Business Operations and Operations Management Decision at L'Oréal

This case study explores the main functions of business operations and evaluates the operations management decision at L'Oréal. It discusses the main functions of business operations, provides an introduction to L'Oréal, evaluates its operations management decision, and suggests ways for improvement. The study also includes a PESTLE and SWOT analysis of L'Oréal.

Case
Study

Table of Contents
INTRODUCTION ..........................................................................................................................2
MAIN BODY...................................................................................................................................2
a) Explanation of the main function of business operations and overview of business
operations of company...........................................................................................................2
b) Introduction of selected company......................................................................................3
c) Evaluation of selected company operations management decision...................................5
d) How well they are doing and how might they improve?...................................................7
CONCLUSION................................................................................................................................7
RECOMMENDATION...................................................................................................................8
REFRENCES...................................................................................................................................9
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INTRODUCTION
Business operations is consider as every activities or practices which are conducted by a
company in order to run as well as earn money in effective manner. For this management need to
develop business plan which include several factors which help in conducting activities
successfully such as peoples, equipments, system, procedure and so on (Choi, Chan and Yue,
2016). By adopting business operations a company able to gain various benefits such as conduct
work effectively because each and every activities are planned and employees work accordingly
for attaining goal. Moreover, it will also save time because works are conducted in systemic
manner as well as it will also help management in resolving issues successfully and
impressively. Organization taken for respective report is L'Oréal which is operating in cosmetics
industry. It is founded by Eugène Schueller in the year 1909 and their head office is situated at
Clichy, France. Respective company is operating at worldwide location through online as well as
offline medium. Topics included in this report are functions of business operations, brief intro of
company and its operation management decision. It will also include recommendation for the
improvement in business operations.
MAIN BODY
a) Explanation of the main function of business operations and overview of business operations
of company
Business operations is refers to the activities which are conducted by a company in order
to run as well as earn money at potential marketplace. There are different key function of
business operations which are present in each and ever company such as accounting, finance,
management, sales, productions and operations and marketing. These all functions work together
so the company attain their desire goal and target. Below explanation of main functions of
business operation in respect L'Oréal are given:-
 Accounting: At L'Oréal, role of accounting is to measure and summarise the business
activities in order to predict profit as well as sales. They also conduct interpretation of
financial information and communicate that result to management as it will help in
decision making process (Dean, Fath and Chen, 2014). They also help in designing
budget according to needs as well as requirements of different departments.
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 Finance: It is consider as overlapping with accounting, finance function of a company
will help them in providing resources as well as they also aid in conducting planning for
essential resources. This will directly and indirectly help in operations and expansion of
the business. At L'Oréal, there are different activities are conducted by this function i.e.
raising finance, tax compliance, budgeting, safeguarding assets and so on.
 Management: This function plays an essential role in an organization, according to
which they need to conduct several activities for attainment of goal and objective. For
this they conduct practices like planning, organizing, controlling and directing (Forsgren
and Johanson, 2014). Along with this at L'Oréal they also ensure that staff get proper
resources as well as tools so that they conduct work effectively for attaining goal.
 Sales: Respective function need to conduct more that just handing products and receiving
monetary value for it. At respective company, sales functions need to conduct various
operations such as promotion of products, determine customers whom company can
target, potential customers, actual selling and follow ups with potential users about the
products.
 Production and operations: The main objective of this function is to use resources of
firm in effective manner in order to develop quality products and services according to
customers needs. In respect of L'Oréal, their operation and production function help in
conducting its work in effective manner for providing quality cosmetics products to
potential customers.
 Marketing: At L'Oréal marketing function help in designing potential products that
based on the customer's need, demand and expectation. Along with this, they also
promote the products so that target as well as potential audience should know about it
effectively. There are also several activities which are consider in it such as advertising,
customers services, creation of market plan and development as well as maintenance of
public relation.
b) Introduction of selected company
L'Oréal is a type of Société Anonyme which is operating at cosmetics industry. It is
founded by Eugène Schueller at 30 July 1909 and its head office is located at Clichy, France.
This firm is operating at worldwide level with their several subsidiaries such as Maybelline,
Garnier, Matrix essentials, NYX cosmetics and Lancôme (Grayson and Hodges, 2017)(Greene
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and et. al., 2013). Moreover their registered office is situated at Paris and it is a world's largest
cosmetics firm which provide wide range of products of hair care, skin care, sun protection,
perfume, hair colour and make up.
L'Oréal business type is to research, manufacture and sale cosmetics products range
according to customers requirement, expectation and trends. They also adopt new and advance
technology to make more innovative as well as impressive cosmetics range. Along with this
85000 employees are working at respective company till 2018 at worldwide level (Total number
of employees of L'Oréal worldwide from 2010 to 2018*, 2019). L'Oréal is a leading cosmetics
company which is operating at 130 countries at five continents such as Unites State, Japan, India,
United Kingdom, Germany, Brazil, France, Italy, South Korea, China and so on (ONLY ONE
LINE OF BUSINESS: BEAUTY, 2019).
L'Oréal is one of the fastest growing cosmetics company which is operating its business
and operations at worldwide level. The respective company is consider as biggest beauty
company around the world as compare to Unilever, Coty, Kao, Beiersdorf, P&G, Avon and so
on.
Along with this, revenue of respective company is also increase day by day which shows
their business is growing or expanding in effective manner. Below data is given shows data from
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Illustration 1: Biggest global beauty company
(Source: L’Oréal success story goes deep below the skin, 2019)

