Loreal Acquisition Strategy
Strategic analysis report on L’Oreal acquisition of Body Shop in 2006
CONTENTS
1. EXECUTIVE SUMMARY……..……………………………………………………3
2. STATEMENT OF PURPOSE………..………………………………………………3
3. LIMITATIONS…………………………..…………………………………………..4
4. INTRODUCTION…………………………..……………………………………….4
5. INDUSTRY BACKGROUND…………………..………………………………….4
6. COMPANY OVERVIEW…………………………..………………………………5 L’Oreal…………………………………………………..…………………………...5 Body Shop…………………………………………………..……………………….5
7. GROWTH STRATEGIES……………………………………..……………………6 Reasons for acquisition……………………………………………..………………..6 Acquisition strategy……………………………………………………..…………...7 Integration Approach………………………………………………………..……….7 Expected synergies……………………………………………………………..……8 Added Value Potentials…………………………………………………………..…9 Competitive Advantage…………………………………………………………..…10 Portfolio Management…………………………………………………………........11
8. CONCLUSIONS AND RECOMMENDATIONS……………………………..….12
9. REFERENCES……………………………………………………………………...13
10. BIBILOGRAPHY………………………………………………………………….14
11. APPENDIX………………………………………………………………………...15
EXECUTIVE SUMMARY
The following report is an analysis of the proposed acquisition of Body Shop by L’Oreal. It provides overview of the two companies and highlights L’Oreal’s growth strategies through acquisitions. It aims to identify the reasons for the acquisition, expected synergies, value added potentials and competitive advantage added to L’Oreal from Body Shop. Expected synergies from this acquisition appear to be access to new markets, access to natural products, growth in market share, access to suppliers and reduction of operating, distribution and R&D costs.
This acquisition would also enable the Body Shop to get access to marketing strategies and techniques of L’Oreal. Moreover, it would provide L’Oreal with a scope to strengthen its position in global cosmetic market, which was expected to be worth more than $ 10 billion by the end of 2006. The key to
CONTENTS
1. EXECUTIVE SUMMARY……..……………………………………………………3
2. STATEMENT OF PURPOSE………..………………………………………………3
3. LIMITATIONS…………………………..…………………………………………..4
4. INTRODUCTION…………………………..……………………………………….4
5. INDUSTRY BACKGROUND…………………..………………………………….4
6. COMPANY OVERVIEW…………………………..………………………………5 L’Oreal…………………………………………………..…………………………...5 Body Shop…………………………………………………..……………………….5
7. GROWTH STRATEGIES……………………………………..……………………6 Reasons for acquisition……………………………………………..………………..6 Acquisition strategy……………………………………………………..…………...7 Integration Approach………………………………………………………..……….7 Expected synergies……………………………………………………………..……8 Added Value Potentials…………………………………………………………..…9 Competitive Advantage…………………………………………………………..…10 Portfolio Management…………………………………………………………........11
8. CONCLUSIONS AND RECOMMENDATIONS……………………………..….12
9. REFERENCES……………………………………………………………………...13
10. BIBILOGRAPHY………………………………………………………………….14
11. APPENDIX………………………………………………………………………...15
EXECUTIVE SUMMARY
The following report is an analysis of the proposed acquisition of Body Shop by L’Oreal. It provides overview of the two companies and highlights L’Oreal’s growth strategies through acquisitions. It aims to identify the reasons for the acquisition, expected synergies, value added potentials and competitive advantage added to L’Oreal from Body Shop. Expected synergies from this acquisition appear to be access to new markets, access to natural products, growth in market share, access to suppliers and reduction of operating, distribution and R&D costs.
This acquisition would also enable the Body Shop to get access to marketing strategies and techniques of L’Oreal. Moreover, it would provide L’Oreal with a scope to strengthen its position in global cosmetic market, which was expected to be worth more than $ 10 billion by the end of 2006. The key to
References: Books/Publications David Walters, Mark Rainbird (2007) Cooperative innovation: a value chain approach, Journal of Enterprise Information Management, Vol 20, No 5, pp John A. Pearce II, and Richard B. Robinson, Jr. (2007) Strategic Management: Formulation, Implementation and Control, New York, McGraw-Hill Companies Inc. Michael A. Hitt, Robert E. Hoskinson, R. Duane Ireland (2007) Management of Strategy: Concept and Case Studies, New Delhi, Akash Press. Mohammed Pakneiat, Monireh Panahi, Javad Noori (2010) Firm capabilities and diversification: how mission matters, Business Strategy Series, Emerald Publishing Ltd., Vol 11, No 4, pp. 248-260. Electronic Resources Simon Pitman (2006) http://www.cosmeticsdesign.com/Products-Markets/L-Oreal-s-Body-Shop-acquisition-meets-with-mixed-reaction, accessed on July 19, 2010. Simon Pitman (2006) http://www.cosmeticsdesign.com/Financial/Body-Shop-gives-nod-to-L-Oreal-takeover, accessed on July 19, 2010. Books/Publications David Walters, Mark Rainbird (2007) Cooperative innovation: a value chain approach, Journal of Enterprise Information Management, Vol 20, No 5, pp John A. Pearce II, and Richard B. Robinson, Jr. (2007) Strategic Management: Formulation, Implementation and Control, New York, McGraw-Hill Companies Inc. Michael A. Hitt, Robert E. Hoskinson, R. Duane Ireland (2007) Management of Strategy: Concept and Case Studies, New Delhi, Akash Press. Mohammed Pakneiat, Monireh Panahi, Javad Noori (2010) Firm capabilities and diversification: how mission matters, Business Strategy Series, Emerald Publishing Ltd., Vol 11, No 4, pp. 248-260. Electronic Resources Simon Pitman (2006) http://www.cosmeticsdesign.com/Products-Markets/L-Oreal-s-Body-Shop-acquisition-meets-with-mixed-reaction, accessed on July 19, 2010. Simon Pitman (2006) http://www.cosmeticsdesign.com/Financial/Body-Shop-gives-nod-to-L-Oreal-takeover, accessed on July 19, 2010. 2008 | YSL Beaute | Cosmetics | Source: L’Oreal’s company website http://www.L’Oreal.com/_en/_ww/html/our-company/history-of-l-oreal.aspx?, accessed on July 22, 2010. Source: L’Oreal’s company website http://www.L’Oreal.co.uk/_en/_gb/index.aspx, accessed on July 22, 2010.