BTEC Business: Globalisation Drivers and Challenges for L'Oréal Group

This presentation analyzes the concept of globalisation and its implications for L'Oréal Group, a leading French personal care company. It explores the key drivers of globalisation, including cost, market, environmental, and competitive factors, and examines the significant impact of digital technology. The presentation includes a detailed PESTLE analysis of L'Oréal, evaluating the political, economic, social, technological, legal, and environmental factors influencing its global operations. It then identifies and explains the strategic complexities and challenges L'Oréal faces when operating in a global environment, such as the economic, political, cultural, social, and environmental dimensions. Finally, the presentation offers strategic recommendations for L'Oréal to overcome these challenges and successfully navigate the global market, emphasizing the importance of adapting to changing consumer demands, leveraging economies of scale, and managing risks associated with international expansion. The presentation is supported by the Harvard referencing system and includes a bibliography.

Higher Nationals
Assignment Brief – BTEC (RQF)
Higher National Diploma in Business (Business Management)
Student Name/ID Number Võ Hoàng Nhật Minh – NE40849
Unit Number and Title Unit 18: Global Business Environment
Academic Year 2021 – 2022
Unit Assessor Ms Phuong Thao
Assignment Number and Title GBE1: Drivers and Challenges for Globalisation (1 of 2)
Issue Date 16-Sep-21
Submission Date 4-Nov-21
IV Name
Date
Submission Format:
The submission is in the form of a 10-minute individual PowerPoint presentation and 5 minutes allocated
for questions. The presentation slides and speaker notes should be submitted as one copy. You are
required to make effective use of PowerPoint headings, bullet points and subsections as appropriate. Your
research should be referenced using the Harvard referencing system. Please also provide a bibliography
using the Harvard referencing system. The recommended word limit is 1,500 to 2,000 words, including
speaker notes, although you will not be penalised for exceeding the total word limit.

Unit Learning Outcomes:
LO1 Analyse the key factors which drive globalisation.
LO2 Determine the strategic complexities associated with operating in a global environment.
Assignment Brief and Guidance:
You are an advisor for the board of directors of ‘L'Oréal Group’, a French personal care company
headquartered in Paris. It is the world's largest cosmetics and beauty company and has developed
activities in the field concentrating on hair colour, skin care, sun protection, make-up, perfume, and hair
care. According to a report by Statista, in 2020, L'Oréal was the leading personal care brand in the world
with a brand value that amounted to 29.47 billion U.S. The company is present in 130 countries on five
continents and hope to continue to expand into other countries soon.
A new CEO has taken over the organisation and has asked you to produce a presentation to the board of
directors to advise them on the concept of ‘Globalisation’ and the challenges this creates for global
businesses trying to enter new markets.
You are required to investigate and explain the key factors that drive globalisation as well as the key
challenges this creates when operating globally. This will be presented by using a PESTLE analysis to
guide you and show analysis of cultural, economic, political and social dimensions.
The presentation should include the following:
1. An introduction to the concept of globalisation.
2. An explanation on the driving factors of globalisation.
3. The significant impact of digital technology upon globalisation.
4. Complete and present a PESTLE analysis of the organisation.
5. Explain the challenges of globalisation and the strategic challenges this represents for the
organisation.
6. Provide recommendations on how to overcome these challenges.
Pearson Education 2018
Higher Education Qualifications
Assignment Brief

Learning Outcomes and Assessment Criteria
Learning Outcome Pass Merit Distinction
LO1 Analyse the key
factors which drive
globalisation
P1 Analyse key factors
of cost, market,
environment and
competition that drive
global commerce and
trade.
M1 Critically analyse
the impact that key
factors have upon the
global business
environment in terms of
benefits and
challenges.
LO1 & 2
D1 Critically evaluate
the global business
environment, including
the opportunities and
challenges faced by
organisations.
LO2 Determine the
strategic complexities
associated with
operating in a global
environment
P2 Explain the
complexity of strategic
challenges faced by
organisations when
operating in a global
environment supported
by specific examples.
M2 Critically analyse
strategic challenges in
context of risk and
diversification
strategies and the
supply chain flow.
Pearson Education 2018
Higher Education Qualifications
Assignment Brief

Higher Nationals RQF
Pearson Education
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STUDENT ASSESSMENT SUBMISSION AND DECLARATION
When submitting evidence for assessment, each student must sign a declaration confirming that
the work is their own.
Student name: Võ Hoàng Nhật Minh –
NE40849
Assessor name:
Ms Phuong Thao
Issue date:
16-Sep-21
Submission date:
4-Nov-21
Submitted on:
4-Nov-21
Programme:
Pearson BTEC Level 5 Higher National Diploma in Business (Business Management)
Unit:
Unit 18: Global Business Environment
Assignment number and title:
GBE1: Drivers and Challenges for Globalisation (1 of 2)
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sources of materials for material you have used in your work, including any material
downloaded from the Internet. Please consult the relevant unit lecturer or your course tutor if
you need any further advice.
Student Declaration
Student declaration
I certify that the assignment submission is entirely my own work and I fully understand the
consequences of plagiarism. I understand that making a false declaration is a form of
malpractice.
Student signature: Date: 4-Nov-21

