Context of Business: LOreal and Body Shop Acquisition Analysis

This report provides a comprehensive analysis of LOreal's business context, examining the impact of the macro environment using a PESTLE analysis, including political, economic, social, technological, legal, and ethical factors. It explores the organizational cultures of both LOreal and the Body Shop, comparing their compatibility, benefits, and challenges. The report delves into the factors LOreal considered before acquiring the Body Shop, focusing on leadership, management, and people development, and highlights the motivations behind the acquisition, such as ethical practices and market expansion. The report also reflects on the ethical issues faced by LOreal and the potential benefits of the acquisition in terms of ethical alignment and business growth.

Context of Business

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK...............................................................................................................................................1
Impact of macro environment on the situation which is current for LOreal...............................1
Organisation culture including Body shop as well as LOreal and compatibility of the culture,
likely benefits and challenges.....................................................................................................3
Factors that LOreal would have considered before acquisition of Body shop...........................4
Factors affected LOreal for the purpose of acquisition of Body shop........................................5
Reflection report..........................................................................................................................6
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................8

INTRODUCTION
LOreal is a large and famous company which deals in Cosmetic. The company was
founded in the year 1909, the founder of the company is Eugene Schueller and the headquarter of
the company is in Clichy, France (Antczak, 2018.). The revenue of the company is 26.93 billion
euros. In the study impact of macro environment factors will be discussed in detail including
Organisation culutre of LOreal and body shop. The study will cover the factors that would have
been considered by LOreal before acquisition of Body shop. What are the factors that motivated
LOreal to acquire Body shop is covered in detail with personal reflection.
TASK
Impact of macro environment on the situation which is current for LOreal.
Macro environment means environment which considers whole economy, it does not consider
particular sector of the company or industry. For LOreal PESTLE model is used to do analysis of
what are the factors which are affecting the company. It is a perfect model because this will
address what are external factors affecting the business (Johansen. and Nielsen, 2018). PESTLE
analysis includes factors such as Political factors, Economic factors, Sociological, technological,
legal and environmental. Specifically ethical factor which is important to discuss is followed.
Political factor
It is a external factor which includes governmental influence. For LOreal the political factor
affecting the company is its unethical practices in which the government can take strict action
against the company. The positive factor for the LOreal is government can allow subsidies to
LOreal for its interest in the Body which is more follower of ethics.
Economical factor
Economical factor affecting LOreal is the change in inflation of the natural products this will
increase the cost of the product and due to which the price of the product will increase. This will
directly impact the market and the customer will shift due to higher price (Dang, 2018). This
issue can be resolved by making advance purchase of the natural product this will save a lot of
cost and time and due to which the company can take competitive advantage related to cost of the
product.
Social factors
The social factors are the factors which include geographical boundaries, change in taste and
preferences etc. LOreal is doing bad to the society by using harmful ingredient in the product
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which is causing society harm. The company is not using natural products which can be more
beneficial to the company. This will create negative image of the firm and the firm will be
suffering loss in the near future due to this (Affinita, 2018). The positive thing the company is
doing to the society is tie up with the Body shop in which the company is focusing more on
human rights and development of the society which will create a positive image and due to which
there will be higher business for the company.
Technological factors
The LOreal is using technologies which are not friendly to the environment and they are only
focused towards making money and profits. This will bring negative image in front of the society
and the business will fall soon due to this. If the LOreal uses undated technology which is more
sound towards the protection of the environment and more sophisticated then it will reduce the
cost and will bring optimal results for the company. This will bring positive image in the minds
of the society and the goodwill will increase.
Legal factor
LOreal is employing child labour which is a major violation of the law and the same can result in
penalising the company is bulk (Maroni, 2019). This can result in fall in the profits and due to
which the trust of the customers with the company will fall and this will directly impact the
reputation of the company. The positive things which can happen to the company for the legal
factor is the stopping the child labour and if the child labour are working then immediately they
should be removed and must be motivated to study and even If LOreal can fund their education
they should do this as it will be replicated in the form of reputation of the company.
Environmental factor
LOreal is doing animal testing which is affecting the wild life and due to which the e co system is
directly affected, this is causing global warming and which is not good for the environment
(Kitsa. and Mudra, 2019.). The LOreal would not do global warming and if done so then should
contribute to the environment in which plantation of the trees and environment protection should
be done. This will directly affect the reputation of the company as it will improve the reputation
which will grow the business of the company.
