Comprehensive Business Strategy Report: L'Oreal Case Study

This report provides a comprehensive analysis of L'Oreal's business strategy. It begins with an introduction to business strategy and its importance, followed by an analysis of L'Oreal's macro-environment using PESTLE analysis, considering political, economic, social, technological, legal, and environmental factors. The report then examines L'Oreal's internal environment through a SWOT analysis, highlighting its strengths, weaknesses, opportunities, and threats. Furthermore, it assesses the competitive environment using Porter's Five Forces model. The report concludes by evaluating different strategic directions available to L'Oreal and recommending appropriate growth platforms and strategies. Finally, it proposes a strategic management plan with defined strategies, objectives, and tactics for L'Oreal's future success. The report emphasizes the importance of understanding both the internal and external environments for effective decision-making and achieving desired business outcomes.

Business Strategy

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
Analyse includes PESTLE and SWOT of organisation with capabilities...................................3
Prepare analysis of the competitive environment of the organisation using Porter’s Five
Forces Model...............................................................................................................................8
TASK 2............................................................................................................................................9
To include an evaluation of the different types of strategic directions available to the
organisation.................................................................................................................................9
A justification and recommendation of the most appropriate growth platform and strategies. 11
And produce a strategic management plan with strategies, objectives and tactics...................11
REFERENCES..............................................................................................................................11

INTRODUCTION
Business strategy is an management activity that helps in achieve goals and desired ends.
It is a long term business plan and mostly takes 3 to 5 years and sometimes longer. Business
strategy is concerned with significant issues regarding resources in which build or construct a
factory or an plant. It is related with allocation of resources on different products so that
accurate results should be achieve. This report is based on L'oreal that is well known fashion
brand of France that give their attributes or product for personal care. It is one of largest brand
name in personal care. This report is based on influence of micro environment of firm further it
elaborates internal environment so that desirable outcomes should be achieve. In addition to it
focuses on competitors analysis with help of Porter model and different strategies and tactics in
taking major decisions.
TASK 1
Analyse includes PESTLE and SWOT of organisation with capabilities.
Macro environment is an framework of external environment that affects business
achievement, success and helps in taking decision making. These factors are uncontrollable in
nature and wider aspect of economy is known as macro environment. In organisation to take
appropriate decision internal and external environment plays key role in giving results
(Bharadwaj and et.al ., 2013). That assignment is based on L'oreal that is well known brand

name in personal care and aimed to expand market share by building different strategies that are
as follows:
PESTEL analysis of L'Oreal:
In external factors consist of various conditions that an organisation have to face while
deal in other country and for other product launch in market (Blackburn, Hart and Wainwright,
2013. ). There are different factors that helps in giving important insights that are as follows:
Political factors:
In political factors consist of rules and policies that organisation have to follow while
deal in different countries. It is a manufacturing company in France so it have to follow rules of
that country. In addition to many rules and policies that affect their business and proceedings in
different regions in L'Oreal. With the advancement of globalization political factors impacts
positively on policies of L'oreal.
Opportunities:
In opportunities for L'Oreal is it operates in almost 130 countries on five continents.
Further it manufacturers its products in Paris so policies of that totally affect on its workings
(Chang, 2016). It operates in different nations so it is very hazardous to cope up with them. In
political instability consist of follow different rules and leadership styles that negatively affects
on their business.
Threats:
L'Oreal deals in different nations to accord within different nations and continents and
apply many situation in different conditions impacts negatively on employees and takes huge
cost. It impacts on choose right strategy according to changes occurs in environment so that they
can get higher results and profitability.
Economic factors:
In economic factors includes exchange rates while operating in different regions.
Upcoming recession is one of the element that affect to cosmetic industry in which L'Oreal. In
addition to many factors that also affect business proceedings in which pricing of products that
vary from region (Goffee and Scase, 2015). In some region price of product is high rather than
other region. GDP is another main factor that contributes in brands such as L'Oreal further
human development index and prosperous economy also a symbol for L'Oreal to develop

