Summary

The report that follows discusses operations management and how it gives a business a

competitive advantage. Enhancing a company's strategic position requires effective management

of its fundamental operations. In light of this, the report uses case analysis to emphasize the two

distinct operational management divisions (Technological advancement and Sustainability) and

therefore brings them together with practical value. L'Oreal is the target firm in this analysis,

which focuses on the cosmetics business. In order to emphasize competitiveness, the study also

offers a critical evaluation of L'Oreal in comparison to a few of its rival companies.

Taking L'Oréal as a case study, its strategic direction profoundly influences its

operational management practices. L'Oréal exemplifies sustainable practices by implementing

green supply chain solutions, such as ethical sourcing and waste reduction initiatives.

Additionally, the company leverages technological advancements like AI and AR to enhance

customer experiences and operational efficiency, staying ahead in the competitive landscape.

However, the beauty and personal care industry also faces challenges in sustainable operations

management. Regulatory compliance, market dynamics, and consumer expectations pose

significant hurdles. By adopting strategies like investing in R&D for sustainable technology,

collaborating with ethical suppliers, and educating consumers, the industry can address these

challenges and uphold its commitment to sustainability. In conclusion, L'Oréal's strategic

direction and operational management practices serve as a model for the beauty and personal

care industry in contrast of other companies. By integrating sustainability and technology into its

operations, L'Oréal ensures its long-term success while addressing current challenges in

sustainable operations management.

Table of Contents

Summary........................................................................................................................................1

1. Introduction............................................................................................................................3

2. Strategic direction of L’Oréal...............................................................................................4

3. OM Strategies to Achieve These Goals.................................................................................6

3.1. Sustainability/Green Supply Chain...................................................................................7

3.2.1. Lessons learned and degree of success achieved........................................................9

3.2. Technological Development...........................................................................................10

3.2.1. Lessons learned and the degree of success achieved at L'Oréal............................12

4. Critical Evaluation of The Application of OM Strategies in Beauty Industry...............13

5. Current Issues and Challenges for Sustainable Operations Management within Beauty

Industry........................................................................................................................................15

6. Conclusion and Recommendation......................................................................................16

References.....................................................................................................................................18
 1. Introduction

The multibillion dollar beauty and skin care sector offers a wide range of goods, including

bases, powders, colors for lipstick, eye liners, eye shades, blushers, & mascara types, in addition

to cleanser, toners, serums, and lotions (Chin & Harizan, 2017). The list continues to expand as

more and better, more recent goods become available on the market. In addition, the market for

cosmetics has grown to encompass men and toddlers in addition to women. Euromonitor

International (2016) reports that the worldwide beauty business was valued at $444 billion in

2016, with skincare items holding a dominant market share of around $120 billion. According to

Allied Market Research (2017), the market for personal care and beauty goods is predicted to

grow at a compound annual growth rate (CAGR) of 4.64% over the following five years, from an

anticipated USD 525.61 billion in 2023 to USD 659.32 billion by 2028 (Ghosh & Lever, 2020).

The general increase in the standard of living and the movement in consumer preference toward

more upscale and luxurious cosmetic products like L'Oreal are to blame for this continuous rise.

L'Oreal Group has been committed to the beauty industry for more than 105 years. With 36

global brands, the Group employed 87,400 people worldwide in 2013 and had an annual revenue

of € 41.8 billion (L'Oréal, 2024).

Because L'Oreal is inherently linked to customer satisfaction, independence, and social

standards, it provides an extensive and captivating backdrop for delving into the nuances of

managing operations in the beauty and private care sector (Xiong, 2024). The strategic

orientation of organizations in the personal care and beauty sector is the main focus of this paper,

and it has a significant influence on operations management. This report aims to clarify how

major industry participants' strategic efforts are developed, directed, and optimized to meet

overall corporate objectives. To do this, it will critically analyze these initiatives. Furthermore,
this paper will examine two particular facets of operations management that were carefully

chosen for their industry-specific relevance and significance. To highlight important findings,

real-world instances from multinational firms will be included.