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Student Name / ID Võ Hoàng Nhật Minh – NE40849
Unit Title Unit 18: Global Business Environment
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Introduction:
International businesses are maximizing the benefits of globalization. They’re
expanding beyond the aerial, sea, and land constraints. Businesses target global
markets that boost their financial growth and market share. Though internal markets
bring in a realm of opportunities, companies face challenges and obstacles while
expanding businesses. It faces challenges that relate to the micro and macro
environment of the enterprise. Expert analysts claim that the social, legal,
environmental, and technological factors pose challenges to the multinational
company. This unit focuses on the hardships faced by Loreal while expanding
business all across the globe. As a global cosmetic leader, Loreal commits itself to
innovations reinventing products to target its global audiences. This report highlights
the challenges and figures out opportunities for the strategic manager running a

business in the global market. Apart from this, it discusses the conflict-generating
conditions to obtain the most effective strategies that would help the company to excel
in its global market.

The definition of globalization:
The term "globalization" refers to the increasing interconnectedness of the world's
economies, cultures, and inhabitants as a result of cross-border commerce in products
and services, technology, and movements of investment, people, and information.
Over many years, countries have formed economic alliances to enable these flows.
However, the word acquired prominence following the end of the Cold War in the
early 1990s, since these cooperative agreements molded present day living. (Kolb,
2021)
Globalization's far-reaching consequences are complicated and politically charged.
Globalization, like major technical developments, helps society while also damaging
specific groups. Understanding the relative costs and benefits can pave the road for
problems to be solved while the larger payoffs are maintained. (Kolb, 2021)

Dimensions of Globalization:
- Economic dimension: Economic globalization occurs when firms become
transnational, either by selling their products in other nations, purchasing
corporations in other countries, or establishing branch offices or subsidiaries
outside their home country. Multinational company expansion and
consumption of foreign-sourced products and services result in national-
economy exports, imports, and investment interactions. (Beckfield and Brady,
2021)
- Political dimension: Political globalization, or the establishment of
transnational ties among elected politicians, bureaucrats, judges, social
movement activists, and nations, has also piqued the public's attention.
Political globalization is facilitated in part by the establishment of
m rng và tiêu th

intergovernmental organizations (IGOs) such as the United Nations and the
World Trade Organization, as well as international nongovernmental
organizations (INGOs) such as the International Committee of the Red Cross.
Anne-Marie Slaughter (2004), for example, demonstrates how political
authorities, particularly regulators and judges, create a web of global
governance and "world order" through transnational links made by these
institutions. (Beckfield and Brady, 2021)
- Cultural dimension: In the sphere of culture, major world religions, media
conglomerates, multinational companies, and international tourism convey and
translate meaning (contained in faith traditions, ideas, goods, and practices)
and symbols across international boundaries. (Beckfield and Brady, 2021)
- Social dimension: is concerned with the impact of globalization on the lives
and work of individuals, their families, and communities. This component
deals with the impact of globalization on employment, working conditions,
income, and social assistance. Beyond the labor sphere, the social component
relates to family and community cohesion, security, culture, and identity.
(Beckfield and Brady, 2021)
- Environmental dimension: Many people consider the environment to be a fifth
dimension of globalization. If states are nodes in worldwide networks, then
environmental concerns make connections by crossing borders: global
warming, ozone depletion, and acid rain have all been identified as
international problems that demand international solutions by social movement
activists and scientists. Indeed, environmental issues demonstrate how the
many components of globalization often reinforce one another: social
movement activists band together through worldwide social movement groups
(social globalization) to raise awareness of environmental concerns (culture
globalization) created in part by multinational firms (economic globalization),
and to advocate for the passage of international accords such as the 1997

Kyoto Protocol on greenhouse gas emissions (political globalization).
(Beckfield and Brady, 2021)

Driving factors of globalisation:
Cost drivers:
The globalization of consumer requirements, as well as the associated opportunity for
scale and uniformity, will radically alter the economics of many businesses. As factors
of global strategy, economies of scale and scope, experience effects, and leveraging
variations in factor costs for product development, production, and sourcing in
different regions of the globe will become more important. At the end of the day, a
single market will no longer be large enough to support a global competitive strategy
in many industries (Academy, 2012).
The economics of global size and breadth are already having far-reaching
consequences. On the one hand, the more new economies of scale and scope define
incumbents' global industry strategies, the more difficult it will be for new entrants to

