Background
Eurocos, Inc., a prominent cosmetic company in Europe, has been facing declining profits despite having established brands in various markets. The CEO is contemplating a strategic shift to address this issue and has sought your advice on the matter.
Key Considerations:
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Industry Structure Analysis: Examine the structure of the cosmetic industry in Europe, focusing on fragmentation and the reasons behind it.
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Profitability Challenges: Understand the factors causing declining profits in recent years.
Final Analysis
To improve profitability and navigate the challenges in the cosmetic industry:
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Strategic Reevaluation: Assess the industry structure and understand the potential benefits of consolidation while maintaining localized marketing and branding.
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Economies of Scale (EOS) and Learning Curves: Leverage EOS and learning curves by consolidating production while considering transportation costs and optimizing plant locations.
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Market Standardization: Evaluate the feasibility of standardizing market needs to achieve operational efficiency while meeting diverse customer requirements.
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Logistics Optimization: Balance the benefits of centralized production against increased logistic complexity and transportation costs.
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Inventory Management: Consider how centralizing production can impact inventory management and how safety stock can be effectively managed.
Also read, A Case Study on Permanent Light Bulbs
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