Impact of Macro Environment on L’Oréal and Body Shop

This report discusses the impact of macro environment on L’Oréal and Body Shop, including social and ethical factors. It also explores the organizational culture of both companies and the benefits and challenges arising from their compatibility. Additionally, it examines the factors considered by L’Oréal before acquiring Body Shop.

Context of Business

Contents
INTRODUCTION...............................................................................................................................3
TASK....................................................................................................................................................3
Impact macro environment had on the current situation faced by L’Oréal particularly the Social,
and Ethical factors.............................................................................................................................3
Organizational culture at Body Shop and L’Oreal along with benefits or challenges arising out of
the compatibility of culture................................................................................................................5
Factors that L’Oreal would have considered before deciding to acquire Body Shop.........................7
Factors that had affect the L’Oreal acquisition of Body Shop resulting it the failure........................8
Reflection..........................................................................................................................................9
CONCLUSION....................................................................................................................................9
REFERENCES..................................................................................................................................11

INTRODUCTION
In a globalised world every business organization wants to expand their operational activities
with the aim of generating larger profits. While operating at global level, organization is
responsible for analysing all the macro and micro factors that directly affect entire functional
activities. With the assistance of this, company can easily reduce negative effects and at the
same time also maximising the positive impact that may assist in developing positive and
famous brand image (Wang and et. Al., 2016). One of the main advantages of analysing
business environment is to capture opportunities and path to sustain for longer period of time
in market place. In addition of this, the main focus of company at global level is to
established its competitive image by serving best quality of services. By this large number of
consumers get easily attracted and consume its services. This will directly contribute in
enhancing positive brand image by capturing larger market share. Current report is based on
the L’Oréal, is one of the famous cosmetic company that operate their business in over the
with the aim of attain competitive success. This company is also operating their business in
around 130 countries along with over 25 brand and different number of sub brands. Apart
from this, Body shop had also emerged as a famous brand that also includes or support
human rights and environmental care. Company has their own presence in approx. 33
countries along with 2600 brands. L’Oréal made a bid to acquire Body Shop for £652
million. By this company make their strong image in market place and also expand their
business activities. This report is going to discussed about impact of macro environment on
company in terms of Social and ethical factors. Along with this, organizational culture of
business organization along with its benefits and challenges is also mentioned in this project.
Furthermore, factors that L’Oréal would be considered before deciding to acquire Body also
discussed here.
TASK
Impact macro environment had on the current situation faced by L’Oréal particularly the
Social, and Ethical factors
Macro business environment play a significant role in company as it consist various factors
that direct affect company in both positive and negative manner. Thus, it is important for
business organization to analysis the same that support in reducing the negative impact and at
the time also improve its positive performance at market place. In context of this, L’Oreal is
one of the famous organizations that operate their business in over the world with the hope of
generating larger profitability and success. Mainly, overall performance of company is highly

depend on the changes in external environment as it put huge impact over the company and
its brand image as well (Mutanga, A., 2015). As there are various factors of macro
environment like political, economic, social, technological, legal and environmental. But in
this, social and ethical factors put their huge impact over the company and its overall
performance as well. This can be understood by following points:
Social factor: it is considered as an important aspect of macro environment that direct affect
the company and its functional activities as well. Mainly it is related wit this customers taste,
their lifestyle, change in taste and demand and many more. All these directly change the
L’Oreal performance and its offerings as well. In market place, new trends and change in
market is affect the customers and their mind set towards the company and its offerings
(Cheng, Yang and Sheu, 2014). In addition of this social factor impact the development of the
guiding principle in the public arena; characterize connections in ideas, for example, chance,
individual flexibility, achievement, independence, and so forth well as social elements decide
huge contrasts in the conduct of purchasers living in various nations. Customer conduct is
constantly affected by social variables, the majority of which are societal position, reference
gatherings, family, social jobs and status. Right now, enormous pretended by publicizing
L'Oreal, which creates constructive feelings including well known individuals: entertainer,
artists, models, TV moderators - world stars. L'Oreal items intended for individuals inspired
and made sure about, and the approaching cost for an item guarantees tolerable quality. Apart
from this, now a day’s number of consumers love to decorate themselves and also share their
lifestyle with others. This has open up a chance for L'Oréal. Individuals today wouldn't like to
go to salon for hair spa however need items with the goal that they can spa at home just and
L'Oréal is giving such items to its customers. Today’s age has gotten extremely cognizant
about the earth, so it doesn't buy that item which has impeding effect on nature. Additionally,
because of the weight of individuals government has restricted the testing of items on the
creature. Thus, it is crucial for company to analysis customers taste before serving products
and services in market place. This can be beneficial in improving the overall profitability
level.
Ethical factor: L’Oreal is world’s famous and leading beauty company that operate their
operations in different country with the hope of establishing its ethical and positive brand
image. In context of this, a few moral issues with L'Oreal that have granted them negative
stamps in various classes on our scoring framework, including for creature testing,
environmental change, poor natural announcing, living spaces and assets, contaminations and

