SWOT Analysis of Ecosystem Services

This assignment examines the ecosystem services framework through a SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis. It delves into various resources such as academic articles, books, and online platforms to analyze the framework's effectiveness. The assignment highlights the key aspects of the ecosystem services framework and discusses its implications for decision-making in environmental management.

L'OREAL
STRATEGY REPORT

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
L1 Pestle, Swot And Rio analysis of organisation......................................................................1
PESTLE ANALYSIS OF L'OREAL..........................................................................................1
L2 Porter's five forces of model of organisation.........................................................................4
TASK 2............................................................................................................................................6
L3 Types of strategic directions available to organisation .........................................................6
Ansoff Matrix-............................................................................................................................6
L4 Strategic management plan with strategies, objectives and tactics.......................................8
Strategic Management Plan ........................................................................................................8
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
L'Oreal is a French beauty and cosmetic company established in Clichy, Hauts-de-Seinewith a
registered workplace in Paris. It is the largest cosmetics organization operation worldwide and
has evolved products in the field targeting hair color, skin care, sun protection, make-up,
perfume, hair care and men's skincare etc. This report will highlight the Pestle, Swot and Vrio
analysis of L'Oreal that frames the strength weaknesses and market analysis of company's
performance(Policy.2016). Further, the project will also comment on the porter's five forces of
model of L'Oreal which will describe the five factors that will affect the working of L'Oreal.
Moreover, the assignment will also highlight the different strategic directions with the help of
Ansoff Matrix and will also justify those strategies in context of the company(Widya Yudha,
Tjahjono,and Kolios.2018). Eventually the report will frame the strategic management plan of
the strategy that will be adopted by company for acquiring huge market share.
TASK 1
L1 Pestle, Swot And Rio analysis of organisation
PESTLE ANALYSIS OF L'OREAL
L’Oreal is one of the popular cosmetic and Beauty Company operating worldwide. It is making
many one-of-a-kinds of merchandise to fulfill the desires of the present day worldwide fashion
developments(Bull,And et.al.2016). L’Oreal is the industry that turned into installed in France
and is considered as the excellent in the area. There are some important factors that are affecting
the enterprise:
 POLITICAL FACTOR: The political factors encompass the guidelines and regulations of
the authorities within which L’Oreal is running. Since its producing department is in
Paris so by and large the governmental rules of France affect the company at a very huge
extent.
 ECONOMIC FACTORS: The GDP of the country is the main element contributing the
business of L’Oreal. The highly-developed states with broad Human Development Index
and an excellent economic system can be a risk for the operations of
L’Oreal(Phadermrod,Crowder,and Wills.2019). Due to this reason, the people of such
states will greater interested in buying products of L’Oreal company, thus, it will increase
the sales volume and could definitely increase the revenue of company as a whole.
1

 SOCIAL FACTORS: Today the societies have a sense of recent era and are constantly
keen to adopt the current technical developments appreciates the innovations by means of
L’Oreal. All these social and ethical pressures and traits play an outstanding function
within the working of L’Oreal.
 LEGAL FACTOR: There are many rivals of L’Oreal company. Thus, in order to hold the
record of achievement, it's miles incumbent to fulfill all the legalities of the vicinity
wherein it is operating. Thus, this component is therefore very essential when it comes to
manufacturers like L’Oreal(Pestle Analysis of L’Oreal.2017).
 TECHNOLOGICAL FACTOR: Technology has its advancement in each sphere of
existence. For the corporations like L’Oreal, the technological attributes like innovation
and believe have performed a top-notch function. Thus, the products of L’Oreal company
is very liable to innovation and has continually accompanied the modern-day trends.
 ENVIRONMENTAL FACTORS: The environmental elements embody various
worldwide surroundings safety laws that should abide by using the global requirements.
Thus, L’Oreal also play its role with the aid of helping such campaigns and following the
norms of the arena(Abdel-Basset,Mohamed,and Smarandache.2018).
SWOT ANALYSIS OF L'OREAL:
L’oreal is the popular brand inside the world of cosmetic and beauty. Even though the
organization has many strengths, along with it also has a some weaknesses and threats. This
SWOT evaluation will explain all of it:
 Strength: No other beauty brand has a larger share inside the cosmetic world than
L'Oreal. Many organizations decide to branch into this industry with a product line or
two. But L'Oreal's portfolio of product is so remarkable that no other company takes the
risk to become its rival. Garnier, Nyx, Maybelline, LANCOME, Shu Uemara etc. are all
the popular brands of L'Oreal(Hernández,and Garcia.2018.). Thus, L'Oreal without a
doubt dominates the cosmetic industry as they’ve acclaimed such excessive profile
manufacturers beneath their name.
 Weaknesses: It appears there’s a brand new hair care line launching every day now.
More products for immediately hair, curly hair, blondes, and unique ethnicity are vying
for attention. Although these are all simply segments within the hair care enterprise,
which is affecting L'Oreal. Moreover, L'Oreal closely invests in research & development
2