oneself in market. In today world people are more interested to buy goods and services related to
cosmetics.
Opportunities:
it deals in different countries and obey different rules and regulations, in scenario of
L'Oreal and at time of recession UK government have to reduce their interest rates so it affects
on their plans and policies.
Threats:
Economic factors hinders profitability of L'Oreal and reduce their goodwill that impacts
negatively on their work and behaviour. Hence it forces to change their strategies accordingly.
Social factors:
In social factors includes recent trends that are technical in nature within society. Modern
society is very much interested towards fashion products and it is also related with L'Oreal.
Societies are more eager to adopt new trends, that given them better life to live. In some cases
L'Oreal faces issues related with ethics while using different ingredients some socities consider it
to use such ingredients as a sin.
Opportunities:
Social factor enables in giving right kind of products and service tot their right consumers
base and increase their loyalty towards organisation. For example when L'oreal aimed to launch
a new product into market they found that people favours sachet in small size. In that case they
launch it both in sachet and big bottles.
Threats:
Social factors enhance probability of hurdles in both case of employees and organisation
and consumers demand products according to it. It influence on strategies of organisation
because organisation have to make products according to consumer demand.
Technological factors:
Technology has its own role in life of every person companies in which L'Oreal.
Technological factors attributes in which innovation and trust factor plays crucial role in
organisational growth (Jeston, 2014.). L'Oreal is very much concern about innovation in their
company and adopt trends that prevail in environment. Technology gives possible outcomes in
seconds and add some more attributes in to their consumers. For luxury brands in which L'Oreal
innovation and technological advancement plays crucial role.

Opportunities:
Opportunities before L'Oreal is that by adopting new technology they can be able to give
their best to their consumers and it become third largest cosmetic firm in the world.
Threats:
when L'Oreal accept different technologies simultaneous that incurs huge cost and in that
lot of investment is require to get better results (Laudon and Traver, 2016.). It influence on their
business because organisation have to provide training and invest huge money to educate them.
Legal factors:
In case of L'Oreal they have lot of competitors to remain always profitable and
competitive in market. L'Oreal have to work simultaneously with different laws and regulations.
Now world become a globalized sphere about legal aspects. It is brand for upper and middle
class people and they are very much concerned about legit stuff. Hence that factor is very much
important for organisational growth and enhancement.
Opportunities:
Frequent changes in legislation affect business in modification of internal and external
influences that are cornerstone of consumer taste and preference. It helps in to increase loyalty of
consumers. In order to they have to adopt different laws and regulations such as labour laws and
others.
Threats:
To deal with different rules and regulations is very hazardous for organisation to deal
with them together manner. It directly affects on their strategies by coordinating different laws
simultaneously affects on their business.
Environmental factors:
In environmental factors consist of different global safety issues and laws that must to
match with standards. The world is very much concerning about planet and its beauty that is
pollution free. Major brands in the whole world are very much practising support activity in
organisation (Lawton, 2017). So in case of L'Oreal play vital role by campaigns and norms of
world. It is one of the brand name that understand internal and external factors that influence to
the whole company. Hence It is one of the most important strategy to follow that to gain
important results to gain advantages.

Opportunities:
When organisation aimed to produce eco friendly products and services it enhance
loyalty level of consumers. It enhance to increase their sales by adopting new technologies that
give better product to society.
Threats:
while build eco friendly products and services it enhances operating and training cost of
the company that affects negative on their growth (McGrath, 2013). It influence on their
strategies because according to consumer demand they have to build strategies and it incur huge
cost.
SWOT analysis of L'Oreal:
In that key strength, weaknesses with opportunities and threats includes that plays major
role in organisational growth and enhancement that are as follows:
Strength:
In main and key strength of L'oreal consist of that it has large chain of products in which
make up, accessories and hair care with dye, skin protection creams are main products that are
very important to give better satisfaction to their consumers. L'Oreal spends much investment
and time to give best attribute to their consumers. In another main strength of L'Oreal consist of
it focus on whole products of cosmetics in which dermatologist by completing their product line.
Hence its main strength is to beat their competitors in better way by giving best products to
market.
Weaknesses:
In their main weaknesses consist of firm facing problem of decentralization in their
organisational structure and there are mainly divisions in their organisation hierarchy. Hierarchy
in organisational system crates many hurdles in organisational growth and enhancement. In
another weaknesses of L'Orale consist of problem of profitability, firm facing problem of margin
that in their products some time due to different region gap arises that reduce chances of
profitability in organisation (Rugman and Verbeke, 2017). Less control in activities and
coordination affect their business strategies. Hence it faces many types of problems related to
structure and strategy that adversely affect their business.
Opportunities:

