L'Oreal is a family company founded in 1909 by Eugene Schueller. At the time, it was known as ‘Societe Française des Teintures Inoffensives pour Cheveux'. Schueller gradually convinced the Parisian hairdressers to buy his products, with the help of some sales representatives.
Keeping its spirit of innovation, the group likes to highlight this pioneer image (research of new products with equal emphasis on client satisfaction), allowing L'Oreal to retain its leadership even after many decades. In 1954, after three years of marketing study, L'Oreal introduced in America its hair products, as recorded by Cosmair.
Today, the group owns more than 25 brands around the world. It allows them to develop its products under various names and concentrating on various positioning according to the different brands. This brand diversity gives L'Oreal the power of being present on all the markets segments. The group can sell its products worldwide managing diversity.
L'Oreal gives a strong place to sustainable development in its organization. This may be one of the reasons why its sales keep going up at an average rate of 6% a year despite the financial crisis. The graph on the right (taken from L'Oreal's website) shows its sales evolution.
Now, how does the group succeed in managing such a worldwide company with that many employees in so many countries? How does L'Oreal manage the diversity and how does the group deal with it? Is it a threat or a strength? What is L'Oreal's management?
In the first section, I am going to introduce the company along with the relevant figures, its business units and a global overview of the company with a PESTEL and SWOT analysis.
I will then talk of L'Oreal's corporate culture before talking of its management and how it integrates the cultural diversity.
Like any other brand, L'Oreal has its strengths and weaknesses, opportunities and threats. It takes advantage of its leader position but has to stay focused in order to retain it. Though the brands benefit from the French image in the world of Beauty and Luxury, the rising demand from emerging markets may change the demand type and L'Oreal has to be aware of this threat.
On the other side, L'Oreal has an advantage that few companies have: its Corporate Culture. Indeed, L'Oreal is a strongly diversity oriented company. It has a Worldwide Diversity department whose senior executive recently2 explained in an interview that since the group was founded, the company has set this value among the core values, albeit regarding team building or products.
The company's mission is to promote an approach to beauty that is fun, affordable, fulfilling, genuine and generous while meeting all stakeholders' expectations by providing a portfolio of deeply diversified range of products. (L'Oreal Group 2007).
The group is a compound of 18 international brands including Lancome, Maybelline New York, or Giorgio Armani. The diversity and the number of different brands testify L'Oreal's desire to offer a various range of products for countries around the world.
Tags: L'Oreal management strategy, intercultural management, Maslow Hierarchy Pyramid
[...] They will be more willing to consider their job as part of a process that could, perhaps, last even a decade, considering the job they are performing today as a mere spoke in the wheel, something that will work towards the company's favor in the long run. They will also consider their career on a long term basis and not just the job they have now. All these parameters need to be taken into account. If this is not done, it could create a hostile environment for the teams (management resistance, command and control issue), and create conflicts. [...]
[...] am going to introduce the company along with the relevant figures, its business units and a global overview of the company with a PESTEL and SWOT analysis. I will then talk of L'Oreal's corporate culture before talking of its management and how it integrates the cultural diversity. Company presentation Figures1 A century of experience in cosmetics 5 different industries: Hair care, Hair color, Skincare, Make-up and Perfume. 23 international brands Global sales : 17.5 billion Euros in 2008 Net Result : 2.7 billion Euros in 2008 Operating in 130 countries 67,662 employees 628 licenses in 2008 3,268 R&D employees of 60 different nationalities 581 million Euros spent on the R&D 18 research centers and 13 test centers around the world. [...]
[...] Effective management of diversity reduces costs of absenteeism and turnover through increased job satisfaction and helps avoid age, race, and discrimination lawsuits. Companies with a favorable diversity reputation will attract more diversity among applicants. Workforce diversity can provide a company with a creativity advantage, useful ideas for favorable publicity and advertising. But the diversity does not stop there! The variety is also translated by the products according to the country, to the culture, and the customers; lifestyle. As an example, there are products for women with all kinds of hair, from straight to frizzy. [...]
[...] L'Oreal plans to set up a system of effective training because the company considers that its "success is based on the development of the leaders of tomorrow". So, the company advances the fact that Human Resources are essential in its project, in the realization of its strategy and the achievement of its objectives To optimize its training programs, the group has several partnerships with schools and universities all over the world (CEDEP, University of Cranfield; CEIBS Shanghai's university) and with the co-workers. [...]
[...] It has to adapt its products, prices, taskforce and so on in order to make the best out of each country's policy. L'Oreal considers India as one of its top-five growing businesses. Last year, L'Oreal sales in India grew Indian market represents more than 60% of its cosmetic sales. On top of that, last year, the group recorded 40% growth in India. SOCIAL: The influences are various according to the countries. Products have to toe L'Oreal's product line as well as adapt to the culture, the values. [...]
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