L'oreal Marketing

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International Strategic Management Of Loreal
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The Cosmetic industry can be analysed using Porters five forces framework (Appendix 5), by identifying threats of New Entrants, Industry Competitors Suppliers, Substitutes and Buyers. According to Euromonitor International (2008), the threat of new entrants into the cosmetic markets is low, considering that majority of the market is already owned by leading companies such as L’Oreal,
Unilever, Proctor and Gamble (Appendix 4). Hence, it would be extremely difficult for a new firm to establish their brand name, due to the intensity of competition. Since there are few differentials between products, and due to strategic objective of growth by business rivalry is high. Porter (2004)
Therefore it can be argue the American barrier to entry into the industry is fairly low, which is a key driver for globalisation. However if a new firm is unable to compete there is the possibility of business failure or threat of being acquired by leading manufactures. Due to the industry leaders acquiring a variety of cosmetics, hair and beauty companies, consumers have the option of an array of substitute products; as a result this lowers the industry attractiveness and sets a limit on price levels. However in order to overcome the issues L’Oreal have established a prestigious brand image based on quality and allowing them to higher price compared to their competitors.
This allows the bargaining power of buyers to be greater, since there are many sellers in the industry and fewer dominant buyers. The bargaining power of supplier is currently low, since majority of the establish firms do not require dependence on suppliers to supply cosmetic products. Porter (2004)
Therefore in order to identify L’Oreal’s position with in the industry a SWOT analysis has been conducted, (Appendix 2).

L’Oreal, How it Began
The French company L’Oreal

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