Business Strategy Report: L'Oreal's Competitive Analysis and Plans

This report provides a comprehensive analysis of L'Oreal's business strategy. It begins with an introduction defining business strategy and its importance, followed by an analysis of the macro-environment using PESTLE analysis, identifying political, economic, social, technological, legal, and environmental factors impacting the company. A SWOT analysis is then conducted to assess L'Oreal's internal strengths and weaknesses, and external opportunities and threats. The report further examines the organization's capabilities using the VIRO model, evaluating the value, rarity, imitability, and organizational aspects of its resources. Finally, the competitive environment is assessed using Porter's Five Forces model, and the report concludes with a strategic management plan, including strategies, objectives, and tactics to ensure long-term sustainability and growth. The report aims to provide a detailed understanding of L'Oreal's strategic positioning and competitive dynamics within the personal care industry.

Business
Strategy

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
Analysing impact and influences of macro environment with its capabilities...........................3
Organisation's Capabilities..........................................................................................................7
Competitive environment of organisation...................................................................................8
TASK 2............................................................................................................................................9
Evaluation of different type of strategies available to organisation............................................9
Justification and Recommendation.............................................................................................9
Strategic management plan with strategies, objectives and tactics...........................................10
CONCLUSION..............................................................................................................................11

INTRODUCTION
In today's context business strategy can be determined as course of action or set of
decision which assist an entrepreneur in achieving specific business objectives and goals within
stipulated period of time. It is one of the master plan that management use to secure a
competitive position in marketplace by carrying out operation in effective manner as well as
achieve desired ends of business(Bharadwaj and et.al ., 2013). In this report organisation chosen
is L'Oreal, a well known fashionable brand of France which attributes its product and services
for personal care. It is one of the biggest brand at worldwide in personal and beauty care
product. This report is going to analysis PESTLE and SWOT as well as organisation capabilities
in an effective manner. Moreover, identifying competitive environment of L'Oreal by using
Porter's Five Force Model. Additionally, evaluating different types of strategies adopted by an
organisation in order to attain sustainability for longer period of time. With proper justification
and recommendation in order to have proper growth platform and strategies. Thus, producing out
strategic management plan with proper strategies, objectives and tactics.
TASK 1
Analysing impact and influences of macro environment with its capabilities
In context to organisation, a macro environment refers to major external and
uncontrollable forces that influences an organisation in decision-making process. It also affect its
strategies and performance which includes competitor changes in interest rate, change in culture

taste or interferences of government regulation. Herein, mangers of L'Oreal are using PESTEL
analysis to know its forces which are uncontrollable as well as effect business adversely. Such
as:
Political Factor: Political factor are determine to extent in which government play's a pivotal
role which impact on organisation on specific industry ( Blackburn, Hartand and Wainwright,
2013). It consist of rules and regulation that affect business operation and day to day activities
that adversely affect proceedings of an organisation. Moreover, this factor create both
opportunities and threats for L'Oreal in competitive marketplace.
Opportunities: L'Oreal is operating in more that 130 countries over 5 continents at
worldwide. Their main objectives is to operate with different nation and countries so that they
can cope up with different government rules and regulation as well as maintain economy
conditions which is beneficial for an organisation as well as nation. Thus, government are
providing subsidiaries and other benefit that help an organisation to operate their business
functions in an effective manner.
Threats: Herein, L'Oreal are operating with different nations and country with different
norms and regulation of respective organisation that adversely affect an organisation probability.
Such as different nations have different norms and regulation in operating business function.
Thus, it create negative impact as it decreases productive of an organisation.
Economic Factor: Economic factor impact on performance which may directly or indirectly
affect on organisation or its profitability(Chang, 2016). This factor play's an essential role as it
includes interest rate, employment or unemployment rate that may affect a business function. In
case of L'Oreal, price of its product are usually higher than other personal and beauty care
product and services.
Opportunities: As L'Oreal are operating with different nation and countries at world
wide it create benefit for them to charge prices as per their norms and regulation of a particular
nation. Moreover, at the time of recession United Kingdom government have reduce their
interest rate so that it do not effect plans and policies of an organisation.
Threats: This factor have adversely hinders out profitability and productivity of their
business operation that impacts negatively on working behaviour of organisation. Thus, this lead
to bring out changes as per impact in their strategies effectively.

