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Business Strategy Assignment- L'oreal

Added on - 12 Nov 2020

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BUSINESS STRATEGY
TABLE OF CONTENTSINTRODUCTION...........................................................................................................................1TASK 1............................................................................................................................................1PESTLE and SWOT analysis for organization's capabilities.....................................................1Porter's Five Forces Model for analysis of competitive environment........................................4TASK 2............................................................................................................................................6Evaluation of different types of strategic directions available to an organization......................6Justification and recommendation of growth strategies and platforms.......................................9Strategic management plan for L'oreal by including strategies, objectives and tactics............10CONCLUSION..............................................................................................................................11REFERENCES................................................................................................................................1
INTRODUCTIONBusiness strategy provides ways and directions by applying which an organizationachieve its goals. It involves long-term planning in which course of actions are executed toattract customer, create competitive advantage, strengthen performance and attain company'sobjectives. Vision and mission are the base on which the whole business plan and strategy isformed and these must be aligned with current and future plans of an entity. It is a road map forsustained profitability, competitiveness and growth (Brewster, 2017). It is a continuous processand conducted in each segment in order to accomplish purposes.This report exhibits impact of various macro environment, analysis of internal capabilitiesand environment, evaluation of different types of strategic directions, recommendation of asuitable strategy for growth and a strategic management plan. To form an effectiveunderstanding of all the above-mentioned, L'oreal has been chosen. It is a French personal carecompany having its headquarters in Clichy, France. It is considered the world's largest cosmeticscompany which provides products for skin care, hair colour and care, make-up, perfume andmen's skincare. By the end of this report, reader will have knowledge about the market standingof L'oreal through various analysis such as PESTLE, SWOT and Porter's Five Force Analysis.TASK 1PESTLE and SWOT analysis for organization's capabilitiesStrategic planning is a systematic approach or process for determining future plans byidentifying goals and objectives. It also includes steps and sequence for attaining the statedprospective vision and goals. It is a long-term planning for at least 3-5 years done in strategicway. The aim is to guide organization's leaders for making decisions regarding resources,operations, employees and stakeholders to have desired outcomes. Also, this enable organizationto make adjustments in direction in respect to changing environment(Cavusgil and et. al., 2014).Further, a company can also know about the viability and success of plans so formulated andimplemented by it. L'oreal is the leading company in cosmetics and it does strategic planning ona continuous basis to remain competitiveness. However, competition is rising because customersare very conscious when it comes to choosing products for their skin and hair. Also, many newcompanies are taking entry into this market not only in UK but in other countries as well. Hence,it becomes imperative for Loreal to make strategies in order to sustain its position in the market.1
Thereby, before any major decision-making, it should analyse the factors, both external andinternal that could affect it. This may be achieved by conducting PESTLE and SWOT which isthen followed by Porter's Five Forces to assess the competitive environment.PESTLE Analysis-Political factors:These factors include foreign trade policies, government policies,labour rate etc(Chang, 2016). L'oreal is being affected by various norms of UK government andto comply with these, it is producing products that are safe to use and does not contain anyharmful or hazardous substance. However, UK government has banned animal testing ofproducts, which is going create a short-term hurdle for L'oreal. It should avoid any kind ofviolation of these policies.Economic factors:A business is affected by inflation rate, currency exchange rates,growth, interest etc. in the economy. Currently, its business has been impacted by fluctuations inpound due to BREXIT. Along with this, the inflation rate in UK has also increased, along withthis, an increase in manufacturing and distributing costs. However, GDP of cosmetic in UKmarket has seen a growth which is plus point for L'oreal. This will incur high costs which willimpact its efficiency. Proper strategies should be made to avoid any negative long-term effect onthe business of company.Social factors:The beliefs, values and perceptions of people living in a society influencethe activities of an entity. The reason behind success of L'oreal is that it launches productsaccording to preferences and fashion trends. Also, it has a responsibility to use technology whichwill not harm its surroundings as well as lives of people living there. Further, L'oreal has beenunder pressure due to societal norms to stop using ingredients which, if used will be consideredas holy sin. Hence, this will impact it sales as buyers will boycott L'oreal's products. Also, it hasmaintained quality and effectiveness in skincare products by maintaining an adequate quantity ofchemicals which are suitable to all skin types.Technological factors:Loreal uses innovation by using contemporary trends. It is thekey to its success and have proved to have created positive outcomes which increased its revenueand sales. Also, it invests extensively in R&D to for new technological development(Chen andJermias, 2014). This helps in maintaining the quality of its cosmetics products and to ensureeffective customer relationship. Further, it has undertaken digital change and due to which itsproducts are also available on e-commerce sites. These are one of the main factors that is2
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