Detailed Analysis of L'Oreal's Business Strategies Report

This report provides a comprehensive analysis of L'Oreal's business strategies. It begins with an introduction to business strategy and the company profile. Task 1 analyzes the external environment using PESTLE analysis, examining political, economic, social, technological, legal, and environmental factors and their impact on L'Oreal. It also includes an analysis of the internal environment using SWOT analysis, identifying the company's strengths, weaknesses, opportunities, and threats. Furthermore, it analyzes the competitive environment using Porter's Five Forces model. Task 2 evaluates different strategic directions, including the Ansoff Matrix, and provides justification and recommendations for growth strategies. Finally, it outlines a strategic management plan for the organization. The report concludes with a summary of key findings and recommendations.

BUSINESS
STRATEGIES

Table of Contents
INTRODUCTION...........................................................................................................................2
TASK 1............................................................................................................................................3
1. Analyse the impact of external environment on organisation strategies.................................3
2. Analysis of internal environment............................................................................................5
3. Analysis of competitive environment of the organisation by using porter's five force model.
.....................................................................................................................................................6
Task 2...............................................................................................................................................8
1. Evaluation of different types of strategic direction available in organisation.........................8
L'Oreal Ansoff Matrix.....................................................................................................................8
2. Justification and recommendation for growth platform or for strategies................................9
3. Strategic management plan for organisation...........................................................................9
CONCLUSION ............................................................................................................................11
REFERENCES .............................................................................................................................12
INTRODUCTION
Business strategy refers as a course of actions or set of decisions which assists individuals
in achieving specified as well as desired objectives in organisations (BSUINESS
STRATEGIES .2019). It also refers to master plan which management use to secure a
competitive position in market, to carry out business operations, plan customers and achieve

desired ends in the organisation. L'Oreal Paris is a French personal care company headquarters in
Clichy, Hauts-de-Seine and a registered office is in Paris. It known as world's largest cosmetic
company and developed activities like hair colour, skin care, make-up, perfumes sun protection
etc. This report includes the environmental analysis and strategic growth management plan by
using pestle and swot analysis. Porter's five force model used by company as to precise properly
about competitive forces. Ansoff model is applied to make the strategic planning in a given
organisation.
TASK 1
1. Analyse the impact of external environment on organisation strategies.
To analysis external environment of business it's important for organisation to make
analysis of PESTLE analysis (Baker, 2014). Deputy strategy manager is responsible for making
management plan by using recognised appropriate tool. It refers to tool used by companies to
track certain environment in which they are operating or launching a new project. The PESTLE
analysis are:-
 Political:- These factors determine influence of government upon economy or in a
certain industry. Factors includes are fiscal policy, trade tariffs, tax policies etc. As if
government imposed new taxes or duties due to which entire revenue generating
structure is also changes for this in advance manager is required to make strategies or
plan to control impact of taxes upon structure (Bereznoi, 2015). This factor brings huge
pressure and opportunity by political institutions to manage at extent government
policies impact L'Oreal operations. Manufacturing company is belongs to France so the
policies of France government effects them most and operations as well as selling
activities are effected as according to region where company is operating like UK. If
import duty on products increased then manager must increase it's products price so that
profit can be generated. To minimise this or be in market company is required to make
plan or strategies so that organisation policies can't get effected.
 Economical:- The factors includes are interest rates, inflation rates, foreign exchange
policy, economic growth patterns etc. These factors are the determinants of an economy
performance which directly impact business and impressed long term effect upon
operations (Boyd and et. al., 2017). If inflation rate in UK raised then company must

