L’oréal: Practical Application of Theory, Concepts and Analytical Tools in the Context of the L’oréal Group

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L’Oréal
Practical application of theory, concepts and analytical tools in the context of the L’Oréal Group

May 16, 2011

Company description
Before analyzing and evaluating the international business activities of the L’Oréal Group, we first provide you a short overview of the firm, in which covers the most essential aspects are covered. History

In 1907, a young chemist named Eugène Schueller developed the first synthetic hair dyes and sold it to hair salons in Paris under the brand name Auréole. Two years later, he registered his company as Société Française de Teintures Inoffensives pour Cheveux, which later became L’Oréal, a company with a strong focus on research and innovation for beauty products. From that moment until 1984, the company was on the road to greatness as it began to grow rapidly. The firm reached its peak in the period 1984-2000 and today, the L’Oréal Group markets more than 500 brands, including The Body Shop, Maybelline, Biotherm, Cacharel, Giorgio Armani Perfumes & Cosmetics, Vichy, and Ralph Lauren Fragrances. While the company started off with solely producing hair products, it now offers thousands of different products around the world, varying from make-up to perfumes to skin and hair care products, making it the leader in the global cosmetics market. Current status

The firm’s total revenues accounted for 19.5 billion dollars in 2010, with net profits being 2.24 billion dollars. With their 66,000 employees and ranking 353 in the Fortune Global 500, the L’Oréal Group is the largest cosmetics and beauty firm in the world. The company became market leader in nearly every country it operates in. Their strong commitment to research and development has greatly contributed to this, as it led to increasingly safe and effective products. Having reached a stable growth rate and worldwide recognition, L’Oréal currently puts increasingly more focus on ethics, social and environmental responsibility. Not only did they win several awards for their environmentally-friendly behavior, they also promote sustainable development. Mission and goals

L’Oréal’s ambitions concerning sustainability are extremely high, as their aim is to be an exemplary corporate citizen. Furthermore, L’Oréal puts more focus on the reduction of the company’s carbon footprint, waste and greenhouse emissions: their goal is to reduce emissions by 50% over the next five years. Apart from their ideals on sustainability, the corporation also tries to increase sales by attracting more customers globally. They do this by not only targeting certain groups based on income, but also on culture. As stated on their official website, L’Oréal’s mission is as follows:

‘To invent beauty and meet the aspirations of millions of women and men. Its vocation is universal: to offer everyone, all over the world, the best of cosmetics in terms of quality, efficacy and safety, to give everyone access to beauty by offering products in harmony with their needs, culture and expectations. With the opening up of the emerging markets, L’Oréal’s mission is broadening in response to the vast diversity of populations. ’ (L’Oréal official statement)

Under the leadership of current CEO Owen-Jones, L’Oréal tries to maintain its position as one of the world’s top companies, never ceasing to grow and provide the world with continuously innovating products in order to reach its mission: to make beauty universal.

Exam field assignment
The following text extensively covers L’Oréal’s international business activities. Different theories, concepts and analytical tools are applied to the L’Oréal Group. By critical analyzation and evaluation, a solid overview of the firm in terms of globalization can be established.

In order to explain the location-specific advantage of L’Oréal, we compared four international trade theories namely: comparative advantage, factor proportions (H-O theory), Linder’s theory of overlapping demand and Michael Porter’s...
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