Business Strategy of L'oreal: A Comprehensive Analysis

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Unit 32 Business Strategy
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Contents
INTRODUCTION.........................................................................................................................3
TASK 1...........................................................................................................................................4
LO1..............................................................................................................................................4
P1.............................................................................................................................................4
TASK 2.........................................................................................................................................10
LO2............................................................................................................................................10
P2...........................................................................................................................................10
TASK 3.........................................................................................................................................15
LO 3...........................................................................................................................................15
P3...........................................................................................................................................15
TASK 4.........................................................................................................................................19
LO4................................................................................................................................................19
P4...............................................................................................................................................19
CONCLUSION............................................................................................................................24
REFERENCES............................................................................................................................25
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INTRODUCTION
In the growing world, there have been many new strategies defined according to the change in
the marketing environment. There are many companies which have been developing by the use
of these strategies and techniques. One of the well-known companies which have established its
empire in the world of marketing is the L’OREAL, which is termed as the largest company in
France. It has been also classified among the world's largest company in terms of cosmetic
products, skin care, and hair care. It is termed as the public company established in the year 1939
(Andriof and Waddock, 2017).
With the growth of the company many changes have been made within the methods of
development, many new theories have been classified in order to increase the market in all over
the world. There have been many types of models used such as Porter’s five force model,
business strategic terms. To determine the effect of the internal and external environment
PESTEL and SWOT Analysis has also been performed for the appropriate growth of the
company (Andriof and Waddock, 2017).
FIGURE 1: Logo
[SOURCE: Watson, 2018]
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TASK 1
LO1
P1
In today’s modern world there has been increasing demand for cosmetic products and the hair
care products with the motive to look stylish and charming. With such an increasing demand of
the beauty products, L'OREAL serves as the best partner of the people who demand the best as
well as the good quality of the products which doesn't damage the skin or the hairs by the
frequent user of the products (Armstrong et al., 2015). L’OREAL is the company which has
achieved the trust of the people belonging to the different countries such as Paris, China, New
Jersey, and India etc. In the year of 2015, L’OREAL was recognized as the leading companies in
terms of cosmetics in Asia (Armstrong et al., 2015).
The head office of the L’OREAL is situated in the Eugene Schaller in Clichy, Hauts-de-Seine,
near Paris. At present, the chairman and the chief executive of the L’OREAL is Jean-Paul Agon.
L’OREAL has also announced its new strategic plan in the year 2013, and by the year of 2020,
L’OREAL promises to increase its customer to over 1billion (Armstrong et al., 2015).
MISSION
The mission of the owners of the L’OREAL Company is to increase its demand in the various
countries by ensuring the delivery of the best products to its customers which keeps them safe
and satisfied with its products (Bowie et al., 2016). Recently, L’OREAL has also announced that
the products manufactured by the company are not at the cost of environmental destruction. It
has also planned to introduce the new cosmetic products and the hair cares which serves to be
nature-based instead of the chemical based, with the aim to increase the demand for its products
between the people of the various different companies (Bowie et al., 2016).
VISION
The vision of the L’OREAL serves to be different and motivating to its customers. The statement
used as the tag line of the L’OREAL is “Because I’m worth it”, which creates the value of its
products among the customers (Davies and Brady, 2016). It sets the motivating line to settle its
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marketing strategy and the policies with the aim to increase the performance of the company and
to capture more area under the marketing share (Davies and Brady, 2016)
STAKEHOLDER ANALYSIS
In every organization, the analysis made by the stakeholders plays a vital role in determining the
sustainable growth of the company. The link between the stakeholders and the powerful services
can decide the growth and the development of the company (Du Toit, 2016). The stakeholder in
the L’OREAL also serves as the backbone for the company in its good and bad times. They have
also helped the company to become the world’s most famous company in terms of the cosmetic
productions with achieving the complete satisfaction of the customers with the assurance of the
products at every level of the competition (Du Toit, 2016).
STRATEGIC PLANNING SERVICES
To achieve the big targets and the big motives it is necessary to develop the strength within the
company which could be made possible by the implementation of the various strategic analyses
by including the factors such as the internal and the external environment effects within the
company, defining the SWOT and PESTEL analysis which helps in the L’OREAL Company to
analyse its macro environment (García-Sánchez et al., 2016).
PESTLE ANALYSIS
POLITICAL ECONOMICAL SOCIAL
 The political factors
include the terms and
conditions related to
the laws and ethics.
