The Loreal Company is the famous brand of beauty or cosmetics products. The company is distributing its business all around the world in 130 countries. The company was founded in the year 1953 in Paris. Loreal has a strong growth from the previous years. The reports of 2014 revealed that, the company earned operating profit of approximately 3890 million Euros. The Loreal company focused to attract the cosmetics companies and keep consumers by focusing on the innovation and creativity. Loreal owns many luxurious brands like Garnier, Maybelline, Ralph Lauren and Armani. The company also owned professional products like Matrix and Kerastase. Moving further, the Loreal group is founded by the Eugene Scheller. The Loreal group offers a wide variety of the products of the cosmetics such as Skin care, Make-up, Hair care, and Sun care professional products and the company is the largest brand of the beauty products in the world.
Mission: The mission of the company is to produce the innovative cosmetics products for women as well as for the men. The mission statement of the LOreal group is to provide the beauty for all.
Vision: The vision of the company is to win the hearts of the billion consumers of the world by providing innovative and creative products in the future and these products will meet the needs and desires of the consumers (Palade, 2011).
Values: The values of the Loreal are expressed in the daily routine of the team members of the company. The company values are:
- Innovation of the products
- Passion for the cosmetic business
- Open Mindedness
- Quest for excellence
Internal and External Analysis
Stakeholders of the Loreal
Stakeholders of the company can be the individual, groups or the organizations and these stakeholders are those who are mostly affected by the change in the company policies or profits and they are the one who shows the great interest in the affairs of the company. There can be the plenty of the shareholders of the company such as owners, creditors, government, directors, suppliers, unions and the communities. The stakeholders of the Loreal company include the customers, employees, investors and the shareholders. These are the most important part of the company as they are given the top priority before making any business decisions. They all are the members of the decisions making process and management team of the Loreal company.
Customers: The Loreal group of company always focuses on the customer’s need and expectations with regard to the beauty products. The company always wants to build its brand image in front of the customers. Loreal Company always thinks out of the box to attract maximum customers by introducing new beauty products (Ashraf et al., 2015).
Investors: The investors of the of the company are also the most important people as they are highly affected by the profit margins of the company. The reports of the company show that the company earning continuous profits for the last years and it increases the rate of 4.8% every year. The companies and the people are very much interested to invest their money into the company because of the increase in profits.
Employees: The employees are the also the important part and the company has the manpower of the 60,000 employees in all over the world. The employees are the key part of the implementation of the strategic management and they are the real people who build the company image.
Leader of the cosmetics industry
Offering high quality and the innovative beauty products to the customers .
Strong advertisement strategies
Having 60,000 employees in the company
Also deals in the pharmaceutical fields apart from the hair protection, make-up and skin care products
Operating in 130 countries and have 40 manufacturing plants
Organization structure of Loreal is not Centralized.
High competition because of the other brands like Lakme, Color Bar, Avon, etc.
Greater market share because of the owned companies like Matrix, Maybelline and Ralph (Yang, 2013).
Loreal has the capability to tap the growing markets of the developed countries
Increase of the competition and the biggest competitors are – Revlon, Lakme, Garnier, color Bar, Avon.
Downfall in the economic conditions of the other countries
The political factors have a great impact on the performance of the company and Loreal is highly influenced by the government rules and regulations, trade policies, provisions of the policies, political infrastructure. Every country in this world has its own political system and has different laws made by the government. The company has its manufacturing plant at Paris, so the policies of the government of France affect the business to a great extent. The different import policies also influence the business of the Loreal. Political roles are positive for the Loreal because of the advent of the globalization (Anju, 2013).
These factors include the economic condition of the country where the Loreal company is working. The change in the exchange rates of the country directly affects the profits of the company. However, the recession is the main element of the cosmetic industry and to maintain that balance the company set the prices of the products differently in the different regions. Moving further, the GDP of the country also the important factor that contributes in the business of the beauty products.
The social factors are the most important elements for the business of the Loreal as it involves the latest fashion trends, needs and expectations of the customers, consumer behavior, culture of the country, etc. Loreal has the sense of offering the new trends and solutions for the problems of the customers. For example, the company introduced the Loreal shampoo to the different hair problems as per the demand of the customers (Marskell, 2012). The ethical issues are also the important part as they are also playing important roles.
