Corporate Strategy and Governance: L'Oréal Misleading Ads Analysis

This report provides a comprehensive analysis of the impact of misleading advertisements on the reputation of L'Oréal, a prominent player in the personal care industry. The study delves into the core of corporate strategy and governance, evaluating how misleading ads affect a company's image. It explores the profitability intentions behind such ads, along with their adverse effects on L'Oréal's brand image. The research includes a literature review, methodology with primary and secondary research, and a critical review of the results, offering recommendations and an action plan to mitigate the negative impacts. The report covers key aspects such as the mindset of companies developing misleading ads, the specific areas where L'Oréal needs to improve its advertising practices, and the overall effect on market competitiveness and reputation. The findings highlight the significance of ethical advertising and the need for robust corporate governance to safeguard brand integrity. The project concludes with actionable insights for L'Oréal to enhance its advertising strategies and maintain a positive brand image in the competitive market.

Corporate Strategy and
Governance

Table of Contents
ABSTRACT.....................................................................................................................................3
TITLE - “To analyse the impact of misleading ads on reputation of a company. A case on
L’Oréal.”..........................................................................................................................................1
Introduction......................................................................................................................................1
Statement of the issue.............................................................................................................1
Overview of the Research......................................................................................................1
Background of the Research...................................................................................................2
Purpose and Significance of the research...............................................................................2
Research Aim ........................................................................................................................3
Research Objectives...............................................................................................................3
Research Questions................................................................................................................3
Structure of the project...........................................................................................................4
Literature Review ............................................................................................................................4
Profitability intentions of company while developing misleading ads..................................5
Negative impact of misleading ads and unethical practices on brand image of L’Oréal.......6
Areas which L’Oréal needs to focus on improving ads while promoting products in order to
gain good reputation and competitiveness in the market.......................................................7
Methodology....................................................................................................................................8
Primary Research....................................................................................................................9
Secondary Research..............................................................................................................10
Critical review of results................................................................................................................11
Critical review on the basis of primary research..................................................................11
Recommendation and action plan..................................................................................................20
Recommendation..................................................................................................................20
Action Plan...........................................................................................................................20
CONCLUSION..............................................................................................................................23
REFERENCES..............................................................................................................................24
Appendix........................................................................................................................................26
.......................................................................................................................................................27

ABSTRACT
Corporate strategy is most essential tool because it provides effective support to
organisation in identifying its objectives and goals so that competitive edge can be achieved by
firm in marketplace. Life cycle of L’Oréal products are evaluated in this report which defines
market position of firm in marketplace. In addition, several methods are also used in this project
so as to identify proper solutions for the complex situations. Along with this, failure of corporate
governance and actions which are taken for reducing its impact are also covered in this report.

TITLE - “To analyse the impact of misleading ads on reputation of a company. A case on
L’Oréal.”
Introduction
Statement of the issue
“Misleading ads led organisation to play with their reputations.”, is the statement for
issue which report is going to show.
Overview of the Research
Corporate strategy basically encompasses as a firm's corporate action with the aim to
attain an organisational aim and objectives while reaching at the competitive edge. Corporate
governance refers as the system of different rules, practices and processes through which an
organisation get proper directions through which it could easily operate its business (Acemoglu,
2012). These two term “corporate governance” and “corporate strategy”, plays vast role in
assisting the overall operations of an organisation in systematic manner. In the modern business
era with a large variety of goods and services, advertising is becoming one of the most integral
instruments of existing and potential customers’ and visitors’ information, awareness and interest
in the cause of communication. Organisation's image totally depends upon different types of
advertisements which is being chosen by company to enforce that their products are better or
more sufficient than the competitors. Misleading ads has huge influence on the operations of an
organisation, thus it reflects bad impression in regards to their brand image of firm or its
offerings. Issue which was raised was basically connected to corporate governance and strategy
of the company. L’Oréal is the chosen organisation for this particular project, it is a French
personal care company with its headquarter is in Clichy, Hauts-de-Seine with a registered office
in Paris. The company is widely concern on implementing effective corporate strategy, in which
it is easy for them to implement proper advertisement operations in respect to gaining attention
of customers towards the firm or its offerings. The present investigation work is based on analyse
of the impact of misleading ads on reputation of a company (Amran, Lee and Devi, 2014).