In their main opportunities consist of that it build products for all age women and men
that increase their profitability ration and enhance market share. Due to enhancement in demand
it get specialization in hair colour, cosmetics and other products (Schaltegger, Lüdeke-Freund
and Hansen, 2012..). It is popular brand name in their field so while it planned to launch a new
product into market that is organic cream in their product chain. It has lot of products that are
already established in market. Hence it has vast opportunities to enlarge market and earn huge
profit.
Threats:
In threats consist of lot of competitors exist in market before the L'Oreal because it is one
of the most selling product into market. So require huge investment and to beat in market to
combat with adverse situations. In another threat before L'Oreal is that economy faces many
downturns that directly affects on their profitability. In their major threats are economic
conditions that adversely affects on their profitability level.
Prepare analysis of the competitive environment of the organisation using Porter’s Five Forces
Model.
Competitor analysis is an important attribute that helps in growth and enhancement of
organisation by evaluating key competitors and their strategies to deal in market sphere. L'Oreal
has lot of competitors in which MAC, Maybelline and chanel etc.. that influence their market
proceedings that are as follows:
Threat of new entrants:
cosmetic industry is one of the most attractive industry which attracts large no. of
consumers base that helps in capture large market share. In case of L'Oreal it faces fierce rivalry
from their competitors. In case of that cosmetic industry, low thereat of new entrants because it
takes huge cost to achieve or enter into market (Scholes, 2015.). In that industry huge cost occurs
while launch a new product and continuous research is also very obligatory to remain always
competitive into market. So less firms can afford that cost and their main competitors that newly
enter into market that are Avon, clinique and others small departments that are works as a threat
for them.
Threat of substitute:
Substitution power is in that market majorly two substitute before consumers that is home
remedies and skin care products that are prepare at home by consumers. It can be prepared with

help of natural ingredients, herbs that are beneficial for human skin (Shuen, 2018.). That
products majorly prepared by rural people. Some females think that options which describe
earlier are obsolete and also not effective. Hence their switching cost are low.
Competitive rivalry:
the competition level is high in case of cosmetic industry because large no. of fierce
competitors are exist in that market in which MAC, Dior, Lancome etc. which offers large no. of
products with different features to their consumers. With their features almost reseamble to each
other so probability to beat each other in competitive market is high in case of L'Oreal.
Supplier power:
This factor is very important to access power and strength of suppliers in bring changes
in price. In that industry supplier power is comparatively low in comparison to others. With help
of various techniques market can be manipulated with hoarding and supply. In that industry
some kind of cost to switch and integration that also an big factor in organisational growth. In
scenario of L'Oreal it has low substitution power in inputs with low cost factor. It build a solid
relationship with their potential suppliers to make trust.
Buyer power:
Bargaining power of their consumers that bring ability to affect their price by leave
products quickly. It possess manipulating power that directly affects on their price by
transferring demand (Spender, 2014). In scenario of L'oreal it possess high power of bargaining
for their consumers. There are large no. of substitutes are available into market that impacts on
their profitability level. It has high substitution power that influence to their consumers in
switching their price level.
TASK 2
To include an evaluation of the different types of strategic directions available to the
organisation.
There are different types of concepts, models and concepts that enables in bringing and
making strategic plan in which consist of Porter's generic model, Ansoff matrix and Bowman
model that are major attributes in growth and enhancement and give important knowledge in
planning and implementing strategies in proper way (Verbeke, 2013). There are different
strategies and their main attributes that pay attention of different factors in which cost
Leadership, differentiation with focus are major attributes that are very important.

