INTRODUCTION

The L’Oreal Group is the world's largest cosmetics and beauty

company. With its registered office in Paris and head office in the Paris

suburb of Clichy, Hauts-de-Seine, France, it has developed activities in the

field of cosmetics. Concentrating on hair color, skin care, sun protection,

make-up, perfumes and hair care, the company is active in the

dermatological, tissue engineering and pharmaceutical fields and is the top

nanotechnology patent-holder in the United States.

Before the facial cosmetics, L’Oreal was known as a hair-color

formula developed by French chemist Eugene Schueller in 1907. It was

then known as "Aureole". Schueller formulated and manufactured his own

products which were sold to Parisian hairdressers. It was only in 1909 that

Schueller registered his company as "Societe Francaise de Teintures

Inoffensive pour Cheveus, "the future L’Oreal. Scheuller began exporting

his products, which was then limited to hair-coloring products. L’Oreal got

its start in the hair-color business, but the company soon branched out into
other cleansing and beauty products. L’Oreal currently markets over 500

brands and many thousands of individual products in all sectors of the

beauty business: hair color, permanents, hair styling, body and skin care,

cleansers, makeup and fragrances. The company's products are found in a

wide variety of distribution channels, from hair salons and perfumeries to

hyper - and supermarkets, health/beauty outlets, pharmacies and direct

mail.

There were 3 chemists employed in 1920. In 1950, the research

teams increased to 100 and reached 1,000 by 1984. Today, research teams

are numbered to 2,000 and are still expected to increase in the near

future. Through agents and consignments, Scheuller further distributed his

products in the United States of America, South America, Russia and the

Far East. The L’Oreal Group is present worldwide through its subsidiaries

and agents. L’Oreal started to expand its products from hair-color to other

cleansing and beauty products. The L’Oreal Group today markets over 500

brands and more than 2,000 products in the various sectors of the beauty

business. Such includes hair colors, permanents, styling aids, body and

skincare, cleansers and fragrances. Indeed, the L’Oreal Group has reached
the peak that all cosmetic brands sought after. Many factors contribute to

the success of the Company.

SWOT ANALYSIS

1. Strength

The ongoing success of the L’Oreal Group is without if not for the

ingenuity of the concept of their vision as a team. L’Oreal Chairman and

CEO Lindsay Owen-Jones consider passion as the key to the well-renowned

accomplishment of the said Company. The primary strength of the

Company is the continuing research and innovation in the interest of

beauty which assures that the L’Oreal Cosmetics offers the best to their

consumers. Their dedication to their continuous research makes them the

leader in the growing cosmetics industry despite the competition in the

market. Strength of the L’Oreal Groups is the developed activities in the

field of cosmetics as well as in the dermatological and pharmaceutical fields

in order to put more concentration their particular activities. The cosmetics

activities of L’Oreal are divided into five groups. First is the Consumer
Product Division which encompasses all the brands distributed through

mass markets channels, ensuring that L’Oreal quality is available to the

maximum number of consumers.

The Luxury Products Division includes the prestigious international

brands selectively distributed through perfumeries, department stores and

duty-free shops. The Professional Products Division offers specific hair care

products for use by professional hairdressers and products sold exclusively

through hair salons. The Active Cosmetics Department creates and markets

products for selective distribution through pharmacies and specialist health

and beauty outlets. The L’Oreal Group’s dermatological activities are linked

with Galderma, which is basically a dermatological firm that contributes to

the innovation of the L’Oreal Group’s products. The pharmaceutical

activities of L’Oreal are also handled by Sanofi-Aventis. These divisions and

subdivisions ensure the quality that the L’Oreal Group offers to its

customers. To further add to the enumerated strengths of the company,

L’Oreal’s 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 L’Oreal products within reach of

other women from different parts of the world.

 2. Weaknesses

Perhaps one of the weaknesses that a big company faces is the

decentralized organizational structure. This is also part of the difficulties

that L’Oreal is facing. Due to the many subdivisions of the Company, there

is also the difficulty in the control of L’Oreal. 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. L’Oreal will also have

a difficulty in finding out what division is accountable for the possible

pitfalls of the Company. Another weakness that L’Oreal faces is their profit.