The cosmetic brand, Loreal, is famous because of the innovation and always follow the latest trends. The use of technology is helpful for the Loreal to introduce the latest fashion products and spread all the products in seconds to its customers. The buying and supplying of the cosmetics products becomes easier because of the advancement of the technologies (Haseeb, 2017).
It is very important to understand the legal terms and conditions, where the Loreal company is operating its business. The company needs to understand the legal stuff about the country. The country has different laws and provisions made by the government of the country.
The Loreal also need to analyze the environmental and safety laws. The Loreal company has the social responsibility towards the people and the Customers. The company should manufacturing the products without harming the environment. Before choosing the best strategic option, the ompany need to analyze the environmental aspects and safety laws.
Talking about the BCG matrix, it stands for the Boston Consulting group and this is very helpful in demonstrating the different stages of the product strategy. There are four stages explained by the BcG matrix and these are the Stars, cash cows, Question and Dogs. All these four stages are showing the level of the market share and business growth. This matrix is useful to analyze the different aspects of the market share and the growth of the business In relation to the products of the Loreal.
Star: This is the position when both the levels of the market share and the growth are high. For example the Loreal has its Luxe Products which have high growth rate and the high market share in the different countries (Cuellar-Healey & Gomez, 2013).
Cash Cow: This is the stage when the growth of the products is low, but market share is high.for example, the professional products of the Loreal generate the large cash sales, but very limited to grow in the market.
Question mark: This stage includes the high growth rate and low market share as the consumer products of the Loreal have the huge market growth, but they are not holding good market share in the cosmetic industry (ICAI, 2015).
Dogs: This stage arises when both the elements are low. These products neither need the cash nor they produce high growth rates. For Example, Loreal Active products.
Ansoff Matrix is the matrix that provides the different options to the company for the successful growth of the business and to gain the highest market share. The Matrix demonstrates the product and market strategies for the high growth rate. There are four elements of the Ansoff Matrix and these elements are Market development, product development, market penetration and the differentiation. The different strategies of the Loreal are applicable only in those markets which have the ability and potential to grow. Loreal is a well established company so it will not be difficult for the company to develop new products or the market with differentiation in the quality.
The two best directions which are suitable for the Loreal company are explained as below:
Market Development strategy: As per this strategy, Loreal need to focus on the new developed countries to increase its market share. The company needs to focus on those new territories which have the highest potential to grow in the market to become a successful leader in the beauty products.
(FME Team, 2013).
Product development: According to this strategy, the company need to develop the products just to gain the high share and value in the market. Moreover, Loreal can introduce the creative feature in their products as it is very important for the company to compete with the other beauty brands for gaining the competitive advantage in the market. To provide innovation and beauty for all is the strength of the company and this is the best strategy to attract the maximum number of employees (Sirova, 2015).
Best strategic option
As it is analyzed that the company should choose any one strategic option from the above. The Loreal can either develop its market or its products just to gain the highest market growth rate. The best strategic option for the Loreal is to develop its new markets an launch their high quality products in this market. After analyzing all the internal and external factors, the company need to focus on the new markets for the continuous success.
There are some of the recommendations or the suggestions are given to maintain the brand image of the company and all the above strategies need to analyze in a proper way before their implementation in the company. The recommendations for the strategies and the Loreal products are as follows:
- The feedback systems of the Loreal company need to be improved as it will help to analyze he demands and the expectations of the customers with regard to the products of the Loreal. The ways of collecting the feedback should be like mail, mobile phones, cards, questionnaire and person to person feedback (Macedo-Soares & Silva, 2012).
- The company should need to focus more on its promotional activities to spread the knowledge about the new innovative products in the markets and advertisement strategies should be implemented to compete with the other competitors.
- It is recommended that the Loreal should meet the demand and expectations of the customers and to launch the product at the right time, at a right place, for the right person in the right terms and conditions (Dung, 2012).
- It is suggested that the company should focus more on the consumer products as they have the potential to grow and those products fulfill the needs of the people.
- It is advised that the company should lower down the prices of the products to attract the middle class customers and to increase the market share of the company.
In this report, it is concluded that the Loreal company needs to follow the strategic directions to maintain its brand image and come up with the new ideas. In this report, the Ansoff matrix and the BCG matrix are used to analyze the current situation of the Loreal products as well as suggest some of the strategies in order to compete in the market. At last, the company has the three objectives to increase the sales, market share and profits which are possible only by following the strategic directions given in the report.
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