Strategic Management Report Strategic Management ReportPp 4 Current Strategies

Strategic Management Report

Strategic Management Report

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Table of Contents:

Description of Company----------------------------------------------------------- Pp 4

Current Strategies

Mission Statement------------------------------------------------------------------ Pp 6

Analysis and improvement

Key Members of Management---------------------------------------------------- Pp 9

Organizational Structure------------------------------------------------------------- Pp 12

Distinctive Competencies----------------------------------------------------------- Pp 13

Financial Three-Year Summary----------------------------------------------------- Pp 14

Income statement

Balance sheet

Key Competitors-------------------------------------------------------------------- Pp 17

Key Ratios--------------------------------------------------------------------------- Pp 19

Situation Analysis------------------------------------------------------------------- Pp 22

General environment

Industry analysis

Internal environment

Functional Units- Resources & Capabilities

Current Issues

SWOT Analysis--------------------------------------------------------------------- Pp 32

Recommendations----------------------------------------------------------------- Pp 37

4

Description of Company

L'Oréal is the world's largest cosmetics and beauty products company that

manufactures products ranging from cosmetics, perfume, hair and skincare items.

L'Oréal’s success is built on a strong foundation, which began in 1909 when Eugene

Schueller, a young chemist and entrepreneur, established the company. Its brands

include L'Oréal Paris, Maybelline (mass-market), Lancôme (luxury), Redken

and SoftSheen/Carson (retail and salon). L'Oréal is a publicly listed company, but the

founder’s (Eugéne Schueller’s) daughter, Liliane Bettencourt, and the Swiss food

company, Nestlé, have over a quarter of the shares as well as voting rights. In 2010,

the company’s overall consolidated sales were €19,5 billion. L'Oréal has 23 global

brands among 66 countries with approximately 66,600 employees. There are 38

factories around the world and 5.7 billion units manufactured in 2010.

L'Oréal, who owns Dallas-based SkinCeuticals, also conducts cosmetology and

dermatology research. With more than 50% of sales generated outside Europe,

L'Oréal has focused on acquiring brands in those markets. L'Oréal also owns the UK-

based natural cosmetics retailer The Body Shop International, which accumulated

about 2,550 stores worldwide. The firm's dermatology branch, Galderma, is a joint

venture between L'Oréal and Nestlé. Their company motto is “Savoir saisir ce qui

commence,” which translates to “seize new opportunities”, results to their emphasis

on expansion into larger market segments.

L'Oréal holds 10.41% of the shares of Sanofi-Aventis, Europe’s first

pharmaceutical company. “In our culture, the brands come first. We’ve always been

more active in marketing each of our brands and their culture. That is very deep at

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L'Oréal,” explained Sandrine Michard, Vice President of corporate communications at

L'Oréal Canada.i

L'Oréal has three current strategies: broadening its customer base, changing

business operations and functions, increasing expense in research & development

and promotion & advertising.

/ Broadening Customer Base

The recent economic crisis has brought this strategy into focus. To counter

the deficit, broadening the consumer base will allow the company to concentrate on

accessible innovation. L'Oréal is also expanding geographically. The company is

moving into the Latin American and Eastern European markets for deodorants and

fragrances, which have been an outstanding success.

/ Changing Business Operations and Functions

L'Oréal has been focusing on streamlining, focusing, simplifying and making

their business more efficient. These changes have resulted in continued industrial re-

engineering of the business in every aspect, including closure of inefficient

production facilities, centralization of purchasing processes, better utilization of

equipment and major advances in productivity.

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/ Increasing Expense in Research & Development and

Promotion & Advertising

In 2009, the company started to actively increase R&D. This contributes

invaluably to the innovation efficacy, quality and safety of the products, which in

return gives the company a competitive advantage. L’Oreal supports its sales growth

by increasing expenses in promotions and advertising. “We intend to maintain a

high level of investment in P&A, at the same time as undertaking an in depth

analysis of our operations in this area to ensure that every euro generate maximum

additional growth,”iiJean-Paul Agon, the CEO of the company, stated in their 2010

financial presentation.

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Company Mission Statement

“Cosmetics Are Part Of The Universal Quest For Beauty.

As a form of self-expression, they are personal in the fullest sense - just as they are

part of social life, serving a daily need for self-confidence and contact with others.

At L’Oreal, we are fully committed to meeting that need, putting all our expertise

and research resources to work for the well being of men and women, in al their

diversity, around the world. That commitment is what gives meaning to our

business.”

/ Additional Mission Values

BEAUTY FOR EVERYONE

For more than a century L’Oréal has been pushing back the boundaries of

science to invent beauty and meet the aspirations of millions of women and men. Its

vocation is universal: to offer everyone, all over the world, the best of cosmetics in

terms of quality, efficacy and safety, to give everyone access to beauty by offering

products in harmony with their needs, culture and expectations.

With the opening up of the emerging markets, L’Oréal’s mission is broadening

in response to the vast diversity of populations. The whole company is focused on

this new horizon: teams enriched by their cultural diversity, a portfolio of

international brands present in the different distribution channels, and research that

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is capable of grasping the world’s complexity. The exploration of new scientific and

technological territories is being enriched by this global dimension. Knowledge of

different cultures and rituals worldwide enables the laboratories to anticipate and

invent the products of the future.

L’Oréal is committed to carrying out its mission to make beauty universal in a

sustainable and responsible way. A highly exacting challenge, which the group is

taking up step by step, in a long-term perspective, with the active involvement of all

its employees. Ranked amongst the 100 most sustainable and ethical companies in

the world, L’Oréal’s ambition is to be an exemplary corporate citizen. To help make

the world a more beautiful place.”iii

/ Values

Striving For Excellence

“Perfection is our goal. We are determined to continue enhancing or brand

portfolio with innovative products and to meet the most demanding standards of

quality and product safety at all times.”

A Passion For Adventure

“Our expertise drives our passion for new discoveries and innovation in

cosmetics. Each new achievement – each step forward – is in itself a new beginning.”

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Enrichment Through Diversity

“Understanding and valuing each individual is an essential part of our

corporate culture. Our staff members come from many different backgrounds and

work together to offer a full range of products through varied distribution channels.

Our goal is to serve the beauty and well-being of our consumers in all cultures

throughout the world.”

Valuing Individual Talent

“Just as we are dedicated to enhancing the well-being of our consumers, we

also make it a priority to ensure that each employee has the opportunity to develop

his or her potential through personal and professional growth.”

Leading Innovation In Beauty

“Research is as much a part of our business as marketing, sensitivity to

consumer needs is as important as scientific rigor, and know-how and expertise are

as essential as intuition. Building on our unrivalled experience and expertise,

fundamental research is a specific focus of investment that drives creativity and

contributes to developing the cosmetics of tomorrow.” iv

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/ Evaluating L’Oreal’s Mission

Customers YES – « men and women in all their

diversity »

Product and Service YES – « Cosmetics »

Markets YES – « around the world »

Techonology YES – but vague, « our expertise and

research resources »

Concern for growth NO, not in mission. But in Values:

“opening up to emerging markets”

Philosophy YES – “The Universal Quest for Beauty”

Self-Concept YES – but vague in mission: “fully

committed”. But in Values: “Quality,

Efficacy, Safety”

Concern for Public Image NO, not in mission. But in Values:

“sustainable and responsible way”

Concern for employees YES and NO, it is implied: “we are fully

committed”, but YES in values: “active

involvement”

Thus, L’Oreal achieves 7 out of 9 for its mission alone. If it were to incorporate

some of its mentioned values in its mission, it would possess the perfect mission.

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/ Suggested Revised Mission

BEAUTY FOR ALL

At L’Oreal, we are fully committed to meeting the need for high quality

cosmetics to make beauty universal in a safe, efficient and sustainable way; putting

all our expertise and research resources to work for the well-being of men and

women, in all their diversity around the world. For that purpose we strive to grow by

opening up to emerging markets, exploring new scientific and technological

territories, while ensuring that each of our employees had the opportunity to

develop his or her potential growth.

That commitment is what gives meaning to our business.

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Key Members of Management

CEO / Jean-Paul Agon

Agon joined the group in 1978. He previously had an international career as

General Manager of Consumer Products in Greece, and of L’Oréal Paris in France,

International Managing Director of Biotherm, Managing Director of L’Oréal in

Germany, Managing Director of the Asia zone, President and CEO of L’Oréal USA,

appointed Deputy Chief Executive Officer of L’Oréal in 2005, Chief Executive Officer

in April 2006 and then Chairman and Chief Executive Officer in March 2011. L’Oréal

Board member since 2006 (term of office renewed in 2010). Board member of the

L’Oréal Corporate Foundation and Air Liquide.

Chairman / Lindsay Owen-Jones

Joined the group in 1969. After starting his career in France, he was Chief

Executive Officer of L’Oréal in Italy from 1978 to 1981 and President (CEO) of L’Oréal

USA from 1981 to 1984. He was appointed Chief Executive Officer of L’Oréal in 1984,

then Chairman and Chief Executive Officer in 1988, non-executive Chairman of the

group from April 2006 to March 2011, and Honorary Chairman thereafter. L’Oréal

Board member since 1984 (term of office renewed in 2010). Director and Chairman

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of the L’Oréal Corporate Foundation. Board member of Sanofi-Aventis and Ferrari

(Italy).

Vice Chairman of the Board / Peter Brabeck-Letmathe

He was with the Nestlé group since 1968, appointed General Manager in

1992, then Chief Executive Officer of Nestlé SA (Switzerland) in 1997, Vice-Chairman

of the Board in 2001 and Chairman in 2005. L’Oréal Board member since 1997 (term

of office renewed in 2009), Vice-Chairman of the Board. Vice-Chairman of the Board

of Crédit Suisse Group (Switzerland), Boardmember of Delta Topco Limited (Jersey)

and Exxon Mobil (United States).

Director / Werner Bauer

With the Nestlé group since 1990, appointed General Manager in 2002.

L’Oréal Board member since 2005 (term of office renewed in 2010)

Director / Louis Schweitzer

Joined Renault in 1986, Chairman and Chief Executive Officer from 1992 to

2005, Chairman of the Board until 2009. L’Oréal Board member since 2005 (term of

office renewed in 2009). Chairman of the Board of AB Volvo (Sweden) and

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AstraZeneca (United Kingdom). Board member of BNP Paribas and Veolia

Environnement. Member of the Consultative Board of Allianz AG (Germany).

Director / Annette Roux

Joined Bénéteau in 1964, Chairperson and Chief Executive Officer from 1976

to 2005, Vice-Chairperson of the Supervisory Board thereafter. L’Oréal Board

member since 2007. She is also the President of the Bénéteau Corporate Foundation.

Director / Bernard Kasriel

With the Institut du développement industriel from 1970 to 1975. Chief

Executive Officer of Braud from 1972 to 1974. Executive Vice-President of the

Société phocéenne de métallurgie from 1975 to 1977. Joined Lafarge in 1977,

appointed Deputy General Manager in 1982. Assigned to the United States from

1987 to 1989, appointed Vice-Chairman and Chief Executive Officer from 1989 to

2003, and then Chief Executive Officer from 2003 to 2005. L’Oréal Board member

since 2004 (term of office renewed in 2008).

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Director / Charles-Henri Filippi

French civil service from 1979 to 1987. Worked for CCF (which became HSBC

France in 2000) from 1987 to 2008. Chief Executive Officer of CCF in 1995, HSBC

Group Executive Committee member from 2001 to 2004, Chairman and Chief

Executive Officer of

HSBC France from 2004 to 2007 and Chairman of the Board from September 2007

to December 2008. Chairman of Octagones and Alfina. Chairman of Citigroup for

France since January 2011. L’Oréal Board member since 2007 (term of office

renewed in

2010(8)). France Telecom Board member, Supervisory Board member of Euris and

Censor of Nexity.

Director / Xavier Fontanet

Appointed Chief Executive Officer of Essilor in 1991, Vice-Chairman and Chief

Executive Officer in 1995, Chairman and Chief Executive Officer from 1996 to 2009,

Chairman of the Board of Directors since January 2010. L’Oréal Board member since

2002 (term of

office renewed in 2010). Board member of Crédit Agricole SA and Fonds Stratégique

d’Investissement (FSI).

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Director / Liliane Bettencourt

Daughter of Eugène Schueller, the founder of L’Oréal. L’Oréal Board member

since1995 (term of office renewed in 2007).

Director / Francoise Bettencourt Meyers

Daughter of Mrs Bettencourt. L’Oréal Board member since 1997 (term of

office renewed in 2009).

Director / Francisco Castaner Basco

With the Nestlé group since 1964, General Manager from 1997 to 2009.

L’Oréal Board member since1998 (term of office renewed in 2010(8)).

Director / Marc Ladreit de Lacharriere

Member of the Institut. With L’Oréal from 1976 to 1991, former Executive

Vice-President in charge of Administration and Finance, Deputy Chief Executive

Officer from 1984 to 1991.

Chairman and Chief Executive Officer of Fimalac. Chairman of Fitch (United

States). L’Oréal Board member since 1984 (term of office renewed in 2010). Board

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member of the L’Oréal Corporate Foundation. Board member of Casino and

Renault.

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Organizational Structure

As you can see from the above diagram, the corporate organizational

structure of L’Oreal is too complicated to be categorized as a functional, divisional

CEO

Jean- Paul Agon

CEO

Jean- Paul AgonCommunication

& Public AffairsLatin America &

MEALuxury Products OperationsCIO

Finance &

AdministrationNorth America

Fedric Rose

Research &

InnovationAsia

Africa &

Middle EastProfessional

Products

Business

Development &

External Affairs

Roger Dolden

Active Cosmetics

Henric Sark

Consumer

Products

Joseph Campinell

Luxury Products

Carol Hamilton

L’Oreal Paris

Karen Fondu

Maybelline

New York-Garnier

David Greenberg

Professional

Products

& Salon Products

Patrick Parenty

Human Resources

Sarah Hibberson

Operations

Vince Serpico

Research &

Development

Eric Bone

Chairman

Lindsay Owens-Jones

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or a metrics structure. L’Oreal’s organizational structure can be considered a hybrid

of both divisional and functional structures, as it is organized both through functions

of work and divisions.

The functional aspect can be seen though the titles- CIO, Finance &

Administration, Operations and so forth. However, the structure also satisfies the

divisional organizational structure through titles of the following- Luxury Products,

Consumer Products and so forth. It is essential to also point out that L’Oreal not

only divides its organization through products, but it also utilizes the divisional

organization through geographical divisions such as North America, Africa & Middle

East, Asia and so forth. Therefore, the organizational structure of L’Oreal is of a

rather sophisticated one, mainly due to its global influence and the fact that L’Oreal

is of an extremely established organization. L’Oreal achieves organizational structure

through combining both functional and divisional structures to ensure efficiency

throughout the world.

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Distinctive Competencies

L’Oreal has several core competencies that create value, giving it a

competitive advantage to its competitors. L’Oreal achieves product innovation by

creating new and innovative products at their advanced dermatological research

facilities. The company invests 3% of their sales in research and development and

introduces one or two new products each year. Another core competency is

achieved within their marketing campaign by using high profile celebrities in ad

campaigns. L’Oreal is able to greatly enhance its global image through marketing.

Lastly, L’Oreal offers a diverse range of products including make up, perfume, hair

and skin products that caters to various ethnic groups.

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Financial Summary

/ Consolidated Profit & Loss Statement

€ Millions 2010 2009 2008

Net Sales 19,495.8 17,472.6 17,541.8

Cost of Sales -5,696.5 -5,161.6 -5,187.2

Gross Profit 13,799.3 12,311 12,354.6

Research & Development -664.7 -609.2 -587.5

Advertising and Promotion -6,029.1 -5,388.7 -5,269.1

Selling, general & administrative expenses -4,048.6 -3,735.5 -3,773.4

Operating Profit 3,056.9 2,577.6 2,724.6

Other income and expenses -153.2 -277.6 -156.3

Operational Profit 2,903.7 2,299.9 2,568.3

Finance costs on gross debt -43.8 -92.0 -208.8

Finance income on cash and cash equivalents 17.2 16.0 34.6

Finance costs, net -26.6 -76.0 -174.2

Other financial income (expenses) -9.0 -13.0 -7.2

Sanofi-Aventis dividends 283.8 260.1 244.7

Profit before tax and non-controlling interests 3,151.9 2,471.0 2,631.6

Income tax -909.9 -676.1 -680.7

Net Profit 2,242.0 1,794.9 1,950.9

attributable to:

-owners of the company 2,239.7 1,792.2 1,948.3

-non-controlling interest 2.3 2.7 2.6

Earnings per share attributable to owners of the

company

3.82 3.07 3.31

The consolidated financial statements of L'Oréal and its subsidiaries published for 2010 have been

prepared in accordance with International Financial Reporting Standards (IFRS).

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/ Analysis of the Profit & Loss Statement

L'Oréal has gradually increased profits throughout the last three years.

However, net sales decreased €6.9 million from 2008 to 2009 due to the instability

of the economy. According to the article, Report slams L'Oréal management and

predicts tough 2009, “L'Oréal has been trading on past glories and is beginning to

pay the price for years of mismanagement. L'Oréal has already seen a slowdown in

top line expansion in recent times with organic growth for the past 5 years

averaging out at 5.7 per cent compared to 8.5 per cent for the five previous years.

The company has also missed sales target in three out of the last four years.”v

One of their largest costs are allocated in advertising and promotion, L'Oréal

has used various actresses or different personalities of all ages that best exudes the

vision of the company. Famous personalities enable average individuals to relate to

their personal lives, allowing them to feel good and thus increase higher sales.

L'Oréal has gross profit margin of 71% in 2010, an increase of 1% over last

year, which is a healthy growth. In addition, there is a 12% increase in gross sales,

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which is most likely due to sales in L'Oréal’s new emerging markets from 2008 to

2010.

Their net income also grew 1% over last year, indicating an insignificant

growth. However, with their dedication in the growth of the company, L'Oréal has

spent more on operational expenses to restructure the company, invest in R&D, and

devote more money towards promoting strategies. Therefore, the company was not

able to retain money within the company.

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/ Consolidated Balance Sheet

€ Millions 2010 2009 2008

Non-current assets 17,048.2 17,350.4 16,380.3

Goodwill 5,729.6 5,446.0 5,532.5

Other intangible assets 2,177.5 2,042.4 2,038.2

Tangible assets 2,677.5 2,599.0 2,753.3

Non-current financial assets 5,837.5 6,672.2 5,557.4

Deferred tax assets 626.1 570.8 498.9

Current assets 6996.3 5,941.1 6,526.5

Inventories 1,810.1 1,476.7 1,635.5

Trade accounts receivable 2,685.2 2,443.3 2,694.6

Other current assets 846.0 732.8 985.8

Current tax assets 104.5 115.2 133.6

Cash and cash equivalents 1,550.4 1,173.1 1,077.1

Total assets 24,044.5 23,291.5 22,906.9

Equity 14,865.8 13,598.3 11,562.5

Non-current liabilities 2,596.6 4,306.6 3,978.0

Current liabilities 6,582.1 5,386.5 7,366.4

Accounts Payable 3,153.5 2,603.1 2,656.6

Provisions for liabilities and charges 536.9 510.0 431.1

Other current liabilities 1,958.1 1,750.5 1,848.4

Income tax 166.6 133.2 159.7

Current borrowings and debt 767.0 389.7 2,270.6

Total liabilities 9,178.7 9,693.2 11,344.4

TOTAL 24,044.5 23,291.5 22,906.9

As of 12/31

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/ Analysis on The Balance Sheet

L'Oréal’s total liabilities have gradually decreased over the last three years. It

seems as though they have been able to pay off their long-term liabilities such as

bank loans and mortgage loans. In addition, L'Oréal’s current borrowings and debt

amount of 767 million is significantly higher than 2009, indicating that L'Oréal may

be borrowing large amounts of money to feul R&D for new inventories. These

numbers all suggest the emphasis of L'Oréal’s expansion and growth to become the

front-runner in the industry.

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Key competitors

Because of the major market share L’Oreal has in the cosmetics and personal

care industry, the key competitors of L’Oreal are the biggest beauty and skincare

manufacturers. Below are six of its major competitors:

Estee Lauder, a beauty, hair and skin care company with more than 25 brands

and distributes to over 150 countries. Its brands are catered towards the higher end

and luxury market, including Aveda, Bobbi Brown, Michael Kors, Coach, Tom Ford,

Smashbox, Clinique, Donna Karan, La Mer and M.A.C.

Revlon, a cosmetics, hair color, deodorant and beauty tools company that

distributes to about 100 countries worldwide. Brands are catered towards the mass

market - the middle to lower class market, and include Almay, Revlon products and

Mitchum deodorants.

Avon Products, a cosmetics and skin care company that distributes through

representatives throughout 100 countries. Unlike other companies, Avon does not

sell through brick and mortar stores or distribute to third party vendors, but instead

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through their website, and employs representatives to promote and sell their

products. Some brands under Avon are Mark, Liz Earle and Silpada.

Alberto Culver, a personal care and beauty company that focuses on lower

end and value products that are distributed through the mass market worldwide,

mostly at drugstores and value stores. Brands include Tresemme, St Ives, Noxzema

and Vo5. Unilever acquired the company in May 2011.

Procter & Gamble, a personal care, beauty and household product company

that has a wide range of brands from high to low end. Brands include SK-II, Vidal

Sassoon, Wella, Anna Sui, Gilette, Herbal Essences, Clairol and Head & Shoulders.

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/ Competitive Profile Matrix

Critical Success

Factor L'Oreal P&G Avon Estee Lauder

Weight Rating Score Rating Score Rating Score Rating Score

Advertising 0.15 4 0.6 4 0.6 1 0.15 3 0.45

Product Quality 0.1 3 0.3 3 0.3 4 0.4 4 0.4

Innovation 0.05 4 0.2 2 0.1 2 0.1 3 0.15

Price

Competitiveness 0.1 3 0.3 3 0.3 3 0.3 2 0.2

Management 0.1 3 0.3 3 0.3 4 0.4 3 0.3

Market Share 0.1 4 0.4 3 0.3 2 0.2 2 0.2

Global Expansion 0.05 3 0.15 2 0.1 3 0.15 3 0.15

Distribution 0.05 3 0.15 3 0.15 2 0.1 2 0.1

Customer Loyalty 0.1 3 0.3 2 0.2 4 0.4 4 0.4

Financial positioning 0.1 4 0.4 3 0.3 4 0.4 4 0.4

Product Selection 0.05 4 0.2 4 0.2 4 0.2 4 0.2

Social Responsibility 0.05 4 0.2 4 0.2 4 0.2 4 0.2

Total 1 3.5 3.05 3 3.15

As we can see, L’Oreal is the leading company for the cosmetics and skin care

industry, with Estee Lauder behind, and then Proctor and Gamble, and then Avon.

Proctor & Gamble is as big in size as L’Oreal, however, in terms of cosmetics and

skin care, L’Oreal triumphs over them. Avon loses in terms of advertising and market

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share, and Estee Lauder comes in second due to its product selection as well as

product quality.

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Key Ratios

L'OREAL AVON REVLON ESTEE LAUDER

LIQUIDITY

Current Ratio 1.0x 1.4x 1.5x 1.8x

Quick Ratio 0.6x 0.7x 0.7x 1.1x

LEVERAGE RATIOS

Debt to Assets Ratio 0.4x 0.8x 1.6x 0.6x

Debt to Equity Ratio 0.6x 4x (3)x 4x

Long Term Debt to Equity Ratio 0.06x 1.5x (1.7)x 0.4x

ACTIVITY RATIOS

Inventory Turnover 3 Days 3 Days 3 Days 2 Days

Fixed Assets Turnover 7 Days 7 Days 13 Days 8 Days

Total Assets Turnover Under1 Day 1 Day 1 Day 1 Day

Accounts Receivable Turnover 6 Days 14 Days 7 Days 7 Days

PROFITABILITY RATIOS

Gross Profit Margin 70.80% 63.52% 64.95% 78.49%

Operating Profit Margin 15% 10% 14% 16%

Net Profit Margin 11% 6% 25% 6%

Return on Assets 7.92% 10.25% 12.91% 14.17%

Return on Equity 15.76% 43.96% -37.28% 34.25%

Earnings Per Share $3.79 $1.39 $6.26 $2.38

Price Earnings Ratio (MS based on 11/08/10)

6 21 2 31

GROWTH RATIOS

Sales 12% 6% 2% 13%

Net Income 25% -3% 571% 47%

31

/ Analysis on Key Ratios:

Liquidity Ratios

L’Oreal is not as liquid then the competitors. L’Oreal is not able to pay off

their short-term debts and liabilities as well as their competitors. This ratio indicates

their ability to turn short –term assets into cash to cover debt. Liquidity ratios are

very important, as it can be one of the main indicators of whether a company will

survive in the long term. L’Oreal has almost 1 million (euros) more accounts payable

in 2010 indicating one of the reasons why they have higher liability to their assets.

This may account to the lower current ratio.

Leverage Ratios

L'Oreal is less levered compared to its competitors. They have low Debt to

Assets ratio meaning that they have low liabilities and more assets, which is a good

sign. However, we can also argue that this could result to less growth in the future

since they are not investing as much as other competitors to buy assets to grow the

company. Their low Debt to Equity ratio is also lower than competitors meaning

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they are less of a risky company than competitors. This might mean that L'Oreal can

take advantage of issuing more debt and use the cash to buyback some of its

outstanding shares to return some money to investors.

Activity Ratios

Inventory turnover: In line with competitors. They can try to improve to match

Estee Lauder but they are in healthy shape.

Fixed asset turnover: Very healthy number and in line with competitors. They

have a low number, meaning their fixed assets are used very efficiently.

A/R turnover: Better than competitors, which mean the company is able to

collect money from its customers faster than its competitors. This is good for

liquidity.

Profitability Ratios

Gross Margin Ratio: L’Oreal has a relatively high gross margin ratios

compared to its competitors, which is a good sign. They are left with more

money for the company.

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Return On Equity: L’Oreal’s ROE is low compared to its competitors. They are

less able to generate return for its shareholders. Since L’Oreal has a high

gross margin, assuming that the company perhaps spends more on

advertising or something below the gross profit line that would lead the

company to have lower net earnings. The best guess is their investment on

equipment, restructuring of the company, and promoting efforts that was

indicated by the CEO are some of the reasons why the ROE is a bit lower than

others.

Growth Ratios

Growth ratios are very strong compared to its competitors. Sales are very

strong in 2010 probably because in 2010, they acquired Yves Saint Laurent as one of

their companies to produce cosmetics from. Their net income ratio is in line with

competitors. Revlon recently came out of bankruptcy, therefore they have a very

high net income but it is a skewed ratio. We would like to see the net income ratio

to be a little bit higher, however they have increased their advertising in 2010. This

may be a factor in the net income ratio results, however, 25% is a very good

number.

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Situation Analysis

/ General Environment

INDUSTRY TRENDS

The following are current trends in the cosmetics industry that are driving the

markets:

Due to the increasing awareness of environmental and health issues, natural

cosmetics and green cosmetics that are better for the environment are trending.

People are leaning towards a more natural look and feel, and more nature inspired

products. People care more about what is in their cosmetics, and prefer less

preservatives and chemicals on their skin. Consumers are also caring more about the

environment, and prefer greener and more basic packaging, eco friendly materials

used in packaging, as well as less waste and pollution while manufacturing the

products. Organic and fair trade are also emphasized.

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Another trend in cosmetics, contrary to the green trend, are bright, ever

changing trendy colors. The trends in previous years were that women wear makeup

to look like they weren’t wearing make up at all, but now, cosmetic companies are

pushing more vibrant and bright colors. This would drive customers to change

colors more often and purchase more cosmetic products.

Anti-aging and sun protection are also trends in the industry. Women are

starting their anti-aging regiment from as young as 25, and there is an increasing

popularity in using ingredients such as retinoid, fillers, antioxidants and chemical

peels. FDA is also requiring warning for all sunscreen products, as well as a rating

system for sunscreens. There is also an increased amount of products in the market,

such as moisturizers and other skin care regiments, containing SPF in them.

Collaborations, licensing technologies and working with raw material

companies are becoming more common in the industry. Companies are also

beginning to sell their intellectual property and selling other companies rights to use

their intellectual property to generate more income.

REGULATIONS

The cosmetics industry is mostly a self-regulating industry. The CTFA,

Cosmetics Toiletry Fragrance Association, monitors the industry. FDA does not pre-

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approve cosmetics to see if they are effective or not, and companies cannot label

their products as FDA approved. It is the manufacturer’s responsibility to ensure that

the product is safe and effective for consumers. There are, however, FDA rules for

labeling cosmetics. The product label must contain the following:

Identity statement – The nature and use of product

Net quantity of contents – Weight

Name & place of business

Distributor statement – Where it’s manufactured, and by who

Material facts

Warning and caution statements – If used incorrectly may cause harm, or if

product contain flammable ingredients

Ingredients

The product cannot contain poisonous ingredients that can injure users, and

cannot contain decomposed substance. The product must be packaged in sanitary

conditions where it cannot be contaminated, and the FDA is responsible for

inspecting these cosmetics manufacturing plants. The labels must contain true facts,

and cannot be false or misleading, and in order for the label to be approved, it must

contain all of the above information. If the product turns out to be hazardous, the

FDA cannot recall them. It is the manufacturer’s responsibility to do so.

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/ Industry Analysis

PORTER’S FIVE FORCES MODEL

Industry

The cosmetic industry sells traditional cosmetics such as make-up and

perfume, as well as products of personal hygiene such as tooth-care products,

shampoos and soaps. Today, the cosmetic market is driven by innovation including

new color pallets, treatments targeted to specific skin types and unique formulas

concentrating on different needs. Most cosmetic types have a lifespan of less than

five years, and manufacturers reformulate 25% of their products every year.

L’Oreal’s competitive advantage is product differentiation, requiring the company

to have strong marketing abilities, product engineering, creative flair, strong capacity

in basic research, corporate reputation for quality and technological leadership, long

tradition in the industry, and strong cooperation from channels. Moreover, they

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need strong coordination among functions of R&D, product development and

marketing and amenities to attract highly skilled labor, scientists and creative talent.

Suppliers

Bargaining Power of suppliers – HIGH

In the cosmetic industry, the power suppliers have upon cosmetic companies

is high because products sold by cosmetic companies require expensive research

and expertise. Thus, cosmetic companies are dependent on their suppliers that have

developed the formulas of their products.

Bargaining Power of suppliers at L’Oreal – LOW

L’Oreal owns most of its suppliers through its different brands (forward

integration). Very few brands compete with L’Oreal and thus its suppliers are

dependent on them. The cost of suppliers relative to the cost of its products is

actually quite low.

Substitute Products

Potential development of substitute products - MEDIUM to LOW

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Because L’Oreal is a much-diversified company in cosmetic products ranging

from makeup, crèmes to hair products, it is difficult to find a substitute product that

L’Oreal is not already selling. The only substitute that has arisen today is plastic

surgery, which could replace their cosmetics and aging products. However, the

performance of surgery as compared to cosmetics may be a threat to L’Oreal.

Nevertheless, the switching cost (money-wise and health-wise) is very high, and

most customers are unlikely to switch to surgery.

Another potential substitute is a trend towards ‘no makeup’ and natural looks.

That trend usually goes hand in hand with that of anti-consumerist group that view

cosmetic products as superfluous.

Competitors

Rivalry among competing firms - HIGH to MEDIUM

The number of competitors in this industry is quite high. Some include, but

are not limited to, Avon Products, Inc. and Alticor Inc. Moreover, most of L’Oreal’s

competitors are specialized in a certain type of cosmetic, giving them an expert

image advantage over L’Oreal. The industry growth rate is also relatively high, as we

make constant improvements in aging and other product innovation. However, fixed

and storage costs are also high, but not as high as in other industries: products are

relatively small and easy to store. Moreover, L’Oreal caters to higher end customers,

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producing its products in lower quantities. Product differentiation for L’Oreal is also

quite high because of its brand image; however in the cosmetic industry, such as the

perfume industry, it is often difficult to differentiate yourself from competitors.