build an effective competitive challenge. As a result, the barriers to entry into these
businesses will increase. Simultaneously, competitiveness within such industries is
expected to intensify, reflecting the widening scope of competition among linked
national and regional markets, as well as the reality that true differentiation in such a
competitive environment may be more difficult to accomplish (Academy, 2012).
★ International economic integration: Several trade blocs have made national
borders permeable as trade obstacles between member nations are
reduced/removed. NAFTA, which includes the United States, Mexico, and
Canada, and the East African Community (EAC) are two examples of such
trading blocs. As the movement of products and services across national
boundaries is facilitated, such trade blocs boost competitiveness among
enterprises in member nations. While there is no total liberalization of markets
among member nations, there is progress in that direction, even if
protectionism persists in some blocs, such as that of East Africa. Some
governments, for example, continue to encourage people to buy homemade
items rather than regional products from trade bloc members. Such
protectionism continues to undermine the goals of economic unity (iQualify
UK, 2020).
★ Financial liberalisation: Because of financial market liberalization, countries
are becoming more interconnected. It is now simple to convert money to
'global currencies' such as the US dollar and the British pound. This has made
it easier to buy goods and services around the world. For example, it is simple
to pay tuition fees for an online academic course in the United Kingdom while
in Africa using internet payments.This is made possible by the ease with which
your currency can be converted into US dollars or British pounds. This has
resulted in financial globalisation, which is helped by firms such as PayPal,
who run sophisticated online payment systems, allowing money to be
transferred abroad (iQualify UK, 2020).

★ Reduction in Cross-trade Barriers: Refer to one of globalization's major forces.
Every country prohibits cross-border movement of goods and services. Tariffs
and quotas are levied on products and services imported into the nation.
Furthermore, the unpredictability of regulatory changes creates turmoil in the
global corporate climate. Such procedures place constraints on foreign
commercial operations. However, progressive relaxation of cross-border trade
barriers by most governments encourages free commerce, which in turn boosts
an economy's growth rate (iQualify UK, 2020).
★ Need for economies of scale: Firms are seeking for strategies to gain and enjoy
cost reductions as competition heats up. This is made possible by economies of
scale, which occur when companies create the same product for a large
market. This involves corporations making significant efforts in worldwide
product promotion. PepsiCo is a good example of a company that sells its
products all over the world (iQualify UK, 2020).
Market drivers:
The constant convergence of consumer requirements is one feature of globalization.
As clients in many regions of the world seek more and more identical products and
services, chances for scalability emerge through the marketing of more or less
standardized offerings. The relevance of cultural characteristics, disposable incomes,
and the degree of uniformity of the settings under which the product is consumed or
utilized all influence how common requirements, tastes, and preferences vary
substantially by product. This applies to both consumer and industrial goods and
services. Coca-Cola sells goods that are similar but not identical all over the world.
While adjusting to local tastes and preferences, McDonald's has standardized many
aspects of its operations. Software, oil products, and accountancy services are
becoming increasingly similar regardless of where they are acquired. Understanding
which components of a product or service may be standardized without compromising
responsiveness to local tastes and conditions is the key to capitalizing on such chances

for growth (Academy, 2012).
As requirements continue to converge, global customers have developed. Large firms
such as DuPont, Boeing, and GE expect the same degree of quality in the products and
services they purchase, regardless of where they are purchased. Global distribution
channels are growing in numerous industries to meet the demands of an increasingly
global consumer base, resulting in a convergence of needs. Finally, as purchasing
habits grow more uniform, worldwide branding and marketing will become more vital
to global success (Academy, 2012).
❖ Increase in Consumer Demand: Acts as a primary catalyst for globalization.
Consumer demand for various items has risen throughout time, as has their
level of income and style of living. Aside from that, customers are more aware
of the products and services offered in other nations, prompting many firms to
collaborate with overseas players in order to meet the demands of the home
market (iQualify UK, 2020).
❖ Global education providers: With the growing popularity of online learning,
there are institutions that provide education courses to a global audience.
Universities and colleges have begun to offer a mix of on-campus, distance,
and entirely online programs. Global education providers enable students to
get globally recognized academic credentials while remaining in their native
nations. As a result, the students join the labor market with a varied set of
skills and cultural exposure. This enables them to work for organizations all
across the world, particularly those that use online platforms to produce
articles and instruct students. As a result, there is an expanding number of
people who can give services across boundaries via internet platforms after
receiving 'global education,' forming 'global human capital.' (iQualify UK,
2020)
❖ Socio-cultural convergence: People are losing their 'cultural identity' as a
result of easy access to information via online newspapers and social media.

For example, what used to appear 'unAfrican' is now considered normal, such
as wearing miniskirts. This is due to exposure to cultures where wearing
miniskirts is not frowned upon. As a consequence of the convergence of
cultural values, customs, and beliefs, mini-skirt manufacturers have a global
clientele. What was once a national/regional product has now become a global
product. Firms may now offer their products globally without having to tailor
them to the tastes of certain countries (iQualify UK, 2020).
Competitive Drivers:
Industry characteristics, such as the extent to which the total turnover of the industry
is made up of the volume of exports or imports, the diversity of competitors in relation
to their national origin, the extent to which the main players have globalized their
activities and created an interdependence between their competitive strategies to have
. in different parts of the world they also affect the globalization potential of an
industry. The possibility for industrial globalization is increased by high levels of
trade, competitive variety, and interconnectedness. Industry evolution also has an
influence. Competitors will adapt to changes in the industry's fundamental features in
order to improve and maintain their competitive edge. This can sometimes hasten
industrial globalization. At times, such as in the instance of the global large appliance
sector, globalization may be reversed (Academy, 2012).
➢ Intense competition: Firms are seeking for new markets beyond borders due of
severe rivalry among them. Some industries, such as the media, face
competition from all over the world. Information is easily accessible from both
domestic and international news organizations, promoting businesses to
innovate in order to remain competitive and/or survive. Firms are now looking
for international markets due to tough competition. Increased foreign direct
investment has aided the quest for overseas markets (FDI). Foreign direct
investment (FDI) refers to transactions in which a foreign investor provides
funds to a company for use in its operations. As corporations form worldwide

