Business Strategies and Competitive Analysis
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This assignment delves into the realm of business strategy formulation and analysis. It examines various strategic frameworks, including Porter's Five Forces model and Bowman's Strategy Clock, which are crucial tools for understanding the competitive landscape and devising effective business strategies. The assignment encourages students to analyze how businesses utilize these models to gain a competitive advantage and achieve sustainable growth.
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BUSINESS STRATEGY
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Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................2
PESTLE and SWOT with organisational capabilities................................................................2
Competitive analysis using Porter's Five force model................................................................5
TASK 2............................................................................................................................................7
1. Different types of strategic directions for organization..........................................................7
2. Recommendation and justification of appropriate growth platform for L’Oréal..................10
3. Strategic management plans..................................................................................................11
CONCLUSION .............................................................................................................................12
REFERENCES..............................................................................................................................13
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................2
PESTLE and SWOT with organisational capabilities................................................................2
Competitive analysis using Porter's Five force model................................................................5
TASK 2............................................................................................................................................7
1. Different types of strategic directions for organization..........................................................7
2. Recommendation and justification of appropriate growth platform for L’Oréal..................10
3. Strategic management plans..................................................................................................11
CONCLUSION .............................................................................................................................12
REFERENCES..............................................................................................................................13
INTRODUCTION
Business strategy defines simply as organization's high level plan for achieving specific
business goals and objectives. The strategy can be successful when it leads to business growth,
strong financial performance and strong competitive position. Business strategy is an
organizational tool and planning which helps firm's for reaching to their desired goal. Business
strategy helps companies to set objective and goals for long term development and growth (Hair
Jr and et.al., 2015). It exists in two types which are generic and competitive strategies. The
present report is presented in regard to French skin or personal care company L’Oréal. It is
headquartered in France and Clinchy. This report explains PESTLE and SWOT analysis tools for
identifying the factors that impacts on business functioning. It will describe Porter's Five Forces
Model and different types of strategic directions available to firm. Furthermore, this report
discussed strategic management plan with objectives, strategies and tactics.
TASK 1
PESTLE and SWOT with organisational capabilities
An organisation operates within two boundaries that is external and internal. There are
several factors in both which impact on company operations as well as growth. Any change in
external factor can not be controlled by organisation. By determining factors, it helps business to
develop strategies accordingly. They are able to grow and expand in different countries and
markets. The extensive analysis of macro and micro environmental factors will help in getting
the best and most effective result for strategy formation (Saebi and Foss, 2015). This assessment
will help L’Oréal to improve the quality of services and thus will lead the firm to improve the
quality of products and setting up of action plan that will help in improving the overall
operations in the selected cosmetics organisation. The PESTLE analysis of L’Oréal is as follows:
Political: Any sort of political change in country will directly impact on company
operations. This is because new government comes and new laws and regulations are formulated
related to tariff and trade plans, trade laws, etc. For example, Brexit will negatively impact on
L’Oréal growth and development. Due to change in trade and tariff policies, the company will
not be able to effectively trade with UK. Thus, its market share will be impacted.
Economic: The fluctuation in currency rates and inflation are major economic factors
which can influence the operations of L’Oréal. They will have to make changes in pricing
strategy, import, export policies etc. it will directly impact on strategies and plans developed.
1
Business strategy defines simply as organization's high level plan for achieving specific
business goals and objectives. The strategy can be successful when it leads to business growth,
strong financial performance and strong competitive position. Business strategy is an
organizational tool and planning which helps firm's for reaching to their desired goal. Business
strategy helps companies to set objective and goals for long term development and growth (Hair
Jr and et.al., 2015). It exists in two types which are generic and competitive strategies. The
present report is presented in regard to French skin or personal care company L’Oréal. It is
headquartered in France and Clinchy. This report explains PESTLE and SWOT analysis tools for
identifying the factors that impacts on business functioning. It will describe Porter's Five Forces
Model and different types of strategic directions available to firm. Furthermore, this report
discussed strategic management plan with objectives, strategies and tactics.
TASK 1
PESTLE and SWOT with organisational capabilities
An organisation operates within two boundaries that is external and internal. There are
several factors in both which impact on company operations as well as growth. Any change in
external factor can not be controlled by organisation. By determining factors, it helps business to
develop strategies accordingly. They are able to grow and expand in different countries and
markets. The extensive analysis of macro and micro environmental factors will help in getting
the best and most effective result for strategy formation (Saebi and Foss, 2015). This assessment
will help L’Oréal to improve the quality of services and thus will lead the firm to improve the
quality of products and setting up of action plan that will help in improving the overall
operations in the selected cosmetics organisation. The PESTLE analysis of L’Oréal is as follows:
Political: Any sort of political change in country will directly impact on company
operations. This is because new government comes and new laws and regulations are formulated
related to tariff and trade plans, trade laws, etc. For example, Brexit will negatively impact on
L’Oréal growth and development. Due to change in trade and tariff policies, the company will
not be able to effectively trade with UK. Thus, its market share will be impacted.
Economic: The fluctuation in currency rates and inflation are major economic factors
which can influence the operations of L’Oréal. They will have to make changes in pricing
strategy, import, export policies etc. it will directly impact on strategies and plans developed.
1
Therefore, it will negatively impact on their growth and profitability. For instance, the proper
planning of the economic operations will look after the proper planning of the services and thus,
supports financial growth of LO'real in foreign market. Also, the purchasing power of the
organisation will look after the proper planning of the services.
Social: It is related to change in needs of society as a whole. Any change in needs and
preference of customers highly impact L’Oréal profits. The changes may occur due to social
ethics, values, etc. The majority of the customers using L’Oréal products and services are
females and their choice alters constantly (Serra and Kunc, 2015). So, if their needs vary, it will
create a drastic impact on L’Oréal sales and profits. For example, the increase in the perception
of the people and awareness among the customers will impact the sales and overall business
operations of the organisation. The demographical factors will also play a crucial role in it.
Technological: It refers to technological advancement which affects company
operations. Sometimes, it forces company to use and implement advance technology to improve
product quality or design new products. Also, it affects process or methods which are used in
producing products. L’Oréal uses advance technology in developing products and providing
services to people. Due to this they are able to maintain high quality of their products. For
example, tools like social media and digital platforms will help in increasing the sales of the
organisation. Besides this, it will also help in carrying out of the research that will help in
carrying out of research process that will support development of advance and innovative
products.