There have been many
laws imposed by the
government of Paris
over the L’OREAL to
ensure the quality
delivery of the
products (García-
 The economic factors
in the L'OREAL
mainly include the
factors affecting the
profit generation of the
company such as in
Germany the
L'OREAL focuses on
the liberalization of the
trade policy over the
company. Instead of
 There have been set of
values, beliefs, and
attitudes defined for its
people, such has it
includes the way of
living of the people
according to which the
implementation of the
new product has been
defined, with the aim
to satisfy the needs of
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Sánchez et al., 2016). this factor, many other
factors have also been
included such the
availability of the core
infrastructure,
economic cycles of
various different
countries, an exchange
rate of the products
etc. are the main key
elements (García-
Sánchez et al., 2016).
the customer (García-
Sánchez et al., 2016).
• Despite these changes, the
L'OREAL Company follows
the different laws imposed by
the different countries under
which they work.
 L'OREAL should
adopt the various
factors with respect to
the change in the
economy of the
countries.
 L'OREAL has been
termed as the
"LEADER OF
CHANGE" by the
foundation for social
change.
 L’OREAL has to
follow the rules
defined by the
advertising industry
(García-Sánchez et al.,
2016).
 Consumer activities
are highly sensitive to
global economies
(García-Sánchez et al.,
2016).
 To obtain the
sustainable
development
L’OREAL have been
working upon the
footprints of the
environment (García-
Sánchez et al., 2016).
TECHNOLOGICAL LEGAL ENVIRONMENTAL
 As the company deals
with the cosmetic
products it’s necessary
to have the proper
 The legal team of the
L’OREAL gives their
contribution in terms
of dealing with the
 The aim of the
L’OREAL is to
manufacture the
products which serve
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knowledge of the types
of skin and the hairs
found in the people, to
ensure the safe
delivery of the
products to its
customers (Kennedy,
2016).
legal decisions. They
also help in selecting
the best decision for
the company
(Kennedy, 2016).
environmental friendly
such as by the use of
the natural ingredients
(Kennedy, 2016).
 The technology defines
the formulation
procedures and the
active ingredients
necessary for cosmetic
product manufacturing
(Kennedy, 2016).
 The team of experts
defined within the
company help in
building an effective
decision related to the
economic factors of
the company
(Kennedy, 2016).
 L’OREAL has been
organizing the internal
audits among its
employees to spread
the awareness of
increasing the
performance in terms
of the environment
(Kennedy, 2016).
 The technology also
includes the way of
selecting the
evaluation technology
according to the
demand (Kennedy,
2016).
 The main objective of
the company members
is to give security to
the L'OREAL in terms
of its business
operations and
strategies (Kennedy,
2016).
 It has been asked with
the many group
programs and the
discussions which
focus on the
environment-friendly
issues (Kennedy,
2016).
STRUCTURE -CONDUCT- PERFORMANCE MODEL
This model helps in providing the organization of the industrial economics along with the
complete description of the company performance by the economic conduct upon the incomplete
market by defining the appropriate theories (Melander, 2018). In large firms such as the
L'OREAL, the external factors like the legal and the economic can affect the marketing
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framework of the organization. In order to decrease the effect of the external factors such as the
legal and the economic, the suitable measures have been taken with the short-term goals
(Melander, 2018).
STRATEGIC POSITIONING: ANSOFF GROWTH VECTOR MATRIX
The main aim of the L’OREAL is to focus on the desirable opportunities which fit into the terms
and conditions of the business, thus leading to the enhancement of the products within the
markets which can help in determining the progress of the company in accordance with the need
of the new products in the market (Melander, 2018).
MARKET PENETRATION MARKET DEVELOPMENT
L’OREAL is achieving the popularity in the
markets of the world by the introduction of the
line” Because you are worth it”. This has led to
an increase in gaining popularity along with
the satisfaction of the customers (O’Neill et al.,
2016). In the recent years, L'OREAL has also
increased its productivity in terms of
introducing the variety of new products such as
introducing of the long-lasting eyeliner pencil,
which has attracted the huge number of the
customers (O’Neill et al., 2016).
The marketing development in the L’OREAL
is defined in the range of the products globally
increasing the brand image at an international
level (O’Neill et al., 2016). To assure the
development with the growing market
L’OREAL has made the professional products
division which satisfies the need of the
prestigious products and salons by
coordinating appropriately with the education
teams within the company (O’Neill et al.,
2016).
PRODUCT DEVELOPMENT DIVERSIFICATION
In the past few years L’OREAL has introduced
the variety of products in the field of the
cosmetics, according to the need and the
demand of the customers, along with
developing of the product the company assures
that the chemicals and the ingredients used in
making the product do not cause any harm or
reaction to the skin and hair of the people
L’OREAL has launched the various techniques
and the strategies which help in establishing
powerful competition with its competitors
(García-Sánchez et al., 2016). The L’OREAL
has also introduced the effective group
members which focus towards the
development of the strategies which deals with
the upcoming challenges within the marketing
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(O’Neill et al., 2016). The varieties of products
developed by L’OREAL are X Fiber Mascara,
Pro-Last Eyeliner, Riche Shine Lipstick, Hair
colors, shampoos etc. (O’Neill et al., 2016).
environment (O’Neill et al., 2016).
