Coty Inc.'s Environment and Organizational Structure

Coty Inc.
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Table of Contents TOC \o "1-3" \h \z \u Executive Summary PAGEREF _Toc32728640 \h 3Introduction PAGEREF _Toc32728641 \h 3Organizational Background and Benchmarking PAGEREF _Toc32728642 \h 4Organization Background, Ethics/Legal, and Current 1 to 2 Events PAGEREF _Toc32728643 \h 5Marketing, Financials, and Accounting PAGEREF _Toc32728644 \h 7Organizational Culture, People, and Diversity PAGEREF _Toc32728645 \h 8Strategy and Planning Analysis—Organization Goals PAGEREF _Toc32728646 \h 9SWOT Analysis: Preparing for Recommendations PAGEREF _Toc32728647 \h 11Recommendations, 21st Century, and Moving Forward PAGEREF _Toc32728648 \h 12Conclusion PAGEREF _Toc32728649 \h 13References PAGEREF _Toc32728650 \h 14Appendices PAGEREF _Toc32728651 \h 16Appendix 1: Coty Organizational Structure PAGEREF _Toc32728652 \h 16Appendix 2: L’Oreal Organizational Structure PAGEREF _Toc32728653 \h 17Appendix 3: Gender Statistics PAGEREF _Toc32728654 \h 18Appendix 4: Financial Statement PAGEREF _Toc32728655 \h 19Appendix 5: SWOT Table PAGEREF _Toc32728656 \h 20
Executive Summary
An analysis of a company’s environment can yield important information that can foster improvement of the performance of an organization. Coty Inc. is a US-based firm that operates in the competitive beauty industry. The company owns and licenses 75 brands, which it markets and sells in more than 150 countries around the world. Some of the popular brands under the company include Burberry, Calvin Klein, Adidas, Gucci, Boss, and Chloe. The operations of the company are primarily divided into three segments that include professional beauty, luxury, and consumer beauty. Each of these segment has a leader that form part of the company’s organizational structure.
The company’s organizational structure is diverse and experienced. At the top of it is its CEO, Pierre Laubiles, who has extensive experience in leadership and business. The company recently hired experienced Sophie Hanrot as its Chief of Human Resources Officer. The financial statements of the company indicate that it has been making losses and for this reason, the company implemented a “Turnaround Plan” that focused on changing culture and productivity, reducing costs, and rediscovering growth.
Major challenges facing the company include established competition, financial problems, constantly changing customer preferences and rising labor costs. This paper offers key recommendations that can help the organization return to profitability.
Introduction
The ability of an organization to succeed today depends significantly on its evaluation of the factors in the internal and external environment that affects its operations. Form the internal environment, an organization’s background, management, culture, and financial factors impact operations and its approach to the market. Externally, factors such as political temperatures, technology, and competition influence a firm’s operations. Through an analysis of internal and external influences, an organization can develop a strategic plan to foster performance in the short run and the long run. This paper examines the environment of Coty Inc., an American-based beauty firm that owns and licenses more than 75 brands.
Organizational Background and Benchmarking
Coty is one of the major multinational beauty organizations in the world with leading positions in Europe and America (Coty Inc., 2019). According to the firm’s 2019 annual report, it sells and distributes its products in more than 150 countries around the world. The company primarily operates under three segments: professional beauty, luxury, and consumer beauty. The professional beauty segment targets salon professionals with nail and hair care products. The segment thus sells products to salons, nail and hair professionals, and stores through either online platforms or direct sales (Coty Inc., 2019). According to the website of the company, it considers itself the second-best performing salon professional company in the world (Coty.com, n.d.). It also holds leading positions globally when it comes to salon nail brand, thinning hair brand, and styler. The major brands under the professional beauty segment include system professionals, Sassoon, professional, Wella Professionals, OPI, and ghd (Coty.com, n.d.).
The luxury segment focuses on premium cosmetics, premium skincare, and prestige fragrances (Coty Inc., 2019). Some of the main brands under this segment include Burberry, Gucci, Boss, Chloe, and Calvin Klein (Coty.com, n.d.). As informed by the company’s 2019 annual report, the segment sells and distributes products through perfumeries, e-tailers, and department stores as well as duty-free shops. The final segment, consumer beauty, deals primarily with retail hair styling and coloring products, color cosmetics, and body care fragrances. Some of the key brands under this segment include Covergirl, Adidas, Max Factor, Clairol, and Rimmel (Coty.com, n.d.). These brands are distributed and sold through supermarkets, hypermarkets, pharmacies, drug stores, and e-commerce retailers. It is evident that the company deals with a wide variety of brands, targeting different types of customers.
The mission of the company according to its website is to “celebrate and liberate the diversity of your beauty.” Some of the values promoted by the company include accountability, bravery, and knowledge of beauty, entrepreneurship, and teamwork. Recently, Coty entered into a strategic partnership with Kylie Jenner when it purchased a 51% stake in her company (Cheng, 2019). The $600 million deal is expected to significantly boost the sales of the company, particularly with Generation Z shoppers. Given the number of acquisitions done by Coty, it is deducible that one of its main expansion strategies is acquisition.
