5ODG Organisational Design Report: L'Oreal Case Study Analysis

This report provides a comprehensive analysis of L'Oreal's organisational design, examining its internal context, historical and theoretical perspectives, and the application of organisational design models. The report begins by summarizing the current internal organisational context, including key influences on business strategy, such as market sector, organisation type, and external influences (STEEPLE factors), and measures of organisational performance. It then delves into the historical and theoretical perspectives of organisational design, comparing and contrasting two organisational design models: the Star model (static design model) and the Weisboard Six Box model (dynamic design model). The report then utilizes these two models to critically analyze the structure and management of L'Oreal. Finally, it evaluates the relationship between various aspects of organisational design, work processes, productivity, and the workforce, offering recommendations for HR strategy and practices to support and improve strategic alignment, with a focus on improving productivity and aligning workforce with business goals. The analysis highlights L'Oreal's hybrid structure, its emphasis on innovation, and its focus on customer satisfaction and environmental sustainability.

5ODG - Part B Project - Organisational Design
5ODG - Part B - WRITTEN PROJECT (A.C. 1.1, 1.2, 2.1, 2.2 & 2.3) (2,000 words)
Draw on examples you have read, or know about, when responding and take care to justify your answers.
A member of the senior leadership team has recently read an article on the relationship between
sustainable organisational performance and the strategic alignment of an organisation’s different
components such as its structure, culture, processes, and people management approaches, and is keen to
explore the following question:
“To what extent does the current ‘design’ of the organisation support organisational success?”
You have been asked to produce a report in which you need to:
1. Summarise the current internal organisational context in terms of key influences on business strategy,
and measures of organisational performance. Include consideration of 1. Organisation type 2.
Organisation elements (structures, processes and systems) 3. External influences (STEEPLE factors) 4.
Performance measures. (AC1.2) (approx 400 words)
Assessment Criteria: 1.2 Explain the relationship between organisational elements and the business strategy.
Key impact on business strategies: There are different factors that creates influence on strategies of
firm. Some of them have been illustrated below with respect to L'Oreal:
Organization type:
Market sector: L'Oreal is rendering their services within 130 countries and possess three major zones,
they are: North America, Western Europe and new markets of Africa, Latin America and Asia Pacific. There
target market comprises of young affluent females belonging to middle class. L'Oreal has segmented there
market on the basis of demographics so that they can carry out maximum sales and in this they emphasized on
young females (Barron, Pereda and Stacey, 2017).
Private/Public : L'Oreal is a private firm which delivers there services around the world and have made
strong global positioning.
Purpose: The rationale of L'Oreal is to incline cosmetic industry with sustainability by protecting each
human as well as environment.
Organization elements:
Structure: Within L'Oreal hybrid structure is being utilized as this renders them with high flexibility.
Key functions: They includes human resource management, information technology functions and
formulation of budgets for their beauty products. Along with this render brings innovative, superior and tailor-
made services.
Key processes:This involves developing, manufacturing, distribution, supply chain management.
Ways in which work is organized: As hybrid structure is being followed then each employee is liable to
respond to their senior. For an instance employees will communicate with their mentors, then they will interact
with team leaders, managers and hierarchy goes on (Chabane, Tsoukias and Daniell, 2019). The decisions are
formulated by top authorities and others have to respond in accordance to that.
Communication flow: Each employee knows to whom they have to respond while delivering their
operations. This will aid them within carrying out their operations in a smooth way as two-way interaction
occurs.

External influences: Here, Steeple factor is being utilized for throwing insight into components that may
hinder operations of individuals. They have been provided beneath:
Socio-cultural: Customers have became conscious for their beauty and thus they emphasis on product
formulation (Duczynski, 2017).
Technological: L'Oreal has aligned their service with digitization for bringing in innovation within their
processes as well as attaining competitive edge within market.
Economic: They comprises factors such as exchange & inflation rates and currency rate fluctuation.
Rise of middle class will lead to spur growth within cosmetics market.
Environmental: This leads within promotion of sustainable innovation while formulating products .
L'Oreal initiates sustainable as well as environmental activities.
Political: Governmental policies of France creates impact on operations of organization. When there is a
stability in terms of market regulations, taxes and trade agreements then there is affirmative influence on
L'Oreal.
Legal: This involves regulatory pressure that is created on L'Oreal, for this they ensure that they abide
all the laws.
Ethical: This involves responsibilities of L'Oreal towards society on the whole. For this firm takes
affirmative steps like rewards are given to employees, on time response is given to customers, etc.
Performance measures:
KPI's: The key performance indicators of L'Oreal includes: social & environmental responsibility,
innovation, quality, logistics and competitiveness.
Business Metrics: It is illustrated beneath:
(Source: L'Oreal in figures, 2017)
Profitability: The profit has been increasing every year and up to 2017, it has been illustrated in above
figure. There revenue is around €26.93 billion
Customer satisfaction: L'Oreal tends to offer customers with tailor-made beauty products and
acknowledge needs of customers around the world (Eriksson and Kadefors, 2017).
2. Summarise the historical and theoretical perspectives of organisation design, and give a brief
explanation and comparison of two organisation design models. (AC1.1) (approx 400 words)
Assessment Criteria: 1.1 Examine the historical and theoretical basis of organisation design.
Illustration 1: Record Operating margin at 18.0% of sales

Organizational design is defined as step by step methodology that is liable for identification of
dysfunctional aspects associated with structures, work flow, structures along with systems and realigns them so
that they fit within the current business goals or realities and accordingly develop plans so that new changes can
be implemented. As per the historical perspectives of organizational design there was a low departmentalization
with little formalization and centralized authority. From the beginning of 19th century there has been high
industrial revolution and there has been wide number of conceptual alterations within their endeavor for
defining functionalities of firm to enhance their overall efficiency. In 20th century, firms are seen like closed as
well as rational systems. This period implied the scientific management in which bureaucratic control was
formulated. In the beginning of 60’s organic models were being utilized which are not only emphasize on way
in which organization is formed but also on the functions of management. From theoretical perspectives of
organizational design there are wide range of theories which can be applied by organization depending upon
structure and industry in which they are delivering their services. For an instance classical (scientific
management, weber's bureaucratic and administrative approach) and neoclassical theories (socio-technical,
situational and system approaches) can be applied. As per the weber model (bureaucratic model), there has to be
a clear differentiation of responsibilities and tasks. Along with this, coordination has to be there in terms of
hierarchy, within standardized decision making procedures, rights and norms. Furthermore, technical criteria are
being utilized for recruitment as well as promotion of staff. According to Taylor and Fayol (scientific
management), there are relevant principles for effectual supervision which comprises of maximized number of
direct reports that will furnish chain of commands which will flow from higher executive levels towards lowest
employee levels. At present scenario, firm is conceived like a well designed machine through which objectives
can be attained in an efficient manner. The historical as well as theoretical perspectives of L'Oreal have been
illustrated below through the usage of design models: Static design model: This is being defined through the usage of Star model which acts as a foundation
for design choices of organization. Basically, this involves series of design policies which can be
controlled by management as well as create a strong impact on behavior of employees. Star model is
being used by organisation like L'Orealas this involves crucial aspects of firm, they are: strategies (liable
for identification of directions), structure (it provides employees with details related with who posses
power with respect to decision making), processes (provides means for responding for digitization),
rewards & reward system (impact on on motivational levels of individuals to address goals of
organization) and policies (for defining skills as well as mind sets of human resources).
 Dynamic design model: In this context, firms like L'Oreal opt for making use of Weisboard Six box
model which is liable for assessing functions of organization, issues faced by them along with areas in
which improvisations have to be carried out. This is dynamic in nature as it furnishes them crucial asset
with altering strategies and market (Leyer, Stumpf-Wollersheim and Pisani, 2017). It comprises of
purpose (what business they are dealing it, market in which they have entered and where they are
present), structure (this furnish L'Oreal with details associated with desired outcomes), relationships
(with employees, suppliers and even technologies on which they are working on), rewards (kinds of
incentives given to individuals when they excel within their responsibilities), leadership (balance among
the boxes) and helpful mechanism (coordination among important assets present within organization).
3. Select and use two organisational design models/diagnostic tools (above) as a framework to critically
analyse the structure and management of the organisation. (AC2.1) (approx 300 words)
Assessment Criteria: 2.1 Analyse the key factors that influence organisation design.
Static (Star model) and dynamic (Weisboard six box) design models have been utilized within firm. The
assets which are being delivered by them within L'Oreal have been specified beneath:
Star (Static) model: The management of L'Oreal is liable for formulation of strategies along with this it
is crucial for tackling them so that appropriate measures can be taken for accomplishment of their goals. Along
with this, the model is liable for identification of location where decisions are developed and processes for

