Analyzing Key Words from Secondary Data and Searching for Insights

The research study has improved my knowledge on the corporate social responsibility (CSR) activities of L'Oréal company, as well as various issues faced by the company globally. The report also enhanced my understanding of communication channels used for marketing and branding products.

Corporate Social Responsibility
Cosmetics industry (L’Oreal)
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Table of Contents
Introduction .....................................................................................................................................3
Company presentation and Justification of section ........................................................................3
Main stakeholders...........................................................................................................................4
Presentation of CSR strategy issues faced of L'Oreal .....................................................................7
Analysis of CSR approach in Different countries ..........................................................................7
Critical assessment of CSR Strategy of L'Oreal .............................................................................8
Recommendation for future changes and proposal L'Oreal ............................................................9
Self Reflection ..............................................................................................................................10
Conclusion ....................................................................................................................................11
REFERENCES .............................................................................................................................12
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Introduction
Corporate social responsibility is the significant aspect to gain a better image in the
market and among various stakeholders. CSR are the activities made by the company to oversee
and ensure a company's success in environment and well being. In today's business environment,
CSR has become a major strategy of the company to sustain in the marketplace (Rick, 2011).
The report herewith is going to explain the CSR initiatives of a leading cosmetic company of
France namely L'Oreal. The mentioned organization is the world's largest cosmetics company
which deals with Cosmetics and beauty products. This assignment represents CSR strategy
issues faced by the company as well as CSR approach of L'Oreal in various countries. A critical
assessment of CSR Strategy of L'Oreal is made in the report along with recommending future
changes for L'Oreal.
Company presentation and justification of section
L'Oreal Group is the leading French cosmetics and beauty company which is the e largest
cosmetics company in the world, based in Paris. The company was founded in the year 1909 and
has it’s headquarter in Paris. The mentioned organization has developed activities within
different fields such as cosmetics, skin care, perfumes, make-up, sun protection and haircare.
L'Oreal has further expanded its business in the field of toxicology, tissue engineering, and
dermatology as well as biopharmaceutical research fields. In the year 2014, the company has
generated revenue of around €22.532 billion and earned profits of €4.910 billion (L'Oréal, 2015).
The Corporate mission of company is to offer the best in cosmetic to the women and men
worldwide. The company focuses on quality, efficacy and safety. However, the firm is commuted
to meet the infinite diversity of beauty desires and needs of general people, over the globe. The
organization follows the strategy of Universalisation that means globalisation that respects
differences of culture. For a further extent, Company faces huge differences in desire needs and
traditions and designs its product and offerings by concentrating on different needs, hence it can
be said that L'Oreal is driven by the vision of Universalisation. The brand portfolio of company
is divided into four divisions which are further focused towards developing a specific vision for
each consumption universe as well as distribution channel (Sustainabile development report,
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2013). Each brand of L'Oreal has its own strength and diversity which enable business entity to
meet all beauty aspirations of people around the world.
The new sustainability plan announced by L’ Ore-al in 2013 includes the mission of
producing more cosmetic products with less environmental impact. This is going to help
customers in making sustainable lifestyle choices as well as it enable the company to reach 1
billion new consumers by 2020. With this new sustainable plan, the company is committed to
gain 100 percent of its products to render environmental or social benefit as well as reducing
environmental footprint of company by 60%. The business entity is strongly committed to fight
climate change for this it has made active contribution to the mobilization of the civil society
alongside the States, so as to keep the temperature of environment below 2°C (Peloza and Shang,
2011). In the recent year, this organization came up with its corporate social responsibility
project namely “Sharing Beauty With All” with an objective of making L'Oreal into a modern
company in the form of sustainable innovation, manufacture and consumption and to achieve
shared growth by the end of 2020 (L'Oréal, 2015). The evidence of secondary investigation
shows that the company has done a lot for improvement in corporate image in the marketplace in
the form of various corporate social responsibility activities. The chosen company is suitable for
discussion as they have witnessed number of impacts of CSR activities on the business of
L'Oreal Company. This business entity is suitable because it is involved various corporate social
responsibility programmes.
Main stakeholders
The organization has to deal with stakeholders of business so as to sustain in the
environment. Prior to discuss about the stakeholders, it is to define who are stakeholders of
business. Stakeholders are those groups without whose support the organization (Peloza and
Shang, 2011) . On the other hand, Freeman has defined stakeholders to be the persons who can
affect or are affected by the achievement of organization’s objectives. There are three major
theories of stakeholders such as Normative, Descriptive and Instrumental. As per the normative
stakeholder theory, the organization can understand the reason why organization should take into
account stakeholder interests. Whereas, descriptive stakeholder theory attempts to ascertain
whether companies actually takes the interest of stake-holder's into account. Furthermore,
instrumental stakeholder theory provides the answer to the question if it is beneficial for the
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company to take into account stakeholder interests. There are major two kinds of stakeholders in
the business which are internal and external (L'Oréal, 2015). The internal stakeholder of L'Oreal
includes the people who are employees, shareholders, business partners and so on. On the other
hand external stakeholders of business are Government, investors, community or society. The
stakeholders of company are further divided into three categories i.e. societal Stakeholders,
economic stakeholder and organizational stakeholders.
L'Oreal has a point of -return in which it has to pay to the community and other
stakeholders for their support that-way it attempts to engage in CSR. The customers of L'Oreal
are required to produce quality products that can fulfil needs of cosmetic product. It has been
witnessed that most of the customers of company are female who are having specific needs and
the company attempts to fulfil the needs which is the major base of good earning and customers
retention (L'Oréal, 2015). The shareholders invest their fund in the company with an aim of
gaining higher returns. The company consider interest of stakeholder and invest their amount in
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Illustration 1: Stakeholders
(Source:Permatasari and Dhewanto, 2013)

the profitable business so as to attain higher returns. The societal stakeholders include
community, government and NGO's for which the organization designs effective CSR strategies
and revealed such information so as to keep informed these stakeholders. For Society, it
concerned about life style of society and environment for which it conducts the practices so as to
protect the environment. The company has to fulfil the tax obligations and conduct effective CSR
practices for government. However, L'Oreal faces various issues in management of stakeholders
such as resource intensity, culture clash, uncontrollability, co-optation and, accountability
(Permatasari and Dhewanto, 2013).
Presentation of CSR strategy issues faced of L'Oreal
However, L'Oreal company is involved in carious Corporate social responsibility
programme however it has faced lots of issue in relation to CSR practices. Within United
Kingdom, the company has faced criticism from, OFCOM, a leading NGO of UK in respect
with the truth of their advertising and marketing campaigns that is related to the product
performance of a mascara brands. In the 2007, there was a advertising in Britain which says that
"Telescopic" mascara, featuring Penélope Cruz, will make eyelashes 60% longer. Against this
advertising, The Advertising Standards Authority OF UK attacked L'Oréal. It was witnessed that
the mascaras also makes lashes look 60% bigger and the model used in Advertisement was
wearing false eyelashes (Sustainabile development report, 2013). This was a issue with company
of misleading information provided to the community. Furthermore, in 2011 the British
Advertising Standards Authority has taken actions against L'Oréal, by banning two airbrushed
Lancôme advertisements in the UK for misrepresenting reality and adding self-image problem
amongst females in the UK that was against the community rights. As per the information
mentioned in (L'Oréal's biggest challenge is making 'sustainability desirable'. 2013) L'Oréal was
committed to meeting its targets of reduction in CO2 emissions by 50% in 2015 and achieving
zero net deforestation by the end of 2020. The practices of L'Oréal were significantly protested
by Naturewatch group as it was mentioned that L'Oréal was continuously involved in testing new
ingredients on animals, which is harmful to the environment as well as animal beings. However,
the company has clarified that there was no animal testing for finished products was done since
1989. Further, the company has said that it invested significantly in alternative methods for
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chemical safety testing and the company has also reduced the new ingredients tests to less than
1% of whole safety tests (Peloza and Shang, 2011).
Analysis of CSR approach in Different countries
L'Oréal has adopted number of CSR activities while dealing in different nations. These
activities has impacted the business operations in positive manner. For example, while dealing in
China, company has decided not to have testing of body shop on animals. It has attracted number
of customers of China and boosted the brand image in positive manner (Nagasawa and Kizu,
2012). It is considered as activity which reflects corporate social responsibility and impacted its
brand image positively. This kind of CSR activity has also improved market share of company as
it was first company which has refused to do animal testing in Chinese market. In this respect,
due to improved level of brand image the EU has invited company to present advanced research
on alternative ways which can reduce animal testing in the industry.
CSR activities of L'Oréal has also improved brand image in international market and it is
also one of reason that L'Oréal was listed as one of most trusted brand in Indian market. This
also reflects that the improved level of CSR activities has influenced market share and brand
image in positive manner. Other than this, it has also been spotted that the L'Oréal is
continuously contributing in mobilization of the civil society within United States. Company is
investing in diverse government projects to reduce the negative impact of globalization. Such as
increase in temperature of earth is one of most critical factor so company is investing these kinds
of governance projects (Chu and Lin, 2013). It has also impacted the business firm in positive
aspect and resulted as improvement in profit margin ratio. In association with Solutions COP21
the management is also formulating few environmental standards which is impacting brand
image in positive manner. Company is also organizing diverse business games which is
providing better opportunities to the students and create positive perception among them. It also
provide easy availability of human resources as students are looking forward for job
opportunities in L'Oréal (Madar, Huang and Tseng, 2013).
Critical assessment of CSR Strategy of L'Oreal
L'Oreal is taking steps towards reducing the carbon footprint of company and to save
the environment. In this regard, the organization has destined a Saint Ouen research center. This
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research center had taken various steps towards environment protection, firstly, it uses solar
panel to heat water, collects rainwater to water their greens and it also used local and organic
food to their personal restaurants. In the CSR strategy of company, it is committed to sourced
100% products by renewable raw material that is delivered by Green chemistry (Mueller, 2014).
The company is known as the leading manufacturer and seller of beauty and cosmetic products
in 130 countries and it develops the cosmetic products which are adoptable to the diverse
customers (Gardarson and Wulff, 2011). In the year 2013, L'Oreal opened a research center
which is dedicated to ethnicity of skin and hair types from all around the world. The organization
create their diversity observations with a purpose to foster their respect for society and diversity
as well as for rolling out their actions. As a community services, L'Oreal launched a campaign
with a slogan of “Look good and feel better” in which the organization is a founding member of
the beauty industry's charity (Kizu and Nagasawa, 2012). The funds of charity are used to help
women to combat the visible side-effects of their cancer treatment. The people are encouraged to
take an active part in our community as they have volunteer day to use and support the charity of
employee's choice. In the year, 2009 L’Oréal was seen intended to cut greenhouse gas emissions
as well as the water consumption and waste by 50% between 2005-2015. This reduction in
carbon footprints is going to be achieved by the use of solar panels, biogas and electricity. The
hot water was to be produced from burning of methane gas that are cured from agriculture
cultivation waste. However, in 2012, the organization was witnessed for announcing a 37.1%
reduction in C02 Emissions and around 24% reduction in water consumption. There was around
22% reduction in transportable waste fore with the company has achieved awards for successful
contribution carbon emissions (L'Oréal's biggest challenge is making 'sustainability desirable',
2013). In the previous year 2014, L’Oréal has commitment that not a single product will be
linked to deforestation and use of 100% renewable raw materials by the end of 2020. in addition
to that , the L'Oreal group was enclosed in the Corporate Knights "Global 100" list among one
of the 100 best sustainable companies. In the form of CSR activity the company came in
Partnership with UNESCO to make people aware about AIDS and HIV worldwide uses the
company's web-page to communicate its CSR activities. For this, it uses press releases,
infographic, pictures, news (Spotlight) and videos. Furthermore, the company has multiple
Facebook pages and company is present on Instagram and Twitter (Lee and Glantz, 2012).
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Recommendation for future changes and proposal L'Oreal
The business entity is recommenced to involved in Healthcare sector as this is a essential
need that is required by the people all around the world . L'Oreal can improve its image and can
gain huge profit by providing healthcare services.
 L'Oreal is also recommended to improve its practices in the field of social
protection and it has to put some efforts for managing, preventing, overcoming
the situation that put adverse impacts on the people's well-being .
 The company has to focus on the vision made for 2020 so as to attain the desired
position in the world's cosmetic industry. Although, L'Oreal is witnessed for being
a diverse with their effects for working with environment, career opportunities but
it is still lacking in making a clear path to attain suitability vision for 2020.
 From the secondary investigation, it was found that the company is far behind in
making a strong connection between CSR and brand. Hence, the company is
recommended to make a strong like between CSR practices and Brand so as to
attain .
 L'Oreal is recommended to take more actions for creating better brand
recognitions that ties company's CSR efforts.
 However, there is plenty of information about CSR of L'Oreal on website but the
CSR efforts of company are less seen on the social media sites.