declines it's product and services prices otherwise operations will get effected. The
strategies and plan helps L'Oreal to control the increment in inflation rate. If interest on
loans are increased in other country to minimise it organisation must make advance
strategies or plan.
 Social:- The factors which scrutinize social environment of a market through which
operations of organisation is also get effected. This dimension of environment represents
norms, customs, demographic characteristics and values of populations in a range where
organisation operates. The factors includes age distribution, income distribution, career
attitudes, safety emphasis, lifestyle attitude, population growth rate and cultural barriers.
When it comes to make strategies or management plan as well as to target certain
customer then these factors are essential for marketer to considered so that objectives of
L'Oreal will be accomplished and profit of organisation maximised. The manager must
make strategies according to customer needs, preferences and also considered the market
trends so that new products or innovation in products are accepted by society. If products
are not expected by society then it become difficult for L'Oreal Paris manager to manage
strategic growth in business. To organisation in competition products must according to
customers needs or price must reliable.
 Technological:- It refers to automation, technology awareness which market demands
and research or development. These factors pertains the innovation in technology which
effects the business operation positively as well as negatively. The L'Oreal Paris must
used 24 hours access to their products so that customers don't faced difficulty in buying
products (De Massis and Kotlar, 2014). This factor also pertain organisation whether to
launch new product in particular industry or even in new market. If organisations are not
new technologies to make products then customer retention become difficult.
 Legal:- There are certain laws ans legislation through which operations get effected in
L'Oreal Paris if they get changed or amendment take place in particular law. While
making any strategies, policies or management plan then it's compulsory for organisation
to consider safety standards, labour laws consumer laws etc. so that business can't get
effected. There are numerous competitors of L'Oreal Paris to make graph of success it's
compulsory for manager to make policies according to laws and don't run any unethical
practices in organisation. There are also certain specified laws which organisation must

follow like antitrust law, consumer protection law, discrimination law etc. The
companies must be clear with criteria which factors considered legally to run successful
and ethical business operations in organisation. It become difficult for organisation
when they operates at global level because every country has it's own law. To considered
all of them then organisation re required to change policies as well to run operation
smoothly in other regions.
 Environmental:- The factors includes which is influence or determined by surrounding
environment. The factors such as weather, climate, geographical area, global changes,
environmental offsets etc. The products which L'Oreal Paris manufacture doesn't harm
society or environment otherwise it is difficult them run business. To make management
plans for strategic growth it's compulsory for organisation to considered environment
safety so that brand value or image don't get effected.
2. Analysis of internal environment.
To analysis internal environment of organisation then managers used SWOT analysis as
according to strengths opportunities are identify and as according to weakness threats will be
minimised. The L'Oreal Paris have fantastic brand portfolio as they also owns the body shop.
The SWOT analysis of L'Oreal Paris are:-
 Strength:- It refers to quality or state that make organisation unique from other
companies. The L'Oreal Paris is known as largest cosmetic company in all over world.
The other company have just product line but L'Oreal have complete focus on beauty
products, which is a reason of L'Oreal success in this industry (Galbraith, 2014). The
brand is image is only maintain when customer repurchase the products and happy with
the quality of products. The customer can be assured in terms of quality when they are
using L'Oreal products as products will be amazing as well as tested. They have strong
widespread distribution leading to economic of scale and also share fixed expenses like
factories, warehouse and others. The cost incurred in production also controlled. The
product are natural as well as organic in nature.
 Weaknesses:- To handle large operations is also fraught for organisation to operates.
They are also known for slow and bulky nature of business due to it's sub division. The
human capital is huge in L'Oreal. The profit margin of L'Oreal Paris is low, as they invest

in research & development or organic processes and massive distribution expensive
which lower down profit margin.
 Opportunity:- Potential market for beauty items and personal care is going to increased.
To explore these new markets which gives better or increment in sales down the line of
L'Oreal rather than staying in a same market or in saturated market. The company must
expand in product line or introducing new products. They also introduce more orgine
products so that sales can be increased as well as profit. They also revival about body
shop that company is belongs to L'Oreal Paris. So, that retail outlets picked up their
products also.
 Threats:- The continues updation is demanded by cosmetic industry to keep in time
which is difficult for customers (Jayaram, Choon Tan and Laosirihongthong, 2014). The
L'Oreal Paris is facing cash crunch situation which means when economy slumps the
company face huge lose or problem at time. Due to this cash flow as well as working
capital management become difficult for organisation. The strategic growth plan is also
not made by manager.
3. Analysis of competitive environment of the organisation by using porter's five force model.
To run operations smoothly in organisation, it requires effective analysis of certain
market or environment. It is essential for organisation to make strategies according to vision or
mission of L'Oreal Paris. To make strategic growth and management plan manager need to use
different tools like porter's five force model so that threats can be analysed. Through this
scanning and evaluation is conducted to analysis environment by which negative impact can be
control in business. The Porter's five model is a toot which is used to analysed and identifies
certain five forces through which every industry gets it's own shape, determines industry's
weakness and strengths. It is also used to identify corporate strategy structure and applied to
segmented market of the economy to search for attractiveness and profitability. The porter's five
force model analysis are:-
 Competition in the industry:- It refer to forces which includes number of competition in
market and ability through company get threaten. If in market there are large number of
competitors along with number of products and services they offer then it is company
have lesser power. When competition rivalry is low, then company have greater power
and do according to which sales and profit will increase. The L'Oreal faced competition

