Corporate Strategy and Governance - A Case on L'Oréal

Corporate Strategy and
Governance

Table of Contents
ABSTRACT.....................................................................................................................................3
TITLE - “To analyse the impact of misleading ads on reputation of a company. A case on
L’Oréal.”..........................................................................................................................................1
Introduction......................................................................................................................................1
Statement of the issue.............................................................................................................1
Overview of the Research......................................................................................................1
Background of the Research...................................................................................................2
Purpose and Significance of the research...............................................................................2
Research Aim ........................................................................................................................3
Research Objectives...............................................................................................................3
Research Questions................................................................................................................3
Structure of the project...........................................................................................................4
Literature Review ............................................................................................................................4
Profitability intentions of company while developing misleading ads..................................5
Negative impact of misleading ads and unethical practices on brand image of L’Oréal.......6
Areas which L’Oréal needs to focus on improving ads while promoting products in order to
gain good reputation and competitiveness in the market.......................................................7
Methodology....................................................................................................................................8
Primary Research....................................................................................................................9
Secondary Research..............................................................................................................10
Critical review of results................................................................................................................11
Critical review on the basis of primary research..................................................................11
Recommendation and action plan..................................................................................................20
Recommendation..................................................................................................................20
Action Plan...........................................................................................................................20
CONCLUSION..............................................................................................................................23
REFERENCES..............................................................................................................................24
Appendix........................................................................................................................................26
.......................................................................................................................................................27

ABSTRACT
Corporate strategy is most essential tool because it provides effective support to
organisation in identifying its objectives and goals so that competitive edge can be achieved by
firm in marketplace. Life cycle of L’Oréal products are evaluated in this report which defines
market position of firm in marketplace. In addition, several methods are also used in this project
so as to identify proper solutions for the complex situations. Along with this, failure of corporate
governance and actions which are taken for reducing its impact are also covered in this report.

TITLE - “To analyse the impact of misleading ads on reputation of a company. A case on
L’Oréal.”
Introduction
Statement of the issue
“Misleading ads led organisation to play with their reputations.”, is the statement for
issue which report is going to show.
Overview of the Research
Corporate strategy basically encompasses as a firm's corporate action with the aim to
attain an organisational aim and objectives while reaching at the competitive edge. Corporate
governance refers as the system of different rules, practices and processes through which an
organisation get proper directions through which it could easily operate its business (Acemoglu,
2012). These two term “corporate governance” and “corporate strategy”, plays vast role in
assisting the overall operations of an organisation in systematic manner. In the modern business
era with a large variety of goods and services, advertising is becoming one of the most integral
instruments of existing and potential customers’ and visitors’ information, awareness and interest
in the cause of communication. Organisation's image totally depends upon different types of
advertisements which is being chosen by company to enforce that their products are better or
more sufficient than the competitors. Misleading ads has huge influence on the operations of an
organisation, thus it reflects bad impression in regards to their brand image of firm or its
offerings. Issue which was raised was basically connected to corporate governance and strategy
of the company. L’Oréal is the chosen organisation for this particular project, it is a French
personal care company with its headquarter is in Clichy, Hauts-de-Seine with a registered office
in Paris. The company is widely concern on implementing effective corporate strategy, in which
it is easy for them to implement proper advertisement operations in respect to gaining attention
of customers towards the firm or its offerings. The present investigation work is based on analyse
of the impact of misleading ads on reputation of a company (Amran, Lee and Devi, 2014).
Advertising is the core of an organisations success or failure, thus L’Oréal is using proper
corporate strategy that supports the operations of firm. Advertising is key area for the firm to
increasing its global presence, the company is also concern on using proper advertising tools in
1

respect to reducing the chance of misleading in ads, thus this has direct impact on the reputation
of the firm.
Background of the Research
In this modern business environment, the potential motive of each small as well as large
business enterprises it is develop their brand image in respect to conducting global business
operations (BarNir, 2012). Advertisement is considered as the most integral part that plays vast
role in enhancing the brand reputation of an organization through providing relevant information
to their customers. L’Oréal is a French personal care organisation and deals in high quality
beauty and personal care products or services. The company was funded in the year of 1909. it is
the world’s largest cosmetic and personal care company, the potential motive of the firm is to
develop the brand image of the firm in respect to attaining higher growth and success. The major
consideration of the firm is to enhance its profit margin through developing new and high
qualitative beauty products for their potential buyers (FDA Issues Warning to L'Oreal over
Misleading Ads. 2012). Advertisement is an effective tool that is applied by the firm to increase
its market reach or operations. Now a day's organisations spend a huge amount in their
advertising expenditure in respect to increasing its market reach and grabbing the attention of
people.
Purpose and Significance of the research
Report which has been developed is specifically based on the influence of misleading ads
on reputation of a business organisation, thus this is recognised as the most essential issue which
is faced by organisations due to non appropriate practices and corporate strategies (Bell,
Filatotchev and Aguilera, 2014). The potential purpose of conducting the research is to enhance
the idea and knowledge base of learner in the specified area of study. This is a wide area of
research that describes the impact of misleading ads on the operations of an organisation. The
wide knowledge base in this area helps an individual in developing their about the appropriate
use of advertisement in regards to the effective operations of an organisation. This study also
provides a brief knowledge about the corporate strategy and governance, thus plays integral role
in proper execution of organisational functions in the manner of attaining effective profits and
revenue within the commercial centre.
2