Environmental: The factors are related to environment and CSR policies. Any change in
environmental laws and regulations of country enforces organisation to contribute towards
building a clean environment. They have to change their environmental policies. L’Oréal
operations will be impacted if there is any change in environmental laws of a nation. For
example, as the customers are moving towards the natural and organic products, reducting the
carbon footprints while carrying out the manufacturing process by LO'real.
Legal: Legal factors include laws and regulations related to employment, working hours,
wages and salary, etc. of a country. Every company has to follow these laws. So, it helps in
meeting the operational needs of the organisation. Any formulation of new laws or change in
employment law impact on operations of L’Oréal. They will have to make changes in their
policies as well. For instance, the quality and safety standards related to cosmetics of an
2
planning of the economic operations will look after the proper planning of the services and thus,
supports financial growth of LO'real in foreign market. Also, the purchasing power of the
organisation will look after the proper planning of the services.
Social: It is related to change in needs of society as a whole. Any change in needs and
preference of customers highly impact L’Oréal profits. The changes may occur due to social
ethics, values, etc. The majority of the customers using L’Oréal products and services are
females and their choice alters constantly (Serra and Kunc, 2015). So, if their needs vary, it will
create a drastic impact on L’Oréal sales and profits. For example, the increase in the perception
of the people and awareness among the customers will impact the sales and overall business
operations of the organisation. The demographical factors will also play a crucial role in it.
Technological: It refers to technological advancement which affects company
operations. Sometimes, it forces company to use and implement advance technology to improve
product quality or design new products. Also, it affects process or methods which are used in
producing products. L’Oréal uses advance technology in developing products and providing
services to people. Due to this they are able to maintain high quality of their products. For
example, tools like social media and digital platforms will help in increasing the sales of the
organisation. Besides this, it will also help in carrying out of the research that will help in
carrying out of research process that will support development of advance and innovative
products.
Environmental: The factors are related to environment and CSR policies. Any change in
environmental laws and regulations of country enforces organisation to contribute towards
building a clean environment. They have to change their environmental policies. L’Oréal
operations will be impacted if there is any change in environmental laws of a nation. For
example, as the customers are moving towards the natural and organic products, reducting the
carbon footprints while carrying out the manufacturing process by LO'real.
Legal: Legal factors include laws and regulations related to employment, working hours,
wages and salary, etc. of a country. Every company has to follow these laws. So, it helps in
meeting the operational needs of the organisation. Any formulation of new laws or change in
employment law impact on operations of L’Oréal. They will have to make changes in their
policies as well. For instance, the quality and safety standards related to cosmetics of an
2
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organisation in different countries that will help in improving the performance and busienss
strategy of the organisation.
SWOT Analysis of L’Oréal
Strength Weaknesses
Strong brand portfolio: L’Oréal has a very
high level of brand portfolio due to which they
have built a strong customer base (Slocum,
Lei and Buller, 2014).
Using organic products: This is the
biggest strength of L’Oréal which has
enabled them to maintain quality of
product. With this they are able to
develop a large customer base.
High product value- the products of
L’Oréal is having a high value. they
have built a brand image which reflects
product worth. by this company has
attracted women and develop a strong
customer base.
Rise in competition: There are many
companies which are entering in
cosmetic industry. Thus, there is rise in
competition which is making is difficult
for L’Oréal to retain customers.
High pricing: The cosmetic products
of LO’real are competitively highly
priced that makes the organization to
lose a wide range of customers. The
high pricing of the skin care products
limits the purchasing and usage of their
products among a limited range of
customers.
Opportunities Threat
Industrial expansion: there lies a vast
number of opportunities which can
benefit L’Oréal in generating more
sales and profits. The company can
offer its products in different countries
like India. This will help in meeting the
operational and industrial needs of the
organisation. Other than this, this will
help in proper setting of the goals and
policies that are been carried out within
Quick change in needs: In the future
people may find that L’Oréal products
are of no use and their value is low. It
means that they might not consider
products as basic needs. The rapid
change in the demands will lead to rise
in expectations for the organisation.
Failing to meeting it, the organisation
will lose its customers, which will lead
to rise in decrease of sales and profit of
3
strategy of the organisation.
SWOT Analysis of L’Oréal
Strength Weaknesses
Strong brand portfolio: L’Oréal has a very
high level of brand portfolio due to which they
have built a strong customer base (Slocum,
Lei and Buller, 2014).
Using organic products: This is the
biggest strength of L’Oréal which has
enabled them to maintain quality of
product. With this they are able to
develop a large customer base.
High product value- the products of
L’Oréal is having a high value. they
have built a brand image which reflects
product worth. by this company has
attracted women and develop a strong
customer base.
Rise in competition: There are many
companies which are entering in
cosmetic industry. Thus, there is rise in
competition which is making is difficult
for L’Oréal to retain customers.
High pricing: The cosmetic products
of LO’real are competitively highly
priced that makes the organization to
lose a wide range of customers. The
high pricing of the skin care products
limits the purchasing and usage of their
products among a limited range of
customers.
Opportunities Threat
Industrial expansion: there lies a vast
number of opportunities which can
benefit L’Oréal in generating more
sales and profits. The company can
offer its products in different countries
like India. This will help in meeting the
operational and industrial needs of the
organisation. Other than this, this will
help in proper setting of the goals and
policies that are been carried out within
Quick change in needs: In the future
people may find that L’Oréal products
are of no use and their value is low. It
means that they might not consider
products as basic needs. The rapid
change in the demands will lead to rise
in expectations for the organisation.
Failing to meeting it, the organisation
will lose its customers, which will lead
to rise in decrease of sales and profit of
3
the organisation.
Creation of new products: L’Oréal
can develop variety of products. For
example, they can produce men
cosmetic items. It will help them to
increase customer base and grow
rapidly. This will not only increase the
product portfolio of the organization
but also improves the sales and meeting
up of the needs and demands of their
customers. The expansion of their
product portfolio will also help in
meeting the business objectives of the
organization.
the organisation.
Global economic conditions: Now,
customers are focused on purchasing
low price products (Nulkar, 2014).
