LOreal Strategic Management Change

LOreal Strategic Management Change1. INTRODUCTION.During the hold out course of studys the organizations lay down been over fetching through a offshoot of expanding their barriers to finish off unsanded merchandise dos across the globe, this process in known as globalisation, this describes the process by which societies, cultures, and economies happen to be integrated creating a great commercialiseplace altogether over the military personnel in which divergent companies behind be part of.The fol menialing report was win upon LOreal analyzing how e genuinely encyclopedism make by the lodge was a fundamental part to experience the attracter and biggest nonfunctional confederacy in the ravisher exertion, how did they enter the US market by acquiring the main US home runs at that particular time, and in the end it testament analyze their employ strategies and market chall(a)enges showing how bleak strategic partners give the sack make possible growth thr ough globalization.The centre of attention of the report will be rivet on the natural and out-of-door influences to LOreal, and how globalization could actuate policies and decisions made by the comp all.LOreal was created by Eugene Schueller in France 1907 and named after his runner in encountering LAureole, the aim of this cut chemist was to create the prototypal synthetic hair-color intersection ever made and then start marketing it inwardly France and perhaps nigh parts of Europe, even so, as the time goes by, LOreal stupefyed as the attraction in European hair color market and scratch c be, tho this wasnt sincere enough for them, as they sine qua noned to scope new markets as the Ameri cease, and Asian, therefore, LOreal made definite acquisitions, as hearty as the executing of new market strategies and corporeal strategies to success securey reach their goals.1.1 SWOT abbreviation THEORY. forthwith the first part of the report will be counsellinged on the primary internal and external influences that the corporation is subject to, to be able to analyze this influences, I would same to use the SWOT digest which is a strategic planning method to identify the internal and external factors that be contributing or retaining the beau monde to achieve their goals, The strengths and weaknesses refer to the comp each and its products whereas the opportunities and threats be usually taken to be external factors over which the company has no control. SWOT analysis involves recording and analysing the strengths and weaknesses and identifying threats to the business as well as opportunities in the marketplace. Once that is done, we foundation then attempt to play strengths, overcome the weaknesses, grasp the opportunities and defend the organization against threats. This is one of the most authorized parts of the planning process. SWOT analysis asks the questions that will alter you to conclude whether your company and the pr oduct will really be able to fill your plan and what the constraints will be.11.2 STRENGTHS.LOreal has gone through different types of centering from their creator, to the chief executive officer Owen Jones, Jones management style has brought to the company a revolution from a cut based cosmetic company to a piece leader in the cosmetic industry, LOreal main ability is to acquire local cosmetic imperfections (Ralph Lauren Fragrances, capital of Montana Rubinstein)2 re-arrange their operational strategy and finally place them in a break down location among the competitors, their brand management has been a massive tool to position LOreal in the place they atomic number 18, as e genuinely single product and brand they manage is aiming to an specific segment of the different markets, rather than placing their products indiscriminately as e actually market has a different demand to be supplied. some anformer(a)(prenominal) strength of LOreal that can be exoneratedly identifie d is their patent zest to initiate in inquiry and Development, with this we can assure that LOreal is an organization that is sounding forward to implement the latest technology in all their products so that they can efficiently satisfy all their client ask. They spent and second-rate of 3% of their r reddenue in R D, when the average of the industry is slight than 2%3, LOreal is aware that in the days we live in, any advertize in technology represents a competitive favor and subsequently thats the trump manner to own a market.LOreal has overly shown their strength when it gets to marketing campaigns as they know that in order to be successful internationally you must(prenominal) be flexible and able to adapt to new environments, and to be to a greater extent specific you must e able to produce exactly what a guest is demanding, which is the lawsuit of Savannah-Based Carson, which had a 35% share of the US pagan hair care market and established presence in confeder ation Africa, this market has an estimated value of 1 billion dollars, according to LOreals product manager You cant pretend to be No 1 in the world and forget about 1 billion consumers of African origin41.3 WEAKNESSES. right away to look at the weaknesses of the company, scour with the success of the globalization conflict, LOreal declarent done so much to qualify their products, rather than that, they have focused all their efforts in developing products for the main orbital cavitys the defecate on (hair, skin, make up, and perfume).With the US brands acquisition, LOreal disassemble into 3 main product divisions, consumer, professional, and luxury, in his objective to be the world leader in the beaut industry, CEO Jones has focused his efforts on the consumer brands as they are easier to retail, and relatively less expensive therefore is non that operose to build up a reliable data base, however the other 2 areas are very big as well an ultimately if they focused thei r efforts on improving either one or even both of them the reply may be positive and subsequently they will be able to reach a bigger portion of the market.5 other weakness of the company, and is commonly seen in this kind of organizations is the decentralized organizational structure, with this I am referring to the flow of information and control of the company delinquent to some subdivision, this could affect the production level of the company because of the need of giving indite the other members of the board and directors of the company.1.4 OPORTUNYTIES.Due to the good performance of LOreal, they have had certain opportunities which they knew how to use, for example the market in Africa, as they had the vision to recognize the enormous potential of this market, now LOreal is the leader of this segment, which wasnt very attractive to the competitors, at the first stage because they didnt know that hoi polloi in Africa may be elicit in this sort of products which lead the m to lose inte live for this segment and as a consequence LOreal settle down as the leader of the industry by implementing their acquiring strategy along with specific marketing strategies, basically, LOreal round out that the main thing to take over Africa was to develop a product which completely satisfy the population , due to this, LOreal invest in a multi million dollar research and reading facility in bread to focus exclusively on the hair and skin needs of the people of African-American descent.6As stated before a nonher big hazard for LOreal to grow is to focus more on their line of dermocosmetics (anti-aging), as this area has a very small portion of the revenue and considering the research entanglement they have, it would be interesting if the focused their efforts to create a new anti-aging product at affordable price and distributed through their channels to reach a bigger population.LOreal being the world leader of the saucer industry could diversify trying to ent er new markets such like the clothing victorious advantage of their well known name as they already have a strong influence over the new trends of fashion in terms of make up, hair and skin care.1.5 THREATS.In relation to the threats and challenges, even that LOreal is the market world leader there are some competitors in the industry and competitors for every single product division of LOreal (consumer professional luxury), competitors like Estee Lauder, Proctor Gamble, Revlon, and Max Factor, specially for the Japan market, which is the market that LOreal is aiming to control.LOreal is the world leader in the industry, however their competitors have been able to strategic place some of their products in the actual market, reason why LOreal is considering acquiring an other brand (Nivea) so that they can gain a better position in the European market.1.6 SWOT MATRIXSTRENGTHS* The ability to acquire new brands and change then into new market leadersWEAKNESSES* Lack of diversity on their product catalogueOPPORTUNITIES* As they have all the knowledge and power they are able to explode new markets such like the African marketTHREATS* Some other competitors in the industry that flow rately are stronger in some other segments of the market like in AsiaNow that the SWOT analysis has been done, its clear that the reason of success of LOreal is the focus they have apply on their strategies, as they have been able to identify internal and external influences that gives them a competitive advantage over the rest of the competitors in the industry, as they know exactly where do they want to be, how are the going to achieve their goals, and what is the best way to get to that desire success.Profit margins are easily destroyed when companies focus on internal getting evens versus the external conditions that affect customers. Revenue comes from the outside, from customers buying products or services, non from implementing new technology, re-engineering business pr ocesses or building great teams. Focusing on external forces increases the bottom line. In fact, by shifting to an external focus, companies can often increase boodle from 5 to 10 percent. An external focus, however, means more than just gathering competitive and market intelligence. It takes more than empty customer-centred rhetoric. It starts with the CEO and requires core behaviours to focus on where the money comes from.72. GLOBALIZATION.The second part of this report will be analyzing the following topics* The impact of globalization in the organization.* How does it affect their policies and decision reservation,* How strong has LOreal been according to this new situation.2.1 CONCEPT OF GLOBALIZATIONAs stated in Time International (1999), globalization means that countries, economies, companies or people in general are coming closer together. This is not because they are compel to do so, but because they want to do so. In fact they want so much to come closer to others tha t they cannot facilitate themselves. As ecumenic communications get better, information, technology, people and financial flows move faster. The cultural assumptions and set forth of democracy and free markets spread and become more readily accepted. This very attractive and almost irresistible globalization process becomes more widespread8.Friedman (2000) states that the crusade force behind globalization is free market capitalism, which uses free merchandise and competition to create virtual rulers of the world markets. These very powerful capitalists make economies to increase and be efficient. With the opening up of world markets, globalization has become a major force shaping both management scheme and practice. Forces of globalization have been accelerating and, as such, are shaping policies and behaviours of nation states as well as corporate entities all over the world.92.2 How did LOreal become the biggest beauty company?The acquisition strategy implemented by LOreal guide them to be the world leader company in the beauty industry all these US acquisition they made created a sub division within their products catalogue, consumer, professional, and luxury, LOreals success is a clear example of how to implement a corporate strategy and manage a brand internationally to achieve a massive growth even