Ethical factors
The ethical factors which are harmed by LOreal includes unethical promotion of the employees
and due to which eh non capable employees are getting promotion and which is resulting in
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unfair judgement to the ones who are working hard. Price fixing is another unethical practices, in
which the selected companies come together for fixing the price below which the company will
not sell goods and services. This is done for the purpose of elimination of the competion. If
ethical issues are not resolved then it will badly affect the reputation of company. This can be
resolved by adopting fair practices and not playing dirty games.
Organisation culture including Body shop as well as LOreal and compatibility of the culture,
likely benefits and challenges.
Body Shop
Body shop shares a very positive and soothing organisation culture in which there are ethical
practices followed by the company and which includes supporting the rights of the human, caring
the environment and caring the laws related to child labour laws (Rao, 2018). This is helping the
company to expand all over the world with its good reputation which will help the company in
generating higher customers and building good reputation in form of the society.
Challenges
There are challenges such as rise in the cost of the product due to usage of premium
material used in the production. This will increase the cost of the product and due to which the
customer will shift. But for the long run it will be better when the customer will see positive
results then it will impact the image of the company in positive way.
Benefits
There are various benefits for Body shop including the brand image of the company will
improve due to fair practices and following the rules and regulations of the government which
will lead to respecting the government (Mugrauer. and Pers, 2019). The practices will genuinely
improve the body glow for the long term and this will not include fake promises which is good
for the long run of the business. Organisation culture plays a very important role in which the
company has to take care of the society, environment and the laws.
LOreal
LOreal used to share a positive organisation culture but afterwards it all got over when the
company used malpractices such as providing employment to the child labour for the purpose of
saving the cost and increase the profit (Avalos Alayo, Cruces Guerreros. and Díaz Artadi, 2019).
The company here did mistake by thinking for short term instead of long term. The company is
extensively indulge in air brushing in which fake beauty pictures and commitment the company
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is making and the actual result is completely different from the misleading claim. LOreal is
making false promises in which fake discount offeres are made to the customers and the same is
resulting in bad image in front of the society.
Challenges
There are various challenges that can be arrived due to all these malpractices and they are
as follows future unlawful dispute and future penalising the company due to which higher rate of
amount the company may be required to pay in the form of penalty (Chrimes, Boardman. and
Henninger, 2019). The customer will shift to others if appropriate action against the activities are
not taken timely. All these activities will spoil the reputation of the company and due to which no
one will be willing to work.
Benefits
The benefits are for short term in which the company will able to sale the products by
wrong marketing. The company will make profits out of it but it will not remain for the longer
run.
Factors that LOreal would have considered before acquisition of Body shop.
There are various factors that would have been considered before acquisition of Body shop and
the same are as follows:
Leadership
leadership is a very important factor which should be considered by the LOreal in order
achieve effective and efficient results (Lehanneur, LOreal SA, 2019). If the leadership I snot
sound than there will be no impact of acquisition as there will be poor policies and the same will
harm the acquired company as well. Effective leadership is must for the development of LOreal,
this will help the company in making decisions which are good for the environment and also
good for the company. Poor leadership will ruin the business and due to which the company will
suffer losses. Effective leadership will help the company in improving the productivity of the
employees and due to which the employees will perform better even at the time of pressure. A
good leader will never follow malpractices at work place and which will results in no chances of
penalty in the future.
Management
LOreal is having poor management and this is the reason the company's performance is
downgrading. Acquisition of the better management of the Body shop must also have been
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considered before acquisition of the company in which LOreal should have considered the sound
employees due to which the company s so successful (Suleiman. and et.al, 2019.). The vision and
mission of the company should also have been considered by the LOreal of the Body shop. Due
to proper management the company will be able to plan better and due to which the results will
be better of the company. With the proper management the company, the company will be able to
deliver the quality products on time and with the quality products the firm will be able to make
profits.
Development of people
Before acquisition the LOreal should also focus on the development of the people in
which the employees should have been trained well this will increase the productivity of the
employees and due to which the performance of the company will increase automatically
(Nagamatsu. and et.al, 2019). LOreal should focus on increasing the budget for training and
development in which education of what is legally right and what is legally wrong must be
educated.
Factors affected LOreal for the purpose of acquisition of Body shop.
There are various factors at which Body shop was good at and the company was having large
scale of operation which includes spreading of the company in 33 countries having around 2600
hundred brands. This shows how big the company is and investing in the company will be best if
the company is trending and having better performance (Antczak, 2018.). This will help the
LOreal in washing the sins done by the LOreal. This can be done by suppressing the animal
testing, which was followed by Nestle having around 29% share of the LOreal. This can be
suppressed by more involvement of Body Shop in the improvement of the environment in which
the body of the ones using the cosmetic was glowing. The company was also not using any
harmful ingredients which was harmful to the environment. The another factor is the support of
the human right due to which the employees were happy working in the company as the company
was not making them work more and paying them less (Johansen. and Nielsen, 2018). This is a
positive factor for the growth of the Body shop, this was not available in the LOreal where the
company was making the employees work more and not paying incentives for the work. If Body
shop is following the laws and regulations then there will be fewer chances that the company will
fall in the trouble of higher liability in the future this will be beneficial for the company and the
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LOreal will overcome the situation of high penalising by investing and purchasing the share of
Body shop.
