Strategic Management and Business Models

This assignment includes a list of references related to strategic management, business models, and strategy implementation. It provides information on books, articles, and online sources that cover topics such as business process management, executive compensation, business model innovation, and more. The references are from reputable sources like Routledge, IEEE Transactions, and Forbes.

Business Strategy

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
PESTLE and SWOT of the organisation and an analysis of the organisation’s capabilities......1
Analysis of the competitive environment of the organisation using Porter’s Five Forces
Model..........................................................................................................................................5
TASK 2............................................................................................................................................7
Different types of strategic directions available to the organisation..........................................7
Justification and recommendation of the most appropriate growth platform and strategies......8
Strategic management plan with strategies, objectives and tactics.............................................9
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Business strategy is simply a high level plan developed by an organisation for reaching
specific business objectives. In addition to this it can be defined as a means with the help of
which an organisation achieve its desired ends, basically it is refers to a long term business
planning (Cavusgil and et. al., 2014). The company which is being considered to carry out this
assignment is Loreal which is one of the world's leading providers of wide range of accessories
and skin care products with its headquarter in Clichy. This report focuses on PESTLE and
SWOT of the organisation as well as analysis of the competitive environment of the
organisation using Porter’s Five Forces Model. Apart from this, report will render description
about types of strategic directions available to the organisation and about the strategic
management plan with strategies, objectives and tactics.
TASK 1
PESTLE and SWOT of the organisation and an analysis of the organisation’s capabilities.
In order to sustain in marketplace it is essential for management of Loreal firm to make
an analysis of the external factors affecting the business operations. Thus, the company takes into
consideration PESTLE Analysis techniques which is explained below (Chang, 2016):
PESTLE Analysis of Loreal
Political factor:
These factors refers to the influence of government on the working of an organisation.
These influence can be made by policies, political instability, rules, laws, trade restriction etc.
UK's political stability is the strength of the country which leads to the creation of a stable
policies by the company for long term period which term to be the positive impact for Loreal
business (Chen and Jermias, 2014). As UK government has faced with Brexit it has effected on
the stability of the country and Loreal in a negative way.
Economical factor:
It refers to the factors such as currency rate, inflation rate, disposable income etc. which
helps in determining the performance level of an economy. If the GDP of economy will be low
then it will also lead in decrease in the disposable income of individual. Thus, because of which
purchasing power of the people will get decrease and will will result in decrease in the
profitability margin of an organisation (Cortimiglia, Ghezzi and Frank, 2016). Similarly in case
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if the GDP of an economy will increase then it will lead in increase in the disposable income of
individual which will directly result in increase in the purchasing powers of people. Thus, if the
purchasing power will increase customer of Loreal product will make more of purchase of
products and services which will result in increase in the productivity and profitability margin of
an organisation.
Social factor:
These factors refers to the changes taking place in the social trends, preferences, religion
etc. due to the factors such as demographics, age distribution, cultural barriers (Goffee and
Scase, 2015). If the management of Loreal company will produce products taking into
consideration customer preferences by maintaining the quality standard of its products then it
will positively impact upon business in the form of increase in the productivity and profitability
ratio. In case if the firm ignore the customer preferences and just simple focuses on producing
product then it will negatively impact on business in the from of decrease in profit margin as in
modern era customer are more skin conscious so Loreal firm should produce product taking into
consideration customers perspective.
Technological factor:
These factors refers to the changes that keeps on taking place in the advancement of
technology and tools (Hart, Sharma and Halme, 2016J). So in order to achieve a sustainable
growth in market it is essential for the firm to adopt the undated and modern technology so as to
produce superior quality products. In case if the firm fails to adopt modern technology and keeps
on producing product with its old technology then it will negatively effect the performance of an
organisation in the form of decrease in profitability margin.
Legal factor:
It refers to the rules and regulation which are imposed b y the government of country. As
UK government has passed a rules regarding Advertising Standards Authority and Loreal has
taken such rules and regulation into consideration while adverting about its product which has
help the firm in achieving a great competitive advantage in marketplace (eston, 2014J). Similarly
in case if the company fails to acknowledge the legal rules and regulation made by government
then it will negatively affect the brand image of firm in marketplace. So it is essential for the
firm to make its strategies according to the policies and rules framed by the government as this
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will help the firm to sustain for long period of time and to give stiff competition to its
competitors.
Environmental factors:
As in modern era people are more conscious about the eco-friendly and environment
friendly product which in no manner affect the health. Specifically for the product used on skin.
So Loreal company must ensure that they production process must not include the emission of
harmful chemicals or gases (ocovic and et. al., 2014). In addition to this firm should also ensure
that they make environment friendly packaging methods. Further the company can introduce
campaigns, projects related to environment enhancement by educating people and also
contributing towards the environment.