toxics, human rights, laborers' privileges, production network the board, flippant showcasing,
against social account, questionable advances and political exercises. In this context, L’Oreal
was focus on built as well create a strong ethical principle that support them in developing
and keeping its reputation stronger and more ethical that assist in inviting more and more
people over its offerings. As it may create social and societal responsibility that contributes in
developing innovative environment within the company. It may include different principles
of ethics such as integrity, respect, courage, Transparency and many more (Lelková, A. and
Lorincová, 2017). All these are essential for company to implement these principles within
the business so that they can easily make the positive presence at market place. Apart from
this, there are some negative aspect that company does not follow and implement. Due to this
company can also influence in negative way that can reduce its positive brand within the
market place.
Environment: In March 2019 Ethical Consumer looked the L'Oreal site for an arrangement on
dangerous synthetic concoctions, for example, parabens, triclosan and phthalates. A few
structures or employments of these synthetic substances are prohibited or limited in the EU or
the USA as they sway both human wellbeing at the more extensive condition. For instance,
the Skin Deep site expresses that the coupling dissolvable diethyl phthalate can disturb
hormone creation in people and negatively affect organ work. It likewise takes note of that
there are holes in examination into further effects on human wellbeing (Ramadani and et. Al.,
2015). Tragically diethyl phthalate, in the same way as other comparative phthalates, is
generally found in scents.
Animals: L'Oreal got our most noticeably awful evaluating for creature testing since it
keeps on selling items in China where it is required by administrative specialists to test on
creatures for completed makeup items. Naturewatch has boycotted L'Oreal since the year
2000. L'Oreal additionally campaigned against the 2003 restriction on creature testing in the
EU and keeps on pushing back on it. Naturewatch has additionally exhorted against
purchasing items from Urban Decay despite the fact that it has great creature testing
approaches as this brand is possessed by L'Oreal.
Organizational culture at Body Shop and L’Oreal along with benefits or challenges arising
out of the compatibility of culture
Organisational culture is said to be an underlying procedure that defines how a person
should behave in a proper manner within a company. This generally includes values, beliefs

that are set by leaders. In order to reinforce this method communication process is being
used. In simple words it can be set that organisational culture works as a blueprint of
guidelines for employees and other members working within the company.
Organisational culture of Body Shop:
Body shop is a human oriented company which was established in the year around
1976 by Anita Roddick in Brighton. If compared in recent times corporation have around
1500 stores in approximately 47 countries and selling their 400 products. With the span of
time, organisation has established as one of the renowned companies in United Kingdom. In
all aspects people prefer to buy their products as they are animal friendly as well as good for
the skin. While talking about the company Body Shop is using both “The Adhocracy”
because all the workers who are working in this organisation are with full of energy and
creativity. Employees are always ready to take risks and properly guided by their seniors.
Body Shop’s core values, assumption and objects remains separate (Berger and et. Al., 2015).
Their key stakeholders are their employees and to keep them motivated on a regular basis
organisation provides training, establish direct communication so that employees can feel free
to express their views. Other than this, superiors obtain feedbacks from workers and provide
consultation regarding their work.
Another organisational culture which Body Shop is following is the “Market” culture
which every culture adopts. Organisation establish their business to earn some profits and this
kind of organisational culture help them to do so. Main purpose of implementing “Market
culture” is to build dynamics of for their company so that desired results can be achieved.
Likewise, any other organisation Body Shop’s main aim is to meet all needs and wants of
customers in terms of high quality and good value products but what makes the organisation
different is the raw material they use. Company prefer environmentally sustainable resources
without harming animals or other creatures.
Organisational Culture of L’Oréal
L’Oréal is one of the leading companies that manufactures cosmetics such as skin
care, hair colour etc., Company was established in the year around 1909 by Eugene Schueller
and since then organisation is delivering their best products winning the hearts of their
customers. In order to know company’s culture, it is crucial to understand its values, its
working conditions, involvement of its employees etc., Like other business corporation
L’Oréal has adopted basic corporate culture and with the help of their efficient employees