Thus, it will emerge in change in
market trends. So, it will force them to
use low price products. Also, the
economic ups and downs are affecting
the purchasing power of the
organization that will impact the sales
of enterprise to a greater level. This will
also cause the decrease in the economic
stability enjoyed by the organization.
On the basis f both the analysis this can be concluded that the overall SWOT and
PESTEL shows that L’Oréal is a big brand that is mostly preferred by high class people. Due to
its high quality and price company have built a positive brand image in the minds of people. All
these measures showcase the proper planning of the operations that will help in setting up of the
operations which will help in meeting the operational requirements of the organisation (Bozkurt
and Kalkan, 2014) It helps to achieve the best and most appropriate business measure of the firm.
Analysis of organisational capabilities:
In order to analyse the capabilities of organisation, VRIO framework is used which is as
follows:
Value: This includes the factors like expensiveness of the resources and the ease of
accessibility to it. The products of LO'real have a high value in skin and personal care sector and
organisation have successfully made its products available to larger number of users. For
example, LO'real can include the innovative measures of the growth for the company. This
includes the accessibility factors like purchasing the goods from the outlets or retail stores.
Besides this, in case of a new product, the firm can opt for distributing free samples to its users.
This will help in improving the value of the organisation.
4
Creation of new products: L’Oréal
can develop variety of products. For
example, they can produce men
cosmetic items. It will help them to
increase customer base and grow
rapidly. This will not only increase the
product portfolio of the organization
but also improves the sales and meeting
up of the needs and demands of their
customers. The expansion of their
product portfolio will also help in
meeting the business objectives of the
organization.
the organisation.
Global economic conditions: Now,
customers are focused on purchasing
low price products (Nulkar, 2014).
Thus, it will emerge in change in
market trends. So, it will force them to
use low price products. Also, the
economic ups and downs are affecting
the purchasing power of the
organization that will impact the sales
of enterprise to a greater level. This will
also cause the decrease in the economic
stability enjoyed by the organization.
On the basis f both the analysis this can be concluded that the overall SWOT and
PESTEL shows that L’Oréal is a big brand that is mostly preferred by high class people. Due to
its high quality and price company have built a positive brand image in the minds of people. All
these measures showcase the proper planning of the operations that will help in setting up of the
operations which will help in meeting the operational requirements of the organisation (Bozkurt
and Kalkan, 2014) It helps to achieve the best and most appropriate business measure of the firm.
Analysis of organisational capabilities:
In order to analyse the capabilities of organisation, VRIO framework is used which is as
follows:
Value: This includes the factors like expensiveness of the resources and the ease of
accessibility to it. The products of LO'real have a high value in skin and personal care sector and
organisation have successfully made its products available to larger number of users. For
example, LO'real can include the innovative measures of the growth for the company. This
includes the accessibility factors like purchasing the goods from the outlets or retail stores.
Besides this, in case of a new product, the firm can opt for distributing free samples to its users.
This will help in improving the value of the organisation.
4
Rareness: This is the approach to provide wide range of products and services which are
unique in nature. This will help in improving the sales of the organisations. For example, the
availability of high class skin care product on a comparative reasonable rate makes it's a unique
product or brand in market. The effective pricing and providing high class cosmetics to its users
with few unique products provides a rareness to LO'real.
Imitability: However the rate of imitating the product or resources of LO'real is
comparatively low. Meeting the quality benchmarks set by products of LO'real is quite difficult
for its rival enterprises. This will help LO'real to have a competitive advantage in market. For
examples, many duplicate brands can emerge in market impacting the sales and market share of
the organisation to some extent.
Organisation: The company is said to have a good and effectively organised structure
that helps the organisation to produce its products in vast quantity and cater maximum number of
customers. LO'real will also look after the proper planning of the capabilities that will help the
firm to meet operational goals of the firm. For instance, the proper planning of the product
development operations will impact the sales of the organisation that will help in carrying out the
business operations effectively within the firm.
On the basis of the planning of the operations this will help in proper planning of the
operations and thus will lead to carrying out of the operations and thus will lead to rise in
carrying out of the product development process. Thus, it will help in identifying the needs of
their customers and providing them with services effectively.
Competitive analysis using Porter's Five force model
By using porter five force model management of L’Oréal will get an insight about
competition that exists within cosmetic industry. This will enable them to identify how stiff
competition is and what impact will it have on company growth and development. Furthermore,
by analysing business environment they can develop strategies and plans effectively (Veit and
et.al., 2014). In addition to it, it will determine how external forces are impacting on business
operations.
The management of the competitive environment will help organization to look after
proper assessment of the operations that will lead organization to identify the operations of
organization to evaluate its competitive forces and thus will lead the improvement of the
5
unique in nature. This will help in improving the sales of the organisations. For example, the
availability of high class skin care product on a comparative reasonable rate makes it's a unique
product or brand in market. The effective pricing and providing high class cosmetics to its users
with few unique products provides a rareness to LO'real.
Imitability: However the rate of imitating the product or resources of LO'real is
comparatively low. Meeting the quality benchmarks set by products of LO'real is quite difficult
for its rival enterprises. This will help LO'real to have a competitive advantage in market. For
examples, many duplicate brands can emerge in market impacting the sales and market share of
the organisation to some extent.
Organisation: The company is said to have a good and effectively organised structure
that helps the organisation to produce its products in vast quantity and cater maximum number of
customers. LO'real will also look after the proper planning of the capabilities that will help the
firm to meet operational goals of the firm. For instance, the proper planning of the product
development operations will impact the sales of the organisation that will help in carrying out the
business operations effectively within the firm.
On the basis of the planning of the operations this will help in proper planning of the
operations and thus will lead to carrying out of the operations and thus will lead to rise in
carrying out of the product development process. Thus, it will help in identifying the needs of
their customers and providing them with services effectively.
Competitive analysis using Porter's Five force model
By using porter five force model management of L’Oréal will get an insight about
competition that exists within cosmetic industry. This will enable them to identify how stiff
competition is and what impact will it have on company growth and development. Furthermore,
by analysing business environment they can develop strategies and plans effectively (Veit and
et.al., 2014). In addition to it, it will determine how external forces are impacting on business
operations.
