Contemporary Strategic Management in Global Context

Contemporary Strategic Management in Global Context
INTRODUCTION
Strategic management can be defined as continuous and
on going planning, monitoring and analysis of all those factors
that helps an organization to meets its pre determined goals
(Lasserre, 2017). This study is based on L’Oreal who is a French
personal care company and provides several consumers goods
and other beauty care products. It serves worldwide and has
approximate 86,000 employees. This study is going to show
importance and application of some analysis tools such as
Porter’s five forces, PESTLE analysis and SWOT analysis that
helps the company in analysing all internal as well as external
factors. By analysing all these factors, it takes competitive
advantages and enters in the global market in an effective
manner.
Evaluation of global business environment and strategies for businesses pursuing
global markets
Global environment is a combination of all activities and internal, external
factors of local as well as international businesses. In other words, it refers to the
uncontrollable international and local interactions that affect and influence the way if
operating business of an organization. L’Oreal group is the largest beauty and
cosmetic company of the world and has largest amount of shares and sales. It has
almost 23 global brands having a local gross revenue of approximate $17.5 billion and
$19.5 billion in 2010.
It is stated that this company is facing both tariff and non tariff issues that creates
several problems in its path of doing and operating business activities in global
markets (Karadag, 2015). In the context of strategies related to global market it uses
and make an effective use of Porter’s five forces analysis tool for identifying its
position and intensity of competition in the market
5 forces of competitors are described as follows:
5 Forces Intensity Description
Threats of new entrants High There are several exiting strong competitors and
players in this industry. There is a requirement of
less investment for entering in this industry. So,
there is a high threat of this force.
Bargaining power of
suppliers’
Low In the context of bargaining power of suppliers it
is stated that there are several suppliers in this
beauty industry so there is a low intensity of this
power for L’Oreal.
Bargaining power of
customers
High Customers have many choices as there are
several companies in this industry. When they
get similar features of products in other brand at
affordable prices then they have more power to
bargain. It can decrease the profit margin of
L’Oreal. So it is the big threat for the company.
Substitutes products Low Moderate markets already exists with strong
company like Olay, Avon. So, it is obvious that
there is a lack threat of this force.
Competition among
existing players
High There are several brands and cosmetic business
in the market that also operates in the global
market. Some competitors of L’Oreal are:
Unilever, Revlon, Proctor and gamble. There is s
high intensity of competition but the
international strategy of L’Oreal makes it able to
be the business leader (Plos and et.al., 2015).
So, it can be said that by analyzing all these forces, L’Oreal can make changes I its
strategies and take competitive advantages in the global market.
In addition, it is also stated that uses segmentation, targeting and
positioning strategy as a global market strategy such as:
Consumer demographic plays an important role in creating products as it
makes sure to the company that they are providing the right products to
the target market. Its targeting and segmentation strategies depend upon
different types of people. For example, Its dark and lovely brand is made
and sold specially for African consumers. It is positioned as an ethical
beauty care and cosmetics company that respects differences in
aspirations, desires and cultures. It also has approximate 34 consumer’s
goods brands (Dreher, Puco and Goget, 2019).