Running head: RESEARCH ANALYSIS FOR BUSINESS 1

Research Analysis for Business

Pamela Williams

ECO/561

December 11, 2017

Michael Trousdale
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Research Analysis for Business

For this assignment I have decided to use the company that I am employed by, which is

L’Oréal USA. It is the largest beauty care company in the world. In was founded in 1909 by

Eugene Schueller, a young chemist with an entrepreneurial spirit. He founded this company that

would later become the L’Oréal Group. It began with one of the first hair dyes that he

formulated, manufactured and sold to Parisian hairdressers. With this, founder of the group

forged the first link in what is still the DNA of L’Oréal research and innovation in the services of

beauty.

The L’Oréal Group acquired Maybelline in 1996 to begin they journey to becoming the

leading innovation in beauty and haircare worldwide. L’Oréal Group now owns more than 30

companies worldwide, leading the cosmetic industry in face, lips, eyes and nails. L’Oréal holds

five of the top ten spots in the cosmetics market. It is the largest manufacturer of cosmetics in the

world. L’Oréal manufactures and sell make-up, fragrances, skincare and haircare products. Their

products are priced for every income from dollar store retailers to luxury retailers.

There are four types of market structures in economics, perfect competition market

structure, monopoly market structure, monopolistic competition market structure and oligopoly

market structure. The market structure that L’Oréal operates in is the perfect competition market.

There are five criteria that must be met in this market. 1. All firms must sell an identical product;

2) All firms are price takers- they cannot control the market price of their product; 3) All firms

have a relatively small market share; 4) Buyers have complete information about the product

being sold and the prices charged by each firm; and 50 the industry is characterized by freedom

of entry and exit. Perfect competition is sometimes referred to as pure competition.

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In the year 2014 L’Oréal acquired several beauty and haircare companies. Just to name a

few NYX an American makeup cosmetic manufacturer and Carol’s Daughter was among a few

of the companies that The L’Oréal Group acquired in 2014

In the year 2015 Loreal had 25.3 billion euros in sales worldwide and had a strong

present in 140 countries. The Loreal Group employed more than 82,000 employees with an

international portfolio of more than 30 brands

Loreal has worldwide sales in the year 2016 was over 25.8 billion euros and with the

market share of 20.2 % in Western Europe, 14% North America, 12% Eastern Europe, 13%

Africa, Middle East, 9.5% Asia- Pacific (excl, Japan), and 8.8% in Latin American.

“L’Oréal’s growth engine seems to be going ahead at full steam. After a strong 2016, the

company reported a 4.5% like-for-like growth in its total sales to reach €19.5 billion for the first

nine months of 2017. The star performers as usual were the Active Cosmetics and the L’Oréal

Luxe segments. L’Oréal’s strategic acquisitions are proving to be key drivers of its performance.

One of the key brands driving its Active Cosmetics Segment's growth was its 2017 acquired

brand, Cira Vie. The four most important brands for the growth in the Luxe segment had been:

Lancôme, Yves Saint Laurent, Giorgio Armani, and Koehl’s, along with its 2016 acquisition, IT

Cosmetics. Geographically L’Oréal’s new markets are some of the best performers, particularly

the Asia Pacific market in which China stole the limelight. It is noteworthy that Estee Lauder's

recent performance was also boosted by China. The country is emerging as one of the most

important markets for the growth in beauty sales. Western Europe was also another key market

that drove L’Oréal’s growth (Real gross Domestic Product growth rate in the united states from

2012 to 2022, 2017) .”

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Loreal is leading the market in skin care, fragrances and makeup. Trends in make the last

year has made L’Oréal number one in lips and eye makeup. The 24-hour wear make-up, which

L’Oréal has several eye and lip lines.

L’Oréal has the second largest market share in hair care, the second largest product

segment within beauty care. The hair care sector of L’Oréal accounts for about 20.5% of their net

sales.

With the creation of a new product or acquisition of a new company, there are always

new employment opportunities at L’Oréal. The 24-hour infallible lip color product is the top lip

product that L’Oréal manufactures. In order to manufacture this product new machinery had to

be purchased and employees had to be trained and new employees were hired to keep up with the

demand for the new lip product.

A popular trend among women is contouring which uses a special type of face cosmetic

to give the skin the special look. New machinery and personnel to operate the equipment would

be needed to keep up with the demand of the market.

The gross domestic product (GDP) of a country is a crucial economic indicator,

representing the market value of the total goods and services produced and offered by a country

within a year, thus serving as one of the indicators of a country’s economic state. The real GDP

of a country is defined as its gross domestic product adjusted for inflation.

The growth rate in the United States in 2016 indicated that the real gross domestic

product was around 2.34 percent compared to what it was in 2015.

Economic growth of the United States alongside with countries such as Russia and China

is expected to continue to grow in the coming years. L’Oréal continues to grow in the United
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States and will continue to have a strong presence more than 140 countries, with the exception

of Japan.
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References

Colby, L. (September 6 , 2017). L'Oreal Problem With Men. Retrieved from

http://www.bloomberg.com

L"Oreal. (2017). Financial calender. Retrieved from http://www.loreal-finance.com/eng/calender

L'Oreal. (2017). L'Oreal. Retrieved from http://www.loreal.com/group

Real gross Domestic Product growth rate in the united states from 2012 to 2022. (2017). the

Statistics Portal. Retrieved from http://www.statista.com