Social Factor: In external environment, social factor usually identifies social environment and
emerging trends. Such as understanding customer need and wants, cultural trends, attitude
change and changes in life style(Goffee and Scase, 2015). Herein, L'Oreal are coming up with
new trends in competitive marketplace in order to meet up trends of changing life style of
consumer day by day.
Opportunities: Herein, L'Oreal are adopting trend of upcoming generation so that they
can offer their product and services in personal care in trendy and attractive manner that do not
harm an individual. Moreover, they are preparing their product in such as manner so that they
can acquire large number of market share in order to increase probability in same product line.
Threats: Moreover, social factor in L'Oreal strategies are affected as they need to change
their planning of their offerings in competitive marketplace. Such as in affected strategies which
indicates change in consuming pattern of an individual or change in taste of customer. Thus, it
creates adverse effect on business to operate its function and activities smoothly.
Technological Factor: Technological factor includes changes of innovation and development
that affect a market or an industry. It usually focus on trendy development, methods of
distribution, manufacturing as well as logistic. Additionally, L'Oreal is more concerned in bring
innovation in their product and services. For such instance they are adopting various
technological in order to add more attributes for their customers.
Opportunities: L'Oreal are operating various new technologies and advancement in
manufacturing their product and services so that they can bring out their best outcome in order to
satisfy their customers in an attractive manner. Thus, in this way they are becoming largest
personal care brand at worldwide.
Threats: With the adoption of such advance tools and techniques in order to attain
customer loyalty. This process is occurring huge cost of investment so that appropriate result can
be attained. Moreover, huge adopted is assumed in training and development to employees and
worker so that they can use best tools and techniques.
Legal Factors: Legal factor usually includes health and safety, equally opportunities,
employment laws product labelling and product safety(Jeston, 2014). In case of L'Oreal have
many competitors in competitive marketplace. For such purpose it have to work as per legal
laws that are abided by government in order to sustain in same product line for longer duration of
time.

Opportunities: Adopting frequent changes as per legal laws and customer preference in
competitive marketplace help them to increase loyalty for their brand in an effective manner.
Moreover, they are keen towards their employee's health and safety and following laws that are
abided by government.
Threats: In order to deal with different laws and regulation it become difficult for an
organisation. As it time and cost consuming process in order to maintain each and every factor in
appropriate manner. Thus, it directly and indirectly effect operation of business.
Environmental Factors: This factor is influences by surrounding of environment that impact
on ecological aspect. In case of L'Oreal are playing an essential role in camping its product and
services with proper norms that dose not harm any ethics of society.
Opportunities: L'Oreal are adopting strategies of eco friendly product and services in
order to enhance loyalty among its potential customers as well as society too. Thus, in this way
they are increasing their sales adopting eco friendly tools and techniques.
Threats: While having the strategy of eco friendly product, L'Oreal have to adopt more
huge cost in this process. Though it creates negative impact but in order to have sustainability for
longer duration of time they need to invest cost in it.
SWOT Analysis of L'Oreal
SWOT analysis is adopted by an organisation in order to identify its internal strength and
weakness as well as external opportunities and threats. It is framework that is helpful in
evaluating competitive position and develop strategic planning (Laudon and Traver,
2016).Herein, mangers of L'Oreal are adopting this framework to know its strength, weaknesses,
opportunities and threats.
Strength: Strength usually describe organisation factor that separate it from its
competitors such as strong brand and customer loyalty. In case of L'Oreal are creating a unique
attributes in marketplace as they are offering their product with fashionable and current trends as
per customers preferences. Thus, their main motive is to have strong brand image and attain
customer loyalty in same product line.
Weaknesses: This factors refers to those areas where an organisation need to focus more
and improve their product as per needs and wants. Herein, L'Oreal are facing problem in their
management structure mainly in division of decentralization of power and authorities. Moreover,
they are facing problem regarding their pricing strategy that reduces chances of profitability of