The management of the competitive environment will help organization to look after
proper assessment of the operations that will lead organization to identify the operations of
organization to evaluate its competitive forces and thus will lead the improvement of the
5
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operational strategy of the organization to a greater level. The porter five force model are as
follows:
Threat of new entrant (Low): It refers to entering of new companies in the market or
industry. This impacts on existing competition. There is low chance that any other business will
enter in the cosmetic industry. It is because of strict entry and exit barriers. As L’Oréal is well
established in cosmetic industry there are less chances that new entrants will enter in market.
Therefore, new entrant will result in rise in competition but only to some extent.
Threat of substitution (High): It refers to use of substitute products in order to fulfill
needs. L’Oréal provides cosmetic products to people that do not come in basic need. So, people
can easily substitute it with any other product to fulfill their need. Thus, there is high threat of
substitution in cosmetic industry (Wesseling and et.al. 2015). Thus, it is impacting L’Oréal
6
Illustration 1: Porter's five force model
(Source: What is Five Forces Analysis?, 2019)
follows:
Threat of new entrant (Low): It refers to entering of new companies in the market or
industry. This impacts on existing competition. There is low chance that any other business will
enter in the cosmetic industry. It is because of strict entry and exit barriers. As L’Oréal is well
established in cosmetic industry there are less chances that new entrants will enter in market.
Therefore, new entrant will result in rise in competition but only to some extent.
Threat of substitution (High): It refers to use of substitute products in order to fulfill
needs. L’Oréal provides cosmetic products to people that do not come in basic need. So, people
can easily substitute it with any other product to fulfill their need. Thus, there is high threat of
substitution in cosmetic industry (Wesseling and et.al. 2015). Thus, it is impacting L’Oréal
6
Illustration 1: Porter's five force model
(Source: What is Five Forces Analysis?, 2019)
growth as people are not loyal towards one brand or product. The substitutes are easily available
to them at low prices.
Bargaining power of buyers (High): Bargaining power of buyers means buyers' ability
to affect the price of products and number of buyers. As L’Oréal customer base is very large it
can easily influence company to change price of products. Loyal customers cherish the products
of L’Oréal thus ready to pay more for it. Buyers buy those products which satisfy the needs at
low price. Bargaining power of buyers is getting higher where they have many options of quality
products as compared to L’Oréal skin care items. On the other hand, this power gets lower at the
point where no other company offer the best quality goods within affordable prices as compare
to organization. For LO'real, it is a high power factor affecting its operations in skin and personal
care sector.
Bargaining power of suppliers (Moderate): Bargaining power of suppliers refers to the
ability of supplier to impact price of products. L’Oréal sells its products through suppliers, so
they contain power to impact prices when demand is high and supply is low (Veit and et.al.,
2014). When providers or distributors have much power they can put pressure on company by
increasing or decreasing price by playing off competitors against each other. Company produce
by dozens of manufactures based in multiple countries which impact on distributor power of
bargaining. Mainly they want profit less focusing on others that influence on productivity of
products and develop risks as failure. It will have a moderate impact on the operations of LO'real
as it can effect operations of organization but on limited extent
Rivalry among Existing competitors (High): This factor include competition among
existing business within industry. L’Oréal operates in stiff competitive market. Avon and Proctor
is one of the major rival of organization. Moreover, company is facing competition from other
local and international companies as well in different countries. It is one of the biggest challenge
for L’Oréal in which firm make efforts for improving and developing business more and more.
The rivalry is gradually getting higher with the launching of new and more innovative products
and services.
Based on the effective process of the operations related to Porter's five force model that is
been carried out by the organisation, this will help in carrying out the operations that will help in
proper planning of the operations and thus will lead to rise in the operations which assists in
carrying out of the services. It also assists in improving the service quality of services and thus
7
to them at low prices.
Bargaining power of buyers (High): Bargaining power of buyers means buyers' ability
to affect the price of products and number of buyers. As L’Oréal customer base is very large it
can easily influence company to change price of products. Loyal customers cherish the products
of L’Oréal thus ready to pay more for it. Buyers buy those products which satisfy the needs at
low price. Bargaining power of buyers is getting higher where they have many options of quality
products as compared to L’Oréal skin care items. On the other hand, this power gets lower at the
point where no other company offer the best quality goods within affordable prices as compare
to organization. For LO'real, it is a high power factor affecting its operations in skin and personal
care sector.
Bargaining power of suppliers (Moderate): Bargaining power of suppliers refers to the
ability of supplier to impact price of products. L’Oréal sells its products through suppliers, so
they contain power to impact prices when demand is high and supply is low (Veit and et.al.,
2014). When providers or distributors have much power they can put pressure on company by
increasing or decreasing price by playing off competitors against each other. Company produce
by dozens of manufactures based in multiple countries which impact on distributor power of
bargaining. Mainly they want profit less focusing on others that influence on productivity of
products and develop risks as failure. It will have a moderate impact on the operations of LO'real
as it can effect operations of organization but on limited extent
Rivalry among Existing competitors (High): This factor include competition among
existing business within industry. L’Oréal operates in stiff competitive market. Avon and Proctor
is one of the major rival of organization. Moreover, company is facing competition from other
local and international companies as well in different countries. It is one of the biggest challenge
for L’Oréal in which firm make efforts for improving and developing business more and more.
The rivalry is gradually getting higher with the launching of new and more innovative products
and services.
Based on the effective process of the operations related to Porter's five force model that is
been carried out by the organisation, this will help in carrying out the operations that will help in
proper planning of the operations and thus will lead to rise in the operations which assists in
carrying out of the services. It also assists in improving the service quality of services and thus
7
will lead to planning of the growth measures effectively within the firm. This will help in proper
planning of the operations and thus, supports gaining of a strategic measures within the
organisation.
TASK 2
1. Different types of strategic directions for organization
L’Oréal is world's largest skin and cosmetics company that develop its activities in area
concentrating on skin care, hair color, sun protection, perfume, men's skincare and make-up
products. Bowman's Strategic Clock is one of the best strategic direction model that help
organization in achieving competitive advantages.