Organization Background, Ethics/Legal, and Current 1 to 2 Events
According to Coty’s 2019 annual report, its organizational structure is product category-based, meaning that the structure is organized according to what, where, and why customers shop. The segments of the operations of the company reflect its management and each has separate financial information that is regularly examined by the chief operating decision-maker (CODM) who also happens to be the CEO of the company, Pierre Laubies (Appendix 1). Laubies, who has a Masters in Law and Masters in Economics, has extensive experience in leadership positions of different companies. Before joining Coty, he was the CEO of Jacobs Douwe Egberts (JDE), a major coffee and beverage company. During his time at the company, he oversaw a merger with Mondelēz’s and thereafter helped turn around the financial performance of the company (Coty.com, n.d.). Laubies also has extensive experience with numerous leadership roles at Mars during his 25 year period there.
Under Laubies, there is Pierre-Andre Terisse who serves as CFO, Daniel Ramos - Chief Scientific Officer, Edgar Huber- President, Luxury Segment, Giovanni Pieraccioni - COO Consumer Beauty, Sophie Hanrot-Chief Human Resource Officer (CHRO), Pascal Baltusen-Global Chief Procurement Officer, Luc Volatier- Chief Global Supply Officer, Kristin Blazewicz- Chief Legal Officer, and Sylvie Moreau -President, Professional Beauty (Appendix 1). It is evident that each of the three segments examined has a leader. Given that each segment is dedicated to customers with specific needs, it can be deduced that the organizational structure of Coty reflects the needs of its customers. In comparison to L’Oréal, Coty’s structure is smaller with fewer members of management. The organizational structure of L’Oréal is divided geographically with each major region having an executive vice president (Appendix 2). Furthermore, the structure cover functions that are not in Coty such as research and innovation, digital officer, and travel retail worldwide.
The hiring of Sophie Hanrot as its CHRO in 2019 (Business Wire, 2019) was a key positive HR issue for the company. As noted by Business Wire (2019), Hanrot has 20-year experience in human resources, primarily in functions that include talent management, culture development, and organizational transformation. Given that she runs her own consultancy firm, Hanrot’s knowledge and experience are key to HR practices at Coty. As seen in its mission, the company seeks to celebrate and liberate “diversity of your beauty.” From the company’s website, the sustainability program of the company focuses on “inclusive beauty” where it seeks to create a culture that accommodates everyone (Coty Inclusive Beauty, n.d.). Gender diversity is also reflected in the company’s workforce (Appendix 3). It also notes its website that it tackles prejudice and discrimination based on ethnicity, gender, disability, and LGBTI (Coty Inclusive Beauty, n.d.). It is deducible that the company demonstrates awareness of diversity and cross-cultural issues.
Marketing, Financials, and Accounting
Marketing, finance, and accounting make key functions of any business organization. According to the company’s 2019 annual report, $404.1 million was spent on advertising, marketing, and licensing (Coty Inc., 2019). To promote its brands, Coty uses a variety of models to create unique images and personalities that match the consumers, distribution, and brand’s equity. For the brands that have been licensed, the firm engages with the licensors to find the best way for promotion. It is noted in the company’s annual report that the promotion of the company’s brands is done with packaging, logos, and advertising tailored to boost the uniqueness of each of the brands. Promotion of the brands of the company is done through many ways including in-salon and in-store displays, \ social and digital media, product places, as well as through collaborations. Furthermore, the company seeks editorial coverage brands in digital, social, and traditional media (Coty Inc., 2019).
The marketing strategies are supported by market and brand data analytics. As informed by Fan, Lau, and Zhao (2015), big data analytics have become integral in helping organizations monitor key strategic marketing decisions such as opinions of customers towards a product or a company (p.1). It can be seen that the company utilizes significant opportunities brought about by technology. In this sense, big data analytics is a key technological factor from the PESTLE model that affects its operations. Without proper utilization of technology, the company risks losing a competitive advantage to other players. The utilization of big data analytics also plays a role in reducing the threats of substitutes and competitive rivalry which are key challenges facing its operations due to low switching costs (Lüttgens & Diener, 2016, p.24). With the promotions seeking to differentiate the products of the company in the mind of consumers, the threat of substitutes is reduced.
In regards to financials and accounting, EBITDA is a key measure of the valuation of a firm (Rozenbaum, 2019, p.513). The EBITDA margin helps determine whether a firm experiences profitability and cash flow problems. The EBITDA margin of Coty Inc. is 12.14% (Yahoo Finance, 2020) while that of L’Oreal stands at 20.84% (Yahoo Finance, 2020). Therefore, it is deducible that Coty’s profitability and cash flows are not as strong as L’Oreal’s. Furthermore, the poor performance of the company is evidenced in its 2019 net l...