Comparative Analysis of Business Strategies

The provided document is a comprehensive assignment that delves into the realm of business strategy, encompassing various aspects such as alignment in family and non-family businesses, project management process, digital business strategy, corporate sustainability, operations strategy, and customer relationship management. The assignment draws upon multiple sources, including journals, books, and conference proceedings, to provide a well-rounded understanding of these concepts. It is likely part of a higher education course or research project, aiming to equip students with in-depth knowledge and analytical skills in business strategy and related areas.

UNIT 32 BUSINESS
STRATEGY
Table of Contents

INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
1. Analyse PESTLE and SWOT for making strategic planning and an analyses to adopt
organisation cap[abilities............................................................................................................1
2) Competitive environment using Porter's five forces model....................................................5
TASK 2............................................................................................................................................6
3. To evaluate different types of strategic decisions available to an organisation......................6
4. A justification or recommendation for most appropriate growth strategy..............................7
5.Produce a strategic management plan with strategies, objectives and tactics..........................8
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Business strategy is a process in which higher authorities of business make various
decisions to achieve objectives (Acquaah, 2013). It is a strategic plan which is used to design
particular goal or objectives. The purpose of this is to design, arrange and utilize various
organization instruments which help company to make long term growth for business enterprise.
The company that have been mentioned in the report is L'Oreal. It is the world' largest cosmetic
company founded in 1909, it had made various cosmetic products like shampoo, skin care lotion,
sun screen, make up items, perfumes for both men and women etc. It had launched more than
500 brands in all over the world. The company need to examine external and internal analysis
that includes PESTLE, SWOT and Porters five forces model which form a proper strategic
planning. It also evaluates various type of strategic directions, justify and make certain
recommendations for most suitable growth strategies. L'Oreal have to design a definite strategic
management plan for devising perfect business strategy that had been mentioned in above report.
TASK 1
1. Analyse PESTLE and SWOT for making strategic planning and an analyses to adopt
organisation capabilities
External analysis help to determine strengths and weakness of company which
make some competitive advantage in business and internal analysis help to find out the threats
and opportunities (Alsudiri, Al-Karaghouli and Eldabi, 2013). which help organisation to
determine its objectives.
PESTLE analysis-
It refers to a process which is used by marketers to analysis the various factors of
environment which effect the organization. L'Oreal is a famous cosmetic and beauty company in
all over the world which make various merchandise products to meet up the condition of
different customers. L'Oreal need to examine various factors which form complete marketing
strategies in an organisation.
Political
Political factors mean rules, regulations and policies of government of countries where
L'oreal company has been working. This factors includes political stability, government policy,
foreign trade, tax, labour law, trade restrictions. This company has manufacturing in Paris where
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policies and rules of France affect company. As product safety is very important for every
organisation for surviving, L'oreal needs to report ingredients it uses in product while
manufacturing to France's government. This factors impact strategic planning as policies,
regulation of every country differ from each other which affect manufacturing process. The
political factors affects the L'oreal's strategies because if Govt. changed its rules and regulation
within the country then L'oreal also have to change its strategies, and if the Govt. of a country is
stable then it effect the strategies in positive way.
 Opportunities- The taxes are not so much higher which is imposed by Govt. on
cosmetics products so that it is vital opportunity for the organization to expand its
business with making huge revenue..
 Threats- If government suddenly change their policies regarding cosmetic products, then
L'Oreal has to face threat. If product is not as per standard set by government then it has
to bear huge loss for already manufactured products.
Economic
It means performance of economy which impacts company having long term effects. It
includes inflation, interest rate, economic growth, foreign exchange and others. The recession is
major elements which up-bring cosmetic organisation. Price of products vary from region to
region due to imposing of tax (Bharadwaj and et. al., 2013). The states which are developed
having high human development index contribute more to branded products like L'oreal. The
economic factors also impact the L'oreal strategies as well such as if it develop a strategy to
expand its business in another country, where human development index is not so high then it
have to change its strategy regarding producing products at cheap rate.
 Opportunities- If GDP rise, the purchasing power of consumer also increases which
leads to enhancement of sales which is biggest opportunity for L'Oreal.
 Threats- The decrease in value of dollar and other currencies leads to threat for L'Oreal.
Social
Social factors mean value, belief, opinion and characteristics of consumer (Chang, 2016).
It is the trends where people of society prefer new and latest products. Due to need and demand
of people, L’Oréal’s always do innovations in their products and supply high quality. If L’Oréal
does not focus on supplying high quality and innovation then it has to vanish from market. In this
way, social factors impact organisation and its sustainability. The social factors also influence
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the L'oreal strategies because if its strategies not able to fulfil the demand of current market
scenario then it have to adopt new technology.
 Opportunities- If L’Oréal continuous do innovative in their products as per latest fashion
then it can earn maximum profits from it which is biggest opportunities for it.