Bowman's Strategic Clock-
It is a model that explores options for strategic positioning. For example, how product
should be positioned to given it most competitive environment in market. The main purpose of
Bowman strategy clock model is to exemplify that a business will have different of options of
how to position goods based on two dimensions- perceived value and price. It is based on eight
stage-
Low price and low added value: It is not a very competitive place for business.
Company's products or services are not differentiated and consumer perceives very low
value, despite a low price of goods (Bozkurt and Kalkan, 2014). Thus, if L’Oréal adopt
this strategy, they can attract potential customers towards their goods which is beneficial
for them. By lowering down price of skin care and personal care products, company will
be able to build its strong position in market place.
Low price: Cost minimization is one of the strategy which is required to be successful in
business, often associated with economies of scale. If L’Oréal lower down its product's
price, its profit margin on goods are lower, but high volume of outputs can still give high
overall profitability. At this position, firm produce large quantities and their products are
valued. They sold it at low price which lead to low profits margins on individual things.
Within excepting this position company can grab the attention of new customers.
8
planning of the operations and thus, supports gaining of a strategic measures within the
organisation.
TASK 2
1. Different types of strategic directions for organization
L’Oréal is world's largest skin and cosmetics company that develop its activities in area
concentrating on skin care, hair color, sun protection, perfume, men's skincare and make-up
products. Bowman's Strategic Clock is one of the best strategic direction model that help
organization in achieving competitive advantages.
Bowman's Strategic Clock-
It is a model that explores options for strategic positioning. For example, how product
should be positioned to given it most competitive environment in market. The main purpose of
Bowman strategy clock model is to exemplify that a business will have different of options of
how to position goods based on two dimensions- perceived value and price. It is based on eight
stage-
Low price and low added value: It is not a very competitive place for business.
Company's products or services are not differentiated and consumer perceives very low
value, despite a low price of goods (Bozkurt and Kalkan, 2014). Thus, if L’Oréal adopt
this strategy, they can attract potential customers towards their goods which is beneficial
for them. By lowering down price of skin care and personal care products, company will
be able to build its strong position in market place.
Low price: Cost minimization is one of the strategy which is required to be successful in
business, often associated with economies of scale. If L’Oréal lower down its product's
price, its profit margin on goods are lower, but high volume of outputs can still give high
overall profitability. At this position, firm produce large quantities and their products are
valued. They sold it at low price which lead to low profits margins on individual things.
Within excepting this position company can grab the attention of new customers.
8
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Hybrid: It refers to position involves element of low price relate to competition, but also
differentiation of product. Products value and low price elements added in this positions
that grab the attention of people. Thus, if company focus on providing goods that are of
high value and low priced, they can manufacture good quality of products that attract
customers towards them and help to engaged with longer term of period.
Differentiation: This strategy offers clients the highest level of perceived added value in
which branding play important role as does goods quality. Thus, if L’Oréal using
differentiation strategy, they can give its best to offer to customers and provide good
products as possible as high quality at average price. By adopting this position in
business structure, firm can easily differentiate its products with competitors.
Focused differentiation: This stage concerns positioning strategy on which exclusive
and luxury brand focus; high quality goods at high price. It includes targeted
9
Illustration 2: Bowman's Strategy Clock
(Source: Bowman's Strategy Clock, 2018)
differentiation of product. Products value and low price elements added in this positions
that grab the attention of people. Thus, if company focus on providing goods that are of
high value and low priced, they can manufacture good quality of products that attract
customers towards them and help to engaged with longer term of period.
Differentiation: This strategy offers clients the highest level of perceived added value in
which branding play important role as does goods quality. Thus, if L’Oréal using
differentiation strategy, they can give its best to offer to customers and provide good
products as possible as high quality at average price. By adopting this position in
business structure, firm can easily differentiate its products with competitors.
Focused differentiation: This stage concerns positioning strategy on which exclusive
and luxury brand focus; high quality goods at high price. It includes targeted
9
Illustration 2: Bowman's Strategy Clock
(Source: Bowman's Strategy Clock, 2018)
segmentation, distribution and promotion which lead to higher profit margins. L’Oréal
can set their products price at high levels where consumers buy it because of high
perceived value.
Risky high margins: This is very higher risk positioning strategy in which businesses
sets high prices of their product without offering anything excess in term of perceived
value. If L’Oréal adopt this position and their customers will continue to buy goods at set
prices. But on the other hand, if customers will find out better positioned products that
offers more sensed value for same or low price, that is risky for organization.
Monopoly pricing: This strategy only concentrated on determining the price more than
offering product to customers. In this, firm doesn’t require to be too concerned regarding
what value consumer perceives in product – the only choice that they have is to buy it or
not. Clients is basically depended on services or products that monopolist offers. If
L’Oréal produce that products which is not available or offer by other companies in
marketplace that build their positive image. By getting monopoly in market, company can
grab attention of more people that can increase their profit margins.
Loss of market share: This position refers to the activity of business in which its market
share get lower and profit margin does not increase. L’Oréal do not give customers their
products according to their expectations and perceived values that impact on its
profitability. It declines its profit margin and market share at faster rate.
2. Recommendation and justification of appropriate growth platform for L’Oréal
L’Oréal offers range of products to customers such as, hair color, make up, hair care,
men's skincare goods etc. that build their position in market place better than others. Thus, if they
adopt Bowman's strategic clock's Hybrid position in their business, it can earn more profit and
increase their productivity. It is one of the best growth platforms for organization in which they
can offer products at both low price with high added value and acceptable product
differentiation. They focus on quality of products and also on branding; putting important and
reliable brand on market that help to retain consumers with them for longer period. Clients wants
higher quality of goods and purchase through well reputed brand that assure them about the
quality of products. Company give product to clients that helps to ensure them about there
buying is totally worth it. Getting both elements like reasonable price and accepted product
differentiation customers retain with L’Oréal and like to buy its products again and again. This
10
can set their products price at high levels where consumers buy it because of high
perceived value.
Risky high margins: This is very higher risk positioning strategy in which businesses
sets high prices of their product without offering anything excess in term of perceived
value. If L’Oréal adopt this position and their customers will continue to buy goods at set
prices. But on the other hand, if customers will find out better positioned products that
offers more sensed value for same or low price, that is risky for organization.