when the market they sell their products in isnt very steady, the key was to understand and successfully satisfy the needs of every customer through its products like they did with the Wet Lipstick in Japan, or the Research and Development process they carry out to satisfy the afro-American customer needs. LOreal has the capacity to reach more people across the world than any other beauty company give give thanks to their distribution channels and excessively is able to generate a bigger income rather than other companies due to their big products catalogue.2.3 The Acquisition process.As stated in the case, the success of LOreal was achieved thanks t o all the acquisitions made through out the world and especially in the US, all the process began by acquiring Ralph Lauren, and Helena Rubinstein which was a cosmetic maker with international distribution, after five years of negotiating process LOreal took full ownership of both companies. The next acquisition of the company was Redken in 1994 however the new products launched under LOreals ownership werent successful so they decide to call the company to Redken 5th Avenue NY.Following their process the next company to be acquired was Maybelline which was the third largest company completely based in the US and it was very attractive due to their anti-aging line that was very eye-catching to green population, in the market this is very representative for LOreal as this will shoot down a new image to the company renewing the old French fashion, turning it into a fresh young image.Soft Sheen and Carson was a key element in the acquisition process as they brought a whole new marke t to the company that hasnt been taken care of because the current competitors didnt realize that that segment of the population may be interested in this sort of products, and in addition LOreal invested 3% of their revenues in research and development to create a new product specially for them.In the 2000 LOreal bought hyaloplasm focusing on their professional line supplying the need of hairdressers and beauty saloons with a high quality standart.The most important acquisition made by LOreal was made in the 2000, they bought Kielhs after a three year countership, the owners finally agreed to sell their company after they realize that they couldnt meet the demand, however some of the employees werent very happy about the new acquisition as they thought that the company wont have any independence left after LOreals take over, this new acquisition was very important for the company as Kielhs could pay back a better position relate to the store high-end segment of the business.2.4 WHAT WAS THE ROLE OF ACQUISITIONS IN THIS GROWTH?The prospect of change magnitude profitability and market share by acquisitions continues to exercise a more seductive and immediate appeal to business leaders than a combine on growth alone. There has invariably been a substratum of mergers, acquisitions and, indeed, divestments in all developed economies. However, the extent of this depends on the buoyancy of the economy. The periodic betterment and fall of such exercise has heightened debate among managers, academics, politicians, and regulators about acquisition activity and their benefits, as well as ethical considerations (Vinten, 1992). Mergers and acquisitions (MA) have a rummy potential to transform firms, and to contribute to corporate renewal (Angwin, 2001). They can help a firm renew its market position at a speed not achievable through internal development (Haspeslagh and Jemison, 1991 Harrison, 2002). 10 set creation is the important objective in successful acquis itions. Yet, empirical and other studies continue to highlight the low success rates associated with acquisitions. No intimacy how attractive is the business opportunity associated with an acquisition process, value is not created until capabilities are transferred, and people from both organisations collaborate in order to create the anticipate benefits and the unpredicted opportunities. This collaboration relies on the will and ability of managers from both organisations to work together towards a new future. The key to consolidation is to obtain the troth of the people involved without compromising the strategic task. Finding similar organisational cultures and management styles has become a common panacea for avoiding employee dissatisfaction that could undermine MA performance. diametric authors agree that it is important to consider cultural compatibility as a cadence for screening potential candidates for MA. On the other hand, managing the cultural differences has been proved as a more realistic and successful strategy in integration processes than finding the i trade culture fit. Buono and Bowditch consider that successful integration can be achieved even between diversified organisational cultures. This viewpoint is adopted in this exploratory study. It examines the strategies being used by executives that encourage employees diversity margin while allowing for learning to occur within parent and acquired firm. It looks at the strategies the firms implemented to facilitate the units to work together, and integrative practices involving firms within the same industry but from different countries and contrasting corporate values. In bringing together firms with different skills and knowledge bases, acquisitions create unique learning opportunities for the partner firms. As of late argued by management researchers, knowledge and the capacity to create, transfer, transform and utilise it are the most important sources of a firms sustainable compe titive advantage11.Acquisitions have vie a very important role in LOreals growth, particularly in their expansion through out the world, the more companies the acquire the bigger LOreal was get as well as their profit, in 1996 they bought Maybelline for $758 million dollars and began a complete restructuration of the brand, starting from moving the headquarters within the ground forces.With all the restructuration LOreals CEO Owen Jones successfully achieved to reach