Essay example on Expansion of Coty Inc. Company in Portugal

Published: 2022-11-03
Essay example on Expansion of Coty Inc. Company in Portugal
Type of paper:  Essay
Categories:  Company Professional development Business strategy
Pages: 7
Wordcount: 1792 words
15 min read

Coty, Inc. is a business beauty company with its headquarters in New York City but it has also many subsidiaries in different states worldwide. The subsidiaries help the company in the manufacturing of its products, marketing, and even distributing to consumers and the market. Coty, Inc. deals with products such as consumer beauty, luxury, and professional beauty (Datta, Y., 2018, 180). It has an objective of making the beauty industry to have an impact worldwide because of the type of products it produces. On another parallel, most of the products meet the needs of the consumers hence creating a pull in demand which in turn makes the company expand its branches. The company uses beauty in all its channels to make profits and expand its branches countrywide in the fact that, it gets returns from the subsidiary companies in countries such as Portugal. It expanded its business activities to Portugal because of the trust it had created in the type of products such as health and beauty which are always in need from the consumers.

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The business environment in Portugal

There are continued changes in the economic environment of Portugal for instance, a shift in demand and supply, favorable tax rates and favorable government policies. This makes the Company extend its subsidiary offices on the basis of the comparison made pertaining historical factors, subjective management in the economic sector, and related revenue compensation by the government in case a company incurs a loss during its operations. The derivatives account for a goodwill and significant impact on the wellness of the company and Portugal as a whole. This is because of the post-employment opportunities that the country expects the company to supposedly create for its people hence raising the living standards and gross domestic product of the citizens. The factors impact the company in the sense that, it feels to have received a warm welcome and thereby an enabling environment in its operations.

Coty Inc. is considered a global beauty company and this creates a challenging environment from other beauty companies that deal with the same brands especially in Portugal. Coty Inc., therefore, was able to develop a division subsidiary company by the name Well Prestige Products Portugal SA, which works under the stiff competition and challenging environment. Under the terms and conditions of the subsidiary, the company delivers its products to various shops and to consumers through online and one to one strategies by giving discounts depending on the quantity of purchase made. The discounts created in the market results into negative pricing impacts which are created as a result of the strain to adapt to the stiff competition environment and maximizing the company's profits.

The operational environment of Portugal is risky in the sense that, there is a price for products keeps on shifting because of currency fluctuations. Consequently, political risks such as political instability experienced in East and Middle Europe pose a threat to the operationalization of the business. Notwithstanding reputational and regulatory measures, the working environment is really risky and challenging but the company puts all its efforts to ensure that is felt globally in terms of meeting the expectations of customers and expanding its branches to market all its brands. It respects all the reputations set and the regulatory measures imposed by the Portugal government hence becoming probable and easy to maintain its position depending on the interests and trust of people.

Portugal's Foreign Direct investment is another enabling business phenomenon which strengths the activities relating to investment. From recent statistics, Portugal has created free zones to allow investments from foreign countries and also offers citizenship which is bureaucratically earned (Santos, E., 2018, 174)). The implication behind this perspective is clear that, for one to earn the citizenship there is a fixed sum of money paid to ensure that there is a renewal of the ownership of the companies in Portugal. It is ranked first worldwide in Solar investment and this supports foreign direct investment which is an enabling environment for any company that will wish to invest the country. At the same time, it takes the second position in the foreign direct investment programs and this can be seen from the strategies it employs in most of its products.

Ranking Portugal worldwide on support opportunities it offers to its consumer's affordable products at effective prices hence maintaining its iconic portfolio as ever shining and growing. Products such as fragrance and hair beauty make the company attractive to the fact that, women are the most outstanding beings that make use of such products. In collaboration with foreign direct investment policies, the company ascertains the potential to carry out its activities hence making Portugal a shining nation in terms of foreign investment. Statistics indicate that Portugal stands out as the largest country that supports investment hence making it appropriate for investors to develop trust when investing despite the fears from the economic crisis. Despite Coty Inc. having its subsidiary division in Portugal, the competition with its main office is quite effective in explaining the strengths of the type of business (Santos, E., 2018, 186). It is through this annotation that the company gets its iconic characteristics in beauty products.

