The Effect of Innovation Efficiency to the Cosmetics Industry

Abstract

With the development of technology, the improvement of people's requirements and the harder competition of cosmetics companies, continuous innovation has become one of the key capabilities of to occupy the market in the cosmetics industry. This paper mainly introduces how to improve the development status of cosmetics companies by improving innovation efficiency and uses the ratio of the number of patents to R&D expenses to measure innovation efficiency. By analysing the financial statements of L'Oreal Paris, Estee Lauder, Shiseido, Procter& Gamble and Beiersdorf, we conclude that companies with higher innovation efficiency are in the better business condition. Through our analysis, we point out that cosmetics companies should focus on innovation while cutting unnecessary costs and improving efficiency to improve their business conditions.