L'Oreal and the Globalization of American Beauty

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EXECUTIVE SUMMARY.

If we look at the over 100-year history of L’Oreal we see how much that company changed and became the biggest global cosmetic company. They expanded and acquire many other companies in the world especially in USA and France. They faced some challenges on the way to that title. Some of the challenges are: high rivalry in the industry, marketing problems with sustaining a consistent brand positioning of the products in some markets, and the cultural differences they faced in many countries. However they also possessed specific capabilities that helped on the way to become the world’s largest beauty company. L’Oreal has a strong commitment to research and development; for example they spent $600 million in 2003 on the development of new products and at the same time working on reduction of production costs. Under Owen-Jones L’Oreal experienced a big growth and in my opinion acquisitions have played a big role in L'Oreal's performance and growth together with L’Oreal expertise in product development and marketing. With each acquisition the L’Oreal team applied their expertise and technology to improve products, marketing, and brand image in order to increase market share and sales respectively. They really focused on each brand to be very precisely defined and occupied a very distinct market position without overlapping the other segments and products from other brand they had. Kiehl’s brand presented some global opportunities and limits too, which included plans to increase the brand's presence in the world while sustaining their integrity as an alternative brand with a cult following.

1.How did L’Oréal become the world’s largest beauty company? What challenges did they face in building a global beauty business? What specific capabilities did L’Oréal have (or develop) to become the world’s largest beauty company?

If we look at the history of L'Oreal, the world's largest cosmetics company, from its origins in France in 1907, we see that from the beginning products were sold to other countries, like Netherlands, Italy and Austria. The company entered the United States in 1953, and from 1990, expanded rapidly with the acquisition of U.S. brands. At the same time they started to acquire French brands. As a result L'Oreal developed a portfolio of U.S. and European brands that are sold globally. Their secret sauce is the company attracted different cultures through its many products. L’Oreal sells Italian elegance, New York street smarts and French beauty through its brands, it is reaching out to more people across a big range of cultures and incomes than any other cosmetic company in the world. Moreover L'Oreal is the only real global leader in every segment of the industry. By focusing on internal growth, with help from acquisitions of other companies, continuous product innovations and creating a strong presence in every distribution channel all over the world they became the world’s largest beauty company. They also faced some challenges on the way to that title. L'Oreal has a number of rivals in the cosmetics industry: Estee Lauder, Proctor & Gamble and Revlon, which are trying to compete and be present in other markets too. Another challenge was in marketing they faced some problems of sustaining a consistent brand positioning of the products in some markets, like Japan. Furthermore, L’Oreal managers needed the abilities to observe changes in trends into the products and react quickly to that trends and then had to clever communicate it to the specific audience they selling product to. Cultural differences were the one of the challenge they were facing. On the contrary they also possessed specific capabilities that helped them to become the world’s largest beauty company. L’Oreal as a company had a strong commitment to research and development, which many insiders considered to be the most distinctive values and competitive advantage company has over their competitors. They spent $600...
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