Business Strategy for L'oreal - Doc
Added on 2020-10-22
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BUSINESSSTRATEGY
Table of ContentsINTRODUCTION...........................................................................................................................1TASK 1............................................................................................................................................1PESTLE and SWOT analysis for organization's capabilities.................................................1Porter's Five Forces Model for competitive analysis.............................................................4TASK 2............................................................................................................................................1Different types of strategic directions available to organization with justification andrecommendation of growth strategies and platforms.............................................................1Strategic management plan for L'oreal...................................................................................2CONCLUSION ...............................................................................................................................3REFERENCES................................................................................................................................4
INTRODUCTIONBusiness strategy refers to the decisions or course of action undertaken by an enterprisein order to achieve their long term goals and objectives. Such actions and strategies are aimed atgrabbing the attention of customers, gaining strategic edge over rivals, strengthening businessperformance and attaining high stake in market. The mission and vision of an enterprise serve asthe basis upon which the strategy and planning of business is done (Brewster, 2017). The presentreport is based upon L`oreal which is a French brand dealing in personal care products,headquartered in Clichy, France. It includes PESTLE and SWOT analysis to gain knowledge oforganisational capabilities. Also, Porter Five Force analysis is done to gain an insight into firm'scompetitive environment. Besides this, evaluation of various types of strategic directionsavailable to company is included. Lastly, recommendations have been provided for growthstrategies along with a strategic management plan.TASK 1PESTLE and SWOT analysis for organization's capabilitiesStrategic planning refers to the process of defining the future plans of an entity which arenecessary for accomplishing organisational goals and objectives. It comprises of sequence ofsteps which are essential for an enterprise to align the behaviour and performance of overallorganisation towards the vision and long term goals of company. Basically, it is a long term planwhich is made for a time period of 3-5 years in a strategic manner so as to gain an edge in marketand enhance the profitability and growth of business. The primary objective here is to provide arelevant and adequate guidance to organisational leaders in order to assist them in makingdecisions associated with operations, workforce, utilisation of resources and stakeholders. Thishelps the entity in ensuring that the functioning of company is in accordance with the desiredresults.L'oreal is one of leading brands in cosmetics, hair, make-up and skin care products. Beinga company with outlets spread across the globe, it is highly significant that strategic planning isdone by the enterprise in order to gain knowledge of the internal and external businessenvironment (Cavusgil and et. al., 2014). In today's world, competition is rising at a rapid pacewhich enhances the scope as well as need for L`oreal to come up with effective businessstrategies and plans in order to maintain the position and goodwill of organisation in1
marketplace. New companies are constantly entering into the personal care and cosmeticsindustry in UK which further raises the standards of this sector. Thus, this enterprise takes intoaccount the internal as well as external factors that affect the operations and functioning ofbusiness in the long run.PESTLE AnalysisThis is a strategic tool which helps an enterprise in gaining an insight into the externalenvironment of business. The managers of L`oreal have conducted PESTLE analysis to gainknowledge about the external capabilities of company, as described below:-Political Factors: This defines the extent of government intervention in the operationsand functioning of business. In this, UK government is stable and thus, the laws and legislationsprevailing in the country remain consistent over years for personal care and cosmetic industry.L`oreal is a leading global brand which strives to provide products which do not contain anyhazardous or unhealthy substance (Chang, 2016). However, the government of UK hasprohibited animal testing of goods which may create short-term hassle for this company. Thus,L`oreal is capable of avoiding to get involved in any such acts which are banned by statute.Economic Factors: An enterprise which is running as a part of an economy is affected bya number of economic factors such as currency rates, inflation, interest rate etc. At present, theeconomy of UK is affected the fluctuations of currency as a result of Brexit. Besides this,inflation rate within UK has also increased significantly leading to a rise in distribution andproduction costs. It has been observed that GDP of cosmetic industry within UK has seensubstantial growth over years which is beneficial for L`oreal. Thus, company is capable ofintroducing more products within the cosmetics section in order to gain an edge over rivals.Social Factors: This includes the values, practices, beliefs, norms, traditions of people ofa country. The major reason behind the leading position of L`oreal in today's competitive worldis that the company manufactures and introduces only such products which are capable ofmeeting the needs and demands of consumers. Besides this, it is evident over years that thisorganisation continuously analyses the latest fashion trends and preferences of people and thentake decisions about development of a new product (Chen and Jermias, 2014). Further, there arecertain ingredients the utilisation of which is considered as a holy sin by certain communities.Thus, L`oreal is capable of ensuring that they produce new products and ranges as per consumer2
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