Offensive Strategies in Business and L'Oreal Case Study Report

This report delves into offensive strategies in business, exploring tactics like predatory pricing and their implications. It defines offensive strategies as aggressive actions to disrupt competitors' cash flow. The report discusses the pros and cons of such strategies, emphasizing the risks and potential rewards. It also examines specific strategies, such as attacking a rival's profit sanctuaries through predatory pricing and dumping goods at cut-rate prices. Furthermore, the report includes a value chain analysis of L'Oreal, a global cosmetic giant, highlighting its unique strategies and areas for improvement. The analysis covers branding, marketing, and operational aspects, providing a comprehensive view of L'Oreal's competitive approach and strategic positioning in the market. The report provides a comprehensive overview of offensive strategies and practical application through the L'Oreal case study.

OFFENSIVE STRATEGIES IN
BUSINESS
“Offense is the best
defense” – An English
proverb

DEFINITION: Also called “hardball approach” where the rival makes every possible
move (ethical/ non ethical) to disrupt cash flow of the competitor (Yannopoulos, 2011).
PROS:
 Risky but profitable; risk is equal to returns.
 Not only efficient, but also intense.
 Increases strength of the enterprise
 Acts as a cleansing agent of the market by eliminating unnecessary rival firms
(Thompson, 2016).
CONS:
 Risky endeavor; involves a plethora of anti- social and unethical initiatives, therefore,
high chances of getting criminalized.
 Unethical and immoral that can harm the reputation of the company if the endeavor
goes wrong.
 Involves huge monetary funds and other resources that can make the company incur
huge expenditure.
1. ATTACK A RIVAL’S PROFIT
SANCTUARIES

Definition: Also known as “predatory pricing”, the companies reduce price of a product
up to a level where the competitors cannot compete (Leslie, 2013).
PROS:
 Disallows new entrants in the market, thereby, reducing market commotion and traffic.
 Predatory pricing reduces competition by driving out financially weaker competitors from
the market.
 Firms following predatory pricing acquires dominant positions in the market perpetually
(Thompson, 2016).
CONS:
 Illegal in nature. The methods utilized in predatory pricing are unethical, illegal and
immoral, therefore, risky in terms of social and entrepreneurial policing.
 Predatory pricing is sometimes questionable regarding its utility and authenticity in
certain areas and period of time.
 Predatory prices seem to be less feasible in the long run. For short run, predatory prices
might as well work but it becomes impossible for the firms to maintain their profit
margin if predatory pricing is carried out throughout a longer period of time.
2. DUMPING GOODS AT CUT RATE PRICES
IN THE MARKET OF IMPORTANT RIVALS

Value chain is a strategic tool to analyze internal firm activities. The goal of
value chain is to find out what activity is most prolific for the firm and what could
be improved for competitive advantage (Fernandez-Stark & Gereffi, 2019).
L’oreal is a cosmetic giant operating in 130 countries with a turnover of 13.7
billion since a decade.
Strategies making L’oreal unique:
 Brand expansion through caution and experimentation.
 Branding by tying up with the local culture of various countries, ethnicities and
communities (Hong & Doz, 2013).
 Effective advertisement that triggers the mind of the consumers (functional
and prospective)
L’oreal needs improvement in:
 Premium operational marketing that would make the brand more renowned.
L’OREAL: VALUE CHAIN
ANALYSIS

 Leslie, C. R. (2013). Predatory pricing and recoupment. Colum. L.
Rev., 113, 1695.
 Yannopoulos, P. (2011). Defensive and offensive strategies for market
success. International Journal of Business and Social Science, 2(13).
 Hong, H. J., & Doz, Y. (2013). L’Oreal masters multiculturalism.
Harvard Business Review, 91(6), 114-118.
 Fernandez-Stark, K., & Gereffi, G. (2019). Global value chain analysis:
a primer. In Handbook on Global Value Chains. Edward Elgar
Publishing.
 Thompson, A. A. (2016). Strategy: Core Concepts and Analytical
Approaches. Blue Ridge, IL: McGraw Hill Education.
References: