Strategic Analysis of LOREAL - Case Study Example

FINAL EXAM - Strategic analysis of L’OREAL Please answer the following questions based on L’OREAL Case. Question what are the 5 most important keyfactors of success in the beauty and skin industry? 1. Understand your market in terms of competition, demographics, traffic patterns, and buying patterns. The market has many products all for the same purposes hence requiring that any company coming into the industry to have good knowledge of how to tackle the market and reach the consumers. 2. Start with the client’s or rather customer’s experience in mind. The company should have ways to interact with the customer in order to market their products. A customer who gets the interaction from a brand is more likely to give outright preference to it. 3. Marketing Expertise: - Selecting the right staff to work with and maintaining professionalism through customer orientation and qualifications. The beauty and skin industry requires a company that is ready to work on the distribution channels and methods. The staff should have good knowledge of the market and ensure that the target groups are reached. 4. Build and protect your brand. The industry expects that anyone engaging in its practices offer only the products and services they can comfortably deliver. This ensures that quality is maintained and the effects of the products controlled. 5. Take advantage of the available industry resources and stay fresh through new innovative products and offerings. The industry has so much competition and any product coming into the market need to be outstanding and convincing enough for the customer to purchase it. Question 2: Why do you think L’OREAL has diversified its product portfolio? Explain L’OREAL offers a diverse range of products that include consumer products, professional products, luxury products, active cosmetics, and the body shop. The key objective for the diversified product portfolio is ensure that everyone all over the world have easy access to L’OREAL products through a presence in outlets. The beauty and skin industry has so many products with purposes. L’OREAL being a big company in the field ensures that any requirements regarding beauty and skin are catered for. In addition, L’OREAL is dedicated to ensure that their many products will in one-way or another match anyone’s personal lifestyle. L’OREAL develops brands that fit a person’s power of purchase from the low end to the high end; different products at different prices. Question 3: What do you think are the most valuable L’Oreal’s Competitive assets? Controlled by the Company The company controls the product brands. This ensures that there is flexibility in operations. L’Oreal produces diverse products to ensure they have enough to draw the attention of their target groups. The products include professional Salon Brands that include Matrix, Kerastase and Redken, luxury Brands such as Giorgio Arman, Ralph Lauren, Biotherm and Lancome, retail Brands that include Garnier, Maybeline and L’Oreal Paris and active cosmetics such as body shop, Vichy and La Roche The ability to perform activities To maintain a competitive advantage, L’Oreal ensures that they are able to reach their markets using their experienced marketers. In addition, the company has diverse ways of service delivery to reach all the global markets where their competitors operate. The Company masters source of competitive advantage L’Oreal ensures that they produce two new products every year that means their consumers are kept to date with other products. This gives L’Oreal an advantage since there are a number of options for the consumers depending on their preferences. Attributes acquired by the company that allows it to outperform its competitors L’Oreal ensures that quality is maintained in all the products they produce. In addition, the marketing campaigns are always intense hence reaching a good range of consumers. This keeps the company at a good profitability level to cater for the operations and win over their competitors. Question 4: Give 3 reasons why a company chooses to move first in a given market? 1.-A company may choose to move first in a given market in order to let the population know of their products. This is one of the marketing strategies that most companies will make use of in order to maximize on sales. 2. To lock out the competitors. When a company reaches a certain market before the competitors, it becomes easier to remain relevant for a long time regardless of other companies operating in the same field coming on board. 3.- To learn about consumers’ needs. When a company enters a new market, it becomes possible for the marketers to engage with the consumers and learn about what the population actually wants. Regarding beauty and skin products, consumers will always have specifications about what they need hence giving an opportunity to the company to produce such a product. Question 5: Would you say that L’Oreal acquisitions are Horizontal or Vertical based strategies? Explain The L’Oreal acquisitions are vertical based strategies. L’Oreal operates under three key strategies that include broadening on their customer base, changing functions and operations and increasing research and development through advertising and promotion. L’Oreal gets involved in new aspects of business operations, which enable the company to expand and reach other markets comfortably. Question 6: Why do you think L’Oreal will not break into industries like food or clothes? Due to hygienic matters, Industries dealing with beauty and skin products cannot engage in food, but have prospects of engaging in clothes. Currently, L’Oreal has too many products in the market and engaging in other industries would lead to loss of focus. In addition, entering into other industries may lead to overload and lack of concentration hence poor performance. Question 7: What would be the core competence of L’Oreal that creates a value where it is not simultaneously being implemented by any current or potential player? L’Oreal produces diverse products that are essential in the beauty and skin industry. As an expansion strategy, L’Oreal ensures that they release two new products every year. By doing this, the company ensure that they build core competence in markets where the competitors cannot engage in. Question 8: Which industry presents the highest attractiveness in the market? Rating scale : 1 = Less Favorable; 10 = most favorable Industry Attractiveness Measure Weight Weight and fitness Clothes Cosmetics Jewelry Apothecary Market Size & projected Growth Rate 0.25 6 6 9 5 7 Industry Profitability 0.15 8 5 8 9 9 Intensity of Competition 0.15 4 8 8 8 6 Emerging Opportunities & Threats 0.2 6 4 7 8 7 Resource Requirements 0.05 8 3 8 6 7 Product Innovation 0.15 5 6 10 6 6 Social Political Environmental Factors 0.05 8 7 8 7 6 Totals 1 According to the table of analysis, the cosmetics industry presents the highest attractiveness in the market. The most determining factor is the market size and the projected growth rate, which has a score of nine out of ten. On the other hand, the industry portrays a good profitability hence there are no fears when engaging in the market. Moreover, it is easier to implement innovations as evident with L’Oreal; they manufacture two new products annually. Do you think that L’Oreal should invest in the Jewelry market? Yes No Explain your answer: Yes. L’Oreal should invest in the Jewelry market for a number of reasons. First, Jewelry has close links with beauty products hence making it a plus. Regardless of the projected growth rate being low, the company can gain a lot of profitability in case they venture into the Jewelry market. Question 9: What might be the best choice for L’Oreal to go international? Circle your answer Export License Alliance Greenfield Joint-venture Explain your choice: Export. I think the best option for L’Oreal to go international is Export. One of the main reasons is that, due to globalization, it is easier to market goods online and for clients to purchase online. Through exporting their products, L’Oreal will ensure that they reach the global market and maximize on profitability. Question 10: What market position illustrates the best L’Oreal Company? With the diverse products that L’Oreal produces, L”Oreal Company can best be described as an intervention for lifestyle. The products that L’Oreal sells are of good quality and many consumers identify class with what they purchase. Question 11: What do you think represents the best L’Oreal strategic approach? The Broad differentiation strategy best represents a strategic approach that can work for L’Oreal. Why do you think your choice would be the best alternative for L’Oreal? Using this strategy, the company is able to expand on what they produce and reach a wider range of consumers. The broad differentiation strategy also ensures that the company deals with the high competition in the beauty and skin industry. Question 12: Among the 3 strategic alternatives L’Oreal is considering, which one you think would be the best to grow? Fill out the table below to answer the question and explain Rating scale : 1 = Less Favorable; 10 = most favorable Criteria Weight 1. Adapt products to consumers’ needs 2. Increase International Sales 3. Marketing Research & Development COST 0.20 8 9 5 RISK 0.20 6 8 7 TIME 0.10 4 8 4 BRAND EQUITY 0.20 8 8 9 INTERNATIONALIZATION 0.15 7 9 8 CUSTOMER SERVICE 0.15 9 8 9 TOTAL 1 The global strategy would be best for L’Oreal. L’Oreal is a large company and has been successful in the regions it carries out its operations. People around the world may have knowledge about L’Oreal products but have no access to them. If the company would work on this particular strategy, there would be a number of benefits. First, it would create competition to other industries that produce less quality products in the market. Second, the company would maximize on profitability, which is a plus. END OF EXAM Read More