The purpose of this cases study was to analyse the main problem of L’Oreal which is moral issue, aiming to recommend suitable ways to mitigate the effect of the moral issue. A SWOT analysis was conducted to find the strengths, weakness, opportunities and threats of the performance of L’Oreal. Results indicated that L’Oreal has a strong brand with a strong capability of research and development, having a diversified geographic presence. Yet, the company performances badly in Western Europe which is also a cause of slow revenue growth. Moreover, its moral issue on animal testing is also a problem affecting the company’s profitability. It is recommended the company should differentiation its products compared not only with the competitors such as P&G and Estee Lauder but also the company’s own brands.
This report is aiming to give the best solution to L’Oreal of its biggest threat with a SWOT analysis. The reason of choosing L’Oreal is because it’s debatably moral issue on animal testing cause lots of echo in the society, having a lot of debates and disputes on this particular issue with L’Oreal no intention to change. L’Oreal is the world’s largest cosmetics and beauty company which has developed different activities in the field of cosmetics, concentrating on hair color, skin care, skin care, sun protection, make up, perfumes and hair care. This successful French beauty giant was first founded by Eugene Schueller, a young French chemist in 1901. After nearly more than 100 years with a series of acquisition, innovation products as well as formulae, L’Oreal is currently acting as a monopoly in the beauty industry, primarily operating in Europe and North America. In this report, Moral issue will be the issue that particularly concentrated as it is interesting to show how a business moral issue can greatly affect the company’s performance, profitability as well as reputation.
This report was based on the four factors of SWOT analysis which are Strengths, Weaknesses, Opportunities and Treats. Throughout this report, we analyzed L’Oreal according to SWOT analysis in order to recommend some solutions that L’Oreal may need after looking at some financial and market share data of L’Oreal. In addition, much of the information and data came from the internet and personal findings.
According to SWOT analysis, I found some major issues that L’Oreal is facing. I decided to concentrate on the moral issue of L’Oreal which I think it is the biggest problem that the company needs to cope with as this issue may ruin not only the company’s profitability but also reputation.
i) Strong brands
L’Oreal, undoubtedly, is one of the world’s famous brand names, especially for beauty industry, founded as a cosmetics business since 1909. (According to Datamonitor Company 2006) A series of advertising such as television, magazines, newspaper and radio, took L’Oreal to spend nearly 367 million on advertising and promotion in 2005. It therefore now builds up its brand lineup which includes strong names such as Lancôme, Maybelline, L'Oreal professional and so on. Moreover, L’Oreal is using different celebrities in various areas as its famous promotion policy, such as Beyonce in US.
L’Oreal has operations in over 130 countries across five continents, namely, London, New York, Hong Kong and Tokyo, having a diversified geographic presence. (According to L’Oreal 2007)In 2005, revenue from Western Europe accounted for 46.9%, while North America accounted for 27.9% and ‘the rest of the world’ contributed the remaining 25.2% of total revenue. It showed L’Oreal, is not particular dependent upon any regions, which is good at stability of revenue growth.
iii)Strong research and development capability
In the year of 2005, L’Oreal spent 496 million on research and development with a numerous 529 registered patents related to cosmetics and...