Advertising is the core of an organisations success or failure, thus L’Oréal is using proper
corporate strategy that supports the operations of firm. Advertising is key area for the firm to
increasing its global presence, the company is also concern on using proper advertising tools in
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respect to reducing the chance of misleading in ads, thus this has direct impact on the reputation
of the firm.
Background of the Research
In this modern business environment, the potential motive of each small as well as large
business enterprises it is develop their brand image in respect to conducting global business
operations (BarNir, 2012). Advertisement is considered as the most integral part that plays vast
role in enhancing the brand reputation of an organization through providing relevant information
to their customers. L’Oréal is a French personal care organisation and deals in high quality
beauty and personal care products or services. The company was funded in the year of 1909. it is
the world’s largest cosmetic and personal care company, the potential motive of the firm is to
develop the brand image of the firm in respect to attaining higher growth and success. The major
consideration of the firm is to enhance its profit margin through developing new and high
qualitative beauty products for their potential buyers (FDA Issues Warning to L'Oreal over
Misleading Ads. 2012). Advertisement is an effective tool that is applied by the firm to increase
its market reach or operations. Now a day's organisations spend a huge amount in their
advertising expenditure in respect to increasing its market reach and grabbing the attention of
people.
Purpose and Significance of the research
Report which has been developed is specifically based on the influence of misleading ads
on reputation of a business organisation, thus this is recognised as the most essential issue which
is faced by organisations due to non appropriate practices and corporate strategies (Bell,
Filatotchev and Aguilera, 2014). The potential purpose of conducting the research is to enhance
the idea and knowledge base of learner in the specified area of study. This is a wide area of
research that describes the impact of misleading ads on the operations of an organisation. The
wide knowledge base in this area helps an individual in developing their about the appropriate
use of advertisement in regards to the effective operations of an organisation. This study also
provides a brief knowledge about the corporate strategy and governance, thus plays integral role
in proper execution of organisational functions in the manner of attaining effective profits and
revenue within the commercial centre.
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Research Aim
This is the most essential part of the investigation work as it refers as a predetermined
statement which provides a clear vision about the research issue. This assist the investigator in
moving forward towards right direction to overcome the issue with the support of appropriate
data or information. The essential aim of this particular research is “To analyse the impact of
misleading ads on reputation of a company. A case on L’Oréal.”
Research Objectives
Research objectives are considered as essential and eminent aspects of a study that
provides a clear direction to execute all research inventions in appropriate direction (Evans,
Stonehouse and Campbell, 2012). This part of the research is interconnected through the aim of
research as in this the variables of the investigation are mentioned in the form of small
statements. The potential objectives of this particular research are associated as below:
 To analyse the intention of companies while developing misleading ads.
 To determine the impact of misleading ads and unethical practices on brand image of
L’Oréal.
 To analyse the areas which L’Oréal needs to focus on for improving ads while promoting
products in order to gain good reputation and competitiveness in the market.
Research Questions
The present report is designed in order to explore the influence of corporate governance
and its board structure on increasing the operations of an organisation. This part is widely based
on research aim and objectives as in this research questions are prescribed that covers the main
aim and objectives of the research. This section plays vast role in conducting critical analysis on
the research issue with the support of in-depth analysis. The appropriate research question of this
project are described as under:
 What mindset stays of companies while developing misleading ads ?
 What is the impact of misleading ads and unethical practices on brand image of L’Oréal ?
 What are the areas which L’Oréal needs to focus on for improving ads while promoting
products in order to gain good reputation in the market ?
