As defined by “Global Business Today”, globalization refers to the shift toward a more integrated and interdependent world economy. For companies today, that means a larger scope, and many more opportunities, but also more threats. In the following paper I will discuss the strengths, weaknesses, opportunities and threats of one of the world’s largest cosmetics company, L’Oreal Paris, in its country of origin as well as in the new emerging markets it seeks to expand into. Background on L’Oreal Paris
L’Oréal began as a research and development company for hair products but eventually branched out into other cleansing and beauty products. It now markets over 36 brands and many thousands of individual products in all sectors of the beauty business: hair color, permanents, hair styling, body and skin care, cleansers, makeup and fragrances. (Appendix B) The company's products are found in every type of cosmetic distribution channel, from hair salons and perfumeries to supermarkets, health/beauty outlets, pharmacies and online stores. L’Oréal currently has five research and development centers: two in France, one in the U.S, one in Japan, and in 2005, one was established in Shanghai, China. A future facility in the US will be in Berkeley Heights, New Jersey. Current company info
Currently L’Oréal has operations in over 130 countries and is one of the largest players in the cosmetics industry, employing over 50 000 people. In this paper I have chosen to discuss why it has become so successful in its country of origin, France and one of its international ventures, India, where it is currently one of the top cosmetic companies. Mission
In the next 5 years, L’Oreal has set a goal to bring in one billion new customers. This means expanding their brands into the emerging markets. One of the emerging markets that L’Oreal has been focusing on in recent years is India, and according to the 2013 shareholders letter, the New Markets (which include India) represent around 40% of L’Oreal’s cosmetic sales. Therefore It is a smart move for the company to focus on not only maintaining but increasing their market share in these markets. In order to establish a close relationship with its Indian consumers, L’Oreal has recently opened an advanced research centre in Mumbai, India which will focus on researching specific skin and hair characteristics specific to its Indian customers. The research center was a Greenfield operation
Unsuccessful Advertising Campaigns by L’Oreal Because of Cultural Differences
In July 2007, the British Advertising Standards Authority attacked L'Oréal for a television advertisement on its “Telescopic” mascara stating "it will make your eyelashes 60% longer." In fact, it only made the lashes look 60% bigger, by separating and thickening at the roots and by thickening the tips of the lashes. They also failed to state that the model was wearing false eyelashes (Misleading L'Oreal mascara adverts banned in the UK ). In July 2011, the British Advertising Standards Authority took action against L'Oréal, banning two airbrushed Lancôme advertisements in the UK featuring actress Julia Roberts and supermodel Christy Turlington. The agency issued the ban after British politician Jo Swinson argued that the two ads misrepresented reality and added to the self-image problem amongst females in the UK. L'Oréal acknowledged that the photos had been airbrushed but argued that the two cosmetic products could actually produce the results depicted in the ads and that the results of the products had been scientifically proven( L'Oréal's Julia Roberts and Christy Turlington ad campaigns banned). After researching British culture and consulting with a few friends who live in England, it is obvious that these campaigns did not work because people in Britain are less averse to being deceived and exaggerated to, unlike in America or Canada where it is seen as a norm for commercials to exaggerate...