2013 to 2018 L’Oréal revenue through different divisions such as consumers products, active
cosmetics, body shop, professional products and so on.
c) Evaluation of selected company operations management decision
Operations management decision is considered as the selection of a course of action
which is developed in order to resolve issues or enhance business operations. Company's
management decision is depend on evaluation of market and workplace and for this they may
adopt number of models and theories which lead to attainment of goal successfully. These
decision are generally based on the statistics as well as revenue of company as it help in analysis
firm's credibility and reliability. There are also different factors on which company operations
management decision is based, explanation of those factors in respect of L'Oréal is given
below:-
 Production: It is consider as method of combining several material inputs as well as
immaterial inputs for making something for the consumption of society. It is also act of
creating an output or a goods and services that has value as well as contribute to utility of
a person (Jia and et. al., 2015). In respect of L'Oréal, they produce their approx 89.5
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Illustration 2: L'Oréal revenue at worldwide level through different divisions
(Source: L'Oréal S.A. - worldwide revenue by division from 2012 to 2018, 2019)

percent cosmetics items at their plants. During this process they ensure safety, quality as
well as compliance of customers along with group's value and ethical factors.
 Supply chain: It is considered as a network among the company and its suppliers for
producing and distributing a particular products to the end users. This factor will include
several elements like peoples, informations, data, activities, entities and resources. The
whole process of supply chain will include management of follow of goods, storage of
raw materials, processing and then development of finished good. In context of L'Oréal
they manufacture and markets a wide range of cosmetics products through varied
distribution circuits in several countries.
 Logistics: It is consider as detailed organization as well as implementation of tangle
operation. This factor is also defined as a management of travelling things from origin
point to end point that is to end user who will consume it for full fill their need as well as
requirement (Khalili and et. al., 2013). In respect of L'Oréal they generally provide
training and development to their staffs so that they conduct logistics operations in
effectively manner. Along with this they also use new as well as advance technology for
the flow of goods in effective manner.
 Location strategies: It is consider as plan or strategy for attaining optimal location for an
organization, by identifying their need as well as objective. Moreover it also involve
searching of location at where an organization can offer their goods and services so that
they gain high profitability as well as market value. In context of L'Oréal they generally
focus on major five areas before developing location strategy such as customers need and
demand, location culture, cost, availability of resources and warehouse facilities.
 Quality control: This is consider as method by that business entities can review quality
of all factors of products and services which they produced. According to ISO 9000,
quality control is a part of quality management process which focused on satisfying
required quality of products. In respect of L'Oréal they select their suppliers on the basis
of strict standards as well as criteria and they also use quality material so in order to
ensure high quality products (NawanirKon gand Norezam, 2013). Along with this they
also provide high quality training programmes to their staffs which help in ensuring 100
percent quality control and high performance.
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 Human resource: Human resources is consider as peoples who develop workplace at an
organization, economy or business sector. For the synonymously term of human resource,
human capital is used. These peoples generally conduct several activities which lead a
firm in attaining their desire goal or target such as plan, control, direct, recruit, train and
so on according to requirement. In context of L'Oréal, their team has to reconcile major
two factors i.e. their employees select right path and they conduct work to support
company goal (Pantaleo and et. al., 2014). The mission of L'Oréal human resource team
is to attract, identify, select, develop as well as reward those employees who have finest
talent in the group.
The PESTLE and SWOT analysis of L'Oréal
PESTLE Analysis Description
Political Factors Political factors of UK is unstable.
Economic Factors Economic conditions of UK market is unstable as it keeps on
changing due to change in interest and currency rate.
Social Factors The taste and preferences of people living in UK is dynamic that
varies as per change in trends.
Technological Factors UK is highly advanced in adopting updated and new technology
for carrying out business operation and activities
Legal Factors The legal laws of respective country are very strict where every
business has to follow it in proper manner.
Environmental Factors There are various laws related with beauty products which has to
be followed by respective organisation.
SWOT Analysis Description
Strengths L'Oréal has variety of cosmetic, beauty and high quality products
and services.
Weaknesses The profits margins has decline due to investment in research and
development activities.
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Opportunities It has opportunity to expand in different places and create new
products.
Threats There is quick change in need and demand of consumers and
competitors are providing better products than respective
organisation.
d) How well they are doing and how might they improve?
L'Oréal is conducting their work in effective manner at its potential marketplace. They
conduct proper market analysis before develop any cosmetics products as it will help them in
understanding need and demand of their potential customers (Solaimani, 2014). In respect of
improvement they can develop warehouse at more location because that will help them providing
products to customers effectively as well as at less time duration. Along with this by this strategy
they can also enhance customers loyalty and customers base.
CONCLUSION
By above discussed point it can be summarised for a company it is essential to conduct
effective business operation because that will help them in attaining goal as well as objective
successfully. In a company there are several key functions who work together for attaining desire
goal and target such as finance, accounting, marketing, sales, production and operations and so
on. Along with this business operation of a company is also depend on the different factors like
size, location, type of business, succession rate, industry type and so on. There are also some
other elements on which a company operations management decision is based such as
production, supply chain, logistics, location strategies, human resource and quality control. By
considering all these company able to operate their business effectively which help in earning
high profit at potential marketplace.
RECOMMENDATION
There are some points which must be consider by L'Oréal when they operate at
international level as that will help them in avoiding issues and growing business effectively,
some recommendations are given below:-
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 It is recommended to respective company that they must develop more cosmetics
products for the Japanese market because that will help them in enhancing their
customers base by attracting market of Japan.
 They can also introduce customize skin care products that will be based on the specific
customers skill type as well as requirement.
 L'Oréal can also adopt new as well as fresh image for their cosmetics products so that
they can take it to the another new level, that will attract more and more customers at
worldwide range.
 Respective company should not only hire celebrities to endorse their products they can
also make contact with health experts because that will boost customer self-assurance
towards their cosmetics products range.
These are the main recommendation for L'Oréal which they can adopt in order to expand
their business and sales at the potential marketplace.
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REFRENCES
Books and journals
Choi, T.M., Chan, H.K. and Yue, X., 2016. Recent development in big data analytics for
business operations and risk management. IEEE transactions on cybernetics. 47(1).
pp.81-92.
Dean, C.A., Fath, B.D. and Chen, B., 2014. Indicators for an expanded business operations
model to evaluate eco-smart corporate communities. Ecological indicators. 47. pp.137-
148.
Forsgren, M. and Johanson, J., 2014. Managing networks in international business. Routledge.
Grayson, D. and Hodges, A., 2017. Corporate social opportunity!: Seven steps to make
corporate social responsibility work for your business. Routledge.
Greene, D. H. and et. al., 2013. Palo Alto Research Center Inc, 2013. Integrated energy savings
and business operations in data centers. U.S. Patent 8,447,993.
Jia, P. and et. al., 2015. Supplier selection problems in fashion business operations with
sustainability considerations. Sustainability. 7(2). pp.1603-1619.
Khalili Shavarini, S. and et. al., 2013. Operations strategy and business strategy alignment model
(case of Iranian industries). International Journal of Operations & Production
Management. 33(9). pp.1108-1130.
Nawanir, G., Kong Teong, L. and Norezam Othman, S., 2013. Impact of lean practices on
operations performance and business performance: some evidence from Indonesian
manufacturing companies. Journal of Manufacturing Technology Management/. 24(7).
pp.1019-1050.
Pantaleo, A. and et. al., 2014. ESCO business models for biomass heating and CHP: Profitability
of ESCO operations in Italy and key factors assessment. Renewable and Sustainable
Energy Reviews. 30. pp.237-253.
Solaimani Kartalaei, H., 2014. The alignment of business model and business operations within
networked-enterprise environments.
Online
L'Oréal S.A. - worldwide revenue by division from 2012 to 2018. 2019. [Online]. Available
through:<https://www.statista.com/statistics/271772/loreal-sa-worldwide-revenue-by-
division/>.
L’Oréal success story goes deep below the skin. 2019. [Online]. Available
through:<https://www.ft.com/content/ad0ed0ca-5cae-11e7-9bc8-8055f264aa8b>.
ONLY ONE LINE OF BUSINESS: BEAUTY. 2019. [Online]. Available
through:<https://www.loreal.com/group>.
Total number of employees of L'Oréal worldwide from 2010 to 2018*. 2019. [Online]. Available
through:<https://www.statista.com/statistics/259262/total-number-of-employees-of-
loreal-worldwide/>.
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