Impact of Macro Environment on L'Oreal's Acquisition of Body Shop

Context of Business

Contents
Contents...........................................................................................................................................2
INTRODUCTION...........................................................................................................................1
MAIN BODY..................................................................................................................................1
1. Discussion of the impact of macro environment has on the current situation faced by
L'Oreal.........................................................................................................................................1
2. Organisational culture at Body Shop and L'Oreal...................................................................3
3. Discussion about the factors that L'Oreal would have considered before deciding to acquire
Body Shop...................................................................................................................................4
4. Factors having effect on the L'Oreal's acquisition of Body Shop resulting in failure of
project..........................................................................................................................................5
CONCLUSION................................................................................................................................6
REFERNECES................................................................................................................................8

INTRODUCTION
Context of business can be defined as the analysis of different factors which are affecting
the operational activities of an organisation. In order to carry out all the operations in systematic
manner it is very important for companies to analyse all the elements that may leave negative
impact upon business (Chun, Coste-Maniere, and et.al., 2019). This assignment is based upon
L'Oreal which is one of the largest organisations in cosmetic industry and operating business all
around the world. It has planned to acquire Body Shop which is also executing under same
sector. This report covers various topics such as impact of macro environment, organisational
culture of both the companies, factors required to be considered before acquisition etc.
Additionally, elements resulting in failure of acquisition along with a reflection is also covered in
this project.
MAIN BODY
1. Discussion of the impact of macro environment has on the current situation faced by L'Oreal
Macro environment is the combination of external forces which are affecting an
organisation in positive or negative manner. If management of the company are not able to take
them in to consideration then it may result in higher losses for business. L'Oreal is one of the
largest companies in cosmetic industry which has planned to acquire Body Shop. In order to
analyse the impact of macro environment on this situation of business PESTLE analysis could be
used. There are six different elements of it which are discussed below:
Political: The factors which are related to political interferences are considered as the
part of it. These are corruption, stability of governmental parties, taxation policies, trade
restrictions etc. While acquiring Body Shop L'Oreal has faced different challenges related to
governmental and taxation policies (Febriyanti, 2014). The amount which is paid for acquisition
was 652 million pounds and the company was also required to pay a huge amount of tax on the
same. It has increased cost of acquisition for L'Oreal because a higher amount is being paid by
company.
Economic: The elements such as inflation, deflation, exchange rate, economic growth
trade policies etc. are economic factors which are considered as the major part of macro
environment. L'Oreal is a French personal care company and Body Shop is mainly established in
UK so the organisation has faced various challenges while acquisition. The company was
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