In addition to this it is very much essential for the firm to examine the internal strength
and weakness of an organisation so that weakness can be overcome and this can be done only
with the help of SWOT analysis which is explained below (Klettner, Clarke and Boersma, 2014):
SWOT Analysis of Loreal
Strength Weakness
 One of the greatest strength for Loreal
bis that it has patented its products so
that no other firm can make use of it.
 Its is one of the largest beauty and
cosmetics organisation in the world and
this is because it completely focus on
beauty products whereas other
company concentrate on personal care
and cosmetics which is a major
strength for Loreal firm.
 Other strength is that it keep focusing
on research and development
procedures on continuous basis so as to
ensure safety of consumers.
 Employee management of Loreal is
also a weakness as there exist approx
60,000 employees and which leads in
increase in human capital.
 Another weakness is that an
organisation does not possess good
control over the working of its
employees and this is due to its
decentralised organisational structure.
 Profit margin also get lower due to the
high investment made in research and
development Which is term to be a
weakness for Loreal organisation.
Opportunities Threats
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 Loreal can easily expand its market to
new segment and regions like in Africa
and Middle east.
 As in modern era consumer are more
conscious about the skin and prefer
those skin care product which are skin
conscious. So Loreal company can
easily come up with innovative
products to capture large market share
which is an opportunity for the firm.
 As Loreal has already set up its brand
image so it can take its as a advantage
and can come up with innovative
products in existing market itself.
 There exist large number of
competitors like Uniliver, P&G and
Revlon which deal in similar sector.
 Customer preferences keeps on ching
which is also a major threat for Loreal
firm. So an organisation should
continuously carry out its research so
as to acknowledge the changing trends.
 In modern era customer prefer to go for
beauty surgery like hair surgery,
advanced dermatology etc. rather than
using cosmetic or beauty products
which is also a major threat for Loreal
organisation.
Analysis of organisation capabilities
It is crucial for every organisation to analyse and evaluate the re4sources which could act
as a liabilities or an asset for an organisation so that accordingly strategies and plan can be made
in a effective manner. For instance if Loreal doesnot have brief knowledge about the
competencies and capabilities then the company will not be able to make maximum utilisation of
its resources (Laudon and Traver, 2016). So in order to understand how to make best and
optimum utilisation of resources management of Loreal takes into consideration VRIO
framework and that is explained below:
VRIO framework
Valuable:
It means how much value is generated by the company capabilities in exchange of money
offered by final customers. If the resources are not valuable then it will result in creating
competitive disadvnatge in marketplace (Lawton, 2017). For example factors such as human
resources, technology, raw material crates value for an organisation and if human resources will
give their best to the organisation then it means that they have proper skills and capabilities
which help firm in meeting needs of customers.
Rare:
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It refers to how unique or rare is the capabilities of an organisation as compared to its
competitors in market. For instance human resource of Loreal is tern to be not rare as the
competitors of it also possess skilled human resources (Madsen and Walker, 2015). Whereas on
the other hand marketing activities of the Loreal firm terms to be are and effective from other as
it helps in creating awareness in the society and helps in boosting up of sales. IN addition to this
Technology used by Loreal also term to be rare as they make use of lean management and TQM
which other organisation does not use and it helps in lowering the cost at certain level for firm.
Imitate:
It means that how easy it is for other organisation to copy Loreal products. For instance
financial resources are the one which can be easily made available by other firms too by selling
of equity shares in market (Orna, 2017). Technology use can also be copied easily by making
investment as well as marketing techniques can also be imitate by other firms same as of Loreal.
Organisation:
It means that whether an organisation is making the best utilisation of its resources or not
at their full potential. For instance brand image of Loreal is being set up which in itself specifies
that an organisation make best an optimum utilisation of its resources and its assist firm to earn
more of profit margin (Quirke, 2017). In addition to this brand image of Loreal is term to be rare
in nature as it cannot be copied by other organisation. Thus, it can be said that company is
making best use of its brand image in the form of achievement of competitive advantage in
marketplace.
Analysis of the competitive environment of the organisation using Porter’s Five Forces Model.