company has made effective policies. Through this, organisation is not only handling
personal but professional activities as well. Workers of corporation know what business
wants from them and they are responding accordingly (Marlow and McAdam, 2015). L’Oréal
so as to attract more and more customers they are doing their best to provide better services
and facilities. Corporation follows two-way communication process between employees and
top-level management which helps them in developing better relations with one another.
In the year 2006, Body Shop was taken over by L’Oréal which is a French cosmetic
company deals in cosmetics. Since then controversies regarding animal and environmental
rights was a big problem. Despite losses faced by Body Shop organisation was having
effective environmental audit. Although both Body Shop and L’Oréal deals in the same field
so there should not be any issues regarding operating its business in an effective manner.
Both organisation’s cultural compatibility is similar. Equally they put their employees first
and consider them as their valuable assets. Instead of this some of the benefits will be
efficient employees. This will assist company in managing and directing all its activities in an
effective manner. Staffs with higher quality and talent can have a rise in their professional
growth. Other than this, company can face some of the challenges like customer’s loyalty.
Before merging with L’Oréal, Body Shop was a popular brand and consumers were very
happy with the services they were providing later after this action of amalgamation its
customers can lose faith in the commodities. Workers of previous companies always remain
in chaos whether new company will value them or not and whether they will be benefited
with the new policies and norms.
Despite of all this, merging with other company always result in dissolving of one of
the organisations (Iivari and et. Al., 2016). In this scenario also after running their business
successfully Body Shop has to shut their business down and finally renowned corporation
comes to an end.
Factors that L’Oreal would have considered before deciding to acquire Body Shop
There are various factors that can be use by business organization when it decides to
acquire another company at market place. It may support in improving the overall
performance at market place and also enhance. In context of this, there are some effective
factors that can be used by L’Oreal before acquiring Body Shop which can be understood by
following points:

Cost: It is one of the important factors that help business organization to decide about
acquisition. As there is huge cost is required at the time of acquiring other company. If
business is not much care then they face issues. By analyzing overall cost that may assist in
improving the possibilities of attaining success by making larger profitability level.
Furthermore, company also responsible for analyzing finance, background of new company
and many more aspects that can affect on the firm and its image as well.
A good match: it is not possible that other company is always popular or attractive in market.
In this, it is crucial company that other business that they want to acquire would be have
positive image so that firm can easily improve its positive performance (Lankoski, 2016).
Along with this, organization must be evaluated or analyses culture of another business. As
culture is one of the important aspects that defines whether acquisition will be success or
failure. If it would be effective match for company then it may assist in attaining competitive
success.
Competition: This is also considered as an effective faction that support in find out the
potential competitors at market place so that firm can easily influence customers towards its
products and services. In case competitors are more advanced and developed then it might be
best for company and also support in inviting more and more customers. With the assistance
of this, firm can enhance the possibilities of increasing its positive image at competitive
market place.
Protective planning: It is not possible for company to acquire business without any kind of
strategic planning and thinking ahead. When two companies come together and thinking
about future growth. As it is totally different aspects to consider the same. Along with this,
company also responsible for evaluating the future activities and strategies to make their
activities more protective (Meyer and Peng, 2016). This will assist in improving positive and
competitive image of company in case it operates their business with others.
All these are crucial for business organization to analyses before deciding to acquire Body
Shop that may assist in developing the possibilities of taking right decision to improve the
performance in future. As it assists them in reducing any kind of issues and obstacles in
acquisition.
Factors that had affect the L’Oreal acquisition of Body Shop resulting it the failure
Most of the leading companies do acquisition for diversification, increase its sales, to
make innovative changes and many more. Thus, by keeping all these benefits in mind Body

Shop, which was one of the leading companies of its times was acquired by L’Oréal in the
year 2006 because of its poor GBP of around 652.3m. Despite of its popularity and having
around 1,000 products company was considerably lagging behind. Thus, this was the reason
why it was acquired by L’Oréal. Regardless of having so much acceptance Body Shop was
not been able to survive because of many reasons and some of them are:
Poor performance: while company was independent, they were using products that
were safe for skin. Firstly, business world applauded the merge of both these company
because it has expanded the opportunities. Body Shape was not using any animal raw
material because of which their customers were very loyal towards them. But after
acquisition selling point of the brand gets down and sole reason behind this was failure in
manufacturing innovative products as compared to its rival company i.e. L’Oréal.
Henceforth, not been able to explain the authenticity of its products company lost its
reliability and trust from its customers. Therefore, this result in poor reputation which leads to
decrease in sales.
Increase in knowledge of cosmetic products: with the change in course of time
number of products related to this field has emerged because of which people were acquiring
knowledge regarding different beauty products. They are preferring innovative products but
in reasonable rates. Even after the acquisition L’Oréal, also could not be able to hold to its
profit because company was suspected for testing their products on animals and Body Shape
in its span of business avoided any kinds of animal testing. Therefore, controversies for both
Body Shop and L’Oréal has turned out to be decrease in its sales and products.
Strategic Planning: while running a business in an effective manner there are many
problems that can arise and strategic planning is one of them. This is the reason why most of
the organisation merge with other corporations but this can give adverse results. Therefore,
by the course of time it is essential that company make effective planning considering norms
and values of acquired business so that they can justify the needs of customers and old
workers as well.
Reflection
CONCLUSION
From the above-mentioned report, it has been concluded that business organization
needs to analyse the macro environment in order to expand their business in another market

place. In this regards ethical and social factors plays a crucial role in determining the actual
performance at market place. with the assistance of this, company can easily improve their
performance by reducing any kind of negative impact over its image. Furthermore,
organizational culture also affects the business as it creates various benefits and challenges
that define the current issues among the business organization and market as well. In addition
of this, L’Oreal is also analyse the factors that could be implement before deciding to acquire
another company to enhance their positive image at market place.

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