The profit margin of L’Oreal is comparably low than that of the other

smaller rivals. While L’Oreal projects certain rise in digits as their profit, the

result does not usually meet the expectations. Perhaps, this is also due to

the high-end advertising and marketing as well as the width of the

Company. Finally, the coordination and the control of the activities and

image in the worldwide market are also viewed as a weakness in the part

of L’Oreal. Due to its worldwide marketing strategy, there are also

dissimilarities brought about in the campaign of L’Oreal products as to

what image they are to project. One of the weaknesses that are in the

L’Oreal is Slow revenue growth. L'Oreal's long term revenue growth has
been low. Its nearest competitor, Estee Lauder, reported a higher revenue

growth of6.7% during 2002-2006.Slow revenue growth relative to the

industry average and the revenues of competitors such as Estee Lauder

indicates a decline in competitiveness and lack of revenue driving products

3. Opportunities

The L’Oreal Company concentrates on cosmetic products that enhance

women of all ages. The growing demand for beauty products gives L’Oreal

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.

Another opportunity that L’Oreal must take advantage of is their greater

market share because of the numerous patents registered by the

Company. This enables them to have the top of the line products only to

their name and therefore would lead costumers only to them for they could

not find any of the said cosmetics in other brands.

 Among of their opportunity is a demographic trend in the US.

Growing beauty consciousness especially among the aging baby boomers is

an important trend for all cosmetics companies In the US, the elderly are

seen to be increasingly using beauty enhancing/revitalizing lotions and

cosmetics. Hence, L’Oreal, with leading products marketed for this segment

could look to benefit from this trend.

Next is cosmetics market in emerging nations the importance of

emerging markets such as China, India and Brazil on the rise for cosmetics

companies due to increasing popularity of beauty contests and increasing

disposable incomes. China is the second largest cosmetics market in Asia

after Japan. L’Oreal already has a strong foothold in these markets and

hence is well positioned to benefit from the ensuing demand for beauty

products in these markets.

 4. Threats

A threat to the L’Oreal 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 L’Oreal. 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 L’Oreal are within the

reach of the citizens of developed countries, but L’Oreal may have

problems reaching out even to the average people from the

underdeveloped countries. Also a threat to the L’Oreal Group is the

spending habits of consumer and the economic crunch that most countries

are experiencing as of present. While the L’Oreal Group may be producing

the best of its line, people may find that their products are not of their

basic needs and would skip buying L’Oreal products. However, with the

growth of the market, the damage could be far from taking place.

First of all, the treats of L’Oreal are growing popularity of cosmetic

surgery. Beauty consumers are increasingly taking refuge in new

technologies such as advanced dermatology, cosmetic surgery, hair and

organ transplant and other treatments to enhance their beauty. Not only

are the results from these treatments instant, but they are also long

lasting. This could reduce dependence on traditional beauty aids such as

creams and lotions, which could lead to a fall in demand for the skin and

hair care products of L’Oreal.

Next is an intense competition. The skin care, makeup, fragrance and

hair care businesses are characterized by intense competition throughout

the world. The company competes in selected product categories against a

number of multinational manufacturers. In addition to products sold in the

mass-market and demonstrator-assisted channels, the company's products

also compete with similar products sold in prestige department store

channels, door-to-door or through mail-order or telemarketing by

representatives of direct sales companies. Brand recognition, quality,

performance and price have a significant influence on consumers' choices

among competing products and brands.

 Summary: Using ISO 14000 Certification to gain strategic

Advantage

This insert discusses the use of ISO 14000 certification to gain

strategic advantage. The ISO is based in Ganeva, Switzerland and

represents a network of the national standards institutes for 147 countries.

Its standards are voluntary but widely accepted worldwide. ISO 1440 is a

series of voluntary in the environmental field. This family of standards

addresses the extent to which a firm minimizes harmful effects on the

environment caused by its activities and continually monitors and improves

its own environmental performance. The U.S Environmental Production

Agency offers a guide on becoming ISO 14001 certified.

The major requirements of an EMS under ISO 1401 including,

identifying all aspects of the organization’s activities, products and services

that could have impact on the environmental. Set the performances

objectives and targets for the managements. Implement an EMS to meet

environmental objectives also should audit the operation of the EMS.

Lastly, take corrective actions when deviations from EMS occur. Hence,

from that we can conclude that the ISO 14001 standards on air, water, and

soil quality, and on emissions of gases and radiation, contribute to

preserving the environment in which we all live and work and not being

ISO 14001 certified can be a strategic disadvantages for towns, countries,

and companies as people today expect organizations to minimize or, even

better to eliminate environmental harm they cause.