determination of information flow (Maylor and Turkulainen, 2019). Furthermore, rewards will be delivered for
aligning goals of individuals with L'Oreal as this will render motivation for attaining strategic objectives. Apart
from this, people or the workforce will be trained for ensuring that organization is going in the right direction
with respect to their goals.
Weisboard six box (Dynamic) model: Management of L'Oreal as well as all other key members of team
accepts the aims, missions and goals of organization. It will provide them with rationale behind what they are
doing and why it is being required. This leads to creation of motivation among their employees as they have
clear instructions with respect to what is being required and how it can be delivered. Along with this, details
related with structure and relationship can be gathered which prevails within the organization. This leads
L'Oreal to make alterations according to situations which prevails within the market. In addition to this, rewards
can be provided to individuals who excel within their responsibilities and leadership style can also chosen
accordingly through so that each individual can be valued as well as assisted within attainment of objectives
(Barron, Pereda and Stacey, 2017).
This will enable L'Oreal to attain their KPI's in terms of strong competitive image within the market,
enhanced quality and bring in innovation within products that are being delivered by them.
4. Evaluate the relationship between the various aspects of organisation design and work processes,
productivity and the workforce. Make recommendations in terms of HR strategy and practices to
support and improve strategic alignment. This could be in the form of a plan/table. (AC2.2) (approx 400
words)
Assessment Criteria: 2,2 Assess the implications of organization design for work processes, productivity and
the workforce.
There are different factors which creates impact on ways in which services are being delivered. Along
with this, it is being created through the design which is being followed by the firms. An instance can be taken
into consideration, if dynamic design is being followed then each employees will be liable for attainment of
goals. But in case appropriate appreciation is not given to them then there performance will be hindered and
they wont have effectual contribution within delivery of their operations. Some factors have been illustrated
below with respect to L'Oreal,
Work Processes: It implies steps which leads team for attainment of goals through which efficiency can
be attained along with effectiveness and will also satisfy requirements of the firm. Example can be taken into
account, the work processes of L'Oreal are impelling as they furnish there employees with training which
enables them to deliver there services as per required standards. Furthermore, organizational design like
dynamic will yield affirmative result as it furnish evolution and bring in innovation within there processes.
Productivity: This implies the amount of services which have been produced by organization for
satisfaction of their customers. Number of sales that occurred creates direct impact on what is being produced as
well as organizational design which is being utilized. An example can be taken like when dynamic design
model will be used then each individual within the team can share their vie points which will lead to bring some
innovations while rendering there services (Chabane, Tsoukias and Daniell, 2019). This will lead to enhanced
sales as people often look for innovative services and this will create enhanced productivity.
Workforce: This denotes employees who are working within organization and are responsible for
delivering their responsibilities in an enhanced way. For this, it is crucial for L'Oreal to ensure that they have
effectual workforce as well as appropriate training is being provided to them so that they can work as per
desired standards and attain the organizational goals. The design of firm will create impact on the ways in
which they render their services and facilities that are being provided to employees will aid within their
retention (Eriksson and Kadefors, 2017). Like in bureaucratic design individuals can share their viewpoints but
in autocratic design the same liabilities are not provided to them.

