Exploring L’Oréal’s Business Strategies for Global Market Domination

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1L’ORÉAL STRATEGY REPORT
L’Oréal Strategy Report
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Reference: Harvard

2L’ORÉAL STRATEGY REPORT
Executive Summary
The study describes strategic development followed in L’Oréal, which is a famous brand,
associated with manufacturing of cosmetics and beauty products, and overspread their business
worldwide. It identifies different disciplines of the brand, and their business strategies, which
help them in achieving reputation over others. In this study, a close understanding made on the
business activities of L’Oréal, which includes various analysis, evaluating their effectiveness in
the market and making the globalization of their products. Finally, a brief recommendation is
included with the study, describing different changes or strategies that implemented by the brand
in order to increase their business and supporting its growth.

3L’ORÉAL STRATEGY REPORT
Table of Contents
Executive Summary.........................................................................................................................2
Introduction......................................................................................................................................4
Task 1...............................................................................................................................................4
LO1 and LO2 (P1 and P2):..........................................................................................................4
Mission, vision and objective of L’Oréal................................................................................4
Role of L’Oréal’s strategy to attain the business goals with strategic direction.....................5
PESTEL and SWOT analysis of the organisation...................................................................5
Resource-based view strategy of L’Oréal................................................................................7
Analysis of Organisation capabilities......................................................................................7
VRIO analysis..........................................................................................................................8
Application of Cost-benefit analysis.......................................................................................9
Task 2...............................................................................................................................................9
LO3 and LO4 (P3 and P4):..........................................................................................................9
Market Objectives for L’Oréal................................................................................................9
Use of Balance Scorecard to align L’Oréal’s vision and strategy...........................................9
Competitive environment with Porter’s five forces...............................................................11
Stakeholder analysis..............................................................................................................12
Bowman’s strategy clock.......................................................................................................15
Recommendation for appropriate growth platform for L’Oréal............................................17
Key tactics used by L’Oréal..................................................................................................17
Conclusion.....................................................................................................................................18
References......................................................................................................................................19

4L’ORÉAL STRATEGY REPORT
Introduction
The study mentions the strategy adapted and developed by L’Oréal in order to make their brand
globally successful over others. In task 1, the background of L’Oréal is analysed, which
describes the mission, vision and objectives of the brand. Besides, role of different strategies
implemented in the organization is also described in this context along with SWOT and PESTEL
analysis. Lastly, different analysis of the brand is included in this study. In task 2, market
objectives, along with balance scorecard of L’Oréal is done. Moreover, analysis of competitive
environment and its stakeholders described in this task. Lastly, a strategic development and
recommendation are included in this task for L’Oréal.
Task 1
LO1 and LO2 (P1 and P2):
Mission, vision and objective of L’Oréal
Mission: The principle mission of L’Oréal is to provide a large range of cosmetics products to
their customers overspread worldwide. The principle aim is to offer innovative ranges of
cosmetics, with premium quality, efficacy and safety. Thus, Gatti et al. (2014) commented that
the organization is supposed to meet inestimable beauty needs of their customers present
throughout the world. Therefore, the first and foremost mission of this brand is to make the
beauty universal and offer beauty to all. Besides, it is focusing to develop personalities and self-
confidence of the customers and to expand their outreach to others.
Vision: According to Hong et al. (2013), the main vision of L’Oréal is to use the advancements
of technology in such a way, so that it can able to add reputation to a brand over others. L’Oréal
is making their business with this view and becoming famous over other competitors in the
market. This brand is associated with the manufacturing of large range of make-up and cosmetics
products, with a leading distributer of these products all over the world. Based on this vision,
L’Oréal is now have thousands of beauty products with a market of five hundred brands.
Moreover, this brand is contributing a social responsibility in empowering women in society and
flourishing in different scientific studies.

5L’ORÉAL STRATEGY REPORT
Objectives: The principle followed by L’Oréal in their business is to share beauty among all. As
opined by Chand et al. (2014), based on this principle, L’Oréal now has become a model
organization, comprising with a large range of innovation, with growth. Based on this principle,
the brand constitutes four major objectives, such as sustainability in innovation, production,
consumption and sharing of growth. However, it is done with corporate and social responsibility
of the organization, where it is targeting to make products with 100% environmental benefits
within 2020.
Role of L’Oréal’s strategy to attain the business goals with strategic direction
Strategy observed by L’Oréal is to look at a future with confidence. In order to make the activity
of the brand successful, L’Oréal adapts a strategy that is driven by a comprehensible mission.
However, Villeneuve et al. (2014) commented that the selected strategy for the organization is to
make their products universalized. This is a unique strategy adapted by this organization, which
makes their products globalized. Besides, it is able to understand and respect differences views
from all respects, like needs, desires and traditions. Thus, the strategy implemented by this
organization is offering tailor made beauty products that will satisfy the desire of different
customers present throughout the world.
PESTEL and SWOT analysis of the organisation
PESTEL ANALYSIS
Political: It has been found that the L’Oréal is dealing with the governmental policies of Paris,
where the industry is established, and is often considered as the best domain for practicing their
activities. However, in performing their business, this company is supposed to deal with a lot of
regions or countries. Thus, mainly the import policies of the government of Paris make firm
impact on the activities of the organization. However, David et al. (2013) commented that this
policy play a legislative role to this company and supports globalization of the brand.
Economical: This includes the exchange rates, where the company is dealing with. Besides,
another mainstream factor, which plays an important role, is recession rates and the price of the
products. As the brand is performing in different regions, the prices of the products change
according to the GDP of that place (Daft et al. 2015). Moreover, the Human Development Index
of the country also makes a positive impact on the business as a whole.

6L’ORÉAL STRATEGY REPORT
Social: It includes the technical and social trends of the society, where it is performing their
activities. It has been stated by Wollenber et al. (2016), that L’Oréal is mostly dealing in such
countries and regions, where the society is accepting the beauty products and fashion trends
easily, which provides an additional gear to the brand to make their product successful.
Technological: The technological advancements, like innovation plays an important role in the
success of an organization like L’Oréal. However, the brand is often deals with technological
innovations, adapting its advancements, considering the contemporary drifts (Rovida et al.
2015). Thus, the products of this brand are more prone to adapt innovative approaches, which
play as a key role of success in their business.
Environmental: this is deals with the global laws, which is mainly encompassing the safety
rules, followed by an organization. Besides, it judges the global standards of a product and its
environmental impacts as a whole. As the world is now marching for a pollution fee planet, the
products of a brand must show support to these activity. However, Ottman (2017) commented
that L’Oréal is supporting these activities and is a part of such campaigns, which provides the
brand additional advantages over others in the global market.
Legal: L’Oréal is maintaining their graph of success throughout several years. However, the
majority of acceptance of this brand is among the elite and upper middle class people, who are
very much concerning about the legal policies and aspects (Tjemkes et al. 2017). Thus, in order
to make their business successful, one must concern this factor as an important part of business.
SWOT ANALYSIS
Strength
 A large range of beauty and cosmetic
products
 Premium quality
 International market
 Organic products
 Continual research
Weakness
 Increasing saturation
 Constriction of profit margin
 Slow division
 Price
Opportunity
 Expansion of industries
Threat
 Quick changes

7L’ORÉAL STRATEGY REPORT
 Making of different products
 Being organic and more eco- friendly
 Difficulty in flow of cash
 Emerging of several competitors
Table 1: SWOT Analysis of L’Oréal
(Source: Learner)
Resource-based view strategy of L’Oréal
According to Epstein (2018), the resource- based view strategy identifies the competitive
advantages, which are often derived from the internal and external capabilities of a firm. These
resources are often defined as both the tangible and intangible possessions, which are used in
order to develop a strategy for their business. In case of L’Oréal the assets are often
heterogeneous, and are serving for dynamic capabilities. Thus, these are using by L’Oréal to
initiate their business and upgrade it to the next level. It has been found that this strategic
movement makes the brand successful over others and recognizes it as the “Most Ethical
Company”. Besides, it has been awarded as a company, which is not only practicing and
promoting the ethical activity internally but also exceeding the legal observance with best
practice.
Analysis of Organisation capabilities
According to De Mooij (2018), L’Oréal has a strategic development plan for their business
activities, as it is striving for a global market. This is done by adapting a completely new
packaging solution, which supports the business growth of L’Oréal. It is reflected in several
ways that is it enhances the safety and comfort of the consumers, while using these products.
Besides, L’Oréal has planned to implement newer technological advancements, which
strengthens their markets. Besides, this would also be beneficial for achieving an advantageous
position in the competitive market or becoming more successful over others. It is reflected on the
success graph of the brand, since its very beginning in the year 1939. The pioneer position
obtained by the company within the very fast years of establishment is driven from their
successive challenges, which are adapted by them. Moreover, Rovida et al. (2015) commented
on the effective and attractive promotional or commercial strategies, implemented by L’Oréal, in

8L’ORÉAL STRATEGY REPORT
several channels, which supported the increase of the business of the brand. This successive
development is reflected as organizational capabilities, which is helping the brand in achieving a
pioneer position in the market over others.
VRIO analysis
The VRIO framework is developed on the evaluation of relative importance of the resources
used by an organization. It stands for Value of the resource, Rareness of the resource, Imitation
Risk, and Organizational Competence (Chand et al. 2014). This is developed in order to make a
clear understanding on the role of different resources by identifying their availability in making
of a business model. This VRIO analysis is based on the universalisation of L’Oréal, which is
considered as a resource- oriented analysis, and is based on strategic assumptions. This identifies
how the organization is making the opportunity in order to withstand in competitive market. The
VRIO analysis can be tabulated in the table below:
Resources Value Rare Imitation Organization Advantage
Channel
management
Yes No Can be
imitated
Yes Temporary
Global and local
attendance
Yes Yes Can be
imitated
Yes Temporary
Alignment of
corporate strategy
Yes No No, as each
firm
possessing its
own strategy
No Permanent
Assessment of
company record
Yes Yes Cannot be
imitated
Yes Permanent
Assessing cheap
resources
Yes No Can be
imitated
No Permanent
Flexibility of
supply chai
network
Yes Yes Sometimes can
be imitated
Yes Temporary
Cost Yes No Can be No Permanent

