University Report: Comprehensive Management Analysis of L'Oreal

This management report provides a comprehensive analysis of L'Oreal, a leading personal care brand. It begins with an executive summary and an introduction, followed by a detailed SWOT analysis, assessing the company's strengths, weaknesses, opportunities, and threats. The report then ...Read More

Running head: MANAGEMENT REPORT ON L’OREAL
A management report on L’OREAL
Name of the Student
Name of the University
Author note

1A Mnagement Report on L’OREAL
Executive Summary
This is a management report on L’Oreal that covers the company’s SWOT analysis,
ethical approach of the company and decision-making. Further, a CSR approach chosen by
the company is discussed followed by four key elements that the company follows.
It has a company culture which is discussed focusing on the chosen aspect of the company.
The organizational structure is given and after studying, what type of structure is suitable for
the company is further analyzed. The leadership and motivational theory the company suits
has been given with some recommendations for the company to grow in the next five years.

2A Mnagement Report on L’OREAL
Table of Contents
Executive Summary...................................................................................................................1
Introduction................................................................................................................................3
SWOT analysis...........................................................................................................................3
Determination of the ethical approach.......................................................................................4
Determination of the CSR approach..........................................................................................4
Determination of the four elements of plan...............................................................................5
Determination of the company culture.......................................................................................6
Organization Structure and Strategy Factors.............................................................................7
Leadership and Motivational Theory.........................................................................................8
Recommendations......................................................................................................................9
Conclusion..................................................................................................................................9
References................................................................................................................................11

3A Mnagement Report on L’OREAL
Introduction
L’Oreal is one of the leading personal care brands in the world based in France. They
are considered as the largest cosmetics brand in the world and with having their operations
across the world and diversified product portfolio. They are operating as strategic business
units in different countries with having standardized products. Hence, the products of L’Oreal
are being offered in all the countries of their operation with some market adaptable
approaches (Akhtar et al., 2016). However, they are few limitations in terms of the internal
management of L’Oreal should be improved. This report will discuss about the internal
competencies of L’Oreal along with the different elements and factors relevant in their
business operations. On the basis of the identified issues, a few recommended steps will be
discussed.
SWOT analysis
Strengths  Diversified product portfolio and different renowned brands are
helping L’Oreal in penetrating in the global markets and to
different customer segments.
 Extensive research and development activities are enabling
L’Oreal in developing new and innovative products and staying
ahead in the competition (Rodrigues, Pimentel & Oliveira, 2015).
 Global presence in ensuring higher identity and larger target
market. This is due to the reason that larger global population is
getting catered.
Weaknesses  Negative publicity against the cosmetic brands due to the ill
impacts of their usages is affecting the market potentiality of

4A Mnagement Report on L’OREAL
L’Oreal (Hassali et al., 2015).
 Profit margin is getting lowered for L’Oreal due to the increasing
cost of research and development and decreasing sales price.
Opportunities  Developing markets are possessing huge opportunities for their
rapid market growth.
 Demand for the organic and natural cosmetics is increasing, which
can be well tapped by L’Oreal (Avila Rodriguez, Rodriguez
Barroso & Sánchez, 2018).
Threats  Emergence of new quality and cost effective global brands will
pose challenge for L’Oreal in managing the market share.
 Introduction of new legal amendments against the use of cosmetics
will reduce the market viability of L’Oreal.
Determination of the ethical approach
Utilitarianism concept of ethics states about the importance of positive or favorable
outcome to consider any actions as ethical. In the case of L’Oreal, this approach can be
applied due to the reason that outcome should be defined and based on that actions should be
initiated. Hence, the desired outcome for L’Oreal will be to have effective products in the
market, which will meet the expectations of the target customers (Willis, 2014). Based on this
outcome, the backward actions should be designed and then it will help in ethical decision
making process.
Determination of the CSR approach
L’Oreal should follow the proactive approach of CSR in their business due to the
reason that it will help them in staying ahead in the competition. Proactive approach to CSR

5A Mnagement Report on L’OREAL
states about the intention of the business in initiating the social responsible activities without
the external or internal pressure (Costa & Menichini, 2013). Thus, it will help L’Oreal in
creating positive impression among the involved communities along with the ethical branding
among the target customers. Moreover, with the help of the proactive approach of CSR,
innovative activities can be initiated, which will further create the positive impacts on the
external stakeholders.
Determination of the four elements of plan
The first element of planning is objectives. Prior to the planning process, the
companies should identify their business objectives based on which actions should be
initiated. Objectives for L’Oreal will be identified based of the SMART model.
Specific Measurable Attainable Relevant Time based
Capturing the
organic
cosmetic
markets
10 percent of the
new market
should be
captured
10 percent can
be attained from
the existing
market areas of
L’Oreal
Organic
cosmetic is the
future and will
help L’Oreal to
increase their
long term
viability
1 year
More
penetrating the
developing
markets
30 percent
revenue should
come from the
developing
markets
Expertise and
brand value of
L’Oreal will be
effective in
penetrating in
the new
Developing
markets will
drive the future
growth over the
developed
countries
2 years

6A Mnagement Report on L’OREAL
developing
markets
The next step is actions, which refers to the designing of strategies for achieving the
identified objectives. There are majorly three types of actions namely strategic, tactical and
operational. In terms of the strategic actions, L’Oreal should open more stores in the
developing countries and more organic products in the next 2 years. In terms of the tactical
actions, market adaptable products will be introduced to gain the higher penetration in
different markets (Amer, Daim & Jetter, 2013). In terms of the operational actions,
manufacturing units should be there in each of the operating countries to enhance the logistic
process and market adaptability.
The next element is the resources, which states the availability of inputs in putting the
actions in place. These include human resources, financial resources and equipments. In
terms of the human resources, recruitment and section should be done on the basis of
multistage model to select the right employees for the right job. They will be able to work
according to the strategies and achieve the objectives. In terms of the financial resources, IPO
can be used to gain the public funding.
The last step is implementation, which puts the resources in place to initiate the
actions in achieving the objectives. In doing so, L’Oreal should identify a few key
performance indicators based on which the effectiveness of the resources in achieving the
objectives. The performance of the employees will be gauged on the basis of the KPIs. In
addition, monitoring system should be initiated to identify their issues and challenges along
with gathering feedbacks from them for further improvements.

7A Mnagement Report on L’OREAL
Determination of the company culture
One of the major aspects of company culture is vision. Proper and ideal vision will
help the internal stakeholders to work towards a certain uniform objective. In the case of
L’Oreal, their vision should be to become the most sustainable organization in the world.
Based on this, it is recommended that clan culture should be initiated (Gimenez-Espin,
Jiménez-Jiménez & Martinez-Costa, 2013). This is due to the reason that with the help of the
clan culture, each of the internal stakeholders will be involved and engaged in the process and
thus sustainability can be gained and achieved.
Organization Structure and Strategy Factors
The Unity of Command is a management principle that states there should be only
one boss from where the employees get orders. This leads to function the subordinates
effectively. L’Oreal is present globally so each of its headquarters have supervisors who are
only bound to look after their respective branch and report to the head or CEO who further
commands on how the organization run altogether globally. Centralization is a process where
the decision-making is done at the lower levels before sending it to the higher authorities only
for approval. Whereas, decentralization is where only the top management retain the power to
change company policies and decision-making to frame the whole matter of concern (Schmitt
et al, 2015). L’Oreal follow-ups the centralization structure as the management in different
headquarters know the suitable needs and decisions to be made according to the respective
culture and lifestyle of that particular area. The span of control is a concept, which states that
the number of subordinates a supervisor has the capability to control. The number might vary
with the nature of work such as variable, routine, complex and fixed work. L’Oreal achieves
the span of control because its vast and expanding branches clearly states that the
organization need span of control to work according to the needs. In formalization, the
managers specify rules and regulations, procedures, groups, organizational units as a whole in

8A Mnagement Report on L’OREAL
writing for the individuals leading to develop relationships, process and other procedures of
operating. L’Oreal has this structure in every of its branches to empower and motivate the
employees. The most appropriate organization structure for L’Oreal is the unity of command.
Different headquarter has its management where the management is working accordingly.
Not all the managers interfere in any of the matter id different headquarters and report to the
top management or CEO of the L’Oreal group directly. Presence of unity of command makes
work comparatively easier without less chaos and maintains a balance. Too many command
or bosses to report to a single issue would create more chaos rather than solving so it is better
to follow the structure of unity of command for a company like L’Oreal which is
multinational and expanding its division constantly for the company growth. The strategy
factors for this sort of organizational structure can be that all the existing branches vary in
culture and the lifestyle so even if one management interferes in the other the it will lead to
more complexity because the other management will not have proper knowledge of the
diversified cultural background and preference of the headquarters different from theirs. For
example, the European countries had different lifestyle than that of Asian countries. L’Oreal
has its expansion in both of these countries so if one interferes in the other it might get more
complex to manage the branch and the employees will not know who, to follow. Therefore, it
is better to have one unity of command that is only from the CEO of the group so that not
only the employees get confuse but also the management can work decisively too.
Leadership and Motivational Theory
There are different views in leadership because different characteristics distinguish
the leaders from those who are not leaders. Nowadays, most of the theories are situation
based that states the leadership skills in any sort of emergency determines the characteristics
of a great leader. Motivational theory can be of different types as well that depending on the
structure of the organization. Some of the motivational theory includes Maslow’s hierarchy

9A Mnagement Report on L’OREAL
of needs, Alderfer’s ERG theory, Mcclellan’s acquires needs theory, Cognitive evauation
theory and Herzberg’s two factory theory (Amanchukwu, Stanley & Ololube, 2015). One
leadership and motivational theory L’Oreal can adapt to motivate their employees can be
Transformational leadership that has four tools they use for influencing the employees
creating a sense of commitment to the aims of the company. For the motivational theory, the
company can adapt Maslow’s hierarchy of needs that is divided into self-actualization,
esteem, belongingness, safety and physiological needs of an individual. These goes with the
ethics and values of L’Oreal that will motivate the employee more in doing what they do.
Recommendations
Some recommendations as the company progresses in five years:
a. To focus on publicity that is positive, keeping in mind the ill impacts of the usages of
cosmetic products as that might affect the potentiality of market.
b. Constantly update and be proactive with its product line as the emergence of other
cosmetic line by the rival company might cost effective challenging the global brand.
c. Introducing new amendments that are legal against the usage of cosmetic products for
reducing the market viability of the company.
d. L’Oreal has many sub brands, which makes them to divide the cash earned into
different segments resulting that if economy plunges then it has to face huge
problems. The problems with economy more or less exists in one or the other country,
which might stop the cash inflow. Matters of cash crunch should be kept in mind
while expanding branches.
Conclusion
Thus, L’Oreal is a great multinational company that takes care of the employees
working for them. They are always in accord and aligned with the company aims, values,

10A Mnagement Report on L’OREAL
ethics and mission. They follow proper theories of management to run the company in a
smooth flow very effectively. They keep expanding their branches and product lines in every
sub brand and always work on developing and coming up with good strategy. It can be said
without any doubt that L’Oreal is in top of the cosmetic world because of its strategies and
policies that helped in the well-being of the company. It consists of lots of innovative skills
only because of the employees from various parts of the world come together and work as a
team holistically.

11A Mnagement Report on L’OREAL
References
Akhtar, N., Siddiqi, U. I., Ashraf, A., & Latif, M. (2016). Impact of a Brand Equity on
Consumer Purchase Decision in L'Oreal Skincare Products. International Review of
Management and Business Research, 5(3), 808.
Amanchukwu, R. N., Stanley, G. J., & Ololube, N. P. (2015). A review of leadership theories,
principles and styles and their relevance to educational management. Management, 5(1), 6-
14.
Amer, M., Daim, T. U., & Jetter, A. (2013). A review of scenario planning. Futures, 46, 23-
40.
Avila Rodriguez, M. I., Rodriguez Barroso, L. G., & Sánchez, M. L. (2018). Collagen: A
review on its sources and potential cosmetic applications. Journal of cosmetic
dermatology, 17(1), 20-26.
Costa, R., & Menichini, T. (2013). A multidimensional approach for CSR assessment: The
importance of the stakeholder perception. Expert systems with applications, 40(1),
150-161.
Gimenez-Espin, J. A., Jiménez-Jiménez, D., & Martinez-Costa, M. (2013). Organizational
culture for total quality management. Total Quality Management & Business
Excellence, 24(5-6), 678-692.
Hassali, M. A., Al-Tamimi, S. K., Dawood, O. T., Verma, A. K., & Saleem, F. (2015).
Malaysian cosmetic market: Current and future prospects. Pharmaceut Reg
Affairs, 4(4), 155-157.
Rodrigues, F., Pimentel, F. B., & Oliveira, M. B. P. (2015). Olive by-products: Challenge
application in cosmetic industry. Industrial Crops and Products, 70, 116-124.

12A Mnagement Report on L’OREAL
Schmitt, A. J., Sun, S. A., Snyder, L. V., & Shen, Z. J. M. (2015). Centralization versus
decentralization: Risk pooling, risk diversification, and supply chain disruptions. Omega, 52,
201-212.
Willis, J. E. (2014). Learning analytics and ethics: A framework beyond
utilitarianism. Educause Review.