(solved) Pestle and Swot Analysis of L’Oréal

Added on - 22 Nov 2020

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BUSINESS STRATEGY
Table of ContentsINTRODUCTION...........................................................................................................................1TASK 1............................................................................................................................................2PESTLE and SWOT with organisational capabilities................................................................2Competitive analysis using Porter's Five force model................................................................5TASK 2............................................................................................................................................71. Different types of strategic directions for organization..........................................................72. Recommendation and justification of appropriate growth platform for L’Oréal..................103. Strategic management plans..................................................................................................11CONCLUSION.............................................................................................................................12REFERENCES..............................................................................................................................13
INTRODUCTIONBusiness strategy defines simply as organization's high level plan for achieving specificbusiness goals and objectives. The strategy can be successful when it leads to business growth,strong financial performance and strong competitive position. Business strategy is anorganizational tool and planning which helps firm's for reaching to their desired goal. Businessstrategy helps companies to set objective and goals for long term development and growth (HairJr and et.al., 2015).Itexists in two types which are generic and competitive strategies. Thepresent report is presented in regard to French skin or personal care company L’Oréal. It isheadquartered in France and Clinchy. This report explains PESTLE and SWOT analysis tools foridentifying the factors that impacts on business functioning. It will describe Porter's Five ForcesModel and different types of strategic directions available to firm. Furthermore, this reportdiscussed strategic management plan with objectives, strategies and tactics.TASK 1PESTLE and SWOT with organisational capabilitiesAn organisation operates within two boundaries that is external and internal. There areseveral factors in both which impact on company operations as well as growth. Any change inexternal factor can not be controlled by organisation. By determining factors, it helps business todevelop strategies accordingly. They are able to grow and expand in different countries andmarkets.The extensive analysis of macro and micro environmental factors will help in gettingthe best and most effective result for strategy formation(Saebi and Foss, 2015). This assessmentwill help L’Oréal to improve the quality of services and thus will lead the firm to improve thequality of products and setting up of action plan that will help in improving the overalloperations 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 companyoperations. This is because new government comes and new laws and regulations are formulatedrelated to tariff and trade plans, trade laws, etc.For example, Brexit will negatively impact onL’Oréal growth and development. Due to change in trade and tariff policies, the company willnot 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 factorswhich can influence the operations of L’Oréal. They will have to make changes in pricingstrategy, 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 properplanning 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 theorganisation 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 andpreference of customers highly impactL’Oréal profits. The changes may occur due to socialethics, values, etc. The majority of the customers using L’Oréal products and services arefemales and their choice alters constantly (Serra and Kunc, 2015). So, if their needs vary, it willcreate a drastic impact on L’Oréal sales and profits.For example, the increase in the perceptionof the people and awareness among the customers will impact the sales and overall businessoperations of the organisation. The demographical factors will also play a crucial role in it.Technological:It refers to technological advancement which affects companyoperations. Sometimes, it forces company to use and implement advance technology to improveproduct quality or design new products. Also, it affects process or methods which are used inproducing products.L’Oréal uses advance technology in developing products and providingservices to people. Due to this they are able to maintain high quality of their products.Forexample, tools like social media and digital platforms will help in increasing the sales of theorganisation. Besides this, it will also help in carrying out of the research that will help incarrying out of research process that will support development of advance and innovativeproducts.Environmental: The factors are related to environment and CSR policies. Any change inenvironmental laws and regulations of country enforces organisation to contribute towardsbuilding a clean environment. They have to change their environmental policies.L’Oréaloperations will be impacted if there is any change in environmental laws of a nation.Forexample, as the customers are moving towards the natural and organic products, reducting thecarbon 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 inmeeting the operational needs of the organisation. Any formulation of new laws or change inemployment law impact on operations of L’Oréal. They will have to make changes in theirpolicies as well.For instance, the quality and safety standards related to cosmetics of an2
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