5. Evaluate the link between organisation design and people management and development strategies.
(AC2.3) (approx 150 words)
Assessment Criteria: 2.3 Evaluate the linkages between organisation design and people management and
development strategies.
There exist association among design of the firm, management as well as development of people and
organization on the whole. This is as:
People management: Flexible working environment means that L'Oreal accepts the changes which are
being made within the market and for this they make use of dynamic design. But with respect to employees this
may not be apt as they adapt to specified working environment and then only it is altered (Duczynski, 2017).
The affirmative impact that will be created through this is that on the basis of market alterations are made and
this leads them to learn new things.
People development: When modifications are made within the working environment, new things are
brought within which implies that to work according to them appropriate training has to be provided with
respect to that so that operations are being carried out in an effectual manner. This will lead both L'Oreal as well
as employees to develop as this will enable them to render their services with respect to expectations of their
customers and innovation can also be brought while manufacturing there services.
6. Draw conclusions as to the alignment between the current design of the organisation, its culture
systems and processes, and its ability to successfully deliver on current and future business objectives.
(AC2.1) (approx 150 words)
Assessment Criteria: 2.1 Analyse the key factors that influence organisation design.
From above, it can be concluded that organization design creates a strong impact on the ways in which
operations are being carried out firm and being delivered. While opting for specified design firm need to ensure
that it will be enough for acknowledging requirements of present market as well as if any case of modifications
are made then also they can be handled in an effectual manner. This leads to influence processes as well as how
they are being carried. In addition to this, culture also gets impacted like democratic style leads to bring in
innovative environment and each employees thinks accordingly through which innovation can be brought in
within their processes and products that are being delivered by the firm.
7. ADDITIONAL REQUIREMENTS:
 Please also comment on how you will transfer the new knowledge and skills gained during this project
into working practices. You may also use this reflection for your CPD. (approx 200 words)
While carrying out this project, different skills and knowledge have been gained which will aid within
furnishing of their services in an effectual manner. Like through this, insight have been gained in context of
different organizational designs and manner in which creates impact on operations of organization. From this, I
have learnt time management skills, problem solving abilities and analytical skills. In addition to this different
concepts of organization have been understood that will aid in future to deliver services as per required

standards. It seems easy while seeing the project that it can be completed on time but it was not as easy to
gather information as appropriate study has to be done so that things can be carried out in an effectual manner
and ensure that it is being done before the deadline has gone. This will aid within delivery of services with
respect to future while working in some organization and it will not be difficult to understand what liabilities
individual must possess.
 You should also include 5-7 references from up to date and relevant sources in order to support your
findings.
Barron, A., Pereda, A. and Stacey, S., 2017. Exploring the performance of government affairs subsidiaries: A
study of organisation design and the social capital of European government affairs managers at Toyota
Motor Europe and Hyundai Motor Company in Brussels. Journal of World Business, 52(2), pp.184-
196.
Chabane, M., Tsoukias, A. and Daniell, K.A., 2019. Decision Support in Participatory Contexts: The
Organisational Design Dimension. International Journal of Decision Support System Technology
(IJDSST), 11(3), pp.47-80.
Duczynski, G., 2017. Morphological analysis as an aid to organisational design and
transformation. Futures, 86, pp.36-43.
Eriksson, T. and Kadefors, A., 2017. Organisational design and development in a large rail tunnel project—
Influence of heuristics and mantras. International Journal of Project Management, 35(3), pp.492-503.
Karpen, I.O., Gemser, G. and Calabretta, G., 2017. A multilevel consideration of service design conditions:
towards a portfolio of organisational capabilities, interactive practices and individual abilities. Journal
of Service Theory and Practice, 27(2), pp.384-407.
Leyer, M., Stumpf-Wollersheim, J. and Pisani, F., 2017. The influence of process-oriented organisational
design on operational performance and innovation: a quantitative analysis in the financial services
industry. International Journal of Production Research, 55(18), pp.5259-5270.
Maylor, H. and Turkulainen, V., 2019. The concept of organisational projectification: past, present and
beyond?. International Journal of Managing Projects in Business.