Research Aim
This is the most essential part of the investigation work as it refers as a predetermined
statement which provides a clear vision about the research issue. This assist the investigator in
moving forward towards right direction to overcome the issue with the support of appropriate
data or information. The essential aim of this particular research is “To analyse the impact of
misleading ads on reputation of a company. A case on L’Oréal.”
Research Objectives
Research objectives are considered as essential and eminent aspects of a study that
provides a clear direction to execute all research inventions in appropriate direction (Evans,
Stonehouse and Campbell, 2012). This part of the research is interconnected through the aim of
research as in this the variables of the investigation are mentioned in the form of small
statements. The potential objectives of this particular research are associated as below:
 To analyse the intention of companies while developing misleading ads.
 To determine the impact of misleading ads and unethical practices on brand image of
L’Oréal.
 To analyse the areas which L’Oréal needs to focus on for improving ads while promoting
products in order to gain good reputation and competitiveness in the market.
Research Questions
The present report is designed in order to explore the influence of corporate governance
and its board structure on increasing the operations of an organisation. This part is widely based
on research aim and objectives as in this research questions are prescribed that covers the main
aim and objectives of the research. This section plays vast role in conducting critical analysis on
the research issue with the support of in-depth analysis. The appropriate research question of this
project are described as under:
 What mindset stays of companies while developing misleading ads ?
 What is the impact of misleading ads and unethical practices on brand image of L’Oréal ?
 What are the areas which L’Oréal needs to focus on for improving ads while promoting
products in order to gain good reputation in the market ?
Structure of the project
Introduction This section will put light upon the issue and i.e. misleading ads which may
3

impact upon reputation and goodwill of a business organisation. On the other
hand, this section is going to be enclosed with aims and objectives including
rationale, background and structure of the project.
Literature
Review
Under this, detailed information related to objectives are going to be carried out
considering secondary research method.
Critical
Review of
the Results
This section of the report will show the negative and positive impact of the results
that are being carried out.
Recommend
ation and
action plan
Lastly, a proper recommendations along with the action plan is going to be
developed which will aid in pulling out favourable outcomes right on time.
Literature Review
Literature review can be defined as the process of collecting data from various sites
where scholars and authors has given there point of view that helps the researcher in carrying out
in depth study in regards to a specified area of issue (Fernando, 2012). This section mainly helps
the investigator in conducting appropriate theoretical framework that aids in addressing the
research issue with relevant facts or figures. Literature review is being considered as a
comprehensive summary of previous research of different business topics or the titles on which a
researcher is conducting the investigation. The literature review surveys scholarly articles, books,
and other sources relevant to a particular area of research. Present literature review section is
going to include research's objectives that will aid in pulling out favourable outcomes in specific
time frame.
This section of research helps in analysing the research through theoretical frame work as
it is effective in determining the viewpoints of various authors and writes who are having vast
knowledge on the chosen area of study (Fulmer and Ployhart, 2014). In this part, data majorly
has been gathered through secondary sources like books, journals, newspapers, magazines,
published articles or scholars etc. This is the most effective section of an investigation, thus this
provides a wide area of knowledge in a specified area of study. In this part of research, point of
view of different authors, writers and scholars are discussed in respect to developing a proper
4

theoretical frame work in which appropriate discussion has been made in regards to the research
issue.
Profitability intentions of company while developing misleading ads
As per the views expressed by Tom Hooker, 2018, misleading ads basically portray
deceptive and inaccurate data in regards to get users to carry out an action (Gelens and et. al.,
2013). Such kind of ads use various forms of dishonest tactics likewise false claims or
statements, inaccurate affiliations, or fictitious company information, just to name a few. These
ads basically being made with the wrong intentions like without focusing on the society,
company is aiming to make profit. It has been analysed that, business organisations develop
advertisement in an unethical way to enhance sales, profit margins, brand image and goodwill in
short time frame. According to Walls, Berrone and Phan, (2012), there are many cases came in
front of companies like H&M that were not even aware of the fact that they were performing
well at marketplace but the green washing practice which they did, affected negatively upon their
performance level and impacted immensely on its image at international market. Advertising
refers to a form of communication that is applied to persuade a specific group of people to take
some new action towards a brand, company or its offered products and services.
Advertising is considered as an important aspect for the economic growth of the
marketers and different companies in competition. The term misleading ads means any
representation or symbol which may create a potential number of general or relevant public to
misapprehend and create an incorrect decision regardless of whether this representation or
symbol is consistent through facts. Advertising may also be recognised as misleading if an
essential data that the average buyers required to create an informed decision is pending.
Misleading advertising covers assertion or claim that are made instantly to consumers through
manufacturers, distributors and retailers, as well as in advertisements, catalogues, websites etc.
Deceptive advertising is also known as false advertising which refers to a manufacturer's use of
confusing, misleading, or untrue statements at the time of promoting a product (Hill, 2017). This
could be understood with a good example of KFC where, an advertisement was made, a dancing
chicken which basically received approximately 800 complaints. It has been identified that
misleading ads leads to positive impact on growth and profitability of the organisation. This can
5

be further researched upon with the advertisement of Zinger Crunch Salad which can be referred
as one of the most misleading advertisement. This ad resulted in higher sales, profitability and
higher market coverage. Upon testing the same, it has been identified to be explosively
misleading (Graff, Kunkel and Mermin, 2012). Advertising law will protect consumers from
misleading advertising by the social control of specific legislation (Jansen and et. al., 2013).
Advertising law and consumer law have basically the same function: to promote truth in
labelling. Misleading advertisement come in wide array of shapes, formats, size or like regular
pieces of advertisement.
Thus, these are majorly divided on the basis of tactics that are being applied through
various sort of seldom emerging. There is multiple sort of misleading ads like scare tactics,
illegal use of popular brands, fictitious bonuses and sweepstakes, imitating popular website
interfaces, mimic browser operation, imitation of website functionality, using celebrities and
influencers unlawfully etc. Misleading ads creates dissatisfaction among customers and also has
a huge influence on the brand reputation of the firm. Misleading ads has a huge on customers as
well as organisations, thus this create bad impression among the people in regards to the
operations and dissatisfaction among buyers has increased (Van den Berghe, 2012). In this
modern business environment competition is high with in the market place and organisations are
widely concern on developing their market position through enhancing their offerings. The
organisations are widely using advertising tools in respect to grabbing the attention of people
throughout the globe, thus in the manner of attaining higher profitability and growth.
Negative impact of misleading ads and unethical practices on brand image of L’Oréal
According to the opinion of Linda Ray, 2018, False or misleading ads have, in the recent
past been on the emergence as a result of businesses seeking to contend for buyers. Accuracy
needs to be entail full disclosure of all data or information, thus this is crucial in the marketing
field in which customers are expected to develop informed decisions (Khan, Muttakin and
Siddiqui, 2013). Misleading advertisement does not provide a proper of relevant information in
regards to the product or services to their users, so they are not able to give any value to improve
customers experience. Misleading advertisements influences consumer’s choices about their
purchasing. This type of advertisements develops an expectation about the quality of the product
that is not true. Advertisements of this kind are not only dishonest but will make a wrong
6

impression in regards the product and consumer preference will be distorted. L’Oréal is a large
cosmetic brand which has a huge reputation within the market and deals in high qualitative
cosmetic products or services to their significant customers. The company faces various issues in
regards to the misleading ads in and these ads has a huge impact on the operations of the firm.
Few impact of misleading ads on the performance of L’Oréal are associated as below:
Lower Quality Traffic: Misleading ads are basically wrongful assist or redirect users to
unauthorized product page, malware site or simply generate non-existent options. For this
reason, they tend to have lower-quality traffic and lowercase conversion rates when compared to
ethical tools. The company L’Oréal operates at wide scale and company has huge number of
rivals, so the company is preliminary concern on developing the its operations due to the reason
of providing high competition to its rivals. For example: L’Oréal rapped for misleading ads, thus
the company was criticised through the advertisement watchdog over two commercials which
create misleading claims in regards to wrinkle and cellulite creams (Yin and Zhang, 2012).
Issue with trust: Misleading advertisements are also recognised through viruses or other
sort of malicious software that creates a vast issue with trust. Due to the reason of misleading
ads, L’Oréal has faced the issue of customers trust, thus through less information about the
products may create issue for the firm or its operations
Areas which L’Oréal needs to focus on improving ads while promoting products in order to gain
good reputation and competitiveness in the market
According to Wu and Lu, (2012), customers do not trust a business organisation's product
easily and it is essential for company to keep on working on different tools which helps in
improvising brand awareness among consumers. Failure into this may lead an organisation, to
face problems like less recognition of brand and so on. Apart from this, if the advertisement
produced by company is not clear in the mind of customers then their sub conscious mind will
ignore that resulting in bad ROI for company (Marquis and Lee, 2013). For instance, L’Oréal
should try to make their product advertisement clear and real based in nature as it would be
easier for customer to relate themselves with the company. It has been analysed that, if targeted
customers gets satisfied by the products and services which company has showed in its
advertisement, then chances of enhancement of sales also increase to a certain level. According
to Natalia Bokhari, (2018), there are different but connected essentials aspect which every
company should consider while making advertisement which refers to what company wants from
7

the customers and products. For instance, L’Oréal should try to make advertisement which has a
clear and set goal i.e., to sell their product Elvive colour protect shampoo, they should make it
clear that it will assist those customer who has coloured hair and wants to make it healthy. Other
aspect is, Simplicity which refers to how simple the advertisement is (Moser, 2012). If it is hard
to understand or boring in nature, then customers would ignore it.
For instance, if L’Oréal is advertising their anti ageing products, then they should try to
make it simpler and well flowing so that customer would easily understand the concept of
product and advertisement resulting in demand generated in the mind of customers. Call to
action is a factor which should be present in the ads L’Oréal is producing as chances of
increasing in sales also increasing by that. For example, in the ad of infallible fresh wear product,
company should try to ask their clients to fill any form or participate in competitions. It works as
a reminder for customers when they will attempt CTA, knowledge of the product would also
increase in the mind of customer which attains the second level of brand equity model. Last
essential is placement of advertisement as if hoarding containing L’Oréal product is placed in the
area where no one lives then it will be of no use then. That's why organisation should find out the
places where market is full with potential customers and then placed it so that brand awareness
of would increase. According to (Stewart and et. al., 2018), company will only get success in the
competitive market if they encourages their customer to opt new lifestyle which would only be
attain with the help of the product they are offering. For instance, L’Oréal should make their
beauty creams advertisement in which they will spell out the strengths of it and how it would
affect their life style and standard of living if they are using that product (Muchlinski, 2012).
Main motto of advertisement is to provide content which customers wants to read or see.
Methodology
Methodology specifically plays a crucial role when it comes to pull out data in specified
time frame related to the topic. Along with this, there are a range of methodologies like
secondary and primary which helps in pulling out data in order to conduct the investigation.
Under primary research, project makers use various techniques to collect reliable data. Further,
they organise the information, make analysis and then interpret same to draw valid conclusion in
desired way. While, in secondary research, investigators can obtain information from external
sources like books, journals, government data, newspapers, articles and more. Under these type
of sources, several authors and professionals have given their views and opinion on same topic.
8

This would help researchers in evaluating their thoughts and making analysis according to own
perception. In context with present research, where L’Oréal faced issues related to
advertisements which they have made, researcher has used both primary and secondary
investigating methods and these are given below:
Primary Research
Primary research can be defined as methodology which is mostly utilised by the
investigator in order to collect the data directly, rather than depending on data collected from
previously done research. It is being identified that, primary research is solely carried out to
address a certain problem, which requires in-depth analysis. In present context, primary research
is going to be conducted on the basis of data which is collected by the researcher by his/her own.
On the other hand, researcher specifically keep its focus on addressing a certain problem with an
in-depth knowledge. On the other hand, primal advantage of using this type of research method
is that overall investigation done considering authentication which may aid in pulling out
favourable outcomes in specified time frame on the chosen topic i.e. impact of misleading ads on
reputation of a company. For this purpose, they have analysed various techniques of primary
research in order to get specific information. It includes questionnaire, online and offline survey,
interviews and more. Concept of these methods for collecting data are described as- Interviews (Telephonic or face-to-face) : An interview can be defined as a conversation
done among interviewer and interviewee where questions are asked. If it is talked about
the research, it can be said that qualitative research consist of face to face interviews aid
in pulling out favourable outcomes in specified time frame. At the time of building a
questionnaire, it can be said that feedbacks can easily be taken from respondents and
through this right amount of information can easily be carried out. Researcher basically
consist of effective communication in order to improve overall interactions with
interviewee. In present context, where researcher has taken topic as to analyse the impact
of misleading ads, interview can be done by investigator in order to collect the data but it
might cost much to him/her and also it is a time consuming process at the same time (Oh,
Teo and Sambamurthy, 2012). Online survey: An online survey can be defined as a questionnaire that helps in targeting
the audience. Basically, this type of questionnaire is being built online. It can be said that
an online survey is mostly, created as Web forms with a database to store the answers and
9

statistical software to provide analytics. This is being considered as one of a crucial
approach which can be used by a researcher at the time of pulling out favourable
outcomes. It consist with both open end or close end questions which could help in
clearing the issues that a factor consist with. Since the topic of the investigation is relying
upon a large but small area, this type of method will be less useful and along with this, it
is possible that it might cost much to the investigator in order to pull out authentic data
(Rao and Tilt, 2016).
 Questionnaire: This can be defined as a set of printed or written questions with a choice
of answers, devised for the purposes of a survey or statistical study. Under present
investigating report, questionnaire is the tool which can be utilised as an effective
technique and instant responses could easily be pulled out. It has been analysed that
proper questionnaire can easily be developed through a specified format given within the
topic. Feedbacks given by participants or answers may aid in building favourable
outcomes and through this further activities can easily be done right on time (Schaltegger
and Burritt, 2017). Basically, for an investigation at a small level, this type of data
collecting method could be used which may aid in gathering much more authentic in a
short span. Along with this, a questionnaire is being built for both small and big research
and it is cheap as well.
On the other hand, project investigator is going to develop a questionnaire for L’Oréal
which will develop questionnaire which will aid in pulling out the outcomes right on time
(Schneider and Spieth, 2013). Along with this, researcher has chosen random sampling technique
and have selected 40 respondents to collect data in specified time frame.
Secondary Research
Secondary research can be defined as the method which basically connects with primary
research as the data which is being covered under secondary is of an individual who has done the
investigation on a particular topic previously. Under present report, right information can easily
be pulled out through considering external sources. It can be said that there are some basic
resources like articles, books and journals that can be used by experts so that to look into
favourable outcomes focusing on a range of issues as well. Researcher basically uses a range of
issues behind Misleading ads which has been developed by business organisations like L’Oréal.
10

Critical review of results
Critical review on the basis of primary research
Theme 1 : Unethical practice is done by a company
Q1) Why an unethical practice is done by a company? Frequency
a) For Profit maximisation 35
b) To grab attention of customers 5
INTERPRETATION: With the help of above mentioned graph, it can easily be said that
35 respondents were in favour of generating profit margins and mentioned that an organisation
does unethical practice to earn a good amount of profits. Along side this, only 5 respondents has
mentioned that a company does unethical practise to enhance the number of customers so that
effectively, company could expand its business in short span. With the help of this, it can easily
be said that an organisation could easily impacts its performance level.
THEME 2 : Impact upon a business organisation's brand image of misleading ads
Q2) What do you think of misleading ads, do they impact upon a
business organisation's brand image ?
Frequency
a) Yes 25
b) No 15
11
35
5
a) For Profit maximisation
b) To grab attention of
customers

INTERPRETATION: It has been ascertained from the above graph that misleading ads can be
very influential when it comes to business operations. Brand image plays a very important role
at market place as if brand image is good then it attract new customers and retain old customers.
Along with this, Adventism helps an organisation to increase the brand image at market place.
On the other hand, if brand image is not so good then it decrease their sales and value of product
in customers mind. As per the above specified pie chart, it has been analysed that, out of 40,
respondents 25 respondents says that yes misleading ads directly affects the growth and brand
image of its organisation. This is because it create negative image and affect the emotion of
society. On the other hand, remaining 15 respondents says that misleading ads do not affect the
brand image of business organisation. As they do not have much knowledge of market and
products.
Theme 3: Influence of Misleading ads on business organisation's brand image.
Q3) What is the influence of misleading ads on business organisation's
brand image?
Frequency
a) Positive 15
12
25
15
a) Yes
b) No

b) Negative 25
15
25
a) Positive
b) Negative
Interpretation: It can be interpreted from the above statement that misleading advertisements
can carry both positive and negative influence upon organisational brand image. 15 respondents
believe that misleading advertisement can offer short term reputation enhancement to the people
as it enhances market reach. Whereas majority of the respondents i.e. 25 believe that it will carry
a negative impact on organisational reputation as it involves dishonest ways to sell their
products.
THEME 4 : Misleading ads can offer high profits to an organisation
Q3) How long a misleading ads can offer high profits to an
organisation ?
Frequency
a) Longer period of time frame 9
b) Not so long 31
13

INTERPRETATION : In every organisation their main motive is to earn high volume of profit
in order to accomplish organisational goals and objectives. Along with this, advertisement
encourage people to purchase their product and services and create brand image at market place.
As per the above specified pie chart, it has been analysed that, out of 40 respondents, 9
respondents says that misleading ads offer high profit for longer period of to L'Oreal company.
This is because internationally renowned people are brand ambassador of this L'Oreal company
as it influence customers to purchase their product and in future too. Remaining 31 respondents
says that misleading ads not provides long term profit to company. As through advertisement,
providing influence influence customers to buy their products but after buying the product of
L'Oreal customers are dissatisfied from it. This is because given information is not so true which
is shown in the advertisement.
THEME 5 : Major factors that need to be considered by L'Oreal while developing
corporate strategy
Q4) What are the major factors that need to be considered by L'Oreal
while developing corporate strategy ?
Frequency
a) Effective plan 20
14
9
31
a) Longer period of time frame
b) Not so long

b) Allocation of funds 10
c) Demand of the market 10
INTERPRETATION : Companies is used corporate strategy to accomplish organisational goal
and objectives. Along with this, it helps a company to generate competition in market also to
make the positioning of their brand at market place. In context to L'Oreal, company develop
corporate strategy to managing business operation in effective manner. As per the above
specified pie chart, it has been analysed that, out of 40 respondents, 20 respondents says that to
prepare effective plan which is considered by L'Oreal for developing corporate strategy. On the
other hand, 10 respondents says that for developing corporate strategy in L'Oreal they should
allocate the fund for future perspective. Remaining 10 respondents says that demand of the
market is also a major factor for considering L'Oreal for developing corporate strategy.
THEME 6: Importance of L'Oreal to promote its products and services at international
level
15
20
10
10
a) Effective plan
b) Allocation of funds
c) Demand of the market

Q5) Why it is important for L'Oreal to promote its products and
services at international level ?
Frequency
a) For improvisation of sales and profit margins 15
b) To develop customer base much stronger 15
c) For business expansion 10
INTERPRETATION: Marketing strategies helps an organisation to promote their goods and
services at domestic and global level in order to achieve organisational goals and objectives. As
per the above specified pie chart, it has been analysed that, out of 40 respondents, 15 respondents
says that for L'Oreal, promotional strategies is important for promoting their good and services at
international level. This is because it improves their sales and profit margins. Another 15
respondents, says that promotional strategy is good for L'Oreal because it develop the stronger
customer base. And remaining 10 respondents, says that by using promotional activities L'Oreal
expand their business at global level.
16
15
15
10
a) For improvisation of sales
and profit margins
b) To develop customer base
much stronger
c) For business expansion

THEME 7: Significant reason behind failure of corporate strategy and governance of
L'Oreal
Q6) What can be considered as the significant reason behind failure of
corporate strategy and governance of L'Oreal ?
Frequency
a) Weak internal management 25
b) Improper information was spread 5
c) Conflict of interest 10
INTERPRETATION: As per the above specified pie chart, it has been analysed that, out of 40
respondents, 25 respondents says that the reason behind of failure of corporate strategy and
governance of L'Oreal is their internal management is weak. This is because they are mangers
and leaders are not preparing effective strategies in an organisation. On the other hand, 5
respondents says that if improper information was spread then it directly affects an organisation.
Remaining 10 respondents says that conflict of interest is an another reason of failure of
corporate strategy and governance of L'Oreal.
17
25 5
10
a) Weak internal management
b) Improper information was
spread
c) Conflict of interest

THEME 8: Ways used by L'Oreal to improve its reputation at international market
Q7) What ways can be used by L'Oreal to improve its reputation at
international market ?
Frequency
a) Provide discounts to customer 15
b) Through making modifications in advertisements 10
c) Conducting strategies related to corporate social responsibilities 15
INTERPRETATION: As per the above specified pie chart, it has been analysed that, out of 40
respondents, 15 respondents says that if L'Oreal provide discounts on its product to customers
then it will improve its image at global level market. Another 10 respondents says that through
some modification in advertisement can improve its reputation at international market. As it
build positive image in market through which customers can attract and buy its products.
Remaining 15 respondents says that if L'Oreal develop some strategies which is related with
18
15
10
15 a) Provide discounts to
customer
b) Through making
modifications in
advertisements
c) Conducting strategies
related to corporate social
responsibilities

CSR then it automatically improve their image which also build reputation at international
market area.
THEME 9: Satisfaction with the services offered by L'Oreal
Q8) Are you satisfied with the services offered by L'Oreal ? Frequency
a) Yes 25
b) No 15
INTERPRETATION: As per the above specified pie chart, it has been evaluated that, out of 40
respondents, 25 respondents says that, they are satisfied by the services which is offered by
L'Oreal to their customers. Remaining 15 respondents says that, they are not satisfied by the
L'Oreal services because company gives false commitment to customers and do not provide the
services according to customers expectation. With reference to this, customers are going to be
dissatisfied because of it.
19
25
15
a) Yes
b) No

Recommendation and action plan
Recommendation
As per the above research, it has been recommended that, L'Oreal company should have
provide proper information to customers by the medium of advertisement. Along with this, it is
recommended that company should use corporate strategies and governance to implement their
plan and policies for improving its image at market place (Sethi, 2012). If company gives false
commitment to customer's and do not provide services according to customers expectation, then
their sales are reduced because customers are dissatisfied by their services. With reference to
this, I suggest that company should have clear and right information by advertisement to
customers as it help company to create positive brand image at market place. In order to this, it
gain competition advantage at international market.
It is also recommended for managers of L'Oreal to improve its reputation at international
market. In relating to this, by providing discount on their products to customers, to make some
modification on its advertisement and to conduct some strategies which is related to corporate
social responsibilities company can improve its reputation at market place. This would helps an
organisation to improve the performance of an employee and encourage customers to buy their
product for longer period of time. Along with this, it would help L'Oreal for achieving long term
loyalty which lead to achieve great competitive advantage (Tang, Hull and Rothenberg, 2012).
On the other hand, if brand image is not so good then it decrease their sales and value of product
in customers mind. So, it can be highly recommended that, company should improves its brand
image which aid to company for increasing sales and value of product or brand in customers
mind.
Action Plan
As per this present research report, an action plan is require for L'Oreal to improve
misleading ads for attracting customers and generate competition at market place. There are
some of action plan which is discussed below:-
Steps Description
Step 1: Identify the
reason
First step of an action plan is to identify reason behind conducting a
research. L'Oreal can determine importance of advertisement and
promotional strategies by conducting primary and secondary survey.
20

This would help in analysing the way by which L'Oreal can expand
their business at global level. And also create competition advantage
at market place (Teece, Peteraf and Leih, 2016).
Step 2: Formulate the
strategies
After identifying the main source for achievement of competitive
advancement, next step for L'Oreal is to formulate corporate
strategies for achieving organisational goal and objectives. It will
helps company to mange their business operations and make
positioning of their brand at market place.
Step 3: Evaluations of
the risk
Another step is to evaluate the risk of advertisement as it may be
taken as a positive or negative but the demand and sales will increase.
This is because company use international renowned person as a
brand ambassador to promote their brand and product at global level.
Along with this, it encourage customers to bus their products for
longer period of time.
Step 4: Development of
corporate strategies
It refers to one of the major action plan in which L'Oreal company
develop corporate strategies through which organisation get proper
direction to run and mange their business activities. In relation to this,
it helps company to accomplish its goal and objectives ns also L'Oreal
use proper corporate strategies which aid organisation to improve its
growth and brand image.
Step 5:
Implementation of
corporate strategies
and governance
After formulating all above plans for improving advertisement and
brand image of company, the most essential step for L'Oreal is to
implement corporate strategies (Terry Kim and et. al., 2013). This
would help company to gain competitive advantage at market place
and expand their business at global level.
21

22

CONCLUSION
As per the above research report, it has been concluded that corporate strategies and
governance plays a very important in company to run their business activities effectively. Along
with this, misleading ads has two aspect i.e., positive and negative. Sometimes this ads creates
advantage for company as it increase the sales and generate positive brand image at market. And
also helps companies to expand their business at global level. Whereas negative image decrease
their sale and directly affect the growth of success as their customers are dissatisfied from
company. This is because company is give false commitment and fulfil the expectation of their
customers. In addition to this, effective use of corporate strategies and governance aid businesses
to achieve their organisational goal and objectives and also to expand their busines at
international level.
23

REFERENCES
Books and Journals
Acemoglu, D., 2012. What does human capital do? A review of Goldin and Katz's The race
between education and technology. Journal of Economic Literature. 50(2). pp.426-63.
Amran, A., Lee, S. P. and Devi, S. S., 2014. The influence of governance structure and strategic
corporate social responsibility toward sustainability reporting quality. Business Strategy
and the Environment. 23(4). pp.217-235.
BarNir, A., 2012. Starting technologically innovative ventures: reasons, human capital, and
gender. Management Decision. 50(3). pp.399-419.
Bell, R. G., Filatotchev, I. and Aguilera, R. V., 2014. Corporate governance and investors'
perceptions of foreign IPO value: An institutional perspective. Academy of
Management Journal. 57(1). pp.301-320.
Evans, N., Stonehouse, G. and Campbell, D., 2012. Strategic management for travel and tourism.
Taylor & Francis.
Fernando, A. C., 2012. Corporate Governance: Principles, Polices and Practices, 2/e. Pearson
Education India.
Fulmer, I. S. and Ployhart, R. E., 2014. “Our most important asset” a
multidisciplinary/multilevel review of human capital valuation for research and practice.
Journal of Management. 40(1). pp.161-192.
Gelens, J., and et. al., 2013. The role of perceived organizational justice in shaping the outcomes
of talent management: A research agenda. Human Resource Management Review.
23(4). pp.341-353.
Grigoroudis, E., Orfanoudaki, E. and Zopounidis, C., 2012. Strategic performance measurement
in a healthcare organisation: A multiple criteria approach based on balanced scorecard.
Omega. 40(1). pp.104-119.
Hill, T., 2017. Manufacturing strategy: the strategic management of the manufacturing function.
Macmillan International Higher Education.
Jansen, R. J., and et. al., 2013. Information processing and strategic decision-making in small
and medium-sized enterprises: The role of human and social capital in attaining decision
effectiveness. International small business journal. 31(2). pp.192-216.
Khan, A., Muttakin, M. B. and Siddiqui, J., 2013. Corporate governance and corporate social
responsibility disclosures: Evidence from an emerging economy. Journal of business
ethics. 114(2). pp.207-223.
Marquis, C. and Lee, M., 2013. Who is governing whom? Executives, governance, and the
structure of generosity in large US firms. Strategic Management Journal. 34(4). pp.483-
497.
Moser, C. O., 2012. Gender planning and development: Theory, practice and training.
Routledge.
Muchlinski, P., 2012. Implementing the new UN corporate human rights framework:
Implications for corporate law, governance, and regulation. Business Ethics Quarterly.
22(1). pp.145-177.
Ngo, L. V. and O'cass, A., 2013. Innovation and business success: The mediating role of
customer participation. Journal of Business research. 66(8). pp.1134-1142.
24

Oh, L. B., Teo, H. H. and Sambamurthy, V., 2012. The effects of retail channel integration
through the use of information technologies on firm performance. Journal of Operations
Management. 30(5). pp.368-381.
Rao, K. and Tilt, C., 2016. Board composition and corporate social responsibility: The role of
diversity, gender, strategy and decision making. Journal of Business Ethics. 138(2).
pp.327-347.
Schaltegger, S. and Burritt, R., 2017. Contemporary environmental accounting: issues, concepts
and practice. Routledge.
Schneider, S. and Spieth, P., 2013. Business model innovation: Towards an integrated future
research agenda. International Journal of Innovation Management. 17(01). p.1340001.
Sethi, S. P., 2012. Multinational corporations and the impact of public advocacy on corporate
strategy: Nestle and the infant formula controversy (Vol. 6). Springer Science &
Business Media.
Tang, Z., Hull, C. E. and Rothenberg, S., 2012. How corporate social responsibility engagement
strategy moderates the CSR–financial performance relationship. Journal of Management
Studies. 49(7). pp.1274-1303.
Teece, D., Peteraf, M. and Leih, S., 2016. Dynamic capabilities and organizational agility: Risk,
uncertainty, and strategy in the innovation economy. California Management Review.
58(4). pp.13-35.
Terry Kim, T. and et. al., 2013. Social capital, knowledge sharing and organizational
performance: what structural relationship do they have in hotels?. International Journal
of Contemporary Hospitality Management. 25(5). pp.683-704.
Van den Berghe, L., 2012. International standardisation of good corporate governance: best
practices for the board of directors. Springer Science & Business Media.
Graff, S., Kunkel, D. and Mermin, S.E., 2012. Government can regulate food advertising to
children because cognitive research shows that it is inherently misleading. Health
Affairs, 31(2), pp.392-398.
Online
FDA Issues Warning to L'Oreal over Misleading Ads. 2012. [Online]. Available through:
<https://www.medicaldaily.com/fda-issues-warning-loreal-over-misleading-ads-
242469>.
25

Appendix
 To analyse the intention of companies while developing misleading ads.
 To determine the impact of misleading ads and unethical practices on brand image of
L’Oréal.
 To analyse the areas which L’Oréal needs to focus on for improving ads while promoting
products in order to gain good reputation and competitiveness in the market.
Questionnaire
Name:
Age:
Gender:
Q1) Why an unethical practice is done by a company?
a) For Profit maximisation
b) To grab attention of customers
Q2) What do you think of misleading ads, do they impact upon a business organisation's
brand image ?
a) Yes
b) No
Q3) What is the influence of misleading ads on business organisation's brand image ?
a) Positive
b) Negative
Q4) How long a misleading ad can offer high profits to an organisation ?
a) Longer period of time frame
b) Not so long
Q5) What are the major factors that need to be considered by L’Oréal while developing
corporate strategy ?
a) Effective plan
b) Allocation of funds
c) Demand of the market
Q6) Why it is important for L’Oréal to promote its products and services at international
level ?
26

a) For improvisation of sales and profit margins
b) To develop customer base much stronger
c) For business expansion
Q7) What can be considered as the significant reason behind failure of corporate strategy
and governance of L’Oréal ?
a) Weak internal management
b) Improper information was spread
c) Conflict of interest
Q8) What ways can be used by L’Oréal to improve its reputation at international market
?
a) Provide discounts to customer
b) Through making modifications in advertisements
c) Conducting strategies related to corporate social responsibilities
Q9) Are you satisfied with the services offered by L’Oréal ?
a) Yes
b) No
Q10) Any recommendations for L’Oréal so that they can improve its reputation ?
27