2. Strategic direction of L’Oréal

L'Oréal, a significant player in the beauty sector, has a strategic plan that forms the basis of

its operational management approach (Withisuphakorn et al., 2019). The targets and aims of

L'Oréal's strategic plan are its most crucial components, since they are all linked to the business's

approach to running its affairs. The company's mission is to provide the finest possible beauty to

everyone on the planet in terms of effectiveness, security, honesty, and accountability in order to

fulfill the limitless variety of beauty demands and wants (Dmitrievna, 2021). To put it briefly,

L'Oréal's approach in this area is predicated on paying close attention to customers and having a

great deal of regard for their unique demands, preferences, lives, and customs. Additionally,

L'Oréal has proven to be very committed to long-term viability understanding the value of

ethical and ecological awareness in the beauty and cosmetics sector (Smith & Johnson, 2020).

The following represent a few of L'Oréal's sustainability-related objectives:

 Sustainable Ingredient Sourcing: L'Oréal gives ethical and environmentally friendly

material sourcing a lot of attention while developing its cosmetics (L'Oréal, 2022).

 Environmental Goals: Strong environmental targets have been set by L'Oréal (L'Oréal,

2022), including a 2025 deadline for the corporation to become carbon neutral. The

Group has pledged to achieve no emissions at all by 2050 as a participant in the 'Business

Ambition for 1.5°C' project. Furthermore, L'Oréal's main goal for 2030 is to cut its

emissions of greenhouse gases across the board by 50% for each completed product.
  Efforts for the Circular Economic: The firm wants to make sure that all of its

packaging made of plastic is biodegradable, recyclable, or reusable by 2030. It also wants

to reuse and recycle all of the water that is generated by industrial operations.

 Biodiversity and Preservation: Ninety-five percent of the materials utilized in its

product compositions are bio-based, meaning they come from circular processes or

plentiful minerals. Every recipe we use will be completely considerate of every aquatic

ecology.

Figure 1: L'Oréal's Sustainability Goals

L'Oréal is committed to leading the Beauty Tech industry and creating the beauty

products of the future. The pursuit of inclusion and customisation lies at the core of L'Oréal's

beauty innovation method. The firm's dedication to stretching the limits of creativity in the

beauty business is demonstrated by its Beauty Tech sector, which led the way in the development

of greatly customized and diverse beauty products (Dmitrievna, 2021). The corporation wants to

achieve a number of its technological goals, which are displayed in the figure below.

Figure 2: Technological development Goals

 3. OM Strategies to Achieve These Goals

Throughout all sectors, business management actions contribute in a variety of ways to

the accomplishment of corporate objectives. Organizations may increase their competitiveness,

spur development, and provide long-term advantages for stakeholders by concentrating on

lowering expenses, enhancement of quality, adaptability, creativity, and sustainability (Filho,

2022). The company's vision is to "Offering all women and men worldwide the best of cosmetics

innovation in terms of quality, efficacy, and safety, all of our brands and all our ranges."

(L'Oréal, 2021) This goal statement emphasizes L'Oréal's commitment to offering superior, eco-

friendly beauty goods with cutting-edge tech and improved developments to a worldwide

consumer base. The firm's core operational management approaches are outlined in this vision

phrase (Withisuphakorn, Batra, Parameswar, & Dhir, 2019). The company is developing ethical

beauty goods and creating high-quality technological goods that are accessible to all people,

irrespective of their race or religion. By using efficient management of operations techniques,

companies may adapt to evolving marketplace circumstances and achieve their goals while

preserving a durable economic edge. The following explains these two potent operational
management techniques that L'Oréal employed to accomplish its strategic objectives (Santos,

Au-Yong-Oliveira, & Branco, 2018).

3.1. Sustainability/Green Supply Chain

The concept of sustainability is applied to all fundamental company activities choices

through sustainable operations management. In addition to increasing income creation, it

supports economic, social, and environmental goals. Green goods are a concept that the

environment has brought to the marketplace for the beauty sector, offering many businesses new

avenues for expansion (Chen & Chang, 2012). According to a research, the projected $34.5

billion market value for organic and natural beauty products is predicted to grow to $54.5 billion

globally between 2018 and 2027 (Future Market Insights, 2019). Skin care (34.8%), colored

cosmetics (makeup) (27.6%), hair treatments (19.9%), and additional items (oral care, toiletries,

hygiene products) (17.7%) are the item groups. (IBISWorld, 2019). Customers demand personal

care and beauty goods to be developed and supplied in accordance with moral and sustainable

practices, and they also anticipate goods to contain organic components, based to a latest

wellness and health research (Shimul et al., 2022). L'Oréal has introduced a number of

environmentally friendly lines of goods, for instance, its 'L'Oréal Paris Botanicals Fresh Care'

brand, which uses sustainably sourced components and container (L'Oréal, 2022).