Structure of the project
Introduction This section will put light upon the issue and i.e. misleading ads which may
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impact upon reputation and goodwill of a business organisation. On the other
hand, this section is going to be enclosed with aims and objectives including
rationale, background and structure of the project.
Literature
Review
Under this, detailed information related to objectives are going to be carried out
considering secondary research method.
Critical
Review of
the Results
This section of the report will show the negative and positive impact of the results
that are being carried out.
Recommend
ation and
action plan
Lastly, a proper recommendations along with the action plan is going to be
developed which will aid in pulling out favourable outcomes right on time.
Literature Review
Literature review can be defined as the process of collecting data from various sites
where scholars and authors has given there point of view that helps the researcher in carrying out
in depth study in regards to a specified area of issue (Fernando, 2012). This section mainly helps
the investigator in conducting appropriate theoretical framework that aids in addressing the
research issue with relevant facts or figures. Literature review is being considered as a
comprehensive summary of previous research of different business topics or the titles on which a
researcher is conducting the investigation. The literature review surveys scholarly articles, books,
and other sources relevant to a particular area of research. Present literature review section is
going to include research's objectives that will aid in pulling out favourable outcomes in specific
time frame.
This section of research helps in analysing the research through theoretical frame work as
it is effective in determining the viewpoints of various authors and writes who are having vast
knowledge on the chosen area of study (Fulmer and Ployhart, 2014). In this part, data majorly
has been gathered through secondary sources like books, journals, newspapers, magazines,
published articles or scholars etc. This is the most effective section of an investigation, thus this
provides a wide area of knowledge in a specified area of study. In this part of research, point of
view of different authors, writers and scholars are discussed in respect to developing a proper
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theoretical frame work in which appropriate discussion has been made in regards to the research
issue.
Profitability intentions of company while developing misleading ads
As per the views expressed by Tom Hooker, 2018, misleading ads basically portray
deceptive and inaccurate data in regards to get users to carry out an action (Gelens and et. al.,
2013). Such kind of ads use various forms of dishonest tactics likewise false claims or
statements, inaccurate affiliations, or fictitious company information, just to name a few. These
ads basically being made with the wrong intentions like without focusing on the society,
company is aiming to make profit. It has been analysed that, business organisations develop
advertisement in an unethical way to enhance sales, profit margins, brand image and goodwill in
short time frame. According to Walls, Berrone and Phan, (2012), there are many cases came in
front of companies like H&M that were not even aware of the fact that they were performing
well at marketplace but the green washing practice which they did, affected negatively upon their
performance level and impacted immensely on its image at international market. Advertising
refers to a form of communication that is applied to persuade a specific group of people to take
some new action towards a brand, company or its offered products and services.
Advertising is considered as an important aspect for the economic growth of the
marketers and different companies in competition. The term misleading ads means any
representation or symbol which may create a potential number of general or relevant public to
misapprehend and create an incorrect decision regardless of whether this representation or
symbol is consistent through facts. Advertising may also be recognised as misleading if an
essential data that the average buyers required to create an informed decision is pending.
Misleading advertising covers assertion or claim that are made instantly to consumers through
manufacturers, distributors and retailers, as well as in advertisements, catalogues, websites etc.
Deceptive advertising is also known as false advertising which refers to a manufacturer's use of
confusing, misleading, or untrue statements at the time of promoting a product (Hill, 2017). This
could be understood with a good example of KFC where, an advertisement was made, a dancing
chicken which basically received approximately 800 complaints. It has been identified that
misleading ads leads to positive impact on growth and profitability of the organisation. This can
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be further researched upon with the advertisement of Zinger Crunch Salad which can be referred
as one of the most misleading advertisement. This ad resulted in higher sales, profitability and
higher market coverage. Upon testing the same, it has been identified to be explosively
misleading (Graff, Kunkel and Mermin, 2012). Advertising law will protect consumers from
misleading advertising by the social control of specific legislation (Jansen and et. al., 2013).