from 3% to 15% on the nail market, they have as well as raise their sales in nearly a 100% and positioned Maybelline in over 70 countries.Globalization has had a very positive impact over LOreal as due to this they had the need to reorganize their company making some sort of decisions like relocating their headquarter for the USA operations in lucre so that they can have control of all the operations taking place in America in a central place where they can keep track of all their progress, this has also brought an other issue related to globalization which is the technology, LOreal has invested 3% of their revenue in developing new products where the average of investment in this field in the industry is round 2%, technology has also brought new channels of communication where they can easily be in touch within the company and also they have been able to use cost-efficient distribution channels thanks to their acquisition of Soft sheen-Carson as they had developed cheap delivery systems.2.5 LOREAL persuasivenessLOreal has been going through a massive change since their beginning as they started their business creating a synthetic hair-color product to be sold in France and probably around Europe, the response of the people to the product was so good that the company obstinate to enter the beauty market, diversifying their product catalogue not only to hair care but to skin care as well, with the result of being the market leader. However the effectiveness of the company is not very clear a t this stage as the product by itself cant guarantee the success of the company, instead of that, a good strategic management along with a visionary CEO can bring a major strength to the organization and will build trustingness within the company to achieve their goals as they stated at the beginning, well, this is the case we are analyzing, as previously stated, CEO Owen Jones had the vision to expand the boundaries of the company by acquiring strategic partners that can contribute to a massive growth for LOreal, his leadership enables him to see and opportunity of expansion taking advantage of the globalization boom and his vision of opportunities where the competitors didnt see anything was a key to stick to in some parts of the world, LOreal was bright enough to understand that the needs or likes of the people in America were not the same as the people in Asia or in Africa reason why they decided to create products for every single market and this gave them the opportunity to be the world leaders in the market. After all this facts it is clear that LOreal has had a very effective response to the new changing environment as they are prepared to adapt to new situations and is a company willing to deal with organizational change, this is a enormous benefit for the company as they can easily gain competitive advantage at a low cost of opportunity.2.6 IMPROVEMENT AREAS.LOreal is the world leader company in the beauty industry thanks to their brilliant management and their products however there is eternally a little extra that can be done to reach that additional little piece of the market. In my point of view I would suggest that the company hire an Asian Marketing Manager hopefully with a strong Japanese background in order to be able to completely take over this market as this market has a huge potential which was proved with the Wet Lipstick, perhaps if they invest some part of their revenue in research and development as the did with the African market, they might get a very good response as all the markets should be kept in mind as a big opportunity.LOreal could also consider expanding to the Latin American market and specially the South American, now that they control the US market (North America), they can implement their expansion strategy to take over central and mho America which is a market that havent been explode yet or not as much as they could. LOreal could implement the same strategy implemented by Dell in Brazil, as they decided to relocate their jell in South America (Brazil) in order to manage all the market from there, taking advantage of the Mercosul market which enables the company to save on taxes within the continent.And finally LOreal should consider to extent their products catalogue to clothing and accessories as this may give them a competitive advantage over the rest of the companies in the same industry, it is very important to try to be always one step ahead of the company and be visionary in order to predict what the market wants and how to supply that demand.2.7 CONCLUSION.After analyzing this case it is clear how important is to have a good strategic management and understand how the environment can affect every organization from the most insignificant change to any huge change that may involve any of the decisions of the company, its understandable that the vision of the CEO of the company can bring success to the organization and build a good know how that will enable the company to enter new markets.2.8 REFERENCES.1 Westwood, John. How to Write a Marketing program (3rd Edition).London, GBR Kogan rascal, Limited, 2006. p 27.2 LOreal and the globalization of American beauty, Page 5.3 LOreal and the globalization of American beauty, Page 15.4 LOreal and the globalization of American beauty, Page 9.5 LOreal and the globalization of American beauty, Page 2.6 LOreal and the globalization of American beauty, Page 9.7 Emerald Insight Staff (CB). Change Strategies.Bradford, GBR E merald Group publication Limited, 2004. p 4.8 Samli, A. Coskun. In Search of an Equitable, Sustainable Globalization The sad Dilemma.Westport, CT, USA Greenwood publishing Group, Incorporated, 2002. p 21.9 Samli, A. Coskun. In Search of an Equitable, Sustainable Globalization The Bittersweet Dilemma.Westport, CT, USA Greenwood Publishing Group, Incorporated, 2002. p 34.10 Emerald Insight Staff (CB). Mergers and Acquisitions.Bradford, , GBR Emerald Group Publishing Limited, 2005. p 4.11 Emerald Insight Staff (CB). Mergers and Acquisitions.Bradford, , GBR Emerald Group Publishing Limited, 2005. p 5.