an organisation. Thus, a respective organisation is facing many problem in strategies that is
adversely affecting business productivity.
Opportunities: Opportunities are external factors that an organisation cab attain in
competitive marketplace. Herein, L'Oreal are creating opportunities in competition with trendy
hair colours and other extra features in their product and offerings in herbal natural care
products for men. Moreover, it have high benefit in marketplace due to is strong brand image
which leads to create vast opportunities for attain sustainability for longer duration of time.
Threats: In an organisation threats refers to those factor that harm an organisation to
some extent within same product line. One of the biggest threats of L'Oreal is that it have high
number of competitors so it become difficult for them to maintain their stability in same product
line. Thus, it adversely affect its profitability and productivity in marketplace.
Organisation's Capabilities
VIRO model is a frame work used by an organisation to analyse internal resources
capabilities of a particular firm(Lawton, 2011). Herein, L'Oreal is adopting this frame work in
order to know its capabilities of its resources that they are using in offerings of their product and
services. The capabilities of L'Oreal are high brand equity, eco friendly products and
diversification in products
Resources Valuable Rarity Inimitable Organisation
High Brand
quality
Yes No No No
Eco Friendly
product
Yes Yes No No
Diversification in
product
Yes Yes Yes Yes
Value: The first and foremost resources adopted by an organisation must be valuable
that is enough to exploit a hole of weakness in marketplace. Herein, L'Oreal are adopting such
resources in their product which is harmless to an individual skin so that people can have trendy
and fashionable product for their skin. Which indicates high brand quality, eco friendly product
and diversification of product.

Rarity: Rarity indicates resources and capabilities that are unique and obtained by firm
in order to have differentiation from its competitors. Herein, L'Oreal are adopting eco friendly
product and services that is creating rarity from its competitors. For such, instance a firm is using
identical resources in order to implement different and attractive strategies.
Inimitable: In an organisation, there are some of the resources as well as capabilities of
a firm that can be imitated by other firms which lead to lack of original product. In case of
L'Oreal are using best resources in diversified product in different segmentation that cannot be
imitated by other organisation so that it cannot be copied. In this way there are creating their
organisation capabilities so that they can attain profitability for longer period of time.
Organisation: This is the last step in VIRO model. L'Oreal are managing its best
management system, process, policies and organisational structure in order to have full potential
of its valuable, rare and costly to imitate resources and capabilities. Thus, in this a respective
organisation is attaining sustainability as well as attaining large number of market share in
marketplace.
Competitive environment of organisation
In today's era L'Oreal is one of the leading brand in beauty and personal care product in
competitive marketplace. For such instance L'Oreal is using Porter's Five Force Model in order
to know its competitiveness of its business operation and function.
Threat of new entrant: In a competitive marketplace, a company's power is affected by
force of new entrants in to marketplace. Herein, L'Oreal have strong barriers with an attractive
feature in competitive marketplace as they are incurring huge amount of cost for their offerings
in competitive marketplace. Eventually, it become difficult for a normal organisation to enter
into such market of product line. Thus, with high product quality and equivalent strategy L'Oreal
are adopting threats of new entrants.
Threat of substitute: In marketplace, a substitute of product defines similar benefit in
place of same product or offerings. Herein, L'Oreal are having high number of substitute for
their product and services as its competitors are offering same product in competitive
marketplace. Thus, there are various other product and services which are offerings substitute
products in competitive marketplace.
Bargaining power of suppliers: In competitive marketplace, suppliers play's an essential
role as they provides raw material to an organisation as per need and demand. Herein, L'Oreal

are making various contacts with different number of suppliers in order to have effective chain
of multiple suppliers. Thus, in this way they are creating strong supplier and distribution
channels in competitive marketplace.
Bargaining power of Buyer: With the effect of competitive marketplace, buyer want to
have hight quality of product and services with low price. The bargaining power of L'Oreal is
generally higher as it have more number of competitors that usually satisfies potential customer
in competitive marketplace. But with adoption of low cost strategy they are affected with
profitability and productivity in competitive edge.
Competitive Rivalry: In competitive marketplace, there are many rivalry for particular
organisation which determines intensity of level of competition in marketplace. There are many
rivalry in this industry as L'Oreal have high number of competitors in dynamic marketplace.
TASK 2
Evaluation of different type of strategies available to organisation
In order to have strategy, mangers of L'Oreal are using Ansoff Matrix Tool in order adopt
different strategies in order to attain more market share. Some of the strategic decision are
determined below:
Market Development: Market development help an organisation to grow different
strategies where a business seeks to sell its existing product into new marketplace (McGrath,
2013).In case of L'Oreal, having various and different opportunities to introducing its existing
product with new features in it. Moreover, they can develop strategies in offering their product
and services in rural or developing countries.
Market Penetration: In this case a firm can seeks to achieve growth of existing product
and services in current marketplace with motive to increase more market share. Eventually,
L'Oreal can have opportunities of market penetration in Indian market by adopting aggressive
marketing strategies. For such purpose they need to have huge amount of investment.
Product Development: In this phase of model, a firm seeks to develop new products and
services to its existing market segmentation. Herein, L'Oreal is focusing more on female
segmentation as it has wide ranges of variety in it. Along with this they are focusing towards
male segmentation with their product that is herbal and natural care products in order to increase
more market share in competitive marketplace.

