College Introduction and Definitions L’Oreal is a group of firms specializing in French cosmetics and other beauty products for male and female gender. It has a wide coverage in different countries and is founded on one of its core values, innovation. The goal of every business is business, and this has to be reflected by the profits generated, without which the company will be forced out of business by market forces such as competition. For such a company dealing in cosmetics and beauty products, it has no choice but to ensure its policies for strategic management are sound, effective and monitored to meet the customer’s specifications.
Strategic management involves two main steps, formulation, and implementation. Strategic management- this is the formulation and implementation of goals of a company by the top level management, geared towards achieving the objectives of that company by efficiently and effectively optimizing the available resources of the company and factoring in the environment within which the company operates. Formulation of a strategy involves coming up with short term and long term decisions based on an analysis of the internal and external environments ending up with a series of objectives that the company should pursue. Implementation of a strategy is the realization of the already established objectives by structuring, aligning and mobilizing the resources of that company, monitoring the processes to track progress of meeting the specific goals. Roles and Responsibilities for strategy implementation for L’Oreal business scenario. This can be done by looking at the SWOT analysis for L’Oreal.
It has major strengths some of which include its geographical coverage in 130 different countries globally, its research and development department focuses on dermatology and cosmetology thereby not only focusing on beauty alone but also the health effects of their products, and the fact that L’Oreal has stood the test of time since 1909. The company is doing poorly in hair styling especially in the Western Europe market and has registered dismal performance in North America over the years.
These weaknesses undermine investor confidence due to poor performance. L’Oreal can take advantage of new opportunities, for example the old population in United States provide a large market for beauty products since they prefer revitalizing lotions and cosmetics that give them a good appeal and appearance.
Also emerging markets in India, China and Brazil due to high demand for hair color products. L’Oreal faces threats such as increased competition from companies like Revlon, Avon, Unilever and Proctor & Gamble, availability of counterfeit products tarnishes the brand image and some consumers opt for new technology, the company could therefore lose market for its product unless they focus on advanced dermatology and cosmetic surgery. Evaluating resource requirement for L’Oreal in monitoring strategy. The efficiency and performance of L’Oreal services and products can be compared by services offered elsewhere at an earlier time.
This performance review need to be an integral part of management in implementing new strategies. An environmental audit can assist by employing PESTLE and PORTER’S 5 forces analysis. In Porters view, strategic management should be concerned with building and sustaining competitive advantage. The framework involves the bargaining power of buyers and suppliers, threat of new entrants, availability of substitute products and competitive rivalry of firms in the industry. PESTLE analysis is concerned with the political, economic, social, technological, legal and the environment in which L’Oreal operates.
The company is doing well locally and internationally as it registered 70million new customers worldwide, targeting new markets such as India where hair color products are in demand. L’Oreal improves social lives of many, specifically, it has partnered with United Nations to support International Corporate Program for Women in Science, it uses renewable raw material protecting the environment from deforestation and its GeoPeak solar system has seen reduction of water used. Technologically, L’Oreal uses photonics to improve the color of cosmetic products.
It has legal rights as it is licensed to operate in different countries globally. Study reveals that L’Oreal faces market rivalry. Since the company is renowned, threats of new market entrants does not affect the company. Existence of substitute products from other companies affects the market price of merchandize. Suppliers in the market have less power as products are differentiated. The company can switch from one supplier to another without affecting its revenues. With many rivals in the market, buyers have significant bargaining power. However, the unique and differentiated products make it stand out from other competitors. Recommendation for L’Oreal new strategy. Merging with other companies such as Unilever, Proctor & Gamble and Revlon should be considered to avoid unnecessary competition (horizontal integration).
It could also save its operational costs by outsourcing expertise from advertising and marketing experts who will do a better job at a lower cost, expanding its market share (unrelated integration). L’Oreal could also diversify by increasing the number of brands such as skin care products with anti-ageing properties ensuring a wide choice for customers. In addition, L’Oreal should develop new products for the low end market by fostering innovation (market penetration).
It should focus on profitability, cutting down costs and effectively managing their human resource to enhance productivity. Targets and Timescales for achievement to monitor strategies by L’Oreal L’Oreal should have specific targets that should be compared with the actual performance over time so as to achieve its objectives. They include; 1. Sensitivity to the business environment- beauty and cosmetics industry is dynamic. It keeps on changing with varying trends, tastes and preferences of the customers.
L’Oreal should therefore seek to satisfy the specific wants of the customers by conducting market research regularly so that their products are tailor made for different customers with different wants. 2. Global focus- despite its presence in 130 countries, L’Oreal should seek to expand its operations to other nations by intelligent use of technology. Collective aspirations are encouraged when people are encouraged to learn, building their thinking capacity and hence improving productivity to new markets. This goal has no specific timescale but it should be realized annually. 3. Competitive advantage- L’Oreal can either target customers in most or all segments based on offering the lowest price, ( cost leadership strategy ) or target customers in most or all segments based on attributes other than price e. g., via higher product quality or service to command a higher price, ( differentiation strategy). 4.
Cohesion and identity- L’Oreal should be a brand that markets itself due to its ability to build a community with personality, vision, and purpose. By having a strong workforce nurtured by good human relations, its image will flourish because the employees’ expectations are met satisfactorily.
The company cannot start wrong and expect to finish right, therefore this target should be met on a daily basis by adhering to work ethics and rewarding their employees. In Conclusion L’Oreal can be said to be doing well as it’s one of the blue-chip companies in the beauty and cosmetics industry. However big names such as Nivea, Revlon and Proctor & Gamble as its competitors should act as a constant reminder that there is still room for growth and that a lot needs to be done to enhance productivity, profitability, market share and still be relevant to the changing trends in customers tastes and preferences with time.
It should focus on both high end and low end consumers to achieve its targets. Bibliography Patrick J. S. (2014). Business Strategy: Plan, Execute, Win! Canada. John Wiley & Sons, Inc. Lafley A. G. and Roger L. M. (2013). Playing to Win: How Strategy Really Works. New York. Harvard Business Review Press. David A. A. (2001). Developing Business Strategies. Canada. John Wiley & Sons, Inc. Brian O. (2014). Acting as a Business. Vintage.