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Company Overview: Eugène Schueller French Chemist La Cagoule
Company Overview: Eugène Schueller French Chemist La Cagoule
Company Overview
In 1907, Eugne Schueller, a young French chemist and future La Cagoule supporter,
developed a hair dye formula called Aurale. Schueller formulated and manufactured his own
products, which he then sold to Parisian hairdressers.
On 31 July 1919, Schueller registered his company, the Socit Franaise de Teintures
Inoffensives pour Cheveux ("Safe Hair Dye Company of France" literally "French Society of
Inoffensive Tinctures for Hair"), the original LOreal. The guiding principles of the company,
which eventually became LOreal, were research and innovation in the field of beauty.
In 1920, the small company employed three chemists. By 1950, the research teams were
100 strong; that number reached 1,000 by 1984 and is nearly 2,000 today. LOreal purchased
Synthlabo in 1973 to pursue its ambitions in the pharmaceutical field. Synthlabo merged with
Sanofi in 1999 to become Sanofi-Synthlabo. Sanofi-Synthlabo merged with Aventis in 2004 to
become Sanofi-Aventis.
On 17 March 2006, LOreal purchased cosmetics company The Body Shop for 562
million.
Beauty for All
For more than a century, LOreal has devoted itself solely to one business: beauty. It is a
business rich in meaning, as it enables all individuals to express their personalities, gain self
confidence and open up to others. Beauty is a language. LOreal has set itself the mission of
offering all women and men worldwide the best of cosmetics innovation in terms of quality,
efficacy and safety. It pursues this goal by meeting the infinite diversity of beauty needs and
desires all over the world. Beauty is universal. Since its creation by a researcher, the group has
been pushing back the frontiers of knowledge. Its unique Research arm enables it to continually
explore new territories and invent the products of the future, while drawing inspiration from
beauty rituals the world over. Beauty is a science. These are exacting challenges, which are a
source of inspiration and creativity for LOreal. Beauty is a commitment. By drawing on the
diversity of its teams, and the richness and the complementarily of its brand portfolio, LOreal
has made the universalistic of beauty its project for the years to come.
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Adapting its global products to reflect the different tastes of consumers in each market.
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Seeking new acquisition targets, such as its recent deal to buy make-up brand Urban
Decay.
SWOT Analysis
Strengths of the LOreal Groups are the developed activities in the field of cosmetics as
well as in the dermatological and pharmaceutical fields in order to put more concentration in
their particular activities. LOreals advertising strategy also plays a major part to its growth.
Through adapting to the culture of their target market as the main tool of their advertisement, the
Company brought LOreal products within reach of other women from different parts of the
world.
Weaknesses perhaps one of the weaknesses that a big company faces is the decentralized
organizational structure. This is also part of the difficulties that LOreal is facing. Due to the
many subdivisions of the Company, there is also the difficulty in the control of LOreal. This
slows down the production of the Company because of the need of giving reference to the other
Board members and directors of the Company. LOreal will also have a difficulty in finding out
what division is accountable for the possible pitfalls of the Company.
Opportunities The LOreal Company concentrates on cosmetic products that enhance
women of all ages. The growing demand for beauty products gives LOreal the opportunity to
focus in their field of specialization, particularly on hair styling and color, skincare, cosmetics
and perfumeries. Being the leading cosmetic brand gives them the edge for their well-known
image. Opportunity also emanates from their growing market that ranges from the affluent, the
aging and also the masses of the developed countries.
Threats a threat to the LOreal group is also the growing competition within the field of
cosmetic brands. Due to the ongoing addition to the field of cosmetics, there is still the danger
that other brands could surpass the profit of LOreal. Another threat to the Company is the
economic downturn that is quite evident in other countries. Such could thus hurt the possibility
of higher profit for the company. Most products of LOreal are within the reach of the citizens of
developed countries, but LOreal may have problems reaching out even to the average people
from the underdeveloped countries.
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Types of Competition
Country
Major Competitors
Perfect Competition
Monopolistic Competition
Oligopoly
etc
Maybelline, Garnier, and
Monopoly
2. Entry Strategies
True enough, its tough to succeed in a demanding economy.