Product Diversification: Product diversification help a firm to grow into new business
by developing new products for new marketplace. For such instance, L'Oreal can enter into
Cape Adare by introducing sunscreen for men's segmentation. Moreover, this strategy is risky
but if implemented successfully then it can lead to success in an effective manner.
Justification and Recommendation
In today's context product development is beneficial so that an organisation can attain
more number of market share in order attain sustainability for longer period of time. Herein,
some of recommendation and suggestions that can be adopted by L'Oreal is determined below:
 Now a days are people are attracted more towards natural and herbal care products so it
has a good opportunities for L'Oreal to innovated their product for male segmentation in
order to attain more market share.
 They should focus on emphasizing more on their quality of product in order to add value
for them as well as customer so that they can capture market share and beat up
competition.
 Moreover, adopting diversification of product and services in their existing product line
in order to attract large number of customers in an effective manner as it involves risk
too.
Thus, the above mention are some of recommendation and justification for an organisation so
that they can attain more market share in effective manner with high number of competition in
same product line.
Strategic management plan with strategies, objectives and tactics
A strategic management plan is a documentation which is usually prepare by top level
authorities that is formulated with policies in order to achieve targets as per need and
requirement of an organisation(Rugman and Verbeke, 2017). This process is helpful in bringing
effectiveness and productivity such as:
Aim: To attain more market share as well as increase their production in African
Continent
Mission: To provide natural, herbal, trendy products at reasonable price.
Vision: To become leader in beauty and personal care
Core Values: To satisfy the desires of consumers by providing superior quality products.

Objectives: To grab market share in this current year in natural & herbal products
segment and introduce new product line in context to male segment. Herein, L'Oreal is going
launch their natural and herbal product within 6 months in order to attract 6 % of market share in
competitive marketplace.
Strategic direction: The strategy of L'Oreal is provide products as per the desire of
consumers. As demand of herbal products are increasing continuously in India so it has an
opportunity for the company to introduce herbal products which is helpful to beat competition in
the market.
Market Analysis: As per the research which is conducted by MRSS India and Assocham,
they found that the growth rate of herbal products is expected to grow approx 12 percent. The
people of India are more concern about natural and organic products and if it enter in this market
than it can gain the advantage of competitiveness and generate more profits.
Market research: Market research is conducted in order to know what are the needs and
requirements of customers. As trend of herbal products are increasing so if L'Oreal produce
organic beauty products than maximum number of people can attract towards the corporation.
Business Tactics: Herein, mangers of L'Oreal need to raise fund so that they can launch
their product in an effective manner. Moreover, using advance technologies so that best result
can be attained that will help in competition of project within stipulated period of time.
Segmentation, Targeting and Positioning:
Segmentation: L'Oreal is launching its new products in herbal and organic segment
which includes cream, shampoo, face wash for male in order to have sustainability for longer
duration of time.
Targeting: Herein, they are targeting male as they are coming up with their new product
that is herbal and organic colour for men.
Positioning: To promote its products organisation can use various promotional tools and
communicate the information that it is providing natural and organic products at reasonable
price. Moreover, adopting role model strategy such as professional hair stylist or celebrities.
CONCLUSION
From the above discussion it has been concluded that business strategy play's an
essential role which assist an entrepreneur in achieving specific business objectives and goals
within specified period of time. Moreover, with help of PESTLE an organisation can know what

tare the factors that are affecting their business operation as well help to know what are
uncontrollable factors that affect business adversely. Furthermore, Porter's five force model is
helpful for competitive analysis as well as SWOT analysis is beneficial to take important
decisions for the improvement and growth. Thus, strategic management plan is helpful to
capture more market share so that organisation can survive for a long run.
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