strategic alliances, such transactions have enhanced capital mobility and aided
global economic integration (iQualify UK, 2020).
➢ Competitors in each Market: Market success, whether home or foreign, is
frequently determined by the degree of competition, whether international or
local. Large commercial aircraft manufacturers, such as Boeing and Airbus,
compete virtually exclusively in every market they service. What they learn
about one other in one nation helps them forecast the other's methods in other
countries. In contrast, Walmart confronts unique local competitors in nearly
every international market it enters, necessitating tailored local strategy
(Daniels, Sullivan and Lee, 2018).
Environment Drivers:
❏ Geographic obstacles, such as mountains, deserts, jungles, and land-locked
locations, can have an impact on communication and distribution networks.
Furthermore, the possibility of natural disasters and severe climatic conditions
might make business riskier in some places than others, while impacting
supply, pricing, and operational conditions in distant nations. Remember that
climate conditions can have short- or long-term cycles. For example, consider
the recent melting of the Arctic (Daniels, Sullivan and Lee, 2018).
❏ The presence of logistics businesses may lead to a decrease in air quality and
pollution. This raises the health risks in the vicinity of such clusters. As a
result, there is always a compromise between the economic benefits of
logistical operations and the risks associated with their impact on the
environment and health of the surrounding population. There are "green
innovations" in logistics operations and systems that are reducing the
environmental impact of logistics operations (Daniels, Sullivan and Lee,
2018).
❏ Environmental stress: Much critique of globalization revolves across the
monetary boom it brings. One argument is that boom in each manufacturing

and worldwide tour consumes extra nonrenewable herbal sources and will
increase environmental harm despoliation through poisonous runoff into rivers
and oceans, air pollutants from manufacturing unit and automobile emissions,
and deforestation that could have an effect on climate and climate. In addition,
critics contend that shopping for from extra remote places will increase
transportation, for this reason growing the carbon footprint, which refers to the
entire set of greenhouse gases emitted. They factor similarly to the extra than
one thousand field ships plying the seas and counting on heavy oil as a fuel;
every pollutes as lots as 50 million motors do (Daniels, Sullivan and Lee,
2018).
❏ The argument for Global Growth and Global Cooperation: However, different
factions assert that globalization is wonderful for keeping herbal assets and
retaining an environmentally sound planet—the previous via way of means of
fostering advanced and uniform environmental requirements and the latter via
way of means of selling worldwide opposition that encourages organizations to
are looking for useful resource saving and green technologies. A living proof
is the car enterprise that has step by step produced automobiles that use much
less fuel line and emit fewer pollutants. The wonderful consequences of
pursuing worldwide pastimes may, nevertheless, battle with countrywide
pastimes. Consider the impact of world stress on Brazil to assist guard the
world’s weather via way of means of curbing logging pastime withinside the
Amazon region. Unemployed Brazilian people have felt that activity advent
withinside the logging enterprise is extra essential than weather safety out of
doors Brazil (Daniels, Sullivan and Lee, 2018).

Role of Digital Revolution in Globalization:
Since the beginning of time, geographical advantages have affected how MNEs
organize value operations. Searching for raw resources, seeking productive, low-cost
labor, arbitraging tax and tariff benefits, and other factors have driven multinational
corporations (MNCs) to travel the world in search of suitable sites. They frequently
had to work in remote regions typified by insecurity, uncertainty, and risk.
Furthermore, manufacturing things abroad while transporting them here necessitated
an ever-expanding, often-expensive transportation network. Today, to put it mildly,
the times are a-changin'. Revolutionary advancements in digitalization, robotics, and
3D printers force a dramatic reconsideration of the role of geographical advantages in
structuring value activities (Drake-Brockman et al., 2020).
Digitization occurs when an item, picture, voice, document, or signal is converted into

a series of numbers. MNEs are increasingly digitizing items such as software, music,
and books, as well as services such as application processing, financial consolidation,
and legal advice. MNEs may move commodities and deliver services anywhere in the
globe for negligible cost and complication when they are linked to the network. The
ability to pinpoint digital activity nearly everywhere, especially as the Internet
increases, has an impact on how and where MNEs do what. Options that were unheard
of a generation ago, such as X-rays obtained in Boston but reviewed in Bangkok, are
now routine. Distance, which was formerly expressed in terms of geographic space, is
now quantified in terms of electronic time in the cloud computing ether.
Digitalization has ushered in a new global paradigm for financial services, unleashing
disruptive technologies that have altered the game's rules. Due to the concentration of
value operations such as regulatory registration or review, due diligence processes in
mergers and acquisitions used to take place mostly in New York City or London.
Some believe that digitalization will "create a second economy that is enormous,
automated, and invisible, bringing the greatest shift since the Industrial Revolution."
In the future, the shrinking digital divide—the difference between those who have
regular access to digital technology and those who do not—will connect more
individuals to the network. MNE site economics fluctuate, as do MNE configuration
options. With the spread of lower-cost technologies to people all around the world,
fewer places stay off the grid. As freshly wired individuals interact with peers, they
gain proficiency with numerous electronic platforms. As a result, MNEs are
rethinking configuration possibilities in order to tap into growing sources of
capabilities (Drake-Brockman et al., 2020).
Technology has transformed the global economy and has evolved into a vital
competitive strategy. Globalization has resulted in the creation of new markets, and
information technology is one of the technologies that has aided in the development of
these new markets in an increasingly competitive world. Technology has assisted us in
overcoming key barriers to globalization and international trade, such as trade