Monopoly pricing: This strategy only concentrated on determining the price more than
offering product to customers. In this, firm doesn’t require to be too concerned regarding
what value consumer perceives in product – the only choice that they have is to buy it or
not. Clients is basically depended on services or products that monopolist offers. If
L’Oréal produce that products which is not available or offer by other companies in
marketplace that build their positive image. By getting monopoly in market, company can
grab attention of more people that can increase their profit margins.
Loss of market share: This position refers to the activity of business in which its market
share get lower and profit margin does not increase. L’Oréal do not give customers their
products according to their expectations and perceived values that impact on its
profitability. It declines its profit margin and market share at faster rate.
2. Recommendation and justification of appropriate growth platform for L’Oréal
L’Oréal offers range of products to customers such as, hair color, make up, hair care,
men's skincare goods etc. that build their position in market place better than others. Thus, if they
adopt Bowman's strategic clock's Hybrid position in their business, it can earn more profit and
increase their productivity. It is one of the best growth platforms for organization in which they
can offer products at both low price with high added value and acceptable product
differentiation. They focus on quality of products and also on branding; putting important and
reliable brand on market that help to retain consumers with them for longer period. Clients wants
higher quality of goods and purchase through well reputed brand that assure them about the
quality of products. Company give product to clients that helps to ensure them about there
buying is totally worth it. Getting both elements like reasonable price and accepted product
differentiation customers retain with L’Oréal and like to buy its products again and again. This
10
can be very effectual positioning strategy for organization, particularly if they add value in their
products.
Thus, if L’Oréal adopting Hybrid strategy in business functions and production process
they can achieve competitive advantages more than now (Tarhini, Al-Dmour and Obeidat,
2015). It builds their customers base loyal that maximize purchasing interest of customers for
products. By offering low price goods and high value perceives organization grab the attention of
new customers and retain with them for long time of period. Furthermore, it raises their position
in market place and increase profitability as well as productivity. It creates value to consumers
by providing good quality, brand image, innovative products and better services.
Hybrid is one the best strategy that provide customers quality products within affordable
prices which give proper satisfaction to them. It processes manufacture good items that satisfy
clients and retain them with the organization for longer. L’Oréal adopt this strategy in their
business function and activities that help to gain more consumers and increase its profit margin.
By implementing this method company attract clients towards them and through offering quality
goods they can retain them for longer time of period.
Recommendation-
L'Oreal offer its best quality products to customers and make them happy or satisfied
with it. However, recently with the current competition they must adopt the Hybrid
strategy that make their business position higher than others.
This adoption is one of the best suggestion which make new ways of L'Oreal towards
growth and success.
Organization should produce different or unique products focusing on customers
preferences and also use organic things that do not harm skin.
Company must manufacture product concentrating on their quality and offer to customer
within affordable prices.
3. Strategic management plans
Strategic management plans is one of the best way that help to achieve desired goals and
business objectives. By making good plans L’Oréal gain success and develop their business
functions more attainable. Alongside it, this plan is a blueprint of how business will attain goals
and what tactics or strategies will be used. Also, it describe that in what time frame goals will be
attained.
11
products.
Thus, if L’Oréal adopting Hybrid strategy in business functions and production process
they can achieve competitive advantages more than now (Tarhini, Al-Dmour and Obeidat,
2015). It builds their customers base loyal that maximize purchasing interest of customers for
products. By offering low price goods and high value perceives organization grab the attention of
new customers and retain with them for long time of period. Furthermore, it raises their position
in market place and increase profitability as well as productivity. It creates value to consumers
by providing good quality, brand image, innovative products and better services.
Hybrid is one the best strategy that provide customers quality products within affordable
prices which give proper satisfaction to them. It processes manufacture good items that satisfy
clients and retain them with the organization for longer. L’Oréal adopt this strategy in their
business function and activities that help to gain more consumers and increase its profit margin.
By implementing this method company attract clients towards them and through offering quality
goods they can retain them for longer time of period.
Recommendation-
L'Oreal offer its best quality products to customers and make them happy or satisfied
with it. However, recently with the current competition they must adopt the Hybrid
strategy that make their business position higher than others.
This adoption is one of the best suggestion which make new ways of L'Oreal towards
growth and success.
Organization should produce different or unique products focusing on customers
preferences and also use organic things that do not harm skin.
Company must manufacture product concentrating on their quality and offer to customer
within affordable prices.
3. Strategic management plans
Strategic management plans is one of the best way that help to achieve desired goals and
business objectives. By making good plans L’Oréal gain success and develop their business
functions more attainable. Alongside it, this plan is a blueprint of how business will attain goals
and what tactics or strategies will be used. Also, it describe that in what time frame goals will be
attained.
11
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L’Oréal Aim-
Company aim is to be world's leading make up brand among both cosmetic and skin
care products manufacturing organizations. To meet consumer's need for superior quality
facilities and to provide secure and ambitious work environment for all workers.
Objectives-
To build strong customer based is one of the objective of organization that is based on
offering high added value and low price products to customers. L'Oreal offers' high quality
product to customers. Through this, they are able to grab the attention of people and retain
them. L’Oréal need to satisfy customers by offering high quality skin care products which is
one of their main purpose.
Vision-
L'Oreal's vision is to provide customers with good quality of products that make them
happy and satisfied. They want to be leading brand and world's most popular cosmetic provider
by manufacturing the best skin and personal care goods.
Mission-
Organization set their mission of offering all men and women worldwide the best of skin
care and other cosmetic innovation in terms of efficacy, quality and safety.
Cost- Organization become world's leading brand for that they need materials or resource and
workforce for producing products. The whole process need £500.
Time- It takes 2 to 3 months.
Scope- Attract more customers towards their business and retain them with L'Oreal products
and other facilities.
Quality- L'Oreal focus on product's quality and consistently manufacture good product that
build their positive image in marketplace better than others.
Budget-
Particular Amount
Raw materials £100
Workforce £100.00
Production £110.00
12
Company aim is to be world's leading make up brand among both cosmetic and skin
care products manufacturing organizations. To meet consumer's need for superior quality
facilities and to provide secure and ambitious work environment for all workers.
Objectives-
To build strong customer based is one of the objective of organization that is based on
offering high added value and low price products to customers. L'Oreal offers' high quality
product to customers. Through this, they are able to grab the attention of people and retain
them. L’Oréal need to satisfy customers by offering high quality skin care products which is
one of their main purpose.
