Managing Company Ethics and Social Responsibility

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Introduction
L’Oreal is the world’s top cosmetic products manufacturer. In 1907, it was founded by Eugène Schueller, a young chemist who developed a hair dye formula which was safe for people. He named the products as “Aurelióne” and offered to the hair salons in Paris. Within 2 years, he registered his own company as “La Societe Franeaise des Teintures inoffensives pour Cheveux”, which soon became L’Oreal.

In 1920, the company employed 3 chemists in the laboratory. At the end of the year, there were 40000 hair salons in France and L’Oreal new products which are O'Cap, Imédia Liquide, and Coloral gained the most market share. In 1928, L’Oreal developed its diversification strategy by purchasing the soap company Monsavon.

L’Oreal started its business with hair dye products. In 1954, L’Oreal expanded its market into skin care field by entering into technological agreements with company Vichy. In 1960s, there was a rapid growing interest in simulating youthful looks. Therefore the company opened new cosmetological and bacteriological facilities to gain a significant entry into skin care, makeup and perfume markets. Companies such as Garnier and André Courrèges were added into the group.

In 1993, L’Oreal was facing some ethics problems. The animal right activists were about to protest about the use of animal testing that was doing by L’Oreal. As a top manufacturer of cosmetic products, L’Oreal intended to maintain its good reputation and image by ending the activity of animal testing. In 2006, L’Oreal purchased the Body Shop and the consumers were making calls to boycott The Body Shop since the rumour of using animal testing of L’Oreal were stated. In 2011, L’Oreal will have the largest factory in Indonesia by investing US$50 million.

Nowadays, the company markets over 500 brands and has more than 2,000 products in every category in the beauty business. From hair colour products, the company expanded its product lines to permanents, styling aids, cleaners, perfumes and body cosmetics. Those products were distributed through different distribution channels, from hair salons and perfumeries to hypermarkets, supermarkets, and health and beauty outlets. They also distributed their products through direct mails and promoted the products hardly via advertising.

Communication with the consumers played an important role in L’Oreal’s history. L’Oreal won the Oscar in advertising award in 1953. To promote its products, L’Oreal commissioned the promotional posters from graphic artists such as Colin and Loupot. The founder also launched his own women’s magazine, Votre Beauté in 1933.

L’Oreal’s five ethical values are integrity, respect, excellent, courage, transparent and currency. Those ethical values play important role in shaping L’Oreal’s culture and built its reputation and give them a shared vision. L’Oreal sees the importance of ethics and presents the five ethical values in all aspect of their activities, such as their strong Sustainable Development and Diversity policies, Purchasing Department’s responsible sourcing policy and their high standard of product quality and safety.

According to L’Oreal’s official website (www.loreal.com), ethics is everyone’s job that two ethical competencies that have been integrated into their annual appraisal process, which are “Leads with human sensitivity” and “Achieve results with integrity”. In order to implement The L’Oreal Spirit in employees’ day-to day activities, L’Oreal has conducted The Code of Business Ethics in 2000. To highlight the importance of this document, L’Oreal’s Chairman and Chief Executive Officer signed the foreword and the Executive Committee signed the introduction. Each employee also receives a copy of this document to apply in their day-to day activities.

CONTENTS
Corporate Social Responsibility (CSR) refers to the fact that board of directors of a company, as the trustees of various interest parties that actively participate in altruist...
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