Reflection report
As per my view acquisition of Body shop will raise many questions such as what is the main
reason the LOreal is acquiring the company. Whether the LOreal is acquiring the company for
the personal benefit or for the benefit of the environment and society. As per my view what could
have been the other factors for the benefits should have been considered and then analysis of all
the factors should have been done and then choosing of the most appropriate factor which is best
for the company will be done (Dang, 2018.). The LOreal should have focused on improving the
quality of the product first and then should have been thought of acquisition of Beauty shop this
would also have helped the LOreal in clearing doubts of the company what are the factors which
are to be considered and what are the factors to be ignored while the acquisition. Unethical
practices should have been ignored because the unethical practices are not beneficial for the
company and all the reputation and goodwill made by the company will be lost due to unethical
practices in short time (Maroni, 2019). The LOreal should also have focused on design as well as
development of the organisation by taking care of the interest of the stakeholders which will
include benefits for the customers including discounting offers for the introduction of new
natural products. Employees care should have been given by the LOreal in order to provide them
better working conditions and better working environment in which the employees should be
allowed to work on the basis of flexibility. The employees if working more then they should be
paid more this will give motivation to the workers and the workers will increase the involvement
in the company and this will bring positive results for the company. As per the study I also found
that LOreal should also focus on developing policies which are appropriate this will improve the
working environment and also the working conditions will improve.
CONCLUSION
As per the study it is concluded that company should not follow practices which are
unethical in nature because following such practices can result in losses for the company.
Unethical practices are good for the short run but for the long run it is not good and will lead to
negative effect over the company. The LOreal should focus on acquisition of body shop but the
purpose of the acquisition must be clear and positive for the positive results in good faith. Pestle
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analysis is very much necessary in order to find out what are the factors on which the company is
supposed to work on and the factors which are good.
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REFERENCES
Books and Journals
Affinita, F.R., 2018. Together let's make the world more beautiful: a CSR project by Garnier de
L'Oréal.
Antczak, Z., 2018. Raporty CSR w XXI wieku: czy minął czas bajek; baśni i legend?. Prace
Naukowe Uniwersytetu Ekonomicznego we Wrocławiu. (520). pp.9-21.
Avalos Alayo, J.P., Cruces Guerreros, R.M. and Díaz Artadi, A.S., 2019. La gestión de la ética
organizacional a través de recursos humanos y su impacto en la rentabilidad.
Chrimes, C., Boardman, R. and Henninger, C.E., 2019. The Challenges and Future Opportunities
of Social Commerce. In Social Commerce (pp. 255-272). Palgrave Macmillan, Cham.
Dang, B., 2018. EU competitor benchmarking of cosmetic primary packaging in rigid jar form.
Case company: Sulapac.
Johansen, T.S. and Nielsen, A.E., 2018. 3.1 Engaging stakeholders in corporate
volunteering. Engaging With Stakeholders: A Relational Perspective on Responsible
Business.
Kitsa, M. and Mudra, I., 2019. Gender stereotypes of women in television advertising in
Ukraine. Feminist Media Studies. pp.1-17.
Lehanneur, M., LOreal SA, 2019. Cosmetics applicator. U.S. Patent Application 29/546,870.
Maroni, M., 2019. A Court’s Gotta Do, What a Court’s Gotta Do. An Analysis of the European
Court of Human Rights and the Liability of Internet Intermediaries through Systems
Theory. An Analysis of the European Court of Human Rights and the Liability of Internet
Intermediaries Through Systems Theory (March 2019). Robert Schuman Centre for
Advanced Studies Research Paper No. RSCAS, 20.
Mugrauer, A. and Pers, J., 2019. Marketing managers in the age of AI: A multiple-case study of
B2C firms.
Nagamatsu, Y. and et.al, 2019. Composition based on multilayer spherical composite particles
and on a UV-screening agent. U.S. Patent 10,272,021.
Rao, R., 2018. Perceptions of visible tattoos and piercings in the service industry.
Suleiman, A.K. And et.al, 2019. Hair styling compositions having shear thickening properties.
U.S. Patent Application 15/716,785.
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