Furthermore, L'Oréal's commitment to sustainability goes beyond the creation of its products

to encompass ethical sourcing and production methods. To ensure that raw products are acquired

legally and produced responsibly, the firm works with partners who understand its dedication to

responsible environmental care (L'Oréal, 2022). Furthermore, L'Oréal has reduced energy use

and trash production in its production plants by implementing sustainable technology (L'Oréal,
2022). For L'Oréal, these shifts in the company's operations toward sustainability have presented

advantages as well as obstacles. In 2012, L'Oréal did an analysis of materiality as part of the

discussions held to build the Sharing Beauty with All initiative. By going through this method,

the company was able to compare its current plan with the concerns of sustainable growth that

were significant to both inner and outer stakeholders. L'Oréal revised its materiality matrix in

2016 by following the guidelines set forth by the ISO 26000* standard. This updated grid

identifies 25 subjects, of which 10 are strategic for the company and its stakeholders (Belussi,

Ganzaroli, & Orsi, 2015).

Figure 3: challenges faced by L’Oreal in maintaining sustainability

3.2.1. Lessons learned and degree of success achieved

Early on, L'Oréal realized how important sustainability was, therefore to overcome its

problems, it developed a number of operational plans to match its strategic choices with

sustainability objectives (L'Oréal, 2022). As part of this, it set high goals to lessen its influence

on the environment, including cutting back on waste production, water use, and emissions of

carbon (Greenberg, 2019). By focusing on green supply chain or operational management

solutions, L'Oréal was able to meet its environmental targets. The business maintains tight

relationships with its suppliers in order to guarantee ethical sourcing procedures, which include

raw materials tracking. This dedication includes making certain that ingredients are procured

with regard for biodiversity and without causing deforestation. Additionally, it has started

initiatives to promote biodiversity preservation and sustainable agriculture in the supply chains

for essential commodities (Greenberg, 2019).

L'Oréal has also made a lot of significant progress in what has grown to be a significant

eco-mission. It decreased emissions of carbon by 78% in 2019 as opposed to its intended 60%

reduction using a starting point from 2005. It is expected to reduce CO2 emissions by over 80%

this year. Furthermore, L'Oréal is aggressively promoting a circular economy in the beauty sector

(L'Oréal, 2022). In order to achieve greater economic gain, this entails decreasing debris,

boosting reuse, and utilizing more ecological wrapping choices. These effects are quantified at

every phase of an item's life period, taking into account customer use and packaging end-of-life

in addition to purchasing, manufacturing, and shipping (White & Lee, 2021).

Figure 4: Product Life Cycle of Sustainability

 3.2. Technological Development

The company had a solid collection of brands starting in 1925, which included Maybelline,

Lancôme, La Roche Posay, Vichy, Garnier, and L'Oréal Paris, and promoted them with

conventional magazine covers and television commercials, encouraging customers to visit

physical stores, try on, and purchase their goods. Since then, L'Oreal has developed into what is

likely the world's most technologically advanced beauty brand. Over the last couple of years,

L'Oreal has gone through a significant transition, driven by its aim to combine digital into its

core business strategy in order to strengthen its competitive advantage in the beauty sector.

The introduction of the first digital mirror application by L'Oréal Paris in 2014 cleared the path
for the use of AI and AR technology in business. Additionally, in 2018, Lancôme's Le Teint

Particulier launched its Custom-blended base, corresponding an individual's complexion with a

maximum of 72,000 potential combinations instantly through the use of an innovative color

matching algorithm. Launched in 2019, Custom D.O.S.E. combines 48 distinct mixtures and is

designed to scan, assess, and assess each customer's individual skin needs before combining

active components into a custom-made correction serum (Gilbert, 2021). The Water Saving

framework, which uses 80% less water than traditional hair cleaning, is introduced in 2021 and

uses rocket engine science to deliver an opulent and effective hair products treatment both at

home and in salons (Belussi, Ganzaroli, & Orsi, 2015).

Furthermore, L'Oreal is supporting NFTs and blockchain technology to provide web3 initial

economic benefit, as stated by L'Oreal Chief Digital & Marketing Officer Asmita Dubey.