barriers, a lack of uniform ethical standards, transportation costs, and information
transmission delays. The advent of technology has greatly aided in the formation and
expansion of the worldwide market. Multinational Corporations (MNCs) can be
viewed as key players in globalization. MNCs located in one nation frequently pursue
innovation in the host country, and as technology advances, MNC(s) have spread to
other countries. While technology has offered numerous chances for worldwide
networks of tasks, it is critical to examine the system's friction to understand its
limitations (Lamba and Malhotra, 2009).

L’Oréal Background:
In 1909, a French scientist named Eugene Schueller produced the first synthetic hair
color. It was known as Oréale, and it was sold to Parisian hairdressers. Mr. Schueller
not only invented a formula, but also sold it like a business owner. By 1919, the firm
had been rebranded and registered as L'Oréal. Mr. Schueller's aim to provide excellent
and sustainable beauty products to all men and women has been imprinted in the
L'Oréal group for decades. From hiring three chemists in 1920 to having a global
workforce of approximately 80,000 is a testament to empowerment and societal
commitment. 'Eugene Schueller grasped the occasion,' according to the L'Oréal
organization. He created the awe-inspiring beauty that moves the world (Samuel,
2021).
L'Oréal is not like any other cosmetics company that is just concerned with sales and
profits. It is a brand that arose as a result of synthetic hair dye research and
development in the early twentieth century. Eugene Schueller knew that his

innovation was the first step toward ushering in a boom in the beauty business. In a
country like France, where fashion and beauty are closely guarded, items were created
largely for personal care.
(Samuel, 2021)
Mission Statement:
The mission statement of L'Oréal is to "provide all women and men worldwide with
the finest of cosmetics innovation in terms of quality, efficacy, and safety."
Experts in science and aesthetics manage the goal of realizing every human being's
desire. L'Oréal helps its clients acquire confidence and improve their natural beauty
by giving the greatest skin and hair products. Quality, effectiveness, and safety are
supplied not only to consumers, but also to their staff and our world.
(Samuel, 2021)
The slogan of L’Oréal:
L’Oréal focuses on “driving the cosmetic industry with an inclination on
sustainability.”
The tagline was altered in the mid-2000s to "Because you're worth it." They had
changed their technology and innovative processes as well as their tagline. L'Oréal
increased its spending in product development, sustainable packaging, research, and
global marketing.
By late 2009, their slogan has been altered to "Because we're worth it." This
modification was based on motivational analysis and consumer psychology research.
This phrase was created with the intention of involving consumers, staff, and
partnerships. Collaboration with startups, techies, and small businesses centered on
digital beauty services is a win-win scenario for all sides in order to evolve in an ever-
growing beauty sector. Innovative entrants in the market benefit from seasoned
operational assistance, while L'Oréal customers appreciate new ideas and distinctive
goods. In exchange, the brand receives client happiness and establishes a closer link
with them. (Samuel, 2021)

L’Oreal PESTLE Analysis:
Political Factors:
Any organization that makes the purposeful decision to go global in its operations and
availability should be prepared to be impacted by global politics, generally in a
negative way. L'Oreal must be particularly mindful about the policies, rules, and
regulations that apply to the many nations in which they do business.
The European Union has a significant influence on the brand; they have a set of very
severe laws and regulations that cosmetic firms must follow in order to be operational.
Furthermore, they must closely adhere to the criterion of not include any dangerous
substances in their goods.
Because of the culture clash, it is also difficult for firms such as L'Oreal to conduct
business in the Middle East and other conservative regions. Advertisements that
operate in the West that depict women in various styles of dress that are looked upon
in the East can cause complications.

