Analyzing L'Oreal's Global Strategy: A Case Study Examination

This case study analyzes L'Oreal's global strategy and the challenges it faced in implementing it. The company, expanding from its origins in hair dye to a broad range of cosmetic products, aimed to expand into global markets. Key issues included distribution problems in China, the complexities of managing a vast number of SKUs (Stock Keeping Units) across various manufacturing locations, and addressing diverse consumer needs due to ethnic and biological differences in different markets. L'Oreal also faced competition from both local brands and established international competitors like Maybelline. The analysis highlights the hurdles in entering new markets, adapting products, and maintaining a competitive edge within the global cosmetic industry. The company used department stores to expand but later had difficulty competing with the supermarket wave in China. The case study discusses the implications of these issues for the company's expansion and profitability, and the need for effective strategies to overcome these challenges.

Running Head: Business Case Study
Business Case Study

Business Case Study 1
Question-1
What were the main issues L’Oréal was facing in implementing its global strategy?
L’Oreal was established in the year 1909; this company was established to produce synthetic hair
dye from non-corrosive chemical components. The company decided to expand the business in
the late 20s century and this is the reason the company acquired a soap producing company and
later on the company started introducing shampoos and suntan lotions. Almost from the start, the
company decided to expand the business in the foreign markets (Hrebiniak, 118). The company
entered in European countries, North America, Brazil and other Latin American countries. At
this point, the company showed that they are making the use of the global strategy. The global
strategy is a process of expanding and competing in a globalised market. L’Oreal is
implementing the global strategy so that they can expand their business across the world (Peng
3).
The company was facing many issues while implementing the global strategy. One of the issues
which are faced by the company while entering the Chinese market was distribution. At that time
when the company thought to expand the business in China then they find very few markets in
China. L'Oreal believes that supermarket is the primary outlet for the bulk of L'Oreal's product
lines for its flagship brand. To reach the customer the brand decided to make the use of the
departmental stores through which they can easily make the product available to the end users.
These departmental stores made the Chinese people understand about the use of the cosmetic
product in day to day life. The technique of providing the products through departmental stores
opened the ways for the company to expand the business in Paris. The outcome of providing a
product at department store made it difficult for a company to get success in the mass retail
channel after the supermarket wave hit China.

Business Case Study 2
The company is expanding a business to enhance the profitability of the company but the
company is facing difficulties in handling the more than 1000 SKUs. The company is
manufacturing more than 6 billion product unity every year. These product units were pertained
to some 50,000 different Stock keeping units and were produced in the 45 plants that company
operates across the world. Handling the manufactured product is one of the issues faced by the
company while implementing the global strategy.
The company is testing and manufacturing the products at different places across the world, the
main testing ground of the company in Brazil. The population of the different country consists of
ethnic diversity and the biological differences that became a challenger in terms of the
manufacturing of the product and the effectiveness. The products faced this challenge while
launching the product in the new market (Daft 273). The company faced the competition with the
local markets as well as with the international brand such as Maybelline, which is leading
cosmetic firm that is providing the product availability at different places. This competition
became an issue while implementing the global strategy (Hong, Hae-Jung, and Yves Doz 114-
118).

Business Case Study 3
References
Daft, Richard L. Organization theory and design. Cengage learning, 2015.
Hong, Hae-Jung, and Yves Doz. "L’Oreal masters multiculturalism." Harvard Business Review
91.6 (2013): 114-118.
Hrebiniak, Lawrence G. Making strategy work: Leading effective execution and change. FT
Press, 2013.
Peng, Mike W. Global strategy. Cengage learning, 2013.