L’Oréal’s Business Strategies: A Comprehensive Analysis

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L’ORÉAL STRATEGY REPORT
L’Oréal Strategy Report
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L’ORÉAL STRATEGY REPORT
Table of Contents
Introduction......................................................................................................................................3
Task 1...............................................................................................................................................3
LO1 and LO2 (P1 and P2):..............................................................................................................3
Mission, vision and objective of L’Oréal........................................................................................3
Role of L’Oréal’s strategy to attain the business goals with strategic direction.........................4
PESTLE and SWOT analysis of the organisation.......................................................................4
Resource-based view strategy of L’Oréal....................................................................................9
Analysis of Organisation’s capabilities.....................................................................................10
VRIO analysis............................................................................................................................10
Cost benefit analysis..................................................................................................................12
Task 2.............................................................................................................................................12
LO3 and LO4 (P3 and P4):............................................................................................................12
Market Objectives for L’Oréal......................................................................................................12
Use of Balance Scorecard to align L’Oréal’s vision and strategy.............................................13
Competitive environment with Porter’s five forces...................................................................14
Stakeholder analysis..................................................................................................................15
Ansoff matrix to analyse product strategy.................................................................................15
Bowman’s strategy clock...........................................................................................................17
Recommendation for appropriate growth platform for L’Oréal....................................................18
Key tactics used by L’Oréal..........................................................................................................19
Conclusion.....................................................................................................................................19
References......................................................................................................................................20

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L’ORÉAL STRATEGY REPORT
Introduction
Organisations have certain strategies and plans for achieving their organisational goals and
objectives. This process is popular as business strategy through which, organisations successfully
attain their organisational objectives. The present report will shed light on various areas of
L’Oréal’s business strategies. The ways in which, business strategies of L’Oréal influences the
organisational behaviours and environment of the organisation, will be described in the report
below. The mission and vision of the organisation along with its strategies and tactics for
achieving the organisational goals will be highlighted in the following table. Several theories and
concepts along with some analysis methodologies will be used for better evaluation of the
mentioned topics. In this way, better insight into the organisational business strategies will be
gained by the means of this report.
Task 1
LO1 and LO2 (P1 and P2):
Mission, vision and objective of L’Oréal
L’Oréal is one of the leading names in the cosmetic industry of the world, being the biggest
dealer of cosmetics in the world, the mission of L’Oréal is to enhance the looks and personality
of men and women (Loreal.com. 2019). Their vision is to provide their customers with best
cosmetics and beauty products or treatments and serve them with best quality they deserve.
Apart from its vision and mission, L’Oréal desires to expand its business and services all over
the world. Due to this, the objective of the organisation is to extend the branches of company
through many more national boundaries (Loreal.com. 2019). The company also desires to
develop and improvise its business and other strategies in future days. This will help in
enhancing the working environment and corporate culture of the organisation.

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L’ORÉAL STRATEGY REPORT
Role of L’Oréal’s strategy to attain the business goals with strategic direction
The strategies used in L’Oréal are helpful in providing rough estimations of the future actions
and their outcomes. The organisation acquires essential data regarding the demands of the
customers and effective strategies are formed for better fulfilment of these demands and
requirement of the customers (Woodcock et al., 2011). L’Oréal offers value as well as quality to
its customers, which is just because of the effective strategy of the company.
Through effective business strategies, the employees and the operations of the organisation are
managed and organised for better completion of the task and projects allocated in the
organisation (Loreal.com. 2019). Effective cost and pricing strategies helps in provision of
quality products to the customer at most reasonable prices. In this way, proper directions are
provided to the employees and operations of the organisation for better accomplishment of the
organisational objectives.
PESTLE and SWOT analysis of the organisation
The internal and external environment of an organisation is a great influencing factor for the
company. Both of these types of environment decide the working culture as well as business
environment of the organisation (Yüksel, 2012). It applies in case of L’Oréal, as its internal and
external environment is very crucial for the business and organisational behaviours of L’Oréal.
Therefore, it becomes necessary to carry out time-to-time analysis for assessing the situation ad
condition of the internal and external environment of L’Oréal Company. For this purpose,
analysis methods like SWOT analysis and PESTEL analysis are brought into use for carrying out
analysis in the organisation. In this way, necessary changes can be made in the condition of
organisational environment.
PESTLE analysis

