Inglot Case

1. How would INGLOT offer high quality products at lower prices?

2. INGLOT was not affected by the recent global crisis

3. What are the challenges faced by INGLOT? Should it accept the application from France for a franchise license? Support your answer with arguments

4. How open economy macro variables affect cosmetic industry in China

5. Examine case learnings

Answer 1:

INGLOT’s state of the art production facilities in Przemsyl accounted for 95% of production and they have already planned for future expansion which can be accommodated in the facility itself. The company’s vision is to provide high quality products at a low and competitive pricing. True to their vision they use best ingredients sourced from Japan, Switzerland and other countries renowned for quality of cosmetic ingredients. They have a unique capability to replenish stock within few days while other brands can run out high demand products for six months. A strategic advantage that INGLOT has in producing at Przemsyl is the presence of highly qualified yet relatively low cost and loyal labour. Also there has been a significant improvement in the infrastructure with the new airport nearby and development of highway. However, INGLOT could achieve lower per unit costs by shifting production to lower cost locations since they have a presence in 44 countries across the globe. Low cost production avenues can be explored to achieve economies of scale and also for even faster replenishment of the products in the stores. China being an upcoming market with lower labour costs it can be safer place to invest in the manufacturing of their products which can cater to the rising demands in the Asian markets especially India where they have 11 stores currently. Non-equity based modes of entry such as franchising is already being followed by the company while other options such as sub-contracting, contract manufacturing can be explored. Another way to lower the Capex by INGLOT is that it can go for vertical integration where it can acquire the suppliers and distributors to lower the cost.

Answer 2: INGLOT was not affected by the recent global crisis. Discuss.

INGLOT was not affected by the 2008 global crisis because of its self-reliance in terms of finance. The 2008 crisis mainly hit companies who had considerable proportion of long term debt in their balance sheets. INGLOTS financing was mostly self-dependent and independent from external financing. INGLOT took a conservative approach to financing which made them immune to fluctuations of the 2008 crisis. Rather the 2008 scenario benefited INGLOT. Restriction on credit did not affect INGLOT’s ability to expand whereas its competitors were facing financing issues. They had