 Threats- If L'Oreal want to adopt new trends then its sales decline which is threat for it .
As environment is dynamic which changes frequently so for survival changes should be
adopted.
Technological
This factors means change in technology with change in time. It affects management and
marketing in different ways such as new ways for producing, distributing goods and service.
L'oreal should focus on innovation and use contemporary trends. In order to get success in
market, L'oreal need to use latest technology and trends for production and manufacturing of
products. L'oreal strategies also influenced by the technological factors, for example if the new
technology is introduced in the market then L'oreal also have to adopt it by changing existing
strategies. Because customers always attract towards new designs and stylish products.
 Opportunities- With use of latest technology for production can lead to high
manufacturing along with saving time and cost.
 Threats- If L'Oreal does not adopt current technology then profit may decline which is
threat for business.
Legal
It includes equal opportunities, health and safety, consumer rights, product labelling,
advertising standard and product safety (Eaton and Kilby, 2015). There are many competitors of
L'oreal so it need to use all legal standards and laws for manufacturing of products. In order to
avoid violation, chemical products should be banned and follow legal requirements. Legal
factors also influence the L'oreal strategies for example, if in a country tax rates are high or low
then existing market then the respective organization have to change its strategies regarding tax
payments.
 Threats- If it does not follow such law according to competitors then threats arises. The
violation of such laws decrease value of business in market.
 Opportunities- By adopting laws regulated to safety and health creates value for L'Oreal
in market. This helps in enhancement of profits and sustainability of organisation.
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Environmental
This factors means scarcity of raw materials, pollution targets and others in environment.
Currently, customers are demanding high and ozone-friendly products for the use which should
from sustainable source (Iacob, Quartel and Jonkers, 2012). All international brands are
supporting world for making beautiful planet and pollution free. Thus, if it uses high chemical
ingredients for manufacturing products, then it creates pollution which is harmful to environment
as well as people. So it focusses on maintaining standard of product along with quality. These
factors influences its strategies as well because if it operating business operation in a country
where rules regarding pollutions are so much strict, then it have to change its strategies regarding
environmental protection.
 Threats- Using of high chemical ingredients leads to threats for L'Oreal as it creates
problems to customer. The people want high quality product with less or no chemicals in
it.
 Opportunities- The providing of ozone-friendly products to consumer creates
opportunities to L'Oreal in terms of increasing sales revenue and profits.
SWOT Analysis
SWOT analysis is used to analysis the strength, weaknesses, opportunity and threats of the
organization in environment (Jocovic and et. al., 2014). SWOT analysis of L'oeral is as follows:
Strengths: These are the factors which helps the organization to achieve its goals. The
L'oreal have also its strength which make it more strong in the market such as research and
development, quality, safety, diverse market, etc. It offers the high quality products which leads
in retaining customers. It supplies the products all over the world. The organization mainly focus
on the customers need and demand which leads to more sales (Khalili, Shavarini and et. al.,
2013). It is also the capability of organization that it produce all type of cosmetic products,
because it has endless research as it has various products in different niches of cosmetic and
beauty products. Thus, it leads to grow and sustain business in market. It is also capable to
extend its market everywhere in order to fulfils need and demand of customers.
Weaknesses: These are the factors which keep the business from achieving its objectives
and goals. It may be in the form of high level debt, inadequate supply chain, lack of resources
and other factors. The main weaknesses of L'oreal are multiple acquisition, its dependence on
suppliers, shrinking profits. The organization have main focus on research and development
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which is very expensive for organization. The L'oreal offers a large number of products for
which it needs a large number of employees as it increases cost for organization.
Opportunities: It lies outside organisation which can be used for gaining competitive
advantage. It can be high market share, increasing sales, and others. L'oreal has opportunity to
expand business in new market, and products different countries according to their need and
demand. Customer always look for best product, newest for their body, so L'oreal can easily
enter into new market. There is another opportunity for L'oreal where it can manufacture new
types of products for their customer. It focus on manufacturing all types of products for every
consumers. It has opportunity to create more organic products rather than chemical based.
Threats: It means factors which can harm organisation like increasing competition, high
cost for inputs, tight labour supply. The threats which L'oreal can face in terms of economic
crisis, competition, new regulations. The declination of economic and its value will be great
challenges for development of Loreal and its products. With the new entry of different
companies in beauty and products is great challenges for L’Oréal to survive such as Revlon,
Procter & Gamble, Estee Lauder.
Analysis of capabilities of organization:
Analysis of capabilities of the organization can be done through the VRIO model, which
define the valuable, rare, imitability and organized resources of the L'Oreal as follows:
Resources Value Rare Imitability Organized Results
Plant
Location
Plant Location - - - Competitive
disadvantage
Designs Designs Designs - - Competitive
equality/parti
ally
Software Software Software Software - Unused
competitive
advantage
Employees Employees Employees Employees Employees Long term
competitive
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advantage
The major capabilities of the organization are its employees by the help of which it is
able to produce all type of products.
