Business Strategy of L’oreal
Added on 2020-10-05
11 Pages3698 Words238 Views
Business Strategy
Table of ContentsINTRODUCTION...........................................................................................................................1P1 Applying appropriate frameworks analyse the impact and influence of macroenvironmental factors on L’oréal and its strategies....................................................................1TASK 2............................................................................................................................................3P2 Analyse the internal environment and capabilities of a given organisation using appropriateframeworks .................................................................................................................................3TASK 3............................................................................................................................................4P3 Porter's Five Forces Model for examining competitive environment....................................4TASK 4 ..........................................................................................................................................5P4 Strategic management plan for L'oreal by including strategies, objectives and tactics.........5CONCLUSION................................................................................................................................8REFERENCES .............................................................................................................................10
INTRODUCTIONBusiness Strategy is a long term action plan that is designed in order to achieveparticular goals of the organisation. It is essential for the company to plan their businessstrategies in a proper manner to gain competitive position in the market and attain long termgoals. It assist the companies to make effective use of resources in order to perform businessfunctions effectively (Acquaah, 2013). The project is based on the Loreal Company which is aFrance based multinational company deals in personal care and cosmetic products. The projectwill focus on impact of macro environment on the company as well as analyses the competitiveposition of the industry with the help of Porters Five forces Model. It also develops anunderstanding and interpretations of the strategic directions available to the organization. TASK 1P1 Applying appropriate frameworks analyse the impact and influence of macro environmentalfactors on L’oréal and its strategiesIn order to gain competitive advantage in the market, it is essential for Loreal deputystrategy manager to analyse the impact of external environment on the functioning of thecompany. External environment of the business includes the PESTLE analysis which assist themanagers to identify the potential opportunities and risks lying under them. Political- It includes various rules, regulations and policies of the government underwhich the respective company is working. As the company has its manufacturing inParis but its rules and regulations of France will greatly affect the company informulation of strategy. With the increase or decrease in the tax of the country, companyhas to adopt different business strategy in order to make the product affordable to thecustomers. This affects the strategic planning of Loreal with the change in politicalfactors (Acquaah, 2013). Economic- It includes the interest rate, exchange rate and GDP of the country affectingthe performance of the company. If there is fall in the value of currency and dollars itwill impacts consumers purchasing power and therefore impacts sale of Loreal products.It would be a major threat for the company but moreover with the increase in the GDP ofthe state it is the main factor contributing towards the business of luxury cosmetic1
products. People will prefer purchasing products and will provide an opportunity to thecompany to increase its sales. Social- This factor encompasses the changes in the consumer demands and theirattitudes and lifestyle towards buying the product. As the consumers have becomefashion freak, Loreal should continuously innovate its products according to thedemands of the people and assist in gaining competitive advantage(Alsudiri Al-Karaghouli and Eldab, 2013). This makes problem for the Loreal to changes theirbusiness strategy as with the change in the features of product, it leads to change inprice. This affects strategic planning of the company. Technological- It refers to the advancements in the technology used for themanufacturing of goods. Loreal should adopt for recent technologies in order to upgradetheir products and attracts larger customer base. But if the company doesn't usetechnology advancements to innovate their products, it would be a threat for thecompany to maintain its sustainability over a period of time. Legal- This is considered with the laws and legislations of the which the company hasto prevail for its smooth functioning. There are various laws such as product safety,employee health and safety as well as proper advertising of the product. Working alongwith these laws maintains company's competitive position in market. It is also concernedwith various laws such as employment law, anti discrimination act, minimum wages act.Working along with various laws affects the business strategy of the company as theyhave to formulate strategies regarding developing qualitative products as well as to retainemployees in the company for a long period (Bharadwaj and et. al., 2013). Environmental- It is concerned with the proper utilisation of resources within thecompany and carry production process in such a way which doesn't harms theenvironment. It is necessary for Loreal to use raw materials which are eco-friendly innature and doesn't harm the environment. Managers at Loreal needs to adopt businessstrategy so as to provide products which are environmental friendly in nature and gainscompetitive advantage in the market. 2
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