How to resolve project and contract disputes?
STUDENT PAPER
By Agathe Gélis
SKEMA Business School
Paris, France
ABSTRACT
As the disputes between Brand Name Beauty project and its subsidiaries continue to grow, their impact on projects on cost, time and sustainability become hard to handle for both parties. Indeed, how to manage these situations as they can be challenging but also at high risk for the contractor and the owner? First regarding project management but also contract management by doing the right choice of standardized contract to reduce the disputes and create a win-win relationship. Thus, the main aim of this paper is to explain how to choose the appropriate contract regarding some criteria to prevent the risk and disputes for the project to succeed. To help to do that, the paper uses some resources from other fields (construction, researches, fashion area) and legal contract descriptions to have a better understanding and comparison of the alternatives and how they respond to some projects. Based on some criteria these alternatives (types of contracts) are compared and analyzed by doing some modeling of their impact on these disputes. Finally, according to the results found, one type of contract is clearly the solution of this paper questions and it is the IPD Contract. Indeed, this contract can have a real positive impact if it is well written and followed to solve the dispute between both parties.
Keywords: Dispute resolution, beauty industry, contract, sustainable development, acquisition, diversity of brands, license agreement
INTRODUCTION
“Nowadays, the Beauty industry is valued at 445 billion dollars”[1] and will not stop growing in the next years to come. Indeed, big brand name beauty like L’Oréal, Shiseido, Estée Lauder Companies, Unilever, Coty, P&G or J&J own most beauty companies with license agreement and acquisitions. Current major portfolio changing shape the evolution of these companies. This image from the Business Insider explains clearly all the global brand portfolio today:
Figure 1: “Brand Ownership by Conglomerate”[2]
Parent brands are constantly improving their portfolio management. First, by acquiring new independent brands where every project or program manager must analyze the better investment with high return and low risks for the big brand. But also, found the right team for the job, manage diversity and different cultures people, have the appropriate compensation for them if not, disputes can appear. Thus, the project manager decides to launch some projects with specific brands and teams to create a win-win collaboration. But, “project manager can also decide to reshape completely their portfolio like KAO Japanese cosmetics group”[3]. They have recently reorganized the portfolio management to develop internationally by separating into two groups their brands. One group for the global brands and the other for the regional brands. Then, each project manager focuses on one brand of each group and decide what will be the key priority for the project and strategy to adopt. Thus, their international’s prestige brands Kanebo and Sensai goal is to be expended to other markets and distributed on every channel. All these projects can be a source of disputes between the two parties.
Moreover, through the Deloitte’s study on “Shades for success: influence in the beauty market”[4] of 2017 we will understand why they must change their portfolio management and search for new projects. Indeed, some new challenges are part of this new growth. First, the new demographics with millennials born between 1980 -2000 who are digital consumers, influencers and so becoming the main concern for global brand beauty. Indeed, their consumption habits are leading the way for other generations to follow because it is an example of youth and long-life. The second factor is geography, with growing economies in the Middle East and Africa (10,5%), Asia (10%) or South-Korea and its innovations. Finally, the third factor is a new business model different from traditional beauty brand and based on digital innovations like Birchbox or Glossier. These medium-sized independent brands are putting big brand companies like L’Oréal or P&G at risk by challenging them to appeal to new generations and develop innovative products.
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Editor’s note: Student papers are authored by graduate or undergraduate students based on coursework at accredited universities or training programs. This paper was prepared as a deliverable for the course “International Contract Management” facilitated by Dr Paul D. Giammalvo of PT Mitratata Citragraha, Jakarta, Indonesia as an Adjunct Professor under contract to SKEMA Business School for the program Master of Science in Project and Programme Management and Business Development. http://www.skema.edu/programmes/masters-of-science. For more information on this global program (Lille and Paris in France; Belo Horizonte in Brazil), contact Dr Paul Gardiner, Global Programme Director paul.gardiner@skema.edu.
How to cite this paper: Gélis, A. (2019). Collaboration between Brand Name Beauty and their Subsidiaries: How to resolve project and contract disputes? PM World Journal, Vol. VIII, Issue VI, July. Available online at https://pmworldlibrary.net/wp-content/uploads/2019/07/pmwj83-Jul2019-Gélis-brand-name-beauty-and-subsidiary-collaboration.pdf
About the Author
Agathe Gélis
Paris, France
Agathe Gélis is a French student in SKEMA Business School in Paris, doing her MSc in Project and Program Management and Business Development. Thanks to this MSc she is now accredited Agile and Prince2 and search to develop its experiences and contacts in project management. Born in the southwest of France, she made two years in “Classe Préparatoires aux Grandes Ecoles de Commerces” to prepare for the entry exam to French Business Schools. When she entered Skema, she went to live in Nice in France for almost two years before doing one semester in Raleigh, North Carolina. She also lived in Costa Rica in 2012 for one year and a half and keep trying to study abroad and in the future work worldwide. Finally, for the past few years, between her studies, she acquired some experiences in real estate area by working in a rental agency for four months, and as a manager in a French wine shop called “Nicolas” for two months.
Agathe Gélis lives in Paris, France and can be contacted at agathe.gelis@skema.edu
[1] Decker, M. (2017). This Is Who Owns Your Favorite Beauty Brands. Retrieved from https://www.refinery29.com/beauty-brands-ownership-guide.
[2] Willett, M. (2017). These 7 companies control almost every single beauty product you buy. Retrieved from http://www.businessinsider.fr/us/companies-beauty-brands-connected-2017-7
[3] Kao reorganizes its brand’s portfolio management. (2018). Retrieved from http://www.premiumbeautynews.com/en/kao-reorganises-its-brands,13427
[4] Shades for success Influence in the beauty market. (2017). Retrieved from https://www2.deloitte.com/content/dam/Deloitte/cn/Documents/international-business-support/deloitte-cn-ibs-france-beauty-market-en-2017.pdf