It takes breakthrough innovation, breakneck speed, and naturally, the very best talent to outthink
and outmaneuver your competitors.
L'Oreal thus works on a three point guide for meeting with competition:
Innovate by successfully conceiving of and launching a new concept or technology.
Differentiate their products and services through pragmatic marketing strategies.
Dominate in their market and build brand equity and profitable growth.
Strategic Alternatives Corporate strategy deals with three key issues; first is the firm's
overall orientation, second, the market in which it competes and third, the way in which
management caries out its activities and maintains the coordination.
There are also some strategies like Growth Strategy, Stability Strategy and Retrenchment
Strategy.
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The Asia-Pacific region witnessed overall growth of 8 percent in 2004, according to The
World Market for Cosmetics and Toiletries, a report published by Euro monitor International in
October 2005. Growth varied considerably from country to country.
The Japanese market accounted for 53 percent of the regions total cosmetic and toiletry
sales in 2004, according to the report. Despite its dominance, the market grew less than 3 percent
in constant value terms from 2003.
India also exhibited less than stellar growth, edging up 1 percent in 2004. The caste
system was mainly to blame, with beauty premium and upper mass brands enjoyed mainly by the
upper echelons of society. South Korea suffered decline, contracting 7 percent in 2004, which
was attributed to the economic downturn. But the news from other parts of Asia was anything
but bad. Euro monitor International reported growth of greater than 5 percent in China,
Indonesia, Taiwan, Thailand and Vietnam. Growth was attributed to a number of factors,
including higher standards of living and more women in the workplace. Different market
segments also exhibited varying degrees of dominance.
The focus this year will be on the Southeast Asian market: key countries to
scrutinize will be India, Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam.
This zone is one of the fastest-growing beauty markets in the world, making it a very strategic
and very challenging case study. LOreal uses a multi-brand strategy to cover the mass market in
China. At the base of the pyramid comprise of LOreal Paris, Maybeline Garner, and Mini-Nurse
all products that target the mass market. Each level of LOreal brand pyramid occupies a
certain price area, which meets the needs of Chinese consumers from a price sensitivity
perspective namely due to the wide income gaps in China.
Entry Strategies
Advantages
Disadvantages
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The Strategist
Initial Strategy
Cross-fertilization:
3. Entry Restrictions
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LOreal is the largest and oldest cosmetic company worldwide. In order to trade their
products internationally, LOreal has to have expertise on cosmetic legislation and on the
working of the controlling authorities in each country
Cosmetics are regulated worldwide with the objective to protect the consumers health and to
suppress the trading barriers between the countries. Basically, each country has legislation on
cosmetics influenced by either the following three different types.
1) The European Directive (South Africa, Brazil etc).
2) The USA Directive (Canada, Philippines Singapore etc).
3) The Japan Directive (Korea, china, Japan etc).
The legislation is evolving constantly and the number of regulations increases each year.
Overall these regulations involve:
Definition of a cosmetic.
Labeling regulation.
Packaging.
In market control.
Security/Efficacy.
Ingredients.
Inflation rate.
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financial performance. The Group has confirmed its determination to link economic growth
with strong ethical principles and a real awareness of its responsibilities to the community.
Thus, an immense market to cater to with a mind-blowing range of products spells hard work fro
L'Oreal.
4.1 Political
Political System
Socialism
Operating Countries
France
Communism
China
Collectivism
Conditions
This type of behavior has no
place in modern society, and if
France is to be run in this
fashion then one must review
the safety, security and future
of any French investments,
Since the end of the Cultural
Revolution in 1976, China has
all but abandoned the tenets of
classical Marxism, including
collective ownership of the
means of production.
Nowadays, just about
everything is at least partly
privatized.
Cultures are typically divided
into two categories:
collectivist and individualist.
Individualist cultures, such as
those of the United States and
Western Europe, emphasize
personal achievement at the
expense of group goals,
resulting in a strong sense of
competition.
Economic Conditions
2012, French (GDP) in volume terms increased
by 0.2% after a 0.1% decrease over the
previous quarter.
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Trade Deficit/Surplus
Unemployment Rate
Inflation Rate
Market Interest Rate
5 Recent Fiscal or Monetary Activities
China
Economic Factors
GDP
Trade Deficit/Surplus
Unemployment Rate
Inflation Rate
Market Interest Rate
Economic Conditions
China's GDP grow 7.5% for 2012.
China recorded a trade surplus of 196 USD
Hundred Million in November of 2012
Unemployment Rate in China remained
unchanged at 4.10 percent in the third
quarter of 2012 from 4.10 percent in the
second quarter of 2012
Chinas rate of inflation hits 2 percent;
Investors raise concerns over 2013
The benchmark interest rate in China was last
recorded at 6 percent
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Trade Deficit/Surplus
Unemployment Rate
Inflation Rate
Economic Conditions
The Gross Domestic Product (GDP) in the
United States expanded 2.70 percent in
the third quarter of 2012 over the
previous quarter
The United States recorded a trade deficit of
42240 USD Million in October of 2012
Unemployment Rate in the United States
decreased to 7.70 percent in November
of 2012 from 7.90 percent in October of
2012
The inflation rate in the United States was
recorded at 2.20 percent in October of
2012
The benchmark interest rate in the United
States was last recorded at 0.25 percent.
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Specially in case of LOreal it is big question how organization culture keep same in the
world because, organization acquisition policy, create question mark for organization culture The
same reward schemes, motivational methods, desired working environments, etc also cannot be
the same for different employees working for the company in the different nations and thus it
also needs the understanding of different aspects of the impacts of the cultural differences. For
good relationship of foreign supervisor with its subordinate local employees, the cultural
understanding of both becomes an essential object.
Theory X organizations tend to be top heavy, requiring many managers, not just to control
and monitor employees, but to narrow the span of their control at every level under their
management. Theory X managers rely on threat and coercion to achieve the obedience of
employees. This style of management assumes that workers:
Dislike working.
Theory Y management exhibits characteristics such as communicating openly with the team,
facilitating employee engagement in influencing decision making, and creating a supportive
environment in which to work. It assumes that workers:
Take responsibility and are motivated to fulfill the goals they are given.
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Consider work as a natural part of life and solve work problems imaginatively.
The degree of motivation and types of organization varies from country to country and
culture to culture. In addition there motivation to employee from the upper level manager also
varies in LOreal. So we can say that LOreal try to motivate their employee and try to increase
their productivity. In that case LOreal tries to provide as much as employ benefits as they could.
Following benefits in nearly same in every country where LOreal acts:
Organization Type A
American
Organization Type J
Japanese
Organization Type Z
Modified American
Short-term employment
Lifetime employment
Long-term employment
Individual responsibility
Collective responsibility
Individual responsibility
Rapid evaluation & promotion Slow evaluation & promotion Slow evaluation & promotion
Explicit control mechanisms
Gym discounts
Wellbeing events
Dental benefits
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Health screening.
Holiday
Family-friendly benefits
Childcare vouchers.
Discount
Others
Company cars for field sales staff and cash allowance for some staff
hairdressers serve to further the campaign by relaying their knowledge to clients in their salons,
veritable places of exchange and dialogue across the continent. After the mass scale destruction
due to tsunami in India LOreal participated in the international relief effort, LOreal contributed
1 million. LOreal realized the need of women in science and in 1998, the LORAL-UNESCO
FOR WOMEN IN SCIENCE Award was designed This collaboration, illustrates how the private
sector and an intergovernmental institution can pursue joint projects to support women of
science, encourage the advancement of knowledge and enhance development on a global scale.
Five remarkable women physicists receive the LOreal-UNESCO for women in science award
for 2005, the world year of physics. LOreals CSR activities are mainly based on philanthropy.
Recent philanthropy CSR activities of china include:
Love Donation
L'Oreal (China) Co., Ltd. held a move ceremony and donated products to Ai Xin
Supermarket in Shanghai Jing'an Temple community (2009).
L'Oreal (China) announced that based on its success of "Real Interactive" plan for the
campus student platform over the past five years, the company decided to set up "L'Oreal
Campus Community Welfare Fund" to help college students to carry out public welfare
activities ( 2008).
L'OREAL (China) launched a three year plan of charity sales to sponsor education in
cooperation with China Youth Development Foundation and set up the L'OREAL
Education Fund for Western China with a total investment of over one million
yuan(2003-2006).