Vision-
L'Oreal's vision is to provide customers with good quality of products that make them
happy and satisfied. They want to be leading brand and world's most popular cosmetic provider
by manufacturing the best skin and personal care goods.
Mission-
Organization set their mission of offering all men and women worldwide the best of skin
care and other cosmetic innovation in terms of efficacy, quality and safety.
Cost- Organization become world's leading brand for that they need materials or resource and
workforce for producing products. The whole process need £500.
Time- It takes 2 to 3 months.
Scope- Attract more customers towards their business and retain them with L'Oreal products
and other facilities.
Quality- L'Oreal focus on product's quality and consistently manufacture good product that
build their positive image in marketplace better than others.
Budget-
Particular Amount
Raw materials £100
Workforce £100.00
Production £110.00
12
Technologies £70.00
Marketing £120.00
Total amount £500.00
Issues-
The issue faced by company is related with product as customers are not satisfied with it.
L’Oréal Strategies-
In order to achieve business objective LO’real can adopt many strategies like promoting
of products by selecting a target customer. Moreover, they can provide various offers to
customers on purchase of products. This will help in expanding customer base. Besides this,
they can identify needs of people and products different product. It will support in attracting
more customers in different countries.
Measure progress-
Take customer's feedback and identify their preference before producing the product.
Tactics-
Organization provide direction to their employees towards achieving their desired goals
and objectives. Leaders of company must motivate all the staff members to engage more with
customers so that satisfaction can be gained. (Slocum, Lei and Buller, 2014). Conducting
Market research is one of the best tactics that help in determining needs of people and changing
the marketing concept. They have to understand client’s preferences that help to identify what
they exactly want. By asking their opinions organization can increase its customers base more
than now. They can develop their business through maintaining excellent clients service and
support. Promotion is one of the best tactics that helps in attracting more customer.
Implementation and Control-
Collaborate with retail industries and whole-sellers. Also, firm will open its outlets in
different areas which helps it in gaining more attention of customers. Monitor operations and
process of manufacturing goods is one the best way that control customers dissatisfaction
levels.
This will include the setting up of the SMART objectives within the organization that will help
in carrying out of the operations and activities. It also helps in improving the sales of the
13
Marketing £120.00
Total amount £500.00
Issues-
The issue faced by company is related with product as customers are not satisfied with it.
L’Oréal Strategies-
In order to achieve business objective LO’real can adopt many strategies like promoting
of products by selecting a target customer. Moreover, they can provide various offers to
customers on purchase of products. This will help in expanding customer base. Besides this,
they can identify needs of people and products different product. It will support in attracting
more customers in different countries.
Measure progress-
Take customer's feedback and identify their preference before producing the product.
Tactics-
Organization provide direction to their employees towards achieving their desired goals
and objectives. Leaders of company must motivate all the staff members to engage more with
customers so that satisfaction can be gained. (Slocum, Lei and Buller, 2014). Conducting
Market research is one of the best tactics that help in determining needs of people and changing
the marketing concept. They have to understand client’s preferences that help to identify what
they exactly want. By asking their opinions organization can increase its customers base more
than now. They can develop their business through maintaining excellent clients service and
support. Promotion is one of the best tactics that helps in attracting more customer.
Implementation and Control-
Collaborate with retail industries and whole-sellers. Also, firm will open its outlets in
different areas which helps it in gaining more attention of customers. Monitor operations and
process of manufacturing goods is one the best way that control customers dissatisfaction
levels.
This will include the setting up of the SMART objectives within the organization that will help
in carrying out of the operations and activities. It also helps in improving the sales of the
13
organization. The SMART objective will include:
Specific: the data must be carried out to be precise and up to the mark that will help in proper
planning of the particular goal or objective. This will help in planning the operations within the
organization. That will help in carrying out of the operations and suitable launching of a new
product by the organization.
Measurable: LO'real will look after the development of the measurable operations that will
help in carrying out the objectives that will help in proper planning of services which will help
in scale able that will help in monitoring the goals of the organization.
Achievable: LOreal will look after the setting up of a goal which is achievable in nature and the
organization will help on carrying out the operations of the organization.
Relevant: The objective that is been carried out by the firm are required to be looked after the
proper goals that are relevant this will help in proper planning of the product launching in an
effective manner.
Time bound: The product launching is required to be looked after of planning of time
bounding and time strategies that will help in carrying of the services in an effective way.
CONCLUSION
This report is discussed about business strategies that is required for business growth and
success. It has been concluded that PESTLE analysis is the best way that help to identify external
factors that impact on organization's functions and activities. Political, economic, technology etc.
are the elements that effects the functions and operations of firm in both positive and negative
way. SWOT analysis tool helps in determining strengths and weaknesses of firm. It has been
concluded that Porter's Five Forces Model that helps firm for gaining competitive advantages
and also explains Hybrid strategy that L’Oréal adopt for achieving success and build strong
customers base. Furthermore, strategic management plan is developed which defines business
objectives, strategies for achievement and tactics that improve business performance.
14
Specific: the data must be carried out to be precise and up to the mark that will help in proper
planning of the particular goal or objective. This will help in planning the operations within the
organization. That will help in carrying out of the operations and suitable launching of a new
product by the organization.
Measurable: LO'real will look after the development of the measurable operations that will
help in carrying out the objectives that will help in proper planning of services which will help
in scale able that will help in monitoring the goals of the organization.
Achievable: LOreal will look after the setting up of a goal which is achievable in nature and the
organization will help on carrying out the operations of the organization.
Relevant: The objective that is been carried out by the firm are required to be looked after the
proper goals that are relevant this will help in proper planning of the product launching in an
effective manner.
Time bound: The product launching is required to be looked after of planning of time
bounding and time strategies that will help in carrying of the services in an effective way.
CONCLUSION
This report is discussed about business strategies that is required for business growth and
success. It has been concluded that PESTLE analysis is the best way that help to identify external
factors that impact on organization's functions and activities. Political, economic, technology etc.
are the elements that effects the functions and operations of firm in both positive and negative
way. SWOT analysis tool helps in determining strengths and weaknesses of firm. It has been
concluded that Porter's Five Forces Model that helps firm for gaining competitive advantages
and also explains Hybrid strategy that L’Oréal adopt for achieving success and build strong
customers base. Furthermore, strategic management plan is developed which defines business
objectives, strategies for achievement and tactics that improve business performance.
14
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REFERENCES
Books and Journals
Bozkurt, Ö.Ç. and Kalkan, A., 2014. Business Strategies of SME's, Innovation Types and
Factors Influencing Their Innovation: Burdur Model/KOBI'lerin Isletme Stratejileri,
Inovasyon Türleri ve Inovasyonlarini Etkileyen Faktörler: Burdur Modeli. Ege
Akademik Bakis. 14(2) p.189.
Hair Jr, J.F. and et.al., 2015. Essentials of business research methods. Routledge.
Kalepu, S. and Nekkanti, V., 2015. Insoluble drug delivery strategies: review of recent advances
and business prospects. Acta Pharmaceutica Sinica B. 5(5). pp.442-453.
Kernbach, S., Eppler, M.J. and Bresciani, S., 2015. The use of visualization in the
communication of business strategies: An experimental evaluation. International
Journal of Business Communication. 52(2). pp.164-187.
Nulkar, G., 2014. SMEs and environmental performance–A framework for green business
strategies. Procedia-Social and Behavioral Sciences. 133. pp.130-140.
Saebi, T. and Foss, N.J., 2015. Business models for open innovation: Matching heterogeneous
open innovation strategies with business model dimensions. European Management
Journal. 33(3). pp.201-213.
Serra, C.E.M. and Kunc, M., 2015. Benefits realisation management and its influence on project
success and on the execution of business strategies. International Journal of Project
Management. 33(1). pp.53-66.
Slocum, J., Lei, D. and Buller, P., 2014. Executing business strategies through human resource
management practices. Organizational Dynamics. 43(2) pp.73-87.
Sotiriadis, M.D., 2017. Sharing tourism experiences in social media: A literature review and a set
of suggested business strategies. International Journal of Contemporary Hospitality
Management. 29(1). pp.179-225.
Tarhini, A., Al-Dmour, R.H. and Obeidat, B.Y., 2015. STRATEGIC IT-BUSINESS
ALIGNMENT AS MANAGERS’EXPLORATIVE AND EXPLOITATIVE
STRATEGIES. European Scientific Journal, ESJ. 11(7).
Veit, D. and et.al., 2014. Business models. Business & Information Systems Engineering. 6(1).
pp.45-53.
Wesseling, J.H. and et.al., 2015. Business strategies of incumbents in the market for electric
vehicles: Opportunities and incentives for sustainable innovation. Business Strategy and
the Environment. 24(6). pp.518-531.
Wongsansukcharoen, J., Trimetsoontorn, J. and Fongsuwan, W., 2015. Social CRM, RMO and
business strategies affecting banking performance effectiveness in B2B
context. Journal of Business & Industrial Marketing. 30(6). pp.742-760.
Online
Bowman's Strategy Clock. 2018. [ONLINE].Available through:
<https://www.toolshero.com/strategy/bowman-strategy-clock/>
What is Five Forces Analysis?, 2019.[ONLINE].Available through: <https://www.visual-
paradigm.com/guide/strategic-analysis/what-is-five-forces-analysis/>
15
Books and Journals
Bozkurt, Ö.Ç. and Kalkan, A., 2014. Business Strategies of SME's, Innovation Types and
Factors Influencing Their Innovation: Burdur Model/KOBI'lerin Isletme Stratejileri,
Inovasyon Türleri ve Inovasyonlarini Etkileyen Faktörler: Burdur Modeli. Ege
Akademik Bakis. 14(2) p.189.
Hair Jr, J.F. and et.al., 2015. Essentials of business research methods. Routledge.
Kalepu, S. and Nekkanti, V., 2015. Insoluble drug delivery strategies: review of recent advances
and business prospects. Acta Pharmaceutica Sinica B. 5(5). pp.442-453.
Kernbach, S., Eppler, M.J. and Bresciani, S., 2015. The use of visualization in the
communication of business strategies: An experimental evaluation. International
Journal of Business Communication. 52(2). pp.164-187.
Nulkar, G., 2014. SMEs and environmental performance–A framework for green business
strategies. Procedia-Social and Behavioral Sciences. 133. pp.130-140.
Saebi, T. and Foss, N.J., 2015. Business models for open innovation: Matching heterogeneous
open innovation strategies with business model dimensions. European Management
Journal. 33(3). pp.201-213.
Serra, C.E.M. and Kunc, M., 2015. Benefits realisation management and its influence on project
success and on the execution of business strategies. International Journal of Project
Management. 33(1). pp.53-66.
Slocum, J., Lei, D. and Buller, P., 2014. Executing business strategies through human resource
management practices. Organizational Dynamics. 43(2) pp.73-87.
Sotiriadis, M.D., 2017. Sharing tourism experiences in social media: A literature review and a set
of suggested business strategies. International Journal of Contemporary Hospitality
Management. 29(1). pp.179-225.
Tarhini, A., Al-Dmour, R.H. and Obeidat, B.Y., 2015. STRATEGIC IT-BUSINESS
ALIGNMENT AS MANAGERS’EXPLORATIVE AND EXPLOITATIVE
STRATEGIES. European Scientific Journal, ESJ. 11(7).
Veit, D. and et.al., 2014. Business models. Business & Information Systems Engineering. 6(1).
pp.45-53.
Wesseling, J.H. and et.al., 2015. Business strategies of incumbents in the market for electric
vehicles: Opportunities and incentives for sustainable innovation. Business Strategy and
the Environment. 24(6). pp.518-531.
Wongsansukcharoen, J., Trimetsoontorn, J. and Fongsuwan, W., 2015. Social CRM, RMO and
business strategies affecting banking performance effectiveness in B2B
context. Journal of Business & Industrial Marketing. 30(6). pp.742-760.
Online
Bowman's Strategy Clock. 2018. [ONLINE].Available through:
<https://www.toolshero.com/strategy/bowman-strategy-clock/>
What is Five Forces Analysis?, 2019.[ONLINE].Available through: <https://www.visual-
paradigm.com/guide/strategic-analysis/what-is-five-forces-analysis/>
15
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