Competitive environment analysis is must so that an organisation can get to known the
strategies and the tactics that the competitors are using in order to achieve sustainable growth in
marketplace and to attract large number of individual towards purchasing of products and
services. So in order to gain competitive advantage management of Loreal must analyse its
competitive environment. Thus, with the help of Porter's five forces of model Loreal
management can easily acknowledge its competitive environment and that is explained below
(Ryu, Lee and Choi, 2015):
Porter's five forces of model
These model was developed by Michael E Porter of Harvard Business School in 1979 so
as evaluation and access can be done about the competitive strength and position of an
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organisation. This theory is based on five forces which helps in determining the competitive
intensity and attractiveness of a market as well as it will help the Loreal firm to identify where
the power lies in a business situation. Moreover it will also be useful for management of Loreal
firm in understanding about the strength of a position which the firm may look to move into and
the strength of a organisation current competitive position. Therefore the five forces of this
model which will be helpful for Loreal firm to identify areas of strength and the areas where
improvement need to be done are explained below:
Threat of new entrant:
For Loreal organisation threat of new entrant seems to be low as initself it is a brand and
for any cosmetic industry to establish there business there will be huge requirement of capital,
cost for developing products and for research and development process. In addition to this
promotion cost will also be required by new entrant so as to develop market presence, to achieve
economical production economics of scale will be required. Therefore people generally prefer
tried and tested brands for themselves as the use of cosmetic terms to be sensitive issue for many
people so people will like to make purchase of loreal products itself rather then using some new
products of new entrant.
Threat of substitute:
Threat of substitute terms to be high for Loreal organisation as due to wide range of
cosmetic products that are available in market any unsatisfied customers of Loreal will easily
shift to the products of another brand which will render and meet there satisfaction level.
Bargaining power of buyers:
Bargaining power of buyers terms to be low for Loreal products as there exist large
number of customers who make purchase of loreal cosmetic products as they render products as
per customer preferences. So in case if the customer will bargain for the price of its products then
the supplier will not accept there price that they want to pay for their products as there exist large
number of customer for there products.
Bargaining power of suppliers:
Bargaining power of supplier of Loreal organisation terms to be low as the raw material
which is being used by company to produce its products can be easily made available fro many
suppliers ans similarly in case if the supplier of loreal raw material charges high price for there
products then in that case switching cost for the firm will be low.
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Rivalry among existing competitors:
Rivalry among existing competitors terms to be high for Loreal organisation as there
exist number of competitors of Loreal who render stiff competition to them like MAC, Chanel,
Lancome, Dior etc. In addition to this there exist some firm which deal at local level as they
offer produt at low price which are affordable by customers and because of which they have alos
captured some part of market share which result in rendering competition to Loreal products. So
in order to protect the companies from being effected by competitive pressure management of
Loreal must diversifies its product portfolio.
TASK 2
Different types of strategic directions available to the organisation.
Strategic direction is considered to be most important forces in a business as it
establishes the structure for internal responsibilities which each workers and the department
takes on. In addition to this it render a clear vision to each workers about the company objectives
and purpose so that accordingly they can perform there activities. There exist different type of
strategic direction among which best can be applied by Loreal firm so as to achieve sustainable
growth in market share. Therefore in order to understand the different types of strategic direction
Ansoff matrix is being taken into consideration which is explained below ((Ryu, Lee and Choi,
2015)
Ansoff matrix
This matrix provides four different growth strategies which are explained below:
Market penetration:
In this strategy existing products are being sold out into existing market itself. If the
Loreal organisation adopt this strategy then it will help firm to retain potential customers and in
increasing its market share of its current products.
Product development:
It is a growth strategy in which new product are being introduced into existing markets. If
the Loreal company uses this strategy then it will help the firm in differentiating its products
from its competitors so as to remain competitive in marketplace.
Market development:
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In this strategy existing products are being sold into new market so as to explore more
market segment. If the Loreal company uses this strategy then it will help firm to explore more
market segment, buyers etc. Thus, it will help firm to increase its market share and sales revenue
which will result in achieving greater profitability margin.
Diversification:
In this strategy focus is to entering new market segment with new and innovative
products. If the Loreal firm uses this strategy then it will help organisation to come up with
innovative products which will help firm to achieve competitive edge in market as compared to
its competitors. In addition to this it is considered to be high risk strategy as introduction of new
product will diminish the purchase of existing products because of which company might have to
suffer from heavy loss.
Source: Ansoff Matrix, 2019
Justification and recommendation of the most appropriate growth platform and strategies.
In order to achieve successful growth in marketplace the most appropriate strategy which
can be recommended for Loreal is Product development strategy (Uhl and Gollenia, 2016). This
is because in modern era mostly individual are more conscious about the their skin and would
like to prefer those kin care products which are eco- friendly and will not harm skin in any
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Illustration 1: Ansoff Matrix

manner. So taking customer perceptive and preferences into consideration management of Loreal
firm should come up with some innovative and eco- frinedly skin care care products and this can
happen only when the company will prefer product development strategy. Therefore if the
company will produce products taking into consideration customers preferences and demand
then it will help business in achieving not only greater market share but also will lead in
increasing profitability margin ratio.
Strategic management plan with strategies, objectives and tactics.
Strategic management plan is a document which is used to communicate within a
business about the firms vision, mission, values, strategic goals, set priorities and resources so as
to ensure that each employees are working towards the attainment of an organisational goals.