Although safeguarding the confidentiality and safety of data is an important concern for L'Oréal,

the firm faces several issues with these fresh transformations and breakthroughs, such as the

growing digitization of operations and the collecting of enormous quantities of customer

information. Furthermore, in order to successfully attract customers and increase sales, L'Oréal

needs to improve its digital capabilities given the trend toward online shopping and the growth of

e-commerce platforms (Adida, 2021). Customized advertising plans, smooth multichannel

events, and intuitive user interfaces are necessary investments to compete in the digital

marketplace. Furthermore, maintaining product genuineness, thwarting the sale of fake items,

and safeguarding a brand's reputation online present formidable obstacles.

3.2.1. Lessons learned and the degree of success achieved at L'Oréal

As an organization that prioritizes digital, L'Oréal uses technology to help teams and

customers alike, meet current issues, spark curiosity about a hyperconnected world, and cultivate

connections built on trust. L'Oréal has made significant contributions to the digital playground

by integrating this mindset into the core of its business. This can be attributed to the company's

forward-thinking vision, tactical strategy, and flawless go-to-market performance.

Anticipating future obstacles, the organization established its "Connected Beauty Incubator" in

the US in 2012 (Lunt, Staves, & Weyman, 2019). This unit, part of the research division, is

solely focused on technological advancement and market impact. L'Oréal closely observed their

customers and discovered right away that the market they were targeting was always linked, had

gone through a multi-touchpoint research procedure, and was using video clips to look for beauty

solution and see things become reality. "In 2021, we again extended our digital lead: e-

commerce grew by +25.7%, accounting for 28.9% of sales," stated Nicolas Hieronimus,

L'Oréal's CEO.

Remodeling the company with common goals was the initial phase in incorporating

digital into the business plan. Additionally, there are about 3,000 IT specialists spread throughout

20 research facilities in 11 different nations. Furthermore, L'Oréal is implementing e-commerce

plans for its brands, tailored to certain target markets. The primary objective of this initiative is

to "enhance availability even further and assist customers in finding the appropriate products on

preferred platforms." In 2020, the COVID-19 epidemic caused a significant shift in L'Oreal's

online sales platform for the cosmetics brand, leading to the highest growth in overall sales in

electronic commerce. By 2020, e-commerce accounted for more than 25% of L'Oréal's overall

sales. Only 15.6% of this stake was present in 2019, by 2021 the company's online sales share
had increased to 28.9 percent and it fell to about 28 percent in 2022 (Belussi, Ganzaroli, & Orsi,

2015).

Figure 5: Online Sales of L’Oreal

In addition, the business introduced L'Oréal Paris Féria Wild Ombré, a kit for at-home

hair coloring designed especially for ombre lovers who value economy. Five distinct tones were

offered to accommodate a wide range of hair hues, from bright to dark. The revenue generated

by this hair color product category increased by up to 50% as a result of its successful debut

(Filho, 2022).

4. Critical Evaluation of The Application of OM Strategies in Beauty Industry

Aveda is a vegan cosmetics brand that was the first to employ recycled recyclable

materials in its packaging. Additionally, since 1999, the brand has contributed USD $60 million

supporting environmental projects.

 CHANDO (brand value up 36% to US$1.3 billion) has created quite a stir in the

cosmetics industry with its unique goods and creative marketing. Additionally, CHANDO is

regarded as a pioneering brand in ethical and sustainable business operations. CHANDO is

drawing in an increasing number of customers that care about ethics through initiatives like

supporting sustainable packaging and renewable power supplies. Comparatively, Maybelline

New York is the second-fastest expanding beauty brand of the year, with a brand worth of up to

US$4 billion (a 30% increase). Maybelline, a brand owned by L'Oréal, started its global

sustainability initiative, "Conscious Together," in 2022 with the goal of promoting sustainability

and minimizing its environmental impact (Filho, 2022).

Customers have benefited in many ways from nanotechnology's new directions in the

beauty as well as personal care goods industries. For example, the Indian cosmeceutical skincare

business Nano Au Veda created a nano-gold serum in December 2021 that will enhance the

benefits of ayurveda on the skin while also delivering its advantages. Throughout the forecast

time frame of 2022–2027, the incorporation of nanotechnology into personal care and beauty

products is expected to be a major contributor of the market for these goods (Lorenzo & Romo,

2020).

