Impact of Macro Environmental Factors on L'Oreal and Body Shop

Context of Business

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
Impact of macro environmental factors..................................................................................3
Organisational culture at Body Shop and L'Oreal..................................................................5
Factors considered by L’Oreal before acquiring Body Shop.................................................6
Factors that affected in the failure of acquisition of Body Shop by L’Oreal.........................7
Reflection...............................................................................................................................8
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Context of business relates to all the internal and external factors that affects the operations
and functions of business and its sustainable survival in the competitive market. The
companies in order to grow and develop sustainably in the market must follow ethical and
social responsibilities towards all the concerned stakeholders so that its reputation does not
come at stake and it can continue to exist competitively in the marketplace. This assignment
is based on L’Oreal which is a renowned brand in the cosmetic sector and has its branched
in all parts of the world (Sarason and Hanley, 2015) The company has recently faced a
downfall in its reputation because of some unethical activities which it planned to boost up
by acquiring Body Shop which has been known for its ethical code of conduct. In this report
contains the effects of external environment on the company, organisational culture, factors
that are to be analysed before acquisition etc. Further, the elements that result in failure of
acquisition along witha reflection are also covered in this report.
MAIN BODY
Impact of macro environmental factors
Macro environment consists of all the external factors that cannot be controlled or changed
by the company but has to adjust its policies and strategies so that the negative impact of
these factors can be efficiently dealt with. These factors are important to be analysed so
that business do not suffer any losses and can maintain its competitiveness in the market.
PESTLE is a strategic management tool which can be used to analyse the external
environmental factors that affect L’Oreal in the market which are discussed below :
 Political : These factors are related to the governmental rules and regulations like
tax policies, trade tariffs etc. The company had a downfall in its image as it was
involved in price fixing which made it the price leader in the cost industry. This is
considered as unethical in UK as the government does not support companies that
charge high from general public on behalf of price fixing. This lead the company to
increase in negative publicity of the company which also resulted in the
deteriorating image of the company in the minds of its customers and decreased its
shares in the market.