Essilor Cases

1. Essilor had a very strong financial performance since the economic downturn in 2010 did not make any effect to the firm. Moreover, the company gained high amount of profit which was account for 11 percent. They adopted geographical strategy by setting up the plants in U.S., Ireland, and the Philippines, and expanding over 100 countries around the world. Essilor also acquired local distributors, set up new subsidiaries, and partnered with local companies. By doing so, Essilor became a strong firm and can easily penetrate into new market segments. Moreover, the company’s operation was differentiated from their competitors since they focused the operation only on the corrective lens segments which was contributed 93 percent of total revenue while the competitors had expanded into related industries. This was very effective method since they focused on only lens, so they can be concentrated to develop the lens and offer various innovative lens to serve the individuals’ vision requirement. Moreover, the firm offered different innovative products to the different markets, and mostly distributed the products to the stable countries, Europe and North America. These two markets were advanced developed countries or high-end market with high potential and contributed more than 80 percent of the firm’s revenue, so Essilor offered several innovative lenses to them to cover various situation such as modern-life and aging, outdoor, and active lifestyle. While Hoya, the main competitor, highly paid attention to distributed the products to Asian countries and Japan which were not as stable as Europe and North America, so Hoya faced low revenues as a result of the declining population in Japan and falling prices in several countries.

1. Opportunities

First, undeniably, the change in demographics plays a major role in opportunities to the optical industry since there is a continual increasing number of people who have myopia and hypermetropia problems. This problem will continually increase in the future as the world population expands, so this can be implied that people will need more optical products to enhance their eye sights. As a result, Essilor will be able to generate higher sales and profits.

On top of that, the alternatives of optical products have many limitations. For example, most of people try to avoid to wear eye glasses because most of them lose their self-confidence wearing eye glasses. Another alternative is Lasik surgery which is still expensive in many countries and not all the eyeglass wearers can be operated. Therefore, contact lens can be one of the best alternative in order to solve the consumers’ eye-sight problems

Lastly, the level of saturation of the less developed countries can be considered as the opportunity as well because these countries have low saturation level, so they will be able to grow easier than those developed countries. Therefore, Essilor, which is in the market leader position, will be able to market into these countries easily and gain profit from these lucrative markets.

Threats

First, the increasing number of retailing would decrease the bargaining power and gross margins of lens manufacturers. This case can be apparently seen in U.S. market that the retail chain has already controlled about half of the market.