Pestle and Porter's five forces analysis for Coty Inc. in Portugal

The pestle is a set of business analysis tools that are used by many organizations to identify challenges in the macro competitive environment of their businesses. Pestle tools are regarded as the best and strategic methods because they assist organizations to carry out their operations when identifying any weaknesses (Hamilton, L. and Webster, P., 2018, 112). For instance, Coty Inc. Company makes use of the tool to identify the competitive forces that hinder its operation outside the internal problems. It identifies problems that originate from outside the company's management. On the other hand, Porter's five forces analysis comprises of the tools that are used to analyze power situations within an organization for instance power relations before the replacement of some management or external and the internal threats that may lead to disorganization of an organization.

Pestle analysis

Coty Inc. Company can ravish the problems that affect its operations by using the Pestle analysis tool which looks at the external forces that hinder its progress (Hamilton, L. and Webster, P., 2018, 119). For instance, environmental factors are the most outstanding features that determine demand and supply of the company's products. Pestle, therefore, takes a deep look at factors such as political instability, strict government policies, economic factors, to mention but a few. On the same parallel, pestle analysis tool provides a window through which the needs of consumers are taken into consideration to ensure that they have the capability to purchase the products. Discounts bear the best analogy to explain the principle in the sense that, consumers are allowed to get the beauty products at a cheaper price.

Looking at the social, economic and political environment, it is easier to plan on the right strategies that can be used to influence consumers to buy products. Pestle, therefore, allows the company to introduce experts in order to look at factors that will assist the business to thrive and hence making it easier for growth. The economic environment in Portugal particularly the fluctuation of currency is a threat to the progress of Coty Inc. Company's business. Pestle helps to predict the changes and how the brands should be distributed to people in different zones and different geographical areas. In another approach, it looks at the factors that affect the buyer's decision and then taking a step further to improve the conditions so that when one side of the front succeeds, the other follows the same approach hence making it easy to comply with the changes at any given time.

The political aspect from Pestle's point of view illustrates that politics plays a vital role in determining the type of political market of any organization. Portugal government defines employment laws, tax policies, and employment laws and how they affect the competitive business environment. Laws of the state have an interplay and effect on the business in the sense that, they explain trade controls and how the policies and regulations need to be intertwined to result in a healthy environment. Coty Inc. Company experiences some challenges when trying to work in close consideration to the laws although, to some extent, the state offers incentives which also boost its performance and operations.

Porter's five forces analysis

The tool is specific to power that is, it comprises of five forces that assist to determine internal and external power situation that may be threatening or favorable to a business (Hamilton, L. and Webster, P., 2018, 124). Coty Inc. looks at this by inputting its efforts to see how power is balanced between these different situations. The balance of power can be explored five perspectives starting from the supplier, buyer, threat of the new entrants such as the foreign direct investment measures, a threat from competitive organizations, and the threat from the rules and regulations legal institutions. The company experienced all this when extending the business to Portugal. All this is aimed at eliminating a situation that may cause competitions, threats, and weaknesses that may impact the progress of the companies and the wellness of consumers.

Using Porter's five forces, the company is allowed to seek expertise who have a vast experience in marketing and advertising so that they can employ the five forces and determine where there is imbalance so that effective strategies can be implemented. For instance, the supplier power encompasses the number of suppliers that distribute the beauty products, their uniqueness, and the ability to communicate with customers on the type of products they are supplying. The uniqueness of the suppliers will ensure that even if there is competition in the market, the products of a particular company are still attracting a need and therefore increasing the number of products manufactured. The transition of the process means growth and expansion of the business which ensures that productivity is ravished.

A business with subsidiary branches like the case of Coty Inc. has the authenticity to study the country's laws in order to understand rules, policies, and regulations that need to be met in order to smoothly run a business. Portugal allows investment of companies but there are laws that the company has to adhere to for it to be allowed to trade with Portugal's Citizens. Moreover, a state allows a foreign country to predispose its investments because of the belief that, its citizens will get employment opportunities. Coty Inc., therefore, will work in relation to creating employment opportunities for Portugal's local citizens before considering the other group. On the same parallel, payment of taxes hastens the countries revenue improving its economic standards. Portugal, therefore, is strict on this measure to ensure that all its taxes are paid.

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