process which is Unfortunately, vastly pricey and it’s consuming away all their profits —
at the least in assessment to the competition.
 Opportunities: Eco-pleasant consumers want merchandise which are both beneficial
their body and also not taxing on the surroundings. Thus, the L'Oreal have an opportunity
to produce natural and organic merchandise to satisfy the customers who are moving to
Eco-friendly products(Dawes.2018). Moreover, L'Oreal can without difficulty circulate
into newer areas within the beauty industry, just like the personal care sector. People are
continually looking for the most up-to-date, high quality product for their body. Further,
L'Oreal can department out into growing economies and nations wherein saturation isn’t
as prevalent as they have the method and the brand recognition to gain this.
 Threats: Honestly, the cosmetic and beauty industry is changing rapidly due to the
increasing competitors within this domain. Thus, it is declining the demand and supply of
L'Oreal products because of increasing rivals with affordable products like Dove,
Tresemme etc. Further, L'Oreal has endless merchandise and the earnings are divided
into those one of a kind segments but if something takes place to the economy, the
company can have a hassle and thus, if L'Oreal does commercial enterprise in declining
economies, it will affect the revenue of the company(Schawel and Billing.2018).
VRIO ANALYSIS:
Valuable Rare Imitable Organized Result
No Competitive
disadvantage
Yes No Competitive
parity\ Equality
Yes Yes No Temporary
Competitive
advantage
Yes Yes Yes No Unused
Competitive
advantage
Yes Yes Yes Yes Long term
3

Competitive
advantage
 The first situation of table depicts that the products of L'Oreal are not valuable, thus the
customers of company will shift to other brand they are getting more valuable and quality
products.
 The second situation of table implies that the products of L'Oreal are valuable but they
are not rare i.e. they are easily available with other competitors as well. Thus, the loyalty
of customers towards the company will decrease as they will get the same product with
other brands as well(Grünig and Kühn.2018).
 The next situation of table implies that the products of L'Oreal are valuable & rare but are
not imitable, thus, the company will enjoy the strong customer base and will lead over
their rivals but they will enjoy this for short period as their products are not imitable.
 The fourth situation of table depicts that the products of L'Oreal are valuable, rare and
imitable, thus, the company will win over their rivals and will not face the risk of losing
the market.
 The last situation depicts that the products of L'Oreal are valuable, rare, imitable and
organized, thus, the company will continue to lead the cosmetic industry and will capture
huge market share(Loredana.2016).
L2 Porter's five forces of model of organisation
Porter’s Five Forces analysis of L'Oreal is a framework that evaluate the traits that affect
competition advantage of company. This model helps the company to examine the company's
competitor, however it can additionally help companies set up a business approach.
 Intensity Of Existing Rivalry: This element is typically the essential factor of combative
forces. It gauges the extent of opposition among rivals that compete directly on the basis
of price and quality. Thus, there are many competitors of L'Oreal like proctor, Avon,
Estee Lauder etc. have increased the huge competition for the company in the industry of
4