Valuable- It means resources which creates values for L'oreal for surviving in market.
Here, all four capabilities are valuable for running business organisation. For example,
employees, softwares are the capabilities of the organization.
Rare-It is rarity in nature having unique features such as design, software and employees.
These are also the capabilities of the organization, because with the help of these resources
organization is able to produce required stock for the business operations.
Costly to Imitate- The design and plant location of Loreal is very costly to copy. These
both the resources are also shows the capabilities of organization because other firms are not able
to adapt similar resources.
Organised to Functions- The employees working in L'oreal is organised to functions as
it is not easy possible for each and every company to have the same.
2) Competitive environment using Porter's five forces model
Examine the power of competency in a business, which figure out the
attractiveness of a company's profitability by framework or a tool, which draws the five forces of
economy is known as Porter's five forces model (Lawton, 2017).
Competitive Rivalry (Defines the power of competitors), Supplier Power (Defines the
power of supplier in market towards price diversification), Buyer power (Power to turn the
company's price down by switching it to different industry), Threat of Substitution (Fear of
customers, adopting different ways to fulfil need), Threat of new entry (Threat of loosen the
market share by new brand in Market)
These five forces will examined on the economy of L'oreal perspective, a French personal
care company with a tag of world's largest cosmetic industry which is as follows :-
Rivalry among competing firms
 It focuses on the economy with respect to its competition, as the rival works on the
similar product and the chances of switching brand is much more high when it talks of
brand like L'oreal.
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 In today's generation, Men and Women are very conscious about their looks, not only the
French market but across the world so, L'oreal competition is getting heat up with many
other brands such as Biotherm, Vichy, Nuxe etc.
 To tackle this competition, L'oreal should work on their unique strategies which can kill
their competitors in the market ground and maintain loyalty with existing and new
consumers.
Potential entry of new competitors
 Barriers play a vital role, when it talks of new industries coming in market. But offering
quality in less price allows to overcome hurdles while entering into new market with
unique distribution channel.
 Loreal will face a large competition, as in the report of UK Health & Beauty Market, it is
given that market will boost-up by 21.1% over the next five years by most luxurious
brands.
 Innovation in the product line plays a vital role, as L'oreal should work on research and
development and adopt the fifth module of Art of Profit known as a Time profit model.
Bargaining power of customers
 Here demand elasticity is high, as a change in the price of L'oreal product may shift their
customers to another brand.
 Loreal should focus to attract their customers by building initial preference, offering good
quality in less price, building customer relationship and much more.
 To maintain inelastic demand, L'oreal should work on Specialist product which works as
a king of Market.
Potential development of substitute product
 L'oreal has value in the market when it talks about the brand, but cosmetic industries have
high substitutes, so it is easy to lower down the price of manufacturing process and
attracts the customers with high quality in less price.
 The biggest challenge for the L'oreal industry in 2019 are Avon Products, Unilever,
Revlon Inc etc.
 At the time of maintaining the cost accounting book, L'oreal should focus on cut down
the cost of the manufacturing process which help the company to maintain prices in the
market.
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Bargaining power of supplier
 Industries are more focused on suppliers as the less in number with high power of
suppliers will be a great loss for the company with respect of profit earning.
 L'oreal builds a solid trust with their suppliers which make their bond into a good
relationship. It works on the mutual understanding by doing a healthy conversation to
ensure growth together with their supplier of raw material, packaging etc.
 Ensuring their supplier and maintain a loyalty of growth together plays a vital role here,
this works with contacts, agreement or by maintaining good relations.
TASK 2
3. To evaluate different types of strategic decisions available to an organisation
In above study L'Oreal had used SWOT and PESTLE to identify various competencies in
business. Now L'Oreal use ANSOFF matrix, which is a tool used to examine and designed
various strategies for firm (Li and Tan, 2013). It helps L’Oréal marketers to identify different
types of risk and leaders to determine different wants and needs of products. This will build
effective business strategies in business which make more profits for business. There are four
strategies of ansoff matrix which are as follows-
Market penetration: It is a process that increase the sales of non-existent products to an
existent market (McGrath, 2013). For example, L'Oreal can made different promotional
strategies which acquires more competitors to make target only those customers who buy the
product rarely. If this happens then the sale of its product will become high and more demand
can have incurred in company. Such that it can introduced its new type of serum in existing UK
market.
Product development: In this process firm need to develop new products in the existing
market. L'Oreal make an investment in R&D process that help to determine new products in
existing market. For example- L’Oréal adopts different policies and strategic partnerships with
other companies to make a perfect product as with the advance research and development.
