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

L'Oreal and Body
Shop

Table of Contents
INTRODUCTION...........................................................................................................................1
PART 1............................................................................................................................................1
1. Analysis of impact of macro environment on the current situation of the organisation..........1
2. Analysis of organisational culture of L'Oreal and Body Shop................................................2
3. Discussion of different factors which would have considered by L'Oreal before making the
decision of acquisition of Body Shop..........................................................................................4
4. Different factors which have an impact on the acquisition of Body Shop made by L'Oreal
resulting in failure of project........................................................................................................5
PART 2............................................................................................................................................6
Personal reflection of writing the report......................................................................................6
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................8

INTRODUCTION
Acquisition can be defined as the mode of transfer of ownership in which one
organisation is purchased by another one for the purpose of getting monetary benefits. After
taking the possession of an entity all the financial statements are formulated in consolidated form
in which parent company is responsible to form them on the basis of subsidiary (Bamber and
Gransden, 2019). Present report is based upon the acquisition of Body Shop which was acquired
by L'Oreal. Body Shop is a beauty products, cosmetic and perfume company founded in
year1976 and the another enterprise which has acquired it is L'Oreal which is a personal care
entity. It is one of the largest cosmetic brands that are providing products and services in
multiple countries. This assignment covers various topics such as analysis of macro environment,
organisational structure of both the companies, factors taken in to consideration by L'Oreal to
acquire Body Shop etc. Apart from this, all the elements which has affected the acquisition and
resulted in failure are also discussed in this project.
PART 1
1. Analysis of impact of macro environment on the current situation of the organisation
Macro environment: It can be defined as the set of such forces which are affecting an
organisation externally and for all the business entities it is very important to keep an eye on
them so that effective policies for future could be formulated. As L'Oreal has acquired Body
Shop therefore it is very important for the company to assess the macro environment for current
situations. For this purpose, PESTLE analysis could be used which is having six different
elements. Discussion of all of them in the context of the company is as follows:
 Political: Different elements which are related to political situations such as corruption,
stability of legal authorities, trade restrictions, tax etc. are political factors. When L'Oreal
acquire Body Shop various issues which are related to tax and legal implications. The
amount for the acquisition was around 652 million pounds. Due to Brexit the percentage
of tax has been increased therefore the company has paid additional taxation of the total
amount which have resulted in higher cost of acquisition (Dial and Storkey, 2017).
 Economic: There are various component of this element which are exchange, inflation,
interest and deflation rates. Body Shop is a UK company and L'Oreal is a french
company so it has affected the acquisition because the changes in exchange rates affect
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