Porter' generic model:
A firm's position should be determined by evaluating its profitability level that is high or
on average basis that is measure by sustainable competitive advantage. There are three types of
competitive advantage that can be gained by low cost or differentiation strategy, Cost leadership
and focus.
Cost leadership:
In cost leadership a firm provides products that are low in cost advantage that depends
on structure of the industry. With economies of scale, technological advancement and easy
access to raw material and many more. A low cost producer can exploit all advantages and gain
leadership in organisation. In case of L'Oreal emphasis on brand building and give quality of
products to their consumers. It tries to cut cost by adopting various pricing strategies with
innovative way to get best results in organisational growth and enhancement. Hence L'Oreal can
adopt that strategy to gain competitive advantage and enhancement in their goals and objective.
Differentiation:
In differentiation strategy consist of firm produce products that are unique in nature in
comparison to their competitors by different dimensions. It select some attributes or factors on
behalf of that buyer can differ from their competitors and most important for them. It gives
innovation with cost effectiveness (Wang and Verma, 2012). In case of L'oreal it emphasis on
building brand loyalty before their consumers by giving best quality products to them. It
provides products that are need of specific region by accessing their needs and demands in
appropriate manner. It by producing large no. of product chain that give advancement by giving
best attribute in managing quality and features. It emphasis on that strategy because it helps in
increase their market base and grab large market share.
Focus:
This attribute is an important attribute that majorly emphasis on one segment or chain of
segments and modify strategies according to that. It emphasis on two main attributes in which it
focus by cost advantage of target market. On other is differ products by adding various features
in their products and services (Wheelen and et.al., 2017). In case of L'Oreal they make different
strategies and work accordingly. It focus on different strategies and give direction to organisation
to earn profit accordingly. It pay attention on women choice and preferences and add features
according to their choice.

A justification and recommendation of the most appropriate growth platform and strategies.
In Case of L'Oreal a best strategy is to differ products and services from others by giving
major contribution according to choice and preferences of consumers. It has major competitors in
that Lakme, Maybelline and MAC are deal in all product line. So they can deal in different
product line by offering organic products that are more healthier for human health and people
who are health conscious.
Produce a strategic management plan with strategies, objectives and tactics.
Strategic management plan is an important attribute that helps in gain important insights
and knowledge to deal in appropriate manner that are as follows:
Summary:
In case of L'Oreal it focus on enlarge its market share by satisfying their future needs and
wants in well manner so that they can gain consumer base.
Cost:
To expand its market share and give best products according to consumer choice and
preferences are 1,25, 000 pond to get desirable outcomes.
Time:
To get desirable outcomes and takes appropriately 2.5 years.
Scope:
The main motive behind it is to expand and enlarge market share and give best products
to their consumers. So it is very important to organisation to deliver best products.
Quality:
It focus on giving best products to their consumer by adopting best technology and
resources.
Aim:
There main aim is to expand their market share by satisfying wants.
Segmentation, targeting and positioning:
Their target market is all age women to satisfy their wants in better manner (Verbeke,
2013)). On other hand their products for high and middle class people and to reach large no. of
consumers they publish their products at crowed places.

CONCLUSION
From the above report it has been concluded that business strategy is an significant
feature in organisational development and enhancement to fulfil specific goals and objectives.
To plan a new strategy organisation have to pay emphasis on various attributes in that internal
and external factors by with help of different methods that are porter, PESTEL, SWOT analysis
are major areas that delivers in collection of various ideas and views. By analysing strength
and weaknesses of an competitors firm can easily access essential opportunities and threats that
can be occurs by them in near future.
REFERENCES
Books and journals:
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Chang, J.F., 2016. Business process management systems: strategy and implementation.
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Goffee, R. and Scase, R., 2015. The Real World of the Small Business Owner (Routledge
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Jeston, J., 2014. Business process management. Routledge.
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Routledge.
McGrath, R.G., 2013. The end of competitive advantage: How to keep your strategy moving as
fast as your business. Harvard Business Review Press.
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Spender, J.C., 2014. Business strategy: Managing uncertainty, opportunity, and enterprise.
Oxford University Press.
Verbeke, A., 2013. International business strategy. Cambridge University Press.
Wang, J. and Verma, A., 2012. Explaining organizational responsiveness to work‐life balance
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Wheelen, T.L. and et.al., 2017. Strategic management and business policy. Pearson.