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Environment
L'Oreal Group launched the seventh green L' Oreal Cup Event "I Am Proud of Saving
Resources", which began in 2002. The action gained economic and social benefits by
saving energy, recycling and utilization, the successful control of costs (2009).
Along with ECNC, L'Oreal Garnier launched the project "Preserve the Green, Care
for Nature"- China's southwestern region "plant and the community" in Shanghai. On
that day, Garnier launched the first community plant protection fund Garnier.
L'OREAL (China) initiated the "Protecting the Yangtze River and Save the Whitef1ag dolphin" campaign (2005)
In December, 2008, as the World AIDS Day of 21st Century approaches, along with the
hairdresser ambassador against AIDS L'Oreal started a hair salon in Beijing. The project
was funded by L'Oreal and UNESCO in 2005, and has already been implemented in 23
countries and regions(2008)
L'OREAL Research Institute cooperated with the China Medical Association to establish
the joint research project "CMA-L'OREAL Chinese People's Skin Types", which is the
first primary scientific research fund specialized in the skin and hair health of the
Chinese(2003)
L'OREAL sponsored the 20th World Dermatology Conference where it released the
Report on Chinese Skin Types. The report was completed within six years and filled the
existing void in the field of Chinese dermatology(2003)
During the SARS epidemic, L'OREAL donated a package of skincare products with a
total value of two million yuan to medical staff in Shanghai(2003)
Up to 2003, L'OREAL had sponsored such public benefit activities such as the Pingyao
International Photographic Festival, the 6th Shanghai International Arts Festival, the
television program Green World Tour shot by Beijing TV, From Beijing to Versailles: The
China-France Arts Exchange Expo
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7. Marketing Mix
Product
1. Consumer
products
The Division's 5
international brands
are LOreal Paris,
Garnier, Maybelline
New York,
Softsheen.Carson and
Le Club des Crateurs
de Beaut.
2. Professional
3. Luxury products
4. Active cosmetics
products
The Departments
LOreal Professional,
Lancme, Helena
Rubinstein, Biotherm,
Matrix.
Kiehls Giorgio
Armani, Ralph
Lauren, Cacharel,
Place
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Promotion
As you could seek, LOreal products depend on the respects of differences. Therefore,
LOreal creates and give represent them in the TV and everywhere people could see. LOreal
products estimate by the professional chemists and researchers. We can divide LOreals
advertisement in 3 main point of view.
Age :
Skin
Hair
Marketing strategies:
LOreal has advertising media everywhere. By the big posters on the wall, the sigh board,
magazines, internet .To appreciate with the customers and they could reach their products as
easily.
Television Media:
Loreal has many famous celebrities for the present on T.V or in magazines and posters. Those
celebrities are influence and have more powerful with their fan club and the consumers.
People
Employees
Culture
Founder
1907: L'Oral founder and French
hierarchical. In my experience
employees in 60 countries.
in consumer market.
company.
outside of work.
Graduate, London.
Prices
LOreal follows lots of pricing strategies to set the accurate price for the existing product of the
new product. Strategies like:
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Survival.
Product-quality Leadership.
Other Objectives.
Determining Demand.
Price Sensitivity.
There is also a six step procedure for setting the price for a particular product. Six step
procedure:
Determining demand
Estimating costs
Physical evidence
References
LOreal concentrate
marketing
User Story
on Britain's Daily Mail reports Yorkshire's Julie McCabe, 38, just
and wanted to dye her hair. Instead, just moments after applying the
communication efforts, and LOreal Preference product to her hair Julie collapsed and stopped
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adjust
its
advertising breathing.
accordingly, in order to Julie has been in Yorkshire's Airedale General Hospital in a coma
reflect more accepted brand for the past 3 weeks and doctors are giving her only an 8% chance
imagery for the black ethnic of survival. It is believed that she may have suffered an allergic
group with respect to the reaction to a chemical called para-phenylenediamine (PPD) which
LOreal
brand,
through can be found in 99% of all hair dyes. Relatives said she normally
meeting the desires, social dyed her hair about every six weeks but never had any reaction
and self-expressive needs of previously.
the
this
accurately.
group
more
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