Therefore strategic management plan of Loreal with its strategies, objectives and tactics are
being specified below (Soltanizadeh and et. al., 2016):
Strategic management plan of Loreal
Aim:
Main aim of Loreal is to increase business growth by ensuring that its product render
100% environmental or social benefit.
Organisational structure:
Loreal organisation follows matrix organisational structure in which products are being
subdivided into different segment such as hair care products, skin care products etc. Thus, it
whelp in developing effective work culture and to carry out different operational activity in an
effective manner so as to increase the productivity level.
Vision:
Main vision of Loreal firm is to become customer priority, which means to give more
preferences to customer choices and accordingly manufacture products.
Mission:
Main mission of Loreal firm is to enhance their business growth to different nations so as
to earn higher profitability margin.
Values:
Loreal carries out its different activities based on values like fair business practice,
understanding workforce, effective and protected sustainability.
Objectives:
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Main objective of Loreal is enhance its market share by 1.9% in its product lines and this
is based on critical analysis of chart which specifies the sales from 2011-2017.
Goals:
Main goals of Loreal organisation is to maximise customer acquisition by rendering
better quality products to its customers.
Strategies and tactics:
Loreal must take into consideration product development strategic so as to achieve set
strategic objective that is to increase sales by 1.9%in comparison to 2011-2017. As with the help
of product development strategy they can come up with some innovative skin care products. The
tactic the Lorear company can use is taking customers preferences into consideration they can
plan to come up with innovative products so as to increase the customer satisfaction level.
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CONCLUSION
From the above report overall it can be concluded that appropriate business strategy
terms to be important for every organisation as it render guidance to workforce in a way they
have to perform there activities as well as in achieving a sustainable growth. In the above report
PESTLE analysis has been done in order to understand the external factors affecting business
environment so that they can be overcome on time. In addition to this SWOT analysis has also
been done so as to acknowledge the internal strength and weakness of business. Thus, it has
helped business in revealing the uniqueness of business Apart from this Porters five forces model
has been taken into consideration so as to analyse the competitive environment which affect
business. Moreover, pre-stage mission and vision is proved to be very much essential for
implementing effective business strategies and for obtaining sustainable growth.
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REFERENCES
Books and Journals
Cavusgil, S. T. and et. al., 2014. International business. Pearson Australia.
Chang, J. F., 2016. Business process management systems: strategy and implementation.
Auerbach Publications.
Chen, Y. and Jermias, J., 2014. Business strategy, executive compensation and firm
performance. Accounting & Finance. 54(1). pp.113-134.
Cortimiglia, M. N., Ghezzi, A. and Frank, A. G., 2016. Business model innovation and strategy
making nexus: evidence from a cross‐industry mixed‐methods study. R&D
Management. 46(3). pp.414-432.
Goffee, R. and Scase, R., 2015. The Real World of the Small Business Owner (Routledge
Revivals). Routledge.
Hart, S., Sharma, S. and Halme, M., 2016. Poverty, business strategy, and sustainable
development.
Jeston, J., 2014. Business process management. Routledge.
Jocovic, M. and et. al., 2014. Modern business strategy Customer Relationship Management in
the area of civil engineering. Applied Mechanics & Materials, (678).
Klettner, A., Clarke, T. and Boersma, M., 2014. The governance of corporate sustainability:
Empirical insights into the development, leadership and implementation of responsible
business strategy. Journal of Business Ethics. 122(1). pp.145-165.
Laudon, K. C. and Traver, C. G., 2016. E-commerce: business, technology, society.
Lawton, T. C., 2017. Cleared for take-off: structure and strategy in the low fare airline business.
Routledge.
Madsen, T. L. and Walker, G., 2015. Modern competitive strategy. McGraw Hill.
Orna, E., 2017. Information strategy in practice. Routledge.
Quirke, B., 2017. Making the connections: using internal communication to turn strategy into
action. Routledge.
Ryu, H. S., Lee, J. N. and Choi, B., 2015. Alignment between service innovation strategy and
business strategy and its effect on firm performance: an empirical investigation. IEEE
Transactions on Engineering Management. 62(1). pp.100-113.
Soltanizadeh, S. and et. al., 2016. Business strategy, enterprise risk management and
organizational performance. Management Research Review. 39(9). pp.1016-1033.
Uhl, A. and Gollenia, L. A. eds., 2016. A handbook of business transformation management
methodology. Routledge.
Online:
Strategies of L'oreal. 2018. [Online]. Available Through:
<https://www.forbes.com/sites/jannamandell/2018/03/16/loreal-says-in-your-face-to-
competition-with-strategic-ai-and-ar-acquisition-modiface/#185ac80c1f38>.
Ansoff Matrix. 2019. 2018. [Online]. Available Through:
<https://www.mbaskool.com/business-concepts/marketing-and-strategy-terms/2550-
ansoff-matrix.html>.
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