Figure 2: ANSOFF GROWTH VECTOR MATRIX
[Source: O’Neill et al., 2016]
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TASK 2
LO2
P2
STRATEGIC CAPABILITIES
Initially, L'OREAL was started has the company manufacturing the hair color formula, it was
introduced in the marketing environment as the single product manufacturing company. In the
year 1939, when there was an increase in the team members the company introduced the
strategies according to the latest technology and machines (Olutoyin and Flowerday, 2016). In
terms of the development and research, L'OREAL has promoted the new formulas over 100 and
patents about 500. Today the company has been manufacturing over 500 plants operated on the
fast mode. The tagline issued by the company helped the company in increasing the popularity of
the company (Olutoyin and Flowerday, 2016).
The introduction of the strategies such as the resource-based strategy has added the advantage in
the development of the business. The ratio in terms of the profit rate has reached the maximum
limit. By the use of the McKinsey Model, the capabilities and the skills can be defined by more
clarity (Olutoyin and Flowerday, 2016).
MCKINSEY 7S MODEL
With the aim to develop the effective ways to deal with the changing environment there have
been the model introduced which helps in achieving the targeted goals of the company at the
effective level (Schaltegger and Wagner, 2017). It also defines the way to analyze the strategic
capabilities and the skills made available to serve as the strongest weapon in the way of economy
and technology. To make the implementation of this model more effective, there has been the
differentiation between the hard and the soft s (Schaltegger and Wagner, 2017).
The hard S’s includes:
 Strategy: The plan defined by the L’OREAL Company has touched the stage of the
saturation; in order to deal with the increasing number of the customers it is necessary
for the company to define its services and the new products by sustaining the long term
goals (Schaltegger and Wagner, 2017).
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 STRUCTURE: After defining the strategy the next step which arises is to implement the
defined strategies inappropriate way which generates the maximum profit for the
company. In the case of the L’OREAL Company, the marketing strategy depends upon
the needs of the customers. To determine the demands of the customer, L’OREAL has
done research by getting feedback from the costumes. It had also decided to determine
the “Consumer Insights” International Division along with the innovation centers and the
consumer habits (Schaltegger and Wagner, 2017).
 System: It can be defined as the complete collection of many processes which help in
defining the complete strategy and the structure of the company. L’OREAL has
generated the system within which around 68,900 employees generate use of the group's
system, which help in creating the innovations within the various products (Schaltegger
and Wagner, 2017). The another system which works in the L’OREAL is related to the
sales, where the main motive is to spread the popularity of the various new products of
the company among the people to increase the information about the products, it also
focuses on the motive of gaining the trust of its customer by assuring the good quality of
the products (Schaltegger and Wagner, 2017).
THE SOFT S’s includes:
 STYLE: The style of the organization such as the L’OREAL is based on the ability to
achieve the goals which are being targeted. To accomplish this task L’OREAL has
established the atmosphere of the decisive and the non-decisive factors supported by the
supervisors of the company (Tukker and Tischner, 2017).
 STAFF: It is the important term in the eyes of the company such as L’OREAL where its
rapid growth cannot be made possible without the support of its staff including the
educated and uneducated persons. The staffs of the company are kept motivated by
introducing the financial and non-financial means of giving incentives to its employees
(Tukker and Tischner, 2017).
 SKILL: The skill within the organization defines the best way to determine the
effective strategies and the target within the company. L'OREAL adds up the collection
of highly skilled labor which can serve beneficial for the company and could generate a
high-profit rate (Tukker and Tischner, 2017).
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Figure 3: MCKINSEY 7S MODEL
[Source: Tukker and Tischner, 2017]
VRIN/VRIO FRAMEWORK
By the help of the VRIN Framework, the internal capabilities in terms of its strength can be
easily defined in an easier manner. It helps in analyzing the utilization of the resources in the
company.
The VRIN FRAMEWORK for L'OREAL is:
V-Valuable Since the L’OREAL has expanded its business all over the world
and has been gaining the trust of the customers from many years,
which defined the sustainable development of the company
(Tukker and Tischner, 2017).
R-Rare With the aim to provide unique products to its customers,
L'OREAL has developed the products which are rarely available
within the market
I-Imitate L'OREAL has been dealing with a large number of products,
leading to an increase in the number of opportunities.
N/O- Organisation None (Tukker and Tischner, 2017)
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