People nowadays are becoming increasingly aware of political happenings and have
instant access to information via the internet. People are more likely than ever before
to support companies whose values align with their own. One such example is when
L'Oreal had to fire one of its spokespersons, Amena Khan, in 2018 when consumers
discovered previous "anti-Israel" tweets from her; otherwise, many of the brand's
customers would have gone.
Economic Factors:
Global conditions, notably the economy, have once again had a significant impact on
global brands. Countries with weak or shifting economies pose an ongoing problem.
L'Oreal, like many other businesses, was devastated by the Covid-19 epidemic.
Though they lost money in the first half of 2020, their remarkable performance and
determination allowed them to experience 4.8 percent growth in the second half
despite substantial changes in purchasing habits throughout the crisis.
The brand's flawless internet presence has played a significant role in its success
during these trying times. Because of their adept use of numerous internet channels, e-
commerce has done wonders for them. The brand's overall sales increased by a
stunning 62 percent as a result of these web outlets.
They have a significant opportunity to expand further in emerging nations such as
India and China, but due to rising trade tensions between the Chinese and American
governments, L'Oreal will have to work extremely hard to become a major deal in
China. Naturally, their greatest interests are with the United States.
Social Factors:
L'Oreal has engaged in CSR efforts over the years, with the most recent example
being the production and distribution of millions of units of hand sanitizers and lotions
for distribution to front-line employees.
Now is the finest moment to be a cosmetics brand in terms of opportunity. L'Oreal
serves hundreds of thousands of customers all over the world. People are more beauty
conscious than ever before, especially when it comes to social media platforms.

Makeup is the ultimate fashion trend that never goes out of style.
Although L'Oreal currently claims to be a vegan company, which means that their
product formulae are devoid of animal products, the notion of veganism in brands
extends beyond ingredients to animal testing of new innovations. Though the brand is
now categorically opposed to animal testing, they are still required to do animal
experiments in places where it is a legal obligation, such as China; this fact always
lands the brand in hot water with modern-day consumers who oppose animal cruelty.
When a company as large as L'Oreal is involved, it must be extremely cautious about
the messaging it promotes. Munroe Bergdorf, a transgender model, blasted L'Oreal for
posting a statement on social media in favor of the Black Lives Matter movement,
stating that she was fired as an ambassador in 2017 after publicly addressing white
privilege and brutality against people of color. She exposed the hypocrisy, claiming
that L'Oreal is only trying to be safe. The model has since received an apology from
the business for their terrible handling of the situation, and she has resumed working
with them.
In 2020, the brand group declared that phrases like "whitening" will be removed from
their product line, especially in light of the BLM movement that swept the United
States and the world after George Floyd's murder. Although some customers
complained that they were late in making this adjustment, others praised the effort.
Technology Factors:
L'Oreal has been a cosmetics industry participant for almost a century, and the only
way they've been able to do so is by introducing and valuing ongoing innovation in
their goods. L'Oreal's current focus is on fusing green science and digital technology
in order to provide sustainable and nature-based solutions developed with the support
of cutting-edge technology and research.
L'Oreal also allows customers to try on their goods virtually before purchasing them.
Individuals interested in thorough diagnostics may also get tailored solutions from
them.

The "Perso's Smart Skincare" is one of the most astonishing technologies that L'Oreal
has managed to conjure up. Though the make-up capability will be added later, this
gadget can practically conjure up tailored skincare, lipstick, and foundation on the
moment.
The gadget is linked to an app where you may enter your specifications. It allows you
to describe the level of pollution you're exposed to, your skin's state (pigmentation,
wrinkles, fine lines, etc. ), and the newest skincare trends in order to choose the best
product for you. In fact, you can submit a photo of your face to the app to obtain an AI
evaluation of what your skin is up against and what remedies it requires. Let's talk
about creativity!
This machine is portable, offers a clean application, and can even vary the time of day
and night. This is unquestionably a significant step forward for L'Oreal in its quest to
become a worldwide leader in Beauty Technology.
Legal Factors:
Being one of the most well-known companies in the world must be thrilling, but it
must also be exhausting. Today's largest issue for brands is counterfeiting. Makeup
and skincare counterfeiting isn't a new activity, and it's unlikely to go away anytime
soon, but it can seriously harm a brand's credibility and even earnings when hundreds
of vendors throughout the world develop low-cost knockoffs.
L'Oréal learned in 2018 that their counterfeit products were offered in large quantities
on Alibaba. They collaborated with Chinese officials in order to expose the
deception.Eventually, they managed to get the fakes removed, but it was just an
accident.It is difficult to keep track of every fake product made.
Counterfeit cosmetics is also harmful to one's health since it contains inexpensive raw
components that might hurt the skin.
L'Oreal was in court in 2020, accused of wrongfully terminating an attorney because
he refused to participate in a conduct that he considered unethical. He said that
L'Oreal urged him to do things he didn't want to do. There was no substantial evidence

in this case, and the brand basically disputed all of the charges.
Major company brands are expected to submit information on their efforts to eradicate
any form of slavery in their supply chains every year under Britain's 2015 Modern
Slavery Act. In 2017, it was revealed that L'Oreal was one of the businesses that
ignored the hazards of slavery in India, particularly since its employees were exposed
to raw mica, a common cosmetic component.
They issued a statement in which they said they were against all types of forced labor
in third world countries.They claimed to make continuous attempts to ethically collect
mica from Indian mines.
Environmental Factors:
The brand's ongoing objective is to attain environmental sustainability. They had
effectively decreased their CO2 emissions by a stunning 81 percent in contrast to what
their facilities and factories produced in 2005 by the end of the preceding year of
2020.
L'Oreal bolsters this commitment by keeping a regular communication with all of the
brand's stakeholders in order to collaborate on environmentally friendly solutions. As
part of their 10-year sustainability plan, they are now doing research to find methods
to lessen their total effect by 2030.
Despite their best efforts, it was discovered in 2019 that L'Oreal's website lacked
information on their usage of chemicals such as parabens, triclosan, and phthalates,
which are all banned by the EU since they are not only harmful to human health but
also contaminate the environment. As a result, the company should go to work on
developing a comprehensive policy that ensures complete openness in their usage of
toxins.
L'Oreal also intends to boost the usage of environmentally friendly packaging. By
2025, they hope to have made all of their plastic packaging biodegradable, recyclable,
or refillable.
L’Oreal PESTLE Analysis: Conclusion:

As a result of reading this PESTLE Analysis for L'Oreal, the cosmetics and skincare
behemoth, you now have a better understanding of where the company is in terms of
business.
A company as prominent as L'Oreal, with such a long and illustrious history, is
extremely impressive, especially given their ability to dominate the market for over a
century. It's mind-boggling to consider they've made a century.
Despite the fact that the brand is in no danger of becoming extinct, they still need to
concentrate on rectifying a few flaws, the most crucial of which is fully eradicating
animal experimentation. That is not going to be swept under the rug. They must also
be wary of the individuals who contribute to their supply chain in order to avoid any
forms of slavery. They should also adopt a precise strategy on the usage of toxins.

The strategic challenges faced by L’Oreal when operating in a global
environment:
Lack of employee awareness and understanding of the diversity policy:
To begin with, it is obvious that the overall diversity plan was not well conveyed to
the organization, since employees at L'Oreal have yet to completely embrace the
notion of diversity. According to the spectrum of comments and replies obtained, the
group of managers who attended the diversity seminar still has an ambiguous sense of
purpose. It reveals a lack of managerial knowledge and comprehension of how
important diversity is to L'Oreal in the first place, why the firm has decided to pursue
a diversity policy, and the role and advantages that diversity may provide in the long
run.
Some managers questioned the value of a diversity strategy and diversity training
sessions, as well as preconceptions that this was a temporary "flavor of the month"
initiative. This will make implementing the global diversity plan to the rest of

L'Oreal's workers and the rest of the company more difficult. If the managers in
leadership roles are not clearly aligned with the strategy's objectives, the strategy
execution will be wasteful and inefficient.
Employee motivation and engagement:
Individuals are more motivated when defined goals are clear and direct, demanding
yet attainable, according to the goal-setting hypothesis of motivation. This suggests
that in order to be effective, the purpose must first be understood (Carlopio and
Andrewartha, 2012). Some L'Oreal managers are baffled as to why they were required
to attend diversity training, which is a major problem. How can a company keep its
employees engaged in implementing a long-term global plan if they don't completely
comprehend or agree with it?
Additionally, the demand that managers attend diversity training in addition to their
professional obligations may jeopardize L'Oreal's current levels of involvement. Some
managers have stated that they don't have time for a diversity program since they have
too much to do in a day. Furthermore, it appears that expecting managers to spearhead
diversity programs in their own teams is unduly ambitious.
L'Oreal should strive to keep its staff involved in the company's objectives and
motivated to promote global diversity. There are worries that the good impacts of
diversity training courses are short-lived, and that people typically react angrily to
mandatory training sessions. According to some research, this can even trigger
prejudice or cause a reaction.
Geographical and cultural barriers to diversity:
Because of the geographical distance between L'Oreal's various offices, determining
the quality of the diversity efforts that the managers were required to lead in their
offices will be difficult. The geographical distances and cultural variations between
the various nations add to the difficulty of implementing the firm's global diversity
policy in a smooth manner. In order to improve the total variety of the international
firm, BalustreD'Erneville will have to overcome these restrictions.

From an ethnic and cultural standpoint, L'Oreal's Asian national units were regarded
as having highly homogeneous workforces, and that they had not promoted diversity
in their workforce. This emphasizes the necessity of knowing the cultural context of
subsidiaries, since many businesses risk executing tactics that are doomed to fail due
to cultural misalignment. According to Bhardwaj (2016), the meaning of diversity
varies by country and environment, and businesses in various countries may face
distinct diversity difficulties. Many global diversity initiatives fail, according to Nishii
and Ozbilgin (2007), because firms try to transfer local diversity programs straight to
other countries. Even after attending training sessions, several local management
teams had paid little attention to the policy. The notion of establishing a diversity
strategy was seen differently by L'Oreal's worldwide operations due to clear
geographical variations.
Globalization has been accused for contributing to environmental deterioration, and
L'Oreal's complaints about waste management are evidence of this:
It is a widely known reality that globalization has been criticized for inflicting
environmental degradation, and the lawsuits being obtained via way of means of
L’Oreal in regards to waste control are proofs of this. The business enterprise has been
blamed for polluting water structures because of the chemical substances concerned in
its manufacturing wastes, and this has definitely stuck the eye of the public.
Complaints additionally in regards to the business enterprise utilizing stay animals to
inspect their merchandise had been condemned by way of means of animal rights
advocates, and severa protests had been initiated all around the international to
forestall L’Oreal from persevering with such initiatives. While the business enterprise
has usually denied being concerned in those animal trying out activities, animal rights
organizations haven't begun to be satisfied that L’Oreal isn't always responsible of
those violations. These negativities are actually unwanted and want to be constant via
way of means of the business enterprise earlier than they get blown out of proportions
and turn out to be greater complicated.