 This company has connected it's brand with beauty and innovation with CSR
activities, however, the company do not incorporate it into external branding very
well. Hence, the business entity is recommended to improve the external branding
by making use of social media sites.
Self Reflection
The above report has provided me immense knowledge about the leading cosmetic
company of Paris namely L'Oreal. I have researched a lot about the company and its CSR
programmes throughout the world as well as this report has made me aware with the various
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practices of company for society and environment development and its significant impact. After
this report, I am well aware with the cosmetic industry and its environment. This report has
provided me opportunity to develop my personal and professional skills. From this report, I have
learnt how companies can improve there image in the market. The importance of corporate social
responsibility was cleared top me with the help of this report. From this investigation I have
acquire skills such as critical and analytic thinking that are going to be help in taking effective
decision. My knowledge in regard to the marketing area have been developed. I can say that I
acquired skills about conducting a well research which aided me I creating my overall
knowledge base. I further learnt about the importance of time management and how to move in
the research in a step by step manner. The whole research has helped me in enhancing my overall
skills related to research. I have further developed skills related to capturing key words from the secondary data
and searching on to. This research study has improved my knowledge in regard to CSR activities of L'Oreal
company as well as various issued that are faced by the company over the globe. This report has
also improved my knowledge in respect with communication channel used for marketing and
branding of the products.
Conclusion
The above report was made in respect with the Corporate social responsibility of L'Oreal
cosmetic company. From the evidence of entire report, it can be concluded that the mentioned
entity has done a lot for improving its corporate image in the marketplace in the form of various
corporate social responsibility activities. The initiatives of company has impacted the business of
firm in positive aspect and have resulted as improvement in profit margin ratios. The company is
further recommended to improve the communication efforts for CSR efforts on the social media
sites.
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REFERENCES
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Responsibility?. Asian Journal of Business Research. 2(1).
Chu, S.C. and Lin, J.S., 2013. Consumers’ perception of corporate social responsibility in the
United States and China: A study of female cosmetics consumers. International Journal of
Strategic Communication. 7(1), pp.43-64.
Gardarson, C. and Wulff, G., 2011. Small, Medium or Large-Does it Matter? How firm
characteristics influence the organising of CSR activities in Swedish clothing firms.
Kizu, Y. and Nagasawa, S.Y., 2012. Creating the New Brand Equity through EcoDesign of
Cosmetics. In Design for Innovative Value towards a Sustainable Society. pp. 463-467).
Springer Netherlands.
L'Oréal, 2015. International portfolio. [Online]. <Available through: http://www.loreal-
finance.com/eng/annual-report-2014/our-brand-portfolio>. [Accessed on: 18 December,
2015].
L'Oréal's biggest challenge is making 'sustainability desirable'. 2013. [Online]. Accessed from:
<http://www.edie.net/news/6/Loreal-challenge-making-sustainable-consumption/>
[Accessed on: 18th December 2015]
Lee, S. and Glantz, S.A., 2012. South Korea:‘KT&G Sangsang Univ.’employs education for
marketing. Tobacco control.
Madar, A., Huang, H.H. and Tseng, T.H., 2013. Do Ethical Purchase Intentions Really Lead to
Ethical Purchase Behavior? A Case of Animal-Testing Issues in Shampoo. International
Business Research. 6(7), p.p102.
Mueller, T.S., 2014. Consumer Perception of CSR: Modeling Psychological Motivators.
Corporate Reputation Review. 17(3), pp.195-205.
Nagasawa, S. and Kizu, Y., 2012. Green Action as a Luxury Strategy in the Field of Cosmetics.
Peloza, J. and Shang, J., 2011. How can corporate social responsibility activities create value for
stakeholders? A systematic review. Journal of the academy of Marketing Science. 39(1).
pp.117-135.
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Permatasari, A. and Dhewanto, W., 2013. Business Model Innovation towards Competitive
Advantage: Case Study in Indonesian Cosmetics and Herbal Health Companies.
Information Management and Business Review. 5(8), p.385.
Rick , H., 2011. Unrepentant L’Oreal loses its ethical way. [Online]. <Available through:
http://customerfaithful.com/unrepentant-l%E2%80%99oreal-loses-its-ethical-way/>.
[Accessed on: 18 December, 2015].
Sustainabile development report, 2013. [Online]. <Available through: http://loreal-dam-front-
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Zhao, G., 2012. CSR and its Impact on Consumer Behavior. A Study of the Cosmetic Industry.
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