Buyers

Bargaining power of consumers/buyers - MEDIUM to LOW

Customer profile of the luxury cosmetic industry:

Age 16 to 60 years old

Middle to upper class

Higher education, and cultural knowledge

Higher income level

Influence on the world in general

Man and woman, the majority of women

Have leisure time

Is critical, and informed consumer

Not afraid to complain, not tolerant of mistakes and failures in

products

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Consumers have increasing power over companies because of the increased

accessibility of company information. However, L’Oreal is considered a high-end and

high-tech leader in its industry that directs demand rather than follows it. Volume of

purchase is quite low as a consequence, and product quality and differentiation of

suppliers is high. Since prices are high (luxury products), there is not a need for a lot

of buyers. Incentives for better quality and products with a strong brand identity

make the bargaining power of consumer relatively low at L’Oreal and in the luxury

cosmetic industry in general.

Entry of New Competitors

Potential entry of new competitors - LOW

L’Oreal offers products that are different and benefit from economies of scale

for its production. In the cosmetic industry, brand identity and product

differentiation is very high. High capital is required because of the heavy R&D

needed to create cosmetic products. Indeed, it is very expensive to start a new

cosmetic company in this industry with the need of high investment in product

development/testing, and advertising. Switching cost is not very high, but the cost of

switching to a new type of cosmetics that the customer might be allergic to is high.

There is high control of the distribution channels, and the access to raw materials is

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limited because of specific chemicals needed to produce the cosmetic products.

Finally, government policies and regulations continue to get stricter in the cosmetic

industry for consumer protection, creating capital and social barriers to the entry of

new competitors.

/ Internal Environment

Tangible Resources

The tangible resources of L’Oreal would be first and foremost its financial

position and capital. How much profit does L’Oreal make? What is L’Oreal’s

borrowing power? From the year 2009 to 2010, L’Oreal’s net profit rose from 1997

million Euros to 2371 million Euros. The company was able to lower its net financial

debt/equity ratio from 14.4% in 2009 to a staggering low of 0.3% in 2010, meaning

that the company was almost covering all of its debts with its equity. L’Oreal’s net

financial debt lowered from 1985 million Euros in 2009 to 41 million Euros in 2010.

As L’Oreal’s debt lowers, it gives the company more borrowing capacity.

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Physical resources are another component of L’Oreal’s tangible resources. The

total worth of the company’s assets rose from 23,291 million Euros in 2009 to 24,044

million Euros in 2010, of which 17,048 million is non-current assets, 5,446 million is

current assets, and 1,550 million is cash and cash equivalents.

Intangible Resources

For a cosmetics company like L’Oreal, a majority of its resources are

intangible. Some of the company’s major intangible assets are its technological

patents. In 2010, L’Oreal has 612 patents, 18 research centers across the world, and

12 evaluation centers, of which specific ones are dedicated towards the studying of

Chinese, Japanese and African hair and skin. They call this “Geocosmetics,” and prize

their focus on studying ethnic skin types and tapping into global markets. In 2010

alone, L’Oreal spent 665 millions Euros in research and development.

Reputation is another important resource L’Oreal has. L’Oreal has the most

globally known brands as well as brand image, and its diverse brands and products

serve a wide range of customers. It has both accessible, mass marketed brands, as

well as high end, luxury brands for worldwide markets. They are also tapping into

the BRIC markets such as India and Brazil. L’Oreal has some of the top selling

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products in the U.S., for example their Maybelline “Falsies” Mascaras, and are seen as

an environmentally friendly and socially responsible company.

In 2010, L’Oreal employed 66,619 people across the globe, and their mission

is to continue to diversify their human resources as much as possible. They

published a diversity report of its employees in 2010 – the first ever published in

France – and pushed the importance of acceptance of diversity in a workplace,

creating value and enrichment in their working environment. L’Oreal also recruited

young graduates from BRIC markets – which are Brazil, Russia, India and China, and

created “My Learning,” an internet platform which trains employees in tailor-made

ways with specific requirements for each individual job.

Resource and Capabilities

Some of L’Oreal’s main capabilities are its ability to cater products to different

ethnic backgrounds, as well as its advanced R&D in these skin types. For this reason,

they are able to venture into untapped markets. L’Oreal’s constant innovation and

cutting edge technology puts them at the top of the market. They have recently

conducted the first ever stem cell research for makeup purposes. They also triumph

over other companies in terms of marketing and brand management – they are able

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to keep marketing its best products to keep them at their customer’s favorites lists.

Also, last but not least, its financial capabilities are also astounding – they reduced

their debt/equity ratio by 14.1% in a year, as well as reduce its net debt from 1950

million Euros to 41 million in a year.

Current Issues

L’Oreal USA acquire Clarisonic owner (November 11th, 2011)

L’Oréal subsidiary, L’Oréal USA, is planning to buy Pacific Bioscience

Laboratories Inc (PBL), the company behind Clarisonic. Established in 2001, PBL is

headquartered in Redmond, Washington. Its Clarisonic range of electronic skin care

devices – based on sonically oscillating brushes and infusion technology – comprises

of Clarisonic Classic, Clarisonic Mia, Clarisonic PLUS and PRO, and the Clarisonic

Opal Sonic Infusion System. “This is a strategic acquisition for L’Oréal,” said Frédéric

Rozé, president and CEO of L’Oréal USA. “Devices are rapidly emerging globally as

an important new skin care category. Clarisonic is successful and the fastest growing

premium brand in this segment. We think that together with PBL, we will create in

Redmond an outstanding centre of innovation for L’Oréal. Upon the closing of the

transaction, the Clarisonic brand will join the portfolio of L’Oréal Luxe and benefit

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from its worldwide presence.” “L’Oréal brings powerful marketing, distribution and

R&D synergy to the Clarisonic agenda,” added David Giuliani, CEO and co-founder

of PBL. “L’Oréal shares our vision for ingenuity and dedication to quality. Combining

forces, we’re confident Clarisonic will rapidly achieve its global mission to provide

the power to change the future of your skin.” The merger is subject to approval of

PBL’s shareholders and other conditions, and is expected to close in December.

Decisive Court Ruling in Bettencourt- L’Oreal Saga (October 18th, 2011)

A French court has ruled decisively in the long running Bettencourt-L'Oréal

saga. Liliane Bettencourt, the major shareholder in L'Oréal and suffering from

dementia, has been placed under the guardianship of family members. The family's

voting rights in the company will continue to be exercised through the family

holding group. Bettencourt's daughter, Francoise, has re-emphasized the family's

strong attachment to the cosmetics major group and its future development. The

family controls 30.9% of L'Oréal's capital with Nestlé holding 29.7%. Francoise

Bettencourt said the court's decision regarding her mother in no way affected the

agreement reached in 2004 between the family and Nestlé. The 2004 accord

envisaged that up to 2014, each would have a right of pre-emption over the shares

of the other. Following the court ruling, L'Oréal's shares moved up 2.1%.

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Sustainable Cosmetic Summit to focus on sustainable ingredients and

distribution innovations (September 13th, 2011)

Sustainable ingredients and distribution innovations are the focal themes of

the European edition of the Sustainable Cosmetics Summit

(www.sustainablecosmeticssummit.com/Europe). Taking place in Paris from the 28th-

30th of November, the summit will bring together leading organizations involved in

sustainability in the beauty industry to debate key industry issues. Rising oil prices

and dwindling supply are leading many companies to turn to plant-based feedstock

for cosmetic ingredients. However, this development raises many questions about

sustainable harvesting, processing and use of such ingredients. The Sourcing and

Using Sustainable Ingredients session discusses such concerns. Romain Ruth, CEO of

Florame, discusses the pitfalls and challenges of sourcing raw materials from

developing countries. Another paper by AAK looks at the complexities of sustainable

sourcing of commodities, such as vegetables oils. Other speakers will discuss the

sustainable use of plant feedstock, deriving novel actives from food crops, and major

green certification schemes. A conference session and workshop is devoted to

Marketing & Distribution Innovations. Although growth in the sustainable cosmetics

market is continuing, market conditions have changed considerably in recent years.

The entry of large multinationals, retailer private labels and other new brands are

raising the competitive stakes. Marketing has come to the forefront, with many

brands competing on communications, positioning and distribution.

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The opening session of the summit - Sustainability Best-Practices - features

some of the pioneering sustainability initiatives in the beauty industry. The first

paper will give case studies of cosmetic and ingredient companies creating positive

impacts on the environment and society. L’Oréal will discuss some of the challenges

faced by large cosmetic companies when devising and implementing sustainability

programs. With French legislation possibly banning the use of parabens in cosmetic

products, the workshop goes through the green preservative options and assesses

the related adoption issues.

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SWOT Matrix & Analysis

/ Internal Environment

Strengths

Strong Brand Image, locally and Internationally

Perceived high quality standards and products

High Brand Awareness among men and women

Knowledge of different cultures and rituals worldwide: can adapt its products

Portfolio of International brands in different distribution channels (23 global

brands, including L’Oreal Paris, Garnier, Maybelline NY, YSL Beauty, Biotherm)

Strong Research and Development departments- constant innovation (612

patents filed in 2010)

Strong advertising: through product placement, television ads, social medias,

and books.

Diversity of beauty products and services: skin care products, cosmetics, hair

color, hair care, styling, hair-dressers. Men’s line means more selling

opportunities, and meeting the needs of more people.

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Positive social responsibility image: campaign for the fight against ovarian

cancer, partnership with WIN (women in need) to help women achieve their

goals through workshops

Increase in operating profit from 2009 to 2010: they are doing well, despite

the economy.

Dividends have increased by 20 percent in 5 years: attractive to shareholders

Weaknesses

Internal family disputes on heritage and company control

High investment in constant innovation means high risk of failure (loss of

money)

Their smallest cosmetic production and sales is in North America

Decentralized organizational structure: with so many brands under its name,

the company is hard to control: slowing down the production of the company

Hard to know who is accountable/responsible for problems relating to one or

another brand of the company

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Worldwide marketing strategy that adapts to the culture: blurring of the

company image

/ External Environment

Opportunities

Market development in untapped countries such as Korea and the South East

Technological advancement creates new markets and advertising medium

opportunities: social media, online website

Growing demand for beauty products (trend): hairstyling, color, skin care, and

perfumeries

Growing affluent market

Growing aging market in Western countries

Growing market in developing countries (Asia): aspiring customers in

emerging markets

Men growing interest in beauty

Cultural growing interest in aesthetic beauty

Growing concern for UV protection and minimize aging of skin

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Growing concern for the environment and environmentally friendly products

Growing demand for toxic-free, quality products that last

Life expectancy rate increase

Attitude towards France in positive

Threats

Increasing competition from pharmaceuticals

Cosmetic surgeons, and trend towards cosmetic surgery with TV shows, etc.

Image of beauty is changing towards a more “natural” look, makeup-free

On-going, lasting recession

Unemployment rate keeps increasing, meaning people have less disposable

income, are more conservative

Bank issues right now: Wall Street campaign is one of them

Wars and conflicts in developing countries: hard to approach these markets

Increase government policies and regulations on cosmetics: may increase

production price

Increase in price of oil and transportation: global distribution gets expensive

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/ TOWS MATRIX

Strengths

S1 strong brand image and brand awareness

locally, and internationally.

S2 Perceived high quality standards and

products.

S3 Knowledge of different cultures and

rituals worldwide and so can adapt its

products.

S4 Portfolio of international brands: more

markets.

S5 Strong advertising

S6 Diversity of beauty products to answer

the needs of more markets.

S7 Positive social responsibility image.

S8 Increase in operating profit means strong

management.

S9 Dividends have increased, meaning they

attract more investors.

S10 Custom-tailored individual training of

employees through Internet platform

Weaknesses

W1 Internal family disputes on heritage and

company control

W2 Weak in the North American market: smallest

production and sales

W3 Decentralized company structure means hard

to control: slows down company production and

weaken image.

W4 Hard to know who is accountable for

problems with all these different brands in one

company.

W5 Worldwide marketing strategy that adapts

product and advertising to the culture: blurs image

of company.

W6 Continuous innovative ideas and products

required: high R&D costs, and so high risk

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Opportunities

O1 Market development in untapped

countries such as Korea and the South

East

O2 Technological advancement creates

new markets and advertising medium

opportunities: social media, online

website

O3 Growing demand for beauty

products (trend): hairstyling, colour, skin

care, and perfumeries

O4 Growing affluent market

O5 Growing aging market in Western

countries

O6 Growing markets in developing

countries of Asia: aspiring customers

O7 Male growing interest in beauty

O8 Growing concern for UV protection

and minimizing aging

O9 Growing concern for environmentally

friendly products

O10 Positive attitude towards France

(L’Oreal)

O11 Life expectancy rate increase

SO Strategies

1. Use worldwide brands and distribution to

expand to other countries such as Korea

(market development)

2. Invest in development of environmentally-

friendly products (product development)

3. Invest in development of cosmetics for the

aging populations (product development)

4. Use strong advertising to reach to male

market (market penetration)

WO Strategies

1. Restructure company to better understand who

is accountable for what, increase communication

between different divisions

2. Target new market in developing countries: will

not require more investment in R&D (market

development)

3. Refocus the brand image by re-centering on

French roots

4. Increase marketing in North America, especially

to the aging, and male population (market

penetration)

5. Reorganize authority of different divisions by

geography to speed up production and decision-

making (decentralize but more communication)

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Threats

T1 Increasing competition from

pharmaceuticals

T2 Trend towards cosmetic surgery has

increased with TV shows, etc.