Emerging innovations like AI and AR are also being incorporated by L'Oréal into their e-

commerce offerings. Vichy, one of its prominent trademarks, has upped its ante in e-commerce

with the release of Vichy SkinConsult AI, an AI-based service. In collaboration with twelve

dermatologists, Vichy developed an artificial intelligence-driven, science-based system for skin

care that can precisely identify skin conditions and suggest appropriate skin care treatments.

Vichy, or L'Oréal, has gained clients from the first interaction by digitizing the products.
 5. Current Issues and Challenges for Sustainable Operations Management within

Beauty Industry

For L'Oréal, the sustainability debate and the rising demand for cruelty-free and eco-friendly

cosmetics have enormous strategic ramifications. This is an in-depth examination of the

significance of this issue from a strategic standpoint and how it affects different stakeholders:

 Regulatory and Compliance Issues: Issues with Regulation and Compliance Stricter

environmental and consumer protection laws are being implemented by countries and

regulatory bodies around the globe. There may be monetary and legal repercussions for

breaking these rules (Smith & Johnson, 2020). Regulation noncompliance carries

monetary hazards for L'Oréal's stockholders in the form of fines and legal expenses.

Workers might have more responsibility to make sure that goods adhere to legal

requirements. Furthermore, when businesses follow rules for new technological

developments, consumers gain from safer and more environmentally friendly products

(Smith & Johnson, 2020).

 Credibility and Brand Image: Throughout the years, L'Oréal and all other companies

have invested a lot of effort into developing a solid name and image. If environmental

problems and digital media issues like cybersecurity are not addressed, brand's image

may suffer, which will erode customer trust and loyalty.

 Purchasing and Supply Network: Beyond long-term viability supply chain in beauty

industry is impacted. Modifications to vendors and sourcing procedures may be necessary

to guarantee the sustainability of components and packaging substances (Smith &

Johnson, 2020). The organization's total cost profile as well as effectiveness are impacted

by these tactical choices.

  Market dynamics and customer interest: Customers are become more aware of the

things they use and how those products affect the natural world. Since it clearly affects

the market demand for L'Oréal's items, this development has consequences for the

company (Greenberg, 2019). Income and share of the market could be wasted if this

transition is not addressed. A variety of environmentally friendly and clean cosmetics

gives customers options that are consistent with their ideals. If organziations can satisfy

these needs, its good name and customer loyalty will grow. But if L'Oréal doesn't change,

it might lose clients to rivals that have greener options (Greenberg, 2019).

6. Conclusion and Recommendation

L'Oréal has become an international innovator in the ever-changing cosmetics and beauty

sector thanks to its constant dedication to creativity, flexibility, and business insight (Smith &

Johnson, 2020). With an extensive record spanning more than a century, L'Oréal has seized

many chances and persevered through many setbacks (Brown & Lee, 2019). However, the

current strategic challenge surrounding the growing market for eco-friendly and sustainable

beauty goods was not just another phase of the market's development; rather, it was a turning

point that required creativity and strategic resilience. Our investigation into the matter has

clarified how L'Oréal approached this problem with an eye toward the years to come. Since they

directly affect the needs of customers, productivity, compliance with regulations, perception of

the brand, productivity, and longevity, technological and environmental concerns have a strategic

importance for L'Oréal (Brown et al., 2020). Ignoring these problems could lead to hazards and

lost chances that could harm the company's image and standing in the beauty sector. Thus,

L'Oréal's future profitability depends on effectively resolving these concerns.

 To overcome the challenges the beauty industry faces, the organizations should adopt the

different strategies which will help them in achieveing their goals. Firstly, to satisfy customer

needs and legal requirements, spend money on R&D of sustainable technology and ingredients.

in addition, to guarantee an ethical and transparent supply chain, work together with suppliers

who place a high priority on sustainability and ethical sourcing methods. Utilize supply chain

transparency and traceability technologies, like blockchain, to substantiate sustainability claims

and win over customers. Encourage the demand for eco-friendly products by educating and

involving customers in marketing campaigns and activities about the value of sustainability.

Establish measurable sustainability objectives with an emphasis on waste reduction, ethical

ingredient sourcing, and a smaller carbon impact. Then, openly monitor your progress. in

addition, work together with colleagues in the business to exchange best practices and tackle

sustainability issues in the beauty sector as a group. Lastly, promote a culture of ongoing

development and encourage staff members to find and carry out sustainability projects

throughout.
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