Recommendations to solve these challenges:
Balustre-D'Erneville and her team must inform the employees on what diversity
means at L'Oreal, promote awareness about the value and advantages of diversity, and
emphasize the necessity of embracing diversity and implementing a global diversity
plan. According to a Deloitte survey, millennials and older workers have opposing
perspectives on diversity. This is critical for the strategy's long-term effectiveness
since it encompasses numerous characteristics such as nationality, ethnicity,
socioeconomic background, gender, handicap, and age. As a result, all L'Oreal
workers must first understand exactly what diversity means at the company; that it
encompasses numerous aspects such as country, ethnicity, and gender.
L'Oreal's senior executives should enhance their engagement and play active roles in
reinforcing the strategic relevance of diversity within the company to achieve this. It
should be underlined that one of L'Oreal's business goals is to eliminate all types of
discrimination in their offices across the world and to boost the international

corporation's total diversity. Having senior executives on board with the policy and
sharing a strong commitment to diversity emphasizes the policy's relevance to the rest
of the workforce.
It must be evident that the organization is ready to invest time and resources in this
endeavor over time, that it is not only a "nice to have" or a "flavor of the month"
program. Furthermore, all workers should have continual access to a resource and
instructional material, and the policy goals should be conveyed and reinforced to them
on a regular basis. Workshops, seminars, newsletters, and the workplace intranet may
all be used to do this. This will guarantee that the benefits of diversity are fully
understood and that every employee understands why L'Oreal has placed such a high
priority on enforcing this policy.
Company processes such as recruiting and talent management, as well as the number
of promotions and compensation increases monitored, should all be scrutinized.
Progress monitoring should also be clear, updated often, and shared with the
organization. Balustre-D'Erneville is also suggested to create a hybrid diversity
function structure in which the central office defines a global diversity strategy and
sets objectives while also allowing each nation to construct its own local diversity
initiatives in order to handle culture-specific concerns. Changes may be made and
progress monitored after data is collected and examined to pinpoint where the
difficulties are (Morse, 2016).
L'Oreal could also consider rewarding teams who exceed their diversity goals.
Employees at L'Oreal will come to see the policy's execution as an integral part of
their jobs, rather than a separate necessity. Furthermore, in order to create a fresh and
positive view among the managers, diversity training workshops and programs at
L'Oreal should be elective rather than mandatory, allowing managers to choose
whether or not to attend the sessions.
Studies have revealed that when people are pressed to agree with something, their
prejudices are enhanced; but, when they have a choice, their biases are diminished

(Dobbin & Kalev, 2016). Top management should encourage and congratulate
managers who attend these sessions willingly in order for them to feel proud of being
a part of a good change, resulting in increased dedication and excitement. Balustre-
D'Erneville and her team should collect feedback from attendance on a regular basis
to track progress and continue to measure the success of these diversity training
events.
L'Oreal should be able to make the most of its financial and technological resources in
order to develop original, inventive, and relevant beauty products that meet the
demands of its worldwide customers. The organization should invest in training to
make the most of the talents, knowledge, and expertise of its varied personnel. It is
undeniable that the existence of globalization has compelled businesses to employ a
diversified staff.
Summary:
In conclusion, it is proposed to Balustre-D'Erneville that, despite its complexity and
problems, the global roll-out of L'Oreal's diversity strategy be pursued and sustained.
The promotion and cultivation of diversity has enormous benefits for the company
and is the only path ahead. Balustre-D'Erneville must first address three important
challenges with the worldwide execution of L'Oreal's diversity policy: a lack of
employee knowledge and comprehension of diversity, which may limit the plan's
efficient and successful implementation, a lack of employee motivation and
engagement with the strategy, and geographical also cultural hurdles to
implementation.
Because of its excellent tactics aimed at maximizing its strengths and possibilities,
L'Oreal is at the top of the cosmetics sector. It has also aided the organization in
attracting exceptional executives as well as industrious and varied personnel. The
organization thinks that cultural diversity is an asset, which is why its workers' skills,
knowledge, and expertise are constantly improved in order to optimize and put them
to good use.

This report discusses the benefits and downfalls related to business expansion.
Irrespective of the size and nature of the business, global expansion is challenging and
includes threats like cultural diversities, currency fluctuations, poor organizational
structure, and more. It requires management to comply with international laws and
regulations. Global pricing strategies create issues for the firm. Taxes, fees, charges,
and other expenses will vary depending on locations. It likewise points out the
opportunities related to business expansion. By operating businesses in the global
arena, companies get a vast number of customers. It doesn’t only improve the
profitability of the company but also boosts its brand awareness. Cultural diversity
yields positive outcomes, as companies gain insights from marketing and management
perspectives. Finally, it discusses the measures that management ought to take to
counter the adverse effects of globalization.

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