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L’ORÉAL STRATEGY REPORT
Figure.1- PESTEL analysis
(Source: Howandwhat.net, 2019)
By the means of PESTLE analysis methodology, the political factors along with its economic,
social, technological, legal, and environmental factors can be determined easily.
Factors Description/influence
Political factors  As the company is established in Paris,
the rules and regulation made by the
government of France are to be complied
in the business operations of L’Oréal.
 The political factors of L’Oréal have
positive influence on the business
operations of L’Oréal due to active
emergence of globalisation all over the
world (Loreal.com. 2019).
 The change in government leads to
changes in few policies, which are to be
updated in the business operations of
L’Oréal.
Economic factors  Unlike other business retailers in the
market, cosmetics brands like L’Oréal
have no or very less effect of economic

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L’ORÉAL STRATEGY REPORT
drop (Kajanus et al., 2012).
 Due to increasing middle class sectors,
there is a significant rise in the business of
L’Oréal.
Social factors  The increasing awareness among people
regarding their personality and looks has
positively influenced the business
operations of L’Oréal.
 Customers have been leaning more
towards good quality product; this has
facilitated growth in the customers of
L’Oréal.
Technological factors  The trend of active digitalisation has
expanded the market of L’Oréal on online
portals
 The innovative and developed technology
has enhanced the business operations of
L’Oréal and has facilitated growth in the
organisation (Armstrong et al., 2015).
Legal factors  All the legislative frameworks of the
operating areas of L’Oréal are to be
complied necessarily, while carrying out
the business operations.
 Maintaining customers and employees
regulations is very important for L’Oréal
to carry out its business effectively
(Loreal.com. 2019).
Environmental factors  Maintain sustainability in business
activities and operations of L’Oréal will

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L’ORÉAL STRATEGY REPORT
be beneficial for the company and will aid
to creation of good brand image and
reputation.
 The products made and used in the
organisation are environment friendly,
which makes the products more trustable
and reliable for the customers.
 Sustainability policy of L’Oréal is updated
and is found to be very beneficial for the
business of the organisation (Loreal.com.
2019).
Table.1- PESTLE analysis
(Source: learner)
SWOT analysis
The term SWOT is a short name for the terms strengths, weaknesses, opportunity, and threats.
Through this analysis technique, the strengths and weaknesses along with available opportunities
and posed threats of L’Oréal can be analysed effectively (Pesic et al., 2013). This will help in
removing the faulty areas and sustain as well as empower the strong areas of the organisation.

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L’ORÉAL STRATEGY REPORT
Figure.2- SWOT analysis
(Source: Thebalancesmb.com, 2019)
Strengths-
 The products and service offered by L’Oréal are of good quality, which makes them more
preferable by the customers.
 It is the largest company in beauty and cosmetics industry of the world.
 The business operations are operated according to effective sustainable policies.
 There is continuous research and development carried out for better provision of services and
products to the customers, according to the developing trends and customer behaviours
(Boardman et al., 2017)
 The products are safe and ecofriendly, which makes them more user-friendly and harmless.
 The brand and product portfolio of L’Oréal is very strong and vast (Loreal.com. 2019).
Weaknesses-
 The organisation comprise of numerous sub divisions and acquisitions, which makes it
difficult and complicated for the management to handle all the divisions in an effective
manner (Knott, 2015). L’Oréal is so much dependent on its supplier.