T3 Image of beauty if changing towards

a more natural, makeup free look

T4 Lingering recession and slow

economic growth: reduced consumer

spending

T5 unemployment rates keep increasing,

people have less disposable income and

are more conservative

T6 Bank issues such as Occupy Wall

street: makes people scared of spending

T7 Wars and conflicts in developing

countries makes it hard to approach

those markets

T8 Increase government policies and

regulations on cosmetics may increase

prices.

T9 Exchange rate fluctuations

T10 Increase in oil and transportation

price: global distribution gets expensive.

ST Strategies

1. Use strong advertising in campaign against

plastic surgery

2. Acquire competitors (pharmaceutical

companies) to increase Western market share

are reduce threat (horizontal integration)

3. Develop products/cosmetic for natural

look (product development)

4. Bring back some of the manufacturing

domestically by acquiring domestic

distributors/manufacturers (forward

integration)

5. Develop products that last longer, so

customers feel like they get more for their

money

WT Strategies

1. Sell-off some brands that are less profitable

(Divestiture)

2. Emphasize cost-reduction without losing quality:

economies of scale, domestic production, and

better management.

3. Increase communication and combination of

expertise of different brands to reduce redundancy

of some roles and costs.

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Recommendations

According to the SWOT analysis and Matrix, here is an analysis of each

recommended strategy:

/ Market Development

Use worldwide brands and distribution to expand to other countries

such as Thailand, Saudi Arabia, and Vietnam.

Advantages & Benefits

Increase in untapped market share abroad.

Increase in international brand awareness.

Economies of scale: quickly, by expanding the number of stores and

distribution, it will become cheaper to sell to the growth markets.

Use strong knowledge and adaptation of products to culture.

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Expansion of one brand helps the expansion of the other brands in the

market easier.

Can attract investors and shareholders from the new markets: Saudi Arabia

shareholders for example.

Online training means no need for people from headquarters to relocate to

growth markets.

Can market existing products, no need for additional innovation and R&D

since those products will already be new to these markets.

Disadvantages & Costs

Expensive market research before entering the market

Market and government regulations may be costly or hard to meet

Distribution to these markets will increase transportation and distribution

costs

Risk of failure to meet demand of new markets

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/ Market Penetration

Examples of such are as follows, use strong advertising to reach male

market, promote environmentally friendly products, or campaign against

plastic surgery.

Advantages & Benefits

No additional investment in R&D expenses needed

Will generally improve the image of L’Oreal and brand awareness

Increase male market share

Target environmentally responsible people

Improve public relations

Secure market share against substitutes as this industry has relatively high

buyers bargaining power due to similar product offerings within the industry.

Disadvantages & Costs

Risk of diluted perception of L’Oreal’s brand image.

Risk of blurring the image of the company further by opening to new markets

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Costs of heavy advertising in magazines and TV spots

/ Reorganize & Restructure

Restructure the company and the authoritative hierarchy of each division

within L’Oreal. Continue to decentralize and implement divisional

organization structure by geography in order to optimize production

time and efficiency.

Increase communication between all product divisions through

mandatory divisional meetings to decrease unnecessary costs and share

expertise between all L’Oreal products.

Advantages & Benefits

Will speed up production and give innovation leadership to L’Oreal

Will give competitive advantage over companies that do not possess several

brands

Will avoid redundant costs; therefore utilize the additional funds towards

investing in R&D.

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Disadvantages & Costs

This means there will be a need for a change strategy: for such a big

company with so many different divisions the change strategy approach will

need at least two phases:

The first phase will be the Board of Directors that will need to agree on

the strategy and then impose a schedule (force strategy) to implement

the strategy for all the different division heads.

The second phase constitutes the head of divisions using a rational

strategy approach to implement the change in their divisions, by

meeting with all the managers and come up with the best

implementation.

This type of reorganization needs a lot of communication and organization

between the different divisions, which may be costly and time-consuming in

the short-term.

It may be hard to convince the different divisions of the long-term benefits of

this strategy.

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/ Implementing Change

L’Oreal has a highly complex structure, with numerous brands and

decentralized branches. Thus, implementing change throughout the whole company

will have to be done using several change strategies at each stage and level of the

company.

CEO and board members will have to come together and discuss the changes to be

implemented using EDUCATIVE CHANGE strategy.

Then, they will use a RATIONAL and FORCE CHANGE approaches to directing

to managers and heads of the different brands about what the changes will be.

The managers will then use EDUCATIVE and FORCE CHANGE strategies to

implement those changes at the operational level of the different brands.

A tight but realistic schedule will have to be set up, to make sure all brands

make the changes necessary relatively concurrently. In such a huge company, for

strategy implementation to be effective and not too slow, force change approaches

will be necessary on some levels of the company.

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Citations

i http://strategyonline.ca/2008/06/01/tributeloreal-20080601/

ii http://www.cosmeticsdesign-europe.com/Business-Financial/L-Oreal-unveils-three-pronged-

strategy-for-future-growth

iii http://www.loreal.com/_en/_ww/html/our-company/mission.aspx?

iv http://www.csrglobe.com/login/companies/loreal.html

v http://www.cosmeticsdesign-europe.com/Business-Financial/Report-slams-L-Oreal-

management-and-predicts-tough-2009

http://www.article13.com/A13_ContentList.asp?strAction=GetPublication&PNID=112

http://www.article13.com/A13_ContentList.asp?strAction=GetPublication&PNID=191

http://www.greenbook.org/marketing-research.cfm/high-end-cosmetics-trends-in-china

http://www.skininc.com/spabusiness/trends/27240294.html?page=1

http://beauty.about.com/od/makeuptrickstips/a/beautrend.htm

http://www.sltrib.com/sltrib/money/51028456-79/cosmetics-industry-market-

products.html.csp

http://www.fda.gov/Cosmetics/default.htm

http://www.csrglobe.com/login/companies/loreal.html

http://www.loreal.com/_en/_ww/html/our-company/mission.aspx?