Business Strategy: Analysis of L'Oréal and Porters Five Forces Model

BUSINESS STRATEGY

Table of Contents
INTRODUCTION...........................................................................................................................1
1.PESTLE analysis of L'Oréal................................................................................................1
2. SWOT analysis of L'Oréal.................................................................................................4
TASK 2............................................................................................................................................5
1. Porters Five Forces Model..................................................................................................5
2. Strategic planning of L'oreal..............................................................................................7
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................11

INTRODUCTION
Business strategy is an action plan to accomplish long term business goals and objective
by maintaining strong competitive edge in the market. This strategy is formulated by top
management which helps in enhancing the overall performance of the company by increasing
market share, performance and profitability.
L'Oréal is one of the leading cosmetic company in the world. It mainly deals in make-up,
skin care products, hair colour, perfume, sun protection, hair styling products. The mission of
L'Oréal is to offer best cosmetic products worldwide with improved quality and efficacy. The
vision of company is to become global organization with increased customer satisfaction and
profitability. Main objective of L'Oréal is to increase quality of products by continuous research
and development which leads to increase in company's growth and market share by 2020.
This project studies the external environment factors like political, economic, social,
technological, legal and environmental which influence the performance and productivity of
L'Oréal. It highlights the strength, weakness, opportunity and threat of L'Oréal which will help
management team to identify internal environmental factors which influence the future
performance of the company. It also aims at identifying major threats to the company and make
necessary action plan to minimize the threat and utilize the opportunity to gain competitive
advantage. This report also includes evaluation of Porter's five force model to analyse the
competition in the market which affect profitability of business and also making strategic plans
and applying model, concept and theories to understand and interpret the working of
organization.
P1.PESTLE analysis of L'Oréal
L'Oréal is a French personal company which was founded in year 1909 by Eugene
Schueller and it is the world's largest cosmetic and beauty product company which is
headquartered in Clichy, France. L'Oréal mainly focuses its production on hair colour, skin care,
sun protection, make-up, perfume, hair care and hair style products. L'Oréal trademark slogan is
“ Because you're worth it”.
L'Oréal is a growing company in industry of cosmetics and skincare and this is full of risk and
challenges because there are many macro-environmental factors like external environment,
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political factors and others which affects the efficiency of the company. External environmental
factors impact and influence the business strategies of the company which hinders the
performance and productivity of the company(Harf, Herman, and Blanco, 2017).
Political factors: Political factors which generally influence working of L'Oréal are government
policy, political stability or instability, trade restrictions, tax policy, import and export
regulations; fiscal policy, labour laws and employment laws; legislation for advertisement which
effect the productivity and profitability of the organization. All these factors affect the business
operations overseas and in different countries as the countries have different government policies
and procedures which influence the company's business. L'Oréal has its headquarter in Paris and
has to adhere to all government policies for effective working of business. L'oreal is working at
the globalized level and has operations all over the world due to which it has to take into
consideration all trade and policies of different countries.
Economic factors: L'Oréal is influenced by economic growth, interest rates, exchange rates,
inflation rates, financial capabilities, disposable income of consumers and GDP. These factors
affect the business operations of the organization. The economic downturn is the crucial
challenge for L'Oréal as so many competitors are present in the market. Change in exchange rate
affect the cost of exporting goods and prices of supply at the time of importing goods. L'Oréal
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Illustration 1: PESTEL Analysis
Source: Pestel Analysis, 2015