Market development: It is a process in which firm enters into new market with existing
products that they have used. If L’Oréal want to expand its business in new market with same
product then it needs to add some features in it. This helps in attracting large number of
customers. Thus, it had more than 500 stores in all over the country which had increased its
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demand of customers. For example it can launch its existing shampoo with some new and
advanced features.
Diversification: It is a process in which firm enter into new market with new products is
known as market penetration. For example- L'Oreal can made its new products to enlarge its long
term strategy which helps to meet customers’ needs and wants in business that mobilise various
resources. If L’Oréal expand its business in future or launch new products in market then
company will maximise its demand. For example, if it launch other than a cosmetic product into
a new country market then it will help it in diversification.
4. A justification or recommendation for most appropriate growth strategy
Growth strategy is a process in which market increase its sales to maximise its profit to
grow its business (Murthy, 2012). L’Oréal had used different strategies to make its product
increased in competitive market so that sales will be high and more revenue will generate. The
most appropriate strategy that L'Oreal can implement is market development which is described
below:
Market development: It is a process in which companies have make effective strategies
to increase their sales and profit. In this method L'Oreal used to enlarge its business related to
business enterprise position, various competition and government regulations. In it firm need to
enters into new market with existing products. L'Oreal has chosen European market for their
existing products as people of those countries prefer more cosmetic products to use.
Recommendation: Here, L’Oréal can adopt such strategies by analysing its market
properly and their need and demand. As it is planning to come in new market with same existing
product (Oestreicher-Singer and Zalmanson, 2013). Without knowing about new market, it is not
possible to provide products. In market development L’Oréal have to develop a proper marketing
plan in which small competitors have to see which market is best for developing the product.
L’Oréal first modify the performance of infrastructure by identify appropriate strategy for market
development plan, it launches its new product by given advertisements in newspapers, T.V and
through linked In so that people should know its new products. There are three factors that
marketers expand its business while in order to make profits-
 First L'Oreal should develop most appropriate segment to target which type of customers
require this product.
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 Second, it should develop a good market plan to fulfil all needs and requirements
according to customers.
 Third, L'Oreal can make profits if its products is been purchased by number of
competitors of firm.
5.Produce a strategic management plan with strategies, objectives and tactics
Strategic management plan is a process which use to influence organizational needs and
benefits to allocate various type of resources.
Strategy for L'Oreal
For making strategies following should be considered such as:
Market Analysis: It is very necessary for the organization to analysis need and demand
of customers properly. After knowing market, proper strategies for customer should be framed.
Here, it has adopted market development in which it wants to enter into new market with same
existing product.
Objectives of market development strategy
Whenever buyers need to establish a new product then it need to set SMART objective to
fulfil all desires and needs in business (Peng, 2017). This help to make customers to utilise all
goals and create some strategic decisions for company.
 S- Smart- To provide quality cosmetic products to customer in order to fulfils their need
and demand.
 M-Measurable-The goal which L'Oreal has set should be measurable, such as its goal is
to increase sale so that it should be clear that like by what percentage i.e. 25%.
 A-Attainable-Its main objectives in which L'Oreal could great a brand image in the mind
of people so that resources can be attained and effective decisions will be inherited.
 R-Realistic- To creates trust in mind of customers so that it become best cosmetic brand
all over the world.
 T-Time bound- to increase sales by 25% in three years.
Tactics of market development strategy
The market development is used to introduce new product in existing market. There are
several tactics which help to attract more customers and become the product at brand level.
Cash Management- This will help the organization in estimating cash requirement
when it enter into new market. This will help in arranging financial resources (Schaltegger,
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Lüdeke-Freund and Hansen, 2012). L'Oreal can borrow cash from banks and use for research
and development about new products.
Developing new features- In order to capture new market, L'Oreal can bring new
features in existing products. This tactic helps organisation to know about taste and preferences
of customers and they like it or not (Verbeke, 2013). This tactic helps in increasing profit of
organisation by adding features to products. The budget for doing that activity is as follows:
Budget as per 1000 units:
Particulars Amount
R&D 100000
Raw material 30000
Workforce 40000
Advertisement 80000
CONCLUSION
At the end of the report it has been concluded that business is a process in which various
competitors interact with each other to discuss their ideas and interpretations. L’Oréal had
develop SWOT or PESTLE to determine what are the customers’ needs and wants to establish a
competitive edge in business. It also analysed ANSOFF matrix to grow its market in all over the
world. L'Oreal produce a strategic management plan to use in future so that organization make
long term growth strategy for effective utilisation of resources. It is to plan various activities that
make some goals and objectives in firm. Business strategy of L'Oreal is the mission of L'Oreal to
provide good products to both men and women according to their needs and preferences. It also
aims at proving a wide variety of innovative products to all type of generation.
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