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Pestle and Swot Analysis of L’Oréal

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Added on  2020-10-05

Pestle and Swot Analysis of L’Oréal

   Added on 2020-10-05

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BUSINESS STRATEGY
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TABLE OF CONTENTSINTRODUCTION...........................................................................................................................1TASK 1............................................................................................................................................1Pestle and Swot Analysis and analysis of organisational capabilities.........................................1Pestle Analysis of L’Oréal...........................................................................................................3Porter’s Five Forces model..........................................................................................................7TASK 2............................................................................................................................................8Different types of strategic directions available to the organisation...........................................8Justification and recommendation of strategic direction -...........................................................9produce a strategic management plan with strategies, objectives and tactics...........................10CONCLUSION..............................................................................................................................12REFERENCES................................................................................................................................1
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INTRODUCTIONBusiness Strategy is the master plan that the management use to secure a competitiveposition in the market, carry on its operations, please customers and achieve the desired ends ofthe business. The report will outline implication of different strategies like Pestle and Swotanalysis which will help in determining micro and macro business environment of L’Oréal.L’Oréal which is a French personal care company deals in wide range of Cosmo products suchskin care, hair colour, perfume, sun protection, etc. Further, the report will outline strategicmanagement plan of firm with reference to particular strategic direction and growth factors.TASK 1Pestle and Swot Analysis and analysis of organisational capabilitiesSwot Analysis of L’Oréal Strengths: -Research and Innovation: This relies heavily on research and development by investinghuge amount of money which is one of the main strengths of the company. And becauseof this the firm holds the crown of the leader in cosmetics industry. Since, the companyoperates in more than 130 countries, constant research is essential to know what differentcustomers of different culture needs. A powerful portfolio of brands: The company has abigger market share in the beauty and cosmetics industry as compared to other brands. Ithas a powerful portfolio of products which is another strength of the company (Zhongand Li, 2018). The portfolio includes major brands like, Garnier, Nyx, Maybelline,LANCOME, and many more.Organic Products: L’Oréal uses natural ingredients in the products so that, it can attractmore and more consumers from different geographic locations who wants glow skin andhealthy hair. It has also launched a new Organic Brand called, 'La Provençal Bio' in itsproduct portfolio which has contributed in increasing its consumer base.Employees: Company has employed total of 89,135 peopleglobally working in thevarious branches of L’Oréal in different countries which is a great strength for thecompany (Total number of employees of L'Oreal worldwide from 2010 to 2017*, 2018).The employees are having strong skills and knowledge of their respective departmentswhich contributes in increasing market share and profits of the company.
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WEAKNESSES:Profit Margin -> L’Oréal heavily invests funds in Research and Development formanufacturing various products. It is the main reason behind decline in the profits of thecompany, investing huge amount in research help the firm to remain competitive in themarket. so, it is both strength and weakness for the company.Growing Saturation -> Competition in beauty and skin care products industry isincreasing day by day because more and more companies are entering into the industrywith innovative products. eg. Competition of L’Oréal with other big companies like, Sunsilk and Head and Shoulders, etc.Decentralised Organisational Structure: L’Oréal is following decentralised form oforganisational structure which means the authority and responsibilities is divided in theemployees working in different departments at different levels of the company (Petrovicand Kalata, 2019). And due to many sub divisions, the firm is facing the problem ofcontrolling various functions.Figure 1: Swot Analysis(Source: Gregory, 2019)OPPORTUNITIES →
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