
c a m p a ig n ” in
2 0 0 8
• R a is e f u n d s f o r
Th e S t a y in g
A liv eF o u n d a t io n
• Estée Lauder Companies' Breast Cancer Awareness Campaign was established in 1992
Dedicated to spreading awareness about breast cancer and the message that early detection saves lives.
C H AR ITYFO U N D ATIO N S
• L’Oreal Corporate Foundation – €40 million has been pledged for its corporate
mission
• The Body Shop Foundation– Donated over £11 million in grants
• Proctor & Gamble Fund– In 2007, the fund contributed more than $125
million , improving life for more than 50 million children around the world.
Bad: Community
ANIMAL TESTING HARMFUL SUBSTANCES
WASTE GENERATION
BEFOREAFTER
Enlarged Picture of the infected eye
1 . An im a lTe s t in g
2. Waste Generation
3 . E n v ir o n m e n t a l Im p a c t o f P la s t ic s
• -N o n B io d e g r a d a b le
• C o n s is t s t o x ic s u b s t a n c e s
Harmful SubstancesCosmetics contain harmful chemicals such as volatile organic compounds (VOCs)
VOCs and Smog
Summary and Conclusion
Summary
Questionable practices: Who’s at fault for all this?
Suggestion to strike the balance:G o v e r n
:m e n t La w s
a n dR e g u la t
io n( )K o r e a
E d u c a t in g t h e
- p u b lic C h a n g in g
t h e.d e m a n d s
3. D O VE-S e lf
e s t e e mf u n d
2 . A l g o r e a n d Liv e
E a r t h .
Educating the public -Beauty
Conclusion
• Cosmetic and personal grooming industries values and questionable practices to each stakeholder (Market and Non-market Stakeholder)
• Who is at fault?
Suggestion for change
THANK YOU
XOXOAll Natural