Strategy analysis focuses on the long-term objective generating alternative strategies, and selecting strategies to pursue. The firm's present strategies, objectives and mission, couple with the external and internal audit information, provide a basis for generating and evaluating feasible alternative strategies (David 200).
L'Oreal has numerous competitors. To have an advantage on competition, L'Oreal has to apply some strategies that include internal audit information and external opportunities that will make the company stronger. They will also prevent competitors to have an advantage over L'Oreal. This report will be based upon the effectiveness of current strategies of L'Oreal, a real global leader in every segment of the industry.
L'Oreal encounters threats and opportunities and they have weaknesses and strengths. It is known as the TOWS matrix. It is an important matching tool that helps managers develop four types of strategies: SO Strategies, WO Strategies, ST Strategies and WT Strategies. The external opportunities and threats were identified earlier (see part 1) by developing the "External Factor Evaluation Matrix" and "Competitive Profile Matrix" is important for the current strategies development. L'Oreal internal strengths and weaknesses will be discussed further in this report.
SO Strategies uses the internal strengths to take advantage of external opportunities of a firm. L'Oreal has always taken these advantages with their new innovations and global expansion. The company is reaching out to more people across a bigger range of income and cultures than just about any other beauty-products company in the world. L'Oreal strategy positions it beautifully to profit even further when the middle class begins to grow stronger in emerging markets. That makes L'Oreal competitors more hustling to catch up.
WO strategies aim at improving internal weaknesses by taking advantage of external opportunities. Laws and governmental regulations require companies such as L'Oreal to maintain certain standard in quality and responsibility for their product. Rules may vary depending on the country. L'Oreal also have it own set of regulations that are very strict on quality. Whatever product is put on the market, one can be sure that it has gone through a very thorough and scientific series of tests. Those tests are usually even more severe than any regulation, so that the company is assured of the quality of the product.
ST strategies use a firm's strengths to avoid or reduce the impact of external threats. L'Oreal has made strategic acquisitions that strengthen its position in different categories. By doing so, they have taken hold as a leading position that other companies have trouble matching. As an example, L'Oreal can now offer product to Black consumers, because it has acquired "Carson Inc" that specialize in cosmetic products for black consumers. By achieving this significant progress in the ethnic beauty market, they avoid the threat of losing to other competitors.
WT strategies are directed at reducing internal weaknesses and avoiding environmental threats. As a company, L'Oreal has commitments to its employees by training and recruiting people with talents. It avoids having to face losing potential employees to competitors. Their reputation of performance is an everyday reality for L'Oreal Group. Employees have the opportunity to be innovative and that leads to more responsible and committed personal.
EFFECTIVENESS OF STRATEGIES
L'Oreal capitalize on opportunities in the global market. They are international with laboratories on three continents: in Europe, the United State of America, and Asia. They have test centers in many countries, enabling a better understanding of local customers preferences. Their increasingly global outlook, ensure a better and...
References: David, Fred R. Strategic Management: Concept & Cases. New Jersey: Prentice hall, 1999.
"L 'Oreal: The Beauty of Global Branding" Business Week. 11 April 2002
"Strategy Tip Of The Week." 23 April 2002.
"Annual Report 2002." L 'Oreal. 26 Mars 2002 .
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