L'Oreal was created in 1907 by a French chemist: Eugene Schueller. The latter developed a synthetic formula, called Aureole, to dye hair. He then created his own formulas, manufactured his products and marketed them to Parisians hairdressers. In 1909, after registering the articles of the future group L'Oreal, he undertook research on beauty in general. The foundations of what will become the group had already been laid: innovation and research on beauty. In 1912, the group opened abroad. In addition to France, the products were marketed in Holland, Austria and Italy. In 1920, the company had 3 researchers as against 100 in 1950, 1000 in 1984 and 3000 as of today. During the 30s, L'Oreal expanded its range of products: the company sells skin care products and sun creams. After the Second World War, the company diversified its products and brands to gradually include all types of cosmetic products. Thus, little by little, the group was interested in the whole beauty-hygiene sector. Today, the group L'Oreal is present in all the countries of the world and offers global brands in all sectors of beauty: coloring, makeup, skin care, perfumes, hair products, ethnic products.
[...] Weaknesses For several years L'Oreal saw its sales stagnated due to the fact that the number of its competitors increased and a slowing down of the economy could be seen in its key markets. Its growth is significantly lower than some of its competitors such as Shiseido and Estee Lauder. L'Oreal is under-represented in certain markets, such as Japan with only market share which can be explained by its late entry in this niche. This proves that the company has problems to adapt quickly to changing market conditions. [...]
[...] The different levels of strategy implemented at group level Company strategy L'Oreal applies: - A policy of diversification with the existence of a large portfolio of important brands, - Internationalization strategy with access to many foreign markets and an important geographic coverage of the group, mainly thanks to acquisitions, - A policy of innovation with a major stress on research and development so as to become a pioneer in the market, - A strategy of differentiation with a policy on important brand and consequent advertising efforts - A strategy of integration. [...]
[...] Annex PRODUCTION Significant production capacity, 47 Packaging still remains more sites present around the world expensive than the manufacture of Know-how acquired product (content) Staff ( employees) highly Cost of establishment and creation qualified achieving 94% of of subsidiaries high production Good performance of production machines: 4.4 billion products manufactured in 2005 Low production costs due to in-house and local production Achieving economies of scale FINANCES Increased turnover of from Research and development costs 2003 to 2004 increasingly high Potential growth of turnover Risks of loss of market share important RANGES, PRODUCTS, BRANDS RANGES Broad and deep range Risk of scattering by Range suitable for all origins, all diversification very important skin and hair types Virtual inexistence in certain Several ranges, from products for segments (youth of 14-17 yrs) general public, professional Private brands and competitors are products and luxury products also developing their range to better suit to the needs and expectations of customers, and be competitive with regard to a large group like L'Oreal PRODUCTS Strong demand in the choice of raw Seasonality of certain materials, suppliers, employees which products such as waterproof shows a sign of quality mascaras and sun creams Innovations adapted to the changing needs of consumers Positioning : market for male cosmetics, ethnic products African, Asian market), market for “organic” products (acquisition of Sanoflore), sustainable development (acquisition of The Body Shop in March 2006) STRATEGY OF DIVERSIFICATION BRANDS Important portfolio of brands more than Cost of acquisitions, require 20 brands) a substantial budget International presence : Asian, American, African markets, enabling it to cover numerous segments L'Oreal buys a brand and adapts it “L'Oreal's strategy” before launching this brand worldwide (Maybelline) STRATEGY OF ACQUISITION STRATEGY OF INTERNATIONA LISATION STRATEGY OF INTEGRATION PRICE It is a justification of innovation and Competition on the rise with quality private brands (mainly body Very good quality / price hygiene) DISTRIBUTION 135 cosmetic products distributed every In supermarkets products are second arranged in shelves “care and Distribution in 135 countries beauty”, but the vendors are Presence in all distribution networks not trained to answer (GMS, parapharmacies, perfumeries, questions related to product beauty salons, hairdressers, Internet, use. [...]
[...] They seek to offset the weakness of their market power and their level of internationalization through a strategy of differentiation and by positioning their bid in niche markets and innovative niches. This is the case of Turkish society Evyap, one of the only companies to do research and development of products for skin care and makeup, the market leader of soap and shaving products. The new manufacturers in emerging countries, including China, covering an area with very high potential and develop the barriers to entry in their geographic market. [...]
[...] Profile of leader There is stability in management with only four CEOs since the creation of the group. One should know that all the CEOs are “products” of L'Oreal since they made their entire careers within the group. Lindsay OWEN-JONES Education: Lindsay OWEN JONES has an arts degree from Oxford University. Career: 1969: joined L'Oreal as product manager 1971: Managing Director of the Belgian subsidiary of L'Oreal 1976: Marketing Director of the public goods division 1978: Managing Director of the Italian subsidiary of L'Oreal 1981: CEO of Cosmair Inc: American subsidiary of L'Oreal 1984: Vice President and Managing Director of L'Oreal 1988: CEO of L'Oreal 2006: Chairman of the Board of Directors since the General Assembly of 25 April 2006 Profile: Lindsay OWEN JONES has been exalted on numerous occasions as one of the most effective CEOs of his generation. [...]
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