with P&G, Avon, Estee etc. in the current business of cosmetic and skin care products.
The L'Oreal used various types of strategies as to increase sales or profit, they used non-
stop quality enhancement for every production line so that company is being able to
maintain survival of company in the industry (Laguna and Marklund, 2018). The
managers of L'Oreal Paris also used high technology and innovation to enhance market
channels or to obtain good market share as well as globally target customer. For L'Oreal
competition or rivalry is high as they faced huge competition with various brands like
Maybeline, Lakme etc.
 Potential of new entrants into an industry:- It refers to forces through which company
power is also get effected if new competition is enter in market. To enter in competitors
market huge amount or less time is required to be effective as competitor. The industry
which have strong barrier to enter in market then companies have strong power or
operates in their own space with fewer competitors. If companies don't have strong
protection in terms of technology then rival can quickly enter in market and weaken the
organisation position. To enter this industry is very low in the participation of potential
entrants into the moderate industry (Ryu, Lee and Choi, 2015). The L'Oreal don't have
much threat from beginners or might have little threat their business. As they have strong
brand image or customer base. They don't have tremendous risk from any potential
entrants in this industry.
 Power of suppliers:- It refers to force through which suppliers can drive the price of
product. In this force suppliers get power to influence price of goods and services. When
there are large number of supplier than supplier have less power. The supplier have
strong power is when they are offering unique as well as different products to their
customers. If there are more than it is easy for company to switch as well as chose
another option to buy products. The production of L'Oreal Paris is exceeding every year
which is around45 billion every year. The suppliers have little opportunity to pose threat
to L'Oreal. The supplier have no power to bargain with L'Oreal as they don't face huge
threats from it's suppliers.
 Power of customers:- It refers to forces in which customers have power to influence
prices of goods and services. This deals with ability in customers to drive down prices.
This will effected how many buyer a each company have, their potential towards buying

products, how much a customer cost when they switch to one company to another (Lee,
Cho and Kim, 2015). If company have small or powerful customer base then clients have
more power. The L'Oreal faced huge threat in terms of lack of customers. The customer
have huge power to derive the price of products and services offered by L'Oreal.
 Threat of substitute:- It refers to forces in which customers finds different way or
different products as to meet their requirement in lesser price. Aging is considered the
main reason why customers are using skin care products. The L'Oreal have no threat with
substitute products as they don't have substitute in market. There are less substitute in anti
aging products, so it brings less threat to the market as well.
Task 2
1. Evaluation of different types of strategic direction available in organisation.
It is essential for organisation to conduct market analysis so that customer needs or trends
can be examined and products will be offered accordingly. L'Oreal Paris used Ansoff model to
analysed market are:-
Ansoff model:- It was developed by H. Igor Ansoff which was published in Harvard
Business Review 1957. This matrix helps an organisation to focus on organisation present and
potential products .It also helps in formulation of strategic marketing planning in relation to
available opportunities fostering in the market that can be tapped by organisation in order to
compete with other rivalry (Leekha Chhabra and Sharma, 2014). The output from Ansoff
product is a set of growth strategies which directs the future business strategies of the company.
It shows four different strategies that can be used by organisation such as market development,
diversification, market penetration and product development.
L'Oreal Ansoff Matrix.
 Market penetration:- This strategy depicts an organisation focus on adopting a growth
strategy which focusses on selling existing products in existing market. L'Oreal can
implement this strategy by adoption of different technique for example with the use of
aggressive promotion, Pricing and with the use of more intensive distribution chain.
Intensive distribution channel will help the company to reach to a wider number of
audience which in turn will help in increasing revenue of the organisation (Purce, 2014).