9L’ORÉAL STRATEGY REPORT
competitiveness imitated
Table 2: VRIO Analysis of L’Oréal
(Source: Learner)
Application of Cost-benefit analysis
According to Rovida et al. (2015), cost- benefit analysis (CBA) refers to a systemic movement to
identify pros and cons of a business, to evaluate target and making of business plans. It has been
shown that in case of L’Oréal the demands of customers are increasing day by day, which is
dealing with high- quality of products. However, it has been found that the products offered by
this brand are comparatively cheaper than that of other brands, which satisfy the customer’s
need. Moreover, performing of environmental activities is also offered by this brand making the
business enlarged in the market. This is done by managing costs and maintaining quality. It has
been shown that all of these are making the business of L’Oréal advantageous over others in the
market.
Task 2
LO3 and LO4 (P3 and P4):
Market Objectives for L’Oréal
 To increase market share of L’Oréal by 7% in the second quarter of 2019 in order to gain
competitive advantage within the market
 To increase the sales of product line by 6% in 2019
 To target and reach out more customers across UK and in within the global market
Use of Balance Scorecard to align L’Oréal’s vision and strategy
A proper balance scorecard enables a business organization to fulfil its objectives in a proper
manner. The scorecard for L’Oréal is as follows:

10L’ORÉAL STRATEGY REPORT
Strategy
Objectives Measures Targets Initiatives
Financial Increase net
revenue
generated
through sales of
products
Increase in
profits and
number of
products sold at
market
7% in the
second quarter
Make innovation
in existing
products and
launch new form
of hair serum
Customer Reach out to
more customers
Surveys and
feedbacks
25% of total
customers
globally
Improvement in
advertising,
making
discounts and
creating new
beauty products
Internal
Business
Processes
Increase in
advertisement
and logistical
process, 100%
environmental
benefits within
2020
Increase in sales
of products and
easy availably of
products
31% less delay
in logistics
Making alliances
with renowned
logistical
companies
Growth of
Company
Monitor increase
in profits and
sales of products
Routine
checking of
records across
the globe
6% increase in
sales
Advertisement
and promotional
offers
Table 3: Balance Scorecard to align L’Oréal’s vision and strategy

11L’ORÉAL STRATEGY REPORT
(Source: Learner)
Competitive environment with Porter’s five forces
Within any business sector, various factors influence on competitive nature of a particular
organization. In order to analyse the impact of such competitors Porte’s five forces can be
utilised. Sölvell (2015) mentions that analysis of competitive forces helps business organization
to shape their strategies and consequently improve their chances of increased profits within the
market. The analysis of competitive forces for L’Oréal includes the following factors:
Threat of new entrants: New entrants within the industry decreases the customer base and
increases competition through their innovative product and strategy. Within cosmetic industry,
products undergo quality inspection for safety. Fleacă and Fleacă (2016) mentions that cosmetic
industry need to have large investment including technology for manufacturing high quality
products. Therefore, the threat of new entrant for L’Oréal is low.
Threat of substitutes: As per the views of Chan and Mansori (2016), many cosmetic products of
renowned brands comprises of harmful chemicals such as spices and xylene that can interfere
with health of women. As a result, L’Oréal faces threat of substitutes from natural and organic
beauty product. The threat of substitute forces for L’Oréal is high.
Bargaining power of buyers: According to the survey by New Women Magazine, women aged
between 25-70 years of age tend to spend £182,590 on cosmetics (ctpa.org.uk, 2017). This
implies that power of buyers is very high for L’Oréal.
Bargaining power of suppliers: The main suppliers for L’Oréal include packaging materials
suppliers, ingredients for cosmetics and patent companies. Any delay or loss of working of such
associations would lead to loss for L’Oréal. The bargaining power of suppliers for L’Oréal is
quite high.
Rivalry among businesses in industry: There are several well-known cosmetic companies across
the world. They make continuous development regarding innovation within their products. Some
of the notable competitors for L’Oréal include Avon, Revlon and Estee Lauder. The rivalry
power within cosmetic industry is very high.

12L’ORÉAL STRATEGY REPORT
Stakeholder analysis
Shareholders play a critical role in determining success rate of any business organization. As per
the views of Hatherly (2016), shareholders can be categorised as internal and external
shareholder based upon their role within an organization. Various stakeholders and their impact
within business functioning of L’Oréal are as follows:
Stakeholders Nature Roles Impact
Managers Internal Management of all the
undertakings and sales
within company.
High
CEO and Senior
managers
Internal Decision making
regarding policies,
launch of products
and implementation of
business models
within organization.
Medium
Employees and staff Internal Helps in
manufacturing of
products, their sales
and advertisement
strategies. Work
according to the
protocols set by
managers.
Medium
Suppliers External Supply of raw
materials, packing
articles and other
chemicals required for
manufacturing of
products.
Medium
Customers External All the products High