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L’ORÉAL STRATEGY REPORT
 As the company invest so much in its research and development and manufacturing
processes, the profit margin for the organisation is lower when compared to the profit
margins of the rivals.
Opportunities-
 The company has a good opportunity to extend its branches to several Middle East countries
and in Africa (Boardman et al., 2017).
 There is good and wide scope of beauty and care products as well as service in future days.
This has created a great opportunity for the company.
 Due to increasing demands of organic, there is a wide scope for the products of L’Oréal.
Threats-
 There are numerous rivals of L’Oréal present in the global market. Some of them are Chanel,
Maybelline and many such renowned brands (Loreal.com. 2019).
 The changing and upgrading demands and trend of the customers has to be considered and
necessary upgradations are to be brought in the products and services, which demands heavy
expenditures.
Resource-based view strategy of L’Oréal
The resources of the organisation are one of the key factors for L’Oréal to gain competitive edge
in business (Hart and Dowell, 2011). The resources of L’Oréal are categorised into three
different categories, which are intangible resources, tangible resources, and human resources.
The category of tangible resources encompasses all the physical, financial as well as the
organisational resources. In the category of intangible resources, resources like the strategies for
branding, the reputation of the organisation, customers and employee experiences, history,
patents and copyrights and many such intangible resources are counted in .The human resources
are said to be its most significant resources, as it comprises of skilled and talent employees and
staffs L’Oréal.

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L’ORÉAL STRATEGY REPORT
Analysis of Organisation’s capabilities
L’Oréal is not only the largest beauty and cosmetic company in cosmetic industry; it is also the
largest company to have vast innovation and research & development capability in the cosmetics
industry of the world (Buller and McEvoy, 2012). L’Oréal invests more than 3% of its sales, in
its innovation process of its products and services. This enhances its innovation capability in
much better way as compared to any other cosmetic companies. The organisation is capable of
running its business operation by considering its target market, customers, and many such
factors, without any emergence of conflict. The organisation is found to be good at their
negotiation capabilities. All the employees and staffs of L’Oréal Company are provided with
special trainings for enhancing their negotiation skills (Loreal.com. 2019). The company uses
information system in an integrated form, which helps in establishing connection between the
supplier and the manufacturer.
The supply chain of the organisation is highly effective as the relations between the
manufacturers and the suppliers of L’Oréal are very well and strong (Bromiley and Rau, 2016).
This helps in maintaining the stock and prices of the supplies or raw material, which are used for
manufacturing processes. The company has a great capability of acquiring the market trends,
which is due to its multicultural workforce. The workforce of L’Oréal comprises of employees
belonging to various culture and background. This helps in complying with the demands and
requirements of the customer belonging from various culture and regions.
VRIO analysis
Figure.3- VRIO analysis

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L’ORÉAL STRATEGY REPORT
(Source: Dpsiv.files.wordpress.com, 2019)
The business decisions made in L’Oréal are of great significance, as the outcome and the whole
procedure are dependent on it. For effective decision and plan making, VRIO analysis technique
is used for effective formation of business and organisational decisions (Malik et al., 2012).
VRIO stands for value, rareness, imitability, and organisation. With the help of this tool, L’Oréal
can get competitive edge among its rivals present in the market.
Competencies
and
capabilities
Valuable Rareness Imitable Organized Advantage
through
competition
Technology Yes No No Yes Sustainable
competitive
advantage
Executing
CSR activities
Yes No Yes No Sustainable
competitive
advantage
Customer
service
Yes Yes Yes No Temporary
competitive
advantage
Customer base Yes No No Yes Sustainable
competitive
advantage
HRM Yes Yes No No Sustainable
competitive
advantage
Employee
base
Yes Yes No Yes Temporary
competitive
advantage
Table.2- VRIO analysis

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L’ORÉAL STRATEGY REPORT
(Source: learner)
Cost benefit analysis
The business decision is formed in much better ways, by analysing them through technique cost
benefit analysis (Eriksson, 2014). This helps in better formation of decisions and strategies
related to the organisational activities of L’Oréal.
Cost Amount
Hardware $12000
Furniture and fixtures $2000
Labour $7000
Servers $3000
Equipment for telecommunication $4000
Management $6000
Training $9000
Procurement $5000
Others $5000
Total $$53000
Table.3- cost benefit analysis
(Source: learner)
Task 2
LO3 and LO4 (P3 and P4):
Market Objectives for L’Oréal
 To gain market share of 8% more in 2019 second quarter, so that it gains competitive
advantage from the market.