 Product development:- It deals with launch of new product at new market place.
L'Oreal can use some product refinements for example changes in packaging or taste
change. As the company is going for new products it needs to focus more on
promotional aspects as they will be highlighting the added qualities of new products and
will be responsible for attracting new customer and for retaining them.
 Market development:- In this strategy company sells it's existing product at new market
place. L'Oreal needs to develop strategies and reach to new market because of the
growing competition and changing habits of customers (Sarstedt and et. al., 2014). It can
be done by highlighting new use of the existing product, or by repositioning of existing
product and by strengthening existing distribution channel.
 Diversification:- This strategy deals with launching new products in new markets.
Which is basically done to ensure that organisation does not become too dependent on
existing Strategic business units, in order to secure the future of the organisation. L'Oreal
can use new products that have not been introduced yet in the market. Diversification can
be horizontal which comprises of acquisition of another organisation or it can vertical
and conglomerate.
2. Justification and recommendation for growth platform or for strategies.
In this report product diversification strategy is one of the most appropriate strategy
because it helps in securing the future of the enterprise in case of any disaster that could happen
in the near future. In product diversification company needs heavy investment because market
and product both are new as this is not a issue for L'Oreal because it is a financially strong
brand (Taneja, Pryor and Hayek, 2016). This can be considered as means of growth and
expansion against competitors. As diversification involve new products it can attract a large
number of customers and can also help to create a strong brand image in the minds of customers.
It will also help the organisation to increase it's market share in the industry. As their are various
competitive rivalry existing in the industry and each is focussed on obtaining larger market share
this strategy will help the organisation to sustain itself in the market.
3. Strategic management plan for organisation.
Strategic management plan refers to activities which is used to set priorities, strengthen
operations, focus energy, ensure stakeholders to work towards common goal of organisation and
asses or adjust the organisation direction in response to changing environment. This plan also

includes on going process or activities of which organisation will use for aligned as well as
systematic coordination between actions to mission, vision and with strategies (Vom Brocke and
Rosemann, eds., 2014). This will also helps L'Oreal manager to make effective and efficient
decisions and strategies so that organisations goals are effectively accomplish in reality. First
L'Oreal must make strategies, objectives and last need to make tactics so that there will be an
increment in growth of organisation.
The strategies are:-
To make appropriate strategies so that goals can be accomplished properly L'Oreal
manager must analyse the market first and then make strategies according to STP.
 Market analysis:- It refers to analysed or study about dynamic market and
attractiveness of particular market. It is kind of business plan in which circumstances or
condition the business operates it's operations. The L'Oreal Paris used this tool analyse
need and demand of customers. This tool helps manager to make effective decisions so
that objectives can be achieved. The data is used to make products more innovative as
well as unique in market, the competition is also minimised if organisation analysed
market properly. STP( Segmentation, target, positioning):-
1. Segmentation:- Every products is not suited to each customer, to divide customers into a
group which have same needs and preferences it's essentials to segmentation in market.
This will help organisation to meet each group needs cost effectively, also provides huge
advantages over competition. The L'Oreal Paris manager must divide it's potential
customers into group so that products which are manufacture must be according to
customer preferences. The demographic, geographic, behavioural and psychographic are
the areas according to which customers are segmented in market. The L'Oreal Paris
divides it's customer so that sales of organisation will increased.
2. Targeting:- Once the segmentation of customer is completed then according to
organisation preference L'Oreal Paris manager will target their customer. The customer
are targeted according to class such as middle. Upper middle and upper class customers
majority of who are working professionals and other who flaunts their personas. The
middle age and working women are main targets of the company.

3. Positioning:- It refers for creating excellent brand image in potential customers mind
(Wu, Gao and Gu, 2015). L'Oreal has strong brand position in customers mind in terms
of ethical cosmetic and beauty care company or focusing on universaliation which means
respecting difference in desire, culture and aspiration of external or internal environment.
Objectives of L'Oreal Paris:-
 To increase a sales by 25% in coming 2 years and also wants to increase customer base
around 45% in coming years.
Tactics
There are certain tactics strategies which company used to make product more attractive
to customer. As according to this customer base will also increase and competition is lower
down. The tactics strategies are:-
 Cash management:- It refers to tactics decisions which organisation need to make
before launching new products. According to cash flow L'Oreal manager will make
budget. The cash need to be properly analysed otherwise it become very much difficult
for manager to accomplish objectives in time.
 Packaging:- Product must be attractive and pack must be eco-friendly so that society or
environment get protected. The packaging must attract middle age employees or working
women in society. Through making these strategies effective growth cane be examine.
CONCLUSION
From the above report, it can be concluded that to analysis effectiveness if external
environment organisation will use PESTLE analysis tool. According to other country culture,
norms, values etc. need to considered before expanding in new market. The SWOT analysis is
conducted to analysis opportunities and threats through which business increase or declines in
terms of growth. To analysis customers, suppliers buying power, substitute and entry treats
porters five force tool is used through this it can also minimised. The Ansoff model is used
analysis where they want to launch new product. Organisation is ready for diversification i.e.
new market as well as new product.

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