Loreal and the globalization of American beauty

Group Members Karan Gauba (1120117) Kartik Taneja (1120010) Shubham Chaturvedi (1120021) G. K. Subhash (1120040)

SUMMARY :

1. LOreal is the largest beauty company in the world and in the past 100 years that it has expanded, it has supplied to 130 countries with offices in 58 different countries. 2. This global company is the number one premium cosmetic product in the world today and has taken the core and beauty of peoples everyday lives since 1907, the beginning of LOreal. The superior leadership of a guy named Eugene Schueller started this strategic company with basic products such as hair care and also the first man-made hair color product. 3. In 1934 Eugene invented the first mass market of soap less shampoo and this led the success of LOreal in the country of Europe which soon recognized them as the leader in body care and hair coloring products. LOreal realized they needed to expand in other fields of the beauty market and target markets in order to stay alive and successful. This would mean that LOreal would need to acquