Question

Assess the internal environment of the company, ULTA BEAUTY INC.. Specifically evaluate the core competencies, sources of competitive advantage, and the sustainability of the advantages. The analysis should leverage the tools such as value chain, VRIN. Also, link to company performance.

Answer 1

Ulta Beauty, formally known as Ulta Salon, Cosmetics and Fragrance was founded by Richard E. George and Terry Hanson. They operate 1,174 stores across the US as of Feb 2019

At their core, they are a makeup company who owns over 500 brands that are sold in stores across the country but they also have their own stores that have their own brand and other brands as well.

The company aims to carry both cheap and expensive products across its lineup so that they can serve all their customers and every store has a saloon attached which gives grooming services such as concierge desk, skin treatment room, and hair color processing area using Ulta's products only. Also, it affects a person psychologically when a product is used by professionals and the value of the product increases in their mind

You can say they have their own ecosystem (a term which is almost exclusively used for tech companies). They try to bind their customers with their own brand and since they have a loyalty program which provides a 20% discount, people tend to not leave the company's services because they get habitual of the environment.

One more and a major competitive advantage Ulta Beauty have is since they operate nationwide they also have a database of customer's likes and dislikes, what brand they prefer among other things which can be operated by any store if a particular customer happens to set foot in a store far from home.

Valuable: Their attached stores with saloons that provides grooming facilities and obviously use Ulta's product.

Rare: Its omnipresence with the huge number of brands that have products cheap to expensive serving every type of customer.

Imitability: The customer database that helps in serving its customers wherever they want to be served.

Non-substitutable: Their 1,174 stores that span over the country helps a lot in bringing revenue.

Their revenue and net worth have also increased in recent years. In 2014 they reported they reported a revenue of $713.8 million when they had around 125 stores and in 2019 they reported revenue of $6.72 billion which is 14.4% sales growth year to year.