beauty and skin care products worldwide(Mathooko and Ogutu.2015.). These competitors
are adopting various business strategies to replace the L'Oreal and capturing market share
of L'Oreal. Thus, in order to survive the company need to enhance it product quality for
every line of its product like hair care, skin care etc. and they undertake captivating
marketing channels through various social media platform to attain huge market share
and obtain customer loyalty towards their brand.
 Development Of Substitutes: The availability of alternative products will increase the
probabilities that a business will lose clients; hence, substitution lowers the profitability
of companies. Thus, L'Oreal have an advantage of leading the cosmetic market with anti-
aging products so the company won't get disturb from such substitutes. Furthermore,
there are fewer competitors of anti-aging products, thus the L'Oreal continue to lead the
market as they have less risk of losing the customer loyalty.
 Potential Entrants: New rivals are frequently interested in an enterprise due to the
possibility to make income. When new competition enter markets, they come to be
contender to existing market members, which has a tendency to lower the profitability of
all market participants(Mathooko and Ogutu.2015). Although there are very few rivals
who participate in the strong competitive market with strong brands like Olay, Gamble,
Avon and L'Oreal as well. Thus, the L'Oreal may face competition but doesn't have any
risk of losing the market share of cosmetic industry as there are very few rivals who tries
to enter in the strong market and that too are small startups.
 Bargaining Power Of Suppliers: The more strain suppliers puts on a business enterprise,
the greater bargaining power they control over that company. Bargaining power
commonly will increase profitability for the suppliers. Thus, the L'Oreal is a leading
brand in beauty and cosmetic industry and produce huge amount of products of around 40
billion units every year and due to this reason the supplier will have less opportunity to
have control over the company and thus, they will not bargain much with the L'Oreal.
Thus, the company should maintain its market share so that suppliers won't be able gain
power over the company.
 Bargaining Power Of Customers: Just like the suppliers have control over the company,
customers also gain the power to control the company by exerting more stress over the
5

corporation to acquire the products according to their expectations and needs, thus, the
more bargaining strength they have got over that corporation.
Due to the various competitors of L'Oreal in cosmetic industry like Olay, Avon, Shiseido etc. the
customer will gain more power to have control over the company. Further, the value of different
products of different brands allows the customer to switch to other brands as they will be getting
more valuable products(Ansoff and et.al.2019). Therefore, the L'Oreal should enhance the value
of their products by providing different captivating offers to their customers, so that they could
maintain the loyalty of customers towards their product.
TASK 2
L3 Types of strategic directions available to organisation
Ansoff Matrix-
Ansoff matrix is a model which is used to make strategic marketing plan for company.
This model helps L'Oreal in developing new product and in enhancing market share or customers
base of the company. This model is described below-
Market Penetration- Market penetration is a management strategy in which L'Oreal focuses on
selling its existing product in the existing market. Company use this strategy to enhance market
share of its existing product in the current market by using various strategies such as pricing
strategy & promotion strategy(The Ansoff Model.2018).Company offer its product at discounted
price like 15% off & also gives various offers such as Buy one Get one free to its customers
which attract customers & increases rich of its existing product in the existing market. This
strategy is also used to drive out competitors from the market. According to this strategy
company also need to invest much in the market research to gather information about its
customers & competitors.
Market Development- Market Development is a strategy used by companies to grow their
business. According to this strategy firm offer its existing products in the new market. In this
strategy company focuses on expanding its market by shipping its product in the market where it
is not offering its product before. L'Oreal also expand its market by selling its products directly
or by offering them through online websites, by establishing different pricing strategy for new
market and by offering attractive packaging of its products. Before implementing this strategy
company has to analyze and search for the target market where company can offer its new
product. Thus, this strategy is more risky, complex & require huge investment.
6

Product Development- According to this strategy L'Oreal focuses on developing new &
differentiate product in the existing market which helps company to win over its competitors
because new product are rare in the market. Firm develop new product in the current market by
collecting feedback from its customers and by knowing expectation of its customers(Punt,and
et.al.,2016). This strategy helps the company to increase its market share & customer base but
On the other hand its is more risky than market development strategy.
Diversification- When a firm introduce a new product in the new market that that growth
strategy is known as Diversification strategy. L'Oreal needs more investment to adapt this
strategy and this is also more complex & risky than all the above mentioned strategy. A
disadvantage of this strategy for the company is that the company does not have a clear idea
about the new market & new product.
Justification & Recommendation
 Market Penetration: This strategic decisions assist L'Oreal to increase its typical sales
extent. Thus, Lower charges can lead to better sales volume, which will allow company
to reinforce their marketplace proportion at the opposition’s price. Lower costs will also
enhance the goodwill amongest existing customers and encourage new customers to
purchase their products(Mathooko and Ogutu.2015). Along with increasing sales, using a
marketplace penetration method the company can potentially decrease basic production
prices. As sales volume will increase, company can turn over stock more speedily. As a
result, they will be friable to buy goods from providers in more volumes at discounted
charges.
 Product Development: New thoughts assist to create new merchandise. New merchandise
assist to create new sales. New revenues may be used to inspire new ideas. This is the
subculture of innovation. All these steps helps the company to capture an extra
marketplace share by the means of developing new Ayurveda skin care product that will
help L'Oreal to increase its sales by capturing huge marketplace.
We will recommend product development strategy for L'Oreal, as this method will offer a
structure to company for growing its new Ayurveda skin care product and at the same time can
improves the overall performance, cost or quality of present merchandise(Loredana.2016). Thus,
this method will enable the company to attain their objectives, such as getting into new markets,
promoting more to present customers or triumphing business from competitors. Further, product
7

development method will also boom sales and profitability of its new Ayurveda product,
however careful making plans is essential to reduce the threat of expensive mistakes. Moreover,
the primary advantage of product development for L'Oreal is that it will help a brand and
company to maintain its present patron base. By constantly striving to resolve new troubles that
customers face, the company can create the chance to enhance revenues.
L4 Strategic management plan with strategies, objectives and tactics.
Strategic Management Plan
Mission L'Oreal believes that everyone desires to look
perfect and thus, their mission is to help men
and women around the world to recognize that
aspiration and express their respective
personalities to the fullest(Grünig and
Kühn.2018). This is what gives value to their
brand and to the working lives of their
personnel.
Vision L'Oreal vision focuses on consumer safety by
providing quality products at affordable prices,
protecting environment by producing Eco-
friendly products and contributing to the
welfare of their employees by providing
pleasant working surroundings.
Aim L'Oreal aim is to hold back customer loyalty
by providing high quality product according to
the expectations of customers around the world
and gain high quality standard in the cosmetic
industry.
Objective L'Oreal objective is to capture huge
international market share and become the
market leader through technological innovation
8

and diversifying in order to develop new
products and services in existing and new
marketplace(Schawel and Billing. 2018).
Core value L'Oreal follows a phrase “ Because You Are
Worth It” Which means that what a woman
thinks about her passion, innovation, spirit,
open-mindedness, excellence, responsibility
and self-confidence. Thus, this phrase convey
the message that woman can insist themselves
and allow themselves to be who they genuinely
are or want to be.
Strategic Direction L'Oreal have adopted product development
strategy by developing new Ayurveda skin
care products for increasing its sales volume in
international market arena.
Market Analysis According to the recent market analysis,
Global Ayurvedic Market have accounted for
around $3,400.0 million in 2015 and is
predicted to reach $9,800.0 million by 2022
growing at a CAGR of 16.0% from 2015 to
2022. Some important factors also favoring the
marketplace increase encompass, growing
demand for herbal and organic merchandise,
increasing medical tourism across the globe,
rising consumer cognizance and increasing
demand for Ayurvedic cosmetics
products(Dawes.2018).
Tactics L'Oreal will adopt various strategies to
promote its new Ayurveda products like
offering 15% off, buy 1 get 2 free schemes, get
9