Advertising law and consumer law have basically the same function: to promote truth in
labelling. Misleading advertisement come in wide array of shapes, formats, size or like regular
pieces of advertisement.
Thus, these are majorly divided on the basis of tactics that are being applied through
various sort of seldom emerging. There is multiple sort of misleading ads like scare tactics,
illegal use of popular brands, fictitious bonuses and sweepstakes, imitating popular website
interfaces, mimic browser operation, imitation of website functionality, using celebrities and
influencers unlawfully etc. Misleading ads creates dissatisfaction among customers and also has
a huge influence on the brand reputation of the firm. Misleading ads has a huge on customers as
well as organisations, thus this create bad impression among the people in regards to the
operations and dissatisfaction among buyers has increased (Van den Berghe, 2012). In this
modern business environment competition is high with in the market place and organisations are
widely concern on developing their market position through enhancing their offerings. The
organisations are widely using advertising tools in respect to grabbing the attention of people
throughout the globe, thus in the manner of attaining higher profitability and growth.
Negative impact of misleading ads and unethical practices on brand image of L’Oréal
According to the opinion of Linda Ray, 2018, False or misleading ads have, in the recent
past been on the emergence as a result of businesses seeking to contend for buyers. Accuracy
needs to be entail full disclosure of all data or information, thus this is crucial in the marketing
field in which customers are expected to develop informed decisions (Khan, Muttakin and
Siddiqui, 2013). Misleading advertisement does not provide a proper of relevant information in
regards to the product or services to their users, so they are not able to give any value to improve
customers experience. Misleading advertisements influences consumer’s choices about their
purchasing. This type of advertisements develops an expectation about the quality of the product
that is not true. Advertisements of this kind are not only dishonest but will make a wrong
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impression in regards the product and consumer preference will be distorted. L’Oréal is a large
cosmetic brand which has a huge reputation within the market and deals in high qualitative
cosmetic products or services to their significant customers. The company faces various issues in
regards to the misleading ads in and these ads has a huge impact on the operations of the firm.
Few impact of misleading ads on the performance of L’Oréal are associated as below:
Lower Quality Traffic: Misleading ads are basically wrongful assist or redirect users to
unauthorized product page, malware site or simply generate non-existent options. For this
reason, they tend to have lower-quality traffic and lowercase conversion rates when compared to
ethical tools. The company L’Oréal operates at wide scale and company has huge number of
rivals, so the company is preliminary concern on developing the its operations due to the reason
of providing high competition to its rivals. For example: L’Oréal rapped for misleading ads, thus
the company was criticised through the advertisement watchdog over two commercials which
create misleading claims in regards to wrinkle and cellulite creams (Yin and Zhang, 2012).
Issue with trust: Misleading advertisements are also recognised through viruses or other
sort of malicious software that creates a vast issue with trust. Due to the reason of misleading
ads, L’Oréal has faced the issue of customers trust, thus through less information about the
products may create issue for the firm or its operations
Areas which L’Oréal needs to focus on improving ads while promoting products in order to gain
good reputation and competitiveness in the market
According to Wu and Lu, (2012), customers do not trust a business organisation's product
easily and it is essential for company to keep on working on different tools which helps in
improvising brand awareness among consumers. Failure into this may lead an organisation, to
face problems like less recognition of brand and so on. Apart from this, if the advertisement
produced by company is not clear in the mind of customers then their sub conscious mind will
ignore that resulting in bad ROI for company (Marquis and Lee, 2013). For instance, L’Oréal
should try to make their product advertisement clear and real based in nature as it would be
easier for customer to relate themselves with the company. It has been analysed that, if targeted
customers gets satisfied by the products and services which company has showed in its
advertisement, then chances of enhancement of sales also increase to a certain level. According
to Natalia Bokhari, (2018), there are different but connected essentials aspect which every
company should consider while making advertisement which refers to what company wants from
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the customers and products. For instance, L’Oréal should try to make advertisement which has a
clear and set goal i.e., to sell their product Elvive colour protect shampoo, they should make it
clear that it will assist those customer who has coloured hair and wants to make it healthy. Other
aspect is, Simplicity which refers to how simple the advertisement is (Moser, 2012). If it is hard
to understand or boring in nature, then customers would ignore it.
For instance, if L’Oréal is advertising their anti ageing products, then they should try to
make it simpler and well flowing so that customer would easily understand the concept of
product and advertisement resulting in demand generated in the mind of customers. Call to
action is a factor which should be present in the ads L’Oréal is producing as chances of
increasing in sales also increasing by that. For example, in the ad of infallible fresh wear product,
company should try to ask their clients to fill any form or participate in competitions. It works as
a reminder for customers when they will attempt CTA, knowledge of the product would also
increase in the mind of customer which attains the second level of brand equity model. Last
essential is placement of advertisement as if hoarding containing L’Oréal product is placed in the
area where no one lives then it will be of no use then. That's why organisation should find out the
places where market is full with potential customers and then placed it so that brand awareness
of would increase. According to (Stewart and et. al., 2018), company will only get success in the
competitive market if they encourages their customer to opt new lifestyle which would only be
attain with the help of the product they are offering. For instance, L’Oréal should make their
beauty creams advertisement in which they will spell out the strengths of it and how it would
affect their life style and standard of living if they are using that product (Muchlinski, 2012).
Main motto of advertisement is to provide content which customers wants to read or see.
Methodology
Methodology specifically plays a crucial role when it comes to pull out data in specified
time frame related to the topic. Along with this, there are a range of methodologies like
secondary and primary which helps in pulling out data in order to conduct the investigation.
Under primary research, project makers use various techniques to collect reliable data. Further,
they organise the information, make analysis and then interpret same to draw valid conclusion in
desired way. While, in secondary research, investigators can obtain information from external
sources like books, journals, government data, newspapers, articles and more. Under these type
of sources, several authors and professionals have given their views and opinion on same topic.
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This would help researchers in evaluating their thoughts and making analysis according to own
perception. In context with present research, where L’Oréal faced issues related to
advertisements which they have made, researcher has used both primary and secondary
investigating methods and these are given below:
Primary Research
Primary research can be defined as methodology which is mostly utilised by the
investigator in order to collect the data directly, rather than depending on data collected from
previously done research. It is being identified that, primary research is solely carried out to
address a certain problem, which requires in-depth analysis. In present context, primary research
is going to be conducted on the basis of data which is collected by the researcher by his/her own.
On the other hand, researcher specifically keep its focus on addressing a certain problem with an
in-depth knowledge. On the other hand, primal advantage of using this type of research method
is that overall investigation done considering authentication which may aid in pulling out
favourable outcomes in specified time frame on the chosen topic i.e. impact of misleading ads on
reputation of a company. For this purpose, they have analysed various techniques of primary
research in order to get specific information. It includes questionnaire, online and offline survey,
interviews and more. Concept of these methods for collecting data are described as- Interviews (Telephonic or face-to-face) : An interview can be defined as a conversation
done among interviewer and interviewee where questions are asked. If it is talked about
the research, it can be said that qualitative research consist of face to face interviews aid
in pulling out favourable outcomes in specified time frame. At the time of building a
questionnaire, it can be said that feedbacks can easily be taken from respondents and
through this right amount of information can easily be carried out. Researcher basically
consist of effective communication in order to improve overall interactions with
interviewee. In present context, where researcher has taken topic as to analyse the impact
of misleading ads, interview can be done by investigator in order to collect the data but it
might cost much to him/her and also it is a time consuming process at the same time (Oh,
Teo and Sambamurthy, 2012). Online survey: An online survey can be defined as a questionnaire that helps in targeting
the audience. Basically, this type of questionnaire is being built online. It can be said that
an online survey is mostly, created as Web forms with a database to store the answers and
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