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L'Oreal CASE STUDY

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by

Wenwen Zhang

on 8 November 2013

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Transcript of L'Oreal CASE STUDY

L'Oreal CASE STUDY
introduction of L'Oreal
CSR OF L'Oreal
4 CSR Strategies
strategy of L'Oreal
strategy aim: for achieving an advantage
strategies need relevant in the market

porter's generic strategy
3key strategies in business: cost leadership, focus and differentiation
marketing of L'Oreal
MARKETING orientation

MARKETING segmentation

MARKETING mix

ECLR
organizational design
centralization & decentralization
functional structure
divisional structure (geographic based)
divisional structure (product based)

GROUP MEMBER
Constance: Business environment of L'Oreal
Stan : CSR of L'Oreal
He Wang : Strategy of L'Oreal
Claire : Marketing of L'Oreal
Wendy : Organizational Design of L'Oreal
centralization:
decision made by the top level of management
common policies
affected by the globalization


decentralization:
flexibility & response to industry
close to the operation and customer
limitation: increased cost (labor cost, facilities)
lack of integrate systems within group cooperation
functional structure
different functional department
authorities in the top level of management

limitation:
different ability and specialty, when they working together, may caused problems.
challenges for upper level manager

divisional structure(geographic based)
focused on single market
quickly response in action
limitation: lead competition between each zone
divisional structure(product based)
good for manage the products and brands
take actions quickly from the environment change

limitations: conflicts between products group and operation objectives
Obstructive: Deny responsibility, resist change, only disadvantage
Defensive: Manoeuvring, avoid extra responsibility
Adaptive: Accountable, accept external pressure
Proactive: Lead, careful in activities and interests
CSR Analysis
CSR ANALYSIS
case 1: THE BODY SHOP
Choose Positive Energy campaign:
Support clean, sustainable, renewable energy

Protect community’s traditional lifestyle and environment

E.g
Southern India
Workers: Free health care, lunch
20% of product price premium found local school, day care centre, clinic

case 2: against of L'Oreal
Racial discrimination for black:
1. Shampoo promotions: salespeople are required be white
2. French supermarket: Asian + Arab women are unworthy to sell Garnier’s shampoos
3. L’Oreal was fined: total €60,000

Now:
1. Diversity is a primary value
2. Promote staff’s self-performance

strategy: adaptive
CSR Related to Social Environment
CSR Related to Social Environment
Technology environment:
Environment Protection materials

CSR:
80% plant-based materials
100% palm oil supplies are sustainable
Improve quality of products

ECLR
ECLR
Evaluation
-water, CO2 consumption
+ sustainable production
Focus: 100% environmental, social benefits
Critique + Limitation

Racial discrimination
Need: equality in every country
Recommendation
Continue: + sustainable products
- waste of packaging

SWOT
Strengths:
innovative a well-segmented portfolio
weakness:
less dynamism
opportunities:
natural and organic product
threats:
targeting emerging markets;
economic diversity
PORTERS FIVE FORCES
threats of new entrants:

high level of industry rivalry

LOW bargaining powers of suppliers

HIGH bargaining power of buyers

threats of substitutes
FOCUS STRATEGY
L'Oreal has identified several niches in which its products can be relevant and produced cosmetics that match clients in those segments.
LIMITATION
the porter 5 strategy can not promise the company long term profit when they targeting the new market, they need change the strategy. strategy just focus on problem, can not give significant solution, and do not relevant market issues.
recommendation:
conclusion
functional structure
+
divisional structure (geographic and product based)
pest analysis
Political environment:
Government’s regulations (The USA)
Political stability (China)

Economic environment:
Economic crisis
Income (China)

pest analysis
Social environment:
Life style change

Technology environment:
Product development
Packaging of the products
Environmental protection materials

SWOT analysis:
Strength:
Diversified brand portfolio
Strong brand image
Supply chain and manufacturing
Strong R&D capability
Weakness:
Decentralized organizational structure
Low profit margin

Opportunities:
New market (University’s students)
Environmental protection materials
Men’s products
Growing market (BRIC)
Threat:
Competition of other cosmetic brands
Not the basic needs products for customers

limitation:
Product categories
Price

Recommendation:
Focus on the University’s students’ market
Basic needs products
Lower price’s products

Marketing Orientation
Product orientation: sell themselves
pharmaceuticals

L'Oreal:
1) the world never stops pursing beauty;
2) research and innovation--linked to strengths in SWOT analysis, e.g. Clarisonic skin care device

MARKETING segmentation
Multiple segmentation: mass, professional, luxury and active cosmetics
Demographic: different age groups
Geographic: Latin & Asian markets
Psychographic: packaging design
Behavioral: purchasing habit

MARKETING MIX
Product

1) Unique selling point: high quality with both low and high prices
2) innovated products


Price:

Good-value pricing
Place:

Factory locations: produce and consume locally

Promotion:

1) Advertising: remind customers;
2) E-commerce space: Michella Phan & EM cosmetics
3) Sales

ECLR
Threats: competitors who also target emerging markets
Limitation: economic diversity
Product and price differentiation--world's largest company in beauty industry
Recommendation: building up brand loyalty

Business environment
CSR
Business strategy
Marketing
Organizational structure
thanks for listening
any comments
Full transcript