20% extra on available product etc.
Operational Direction For developing new Ayurveda product, L'Oreal
will consult expertise and take advice from
different dermatologist for including the skin
care ingredients in its Ayurvedic products
which will help them to include those
ingredients that will be healthy for the skin of
customers(Hernández and Garcia. 2018).
10

CONCLUSION
This report summarizes about the strategies adopted by L'Oreal for leading the cosmetic industry.
Further, the project have highlighted the pestle analysis of company along with swot and vrio
analysis which comments on the overall performance of company in competitive market.
Moreover, the project have also framed about the porters five forces in context of L'Oreal that
have described the five elements that will affect the operations of L'Oreal. On the other side, the
assignment have commented on the strategic decisions of L'Oreal with the help of Ansoff Matrix
which includes four strategies namely: market penetration, product development, market
development and diversification and along with that it have also mentioned the justification and
recommendation regarding these strategies. Eventually the report have framed about the strategic
plan undertaken by company for its new product development.
11

REFERENCES
Books and Journals
Policy, P., 2016. What is pestle analysis.
Widya Yudha, S., Tjahjono, B. and Kolios, A., 2018. A PESTLE policy mapping and
stakeholder analysis of Indonesia’s fossil fuel energy industry. Energies.11(5).p.1272
Bull, J.W. And et.al., 2016. Strengths, Weaknesses, Opportunities and Threats: A SWOT
analysis of the ecosystem services framework. Ecosystem services.17.pp.99-111.
Phadermrod, B., Crowder, R.M. and Wills, G.B., 2019. Importance-performance analysis based
SWOT analysis. International Journal of Information Management.44.pp.194-203
Abdel-Basset, M., Mohamed, M. and Smarandache, F., 2018. An extension of neutrosophic
AHP–SWOT analysis for strategic planning and decision-making. Symmetry.10(4).p.116.
Hernández, J.G.V. and Garcia, F.C., 2018. The link between a firm´ s internal characteristics and
performance: GPTW & VRIO dimension analysis. Revista de Administração IMED.8(2).pp.222-
235.
Dawes, J., 2018. The Ansoff Matrix: A Legendary Tool, But with Two Logical Problems.
Schawel, C. and Billing, F., 2018. Ansoff-Matrix. In Top 100 Management Tools (pp. 31-33).
Springer Gabler, Wiesbaden.
Grünig, R. and Kühn, R., 2018. Development of Strategic Planning and Its Integration Into
Strategic Management. In The Strategy Planning Process (pp. 17-25). Springer, Berlin,
Heidelberg.
Loredana, E.M., 2016. The Use Of Ansoff Matrix In The Field Of Business. In MATEC Web of
Conferences (Vol. 44, p. 01006).
Mathooko, F.M. and Ogutu, M., 2015. Porter’s five competitive forces framework and other
factors that influence the choice of response strategies adopted by public universities in
Kenya. International Journal of Educational Management.29(3).pp.334-354.
Mathooko, F.M. and Ogutu, M., 2015. Porter’s five competitive forces framework and other
factors that influence the choice of response strategies adopted by public universities in
Kenya. International Journal of Educational Management.29(3).pp.334-354.
Ansoff, H.I. And et.al.,2019. Implanting strategic management. Springer.
Punt, A.E. And et.al.,2016. Management strategy evaluation: best practices. Fish and
Fisheries.17(2). pp.303-334.
12

Online
Pestle Analysis of L’Oreal,2017.[Online].Available through:<http://marketingdawn.com/pestle-
analysis-of-loreal/>
The Ansoff Model,2018.[Online].Available through:<https://www.smartinsights.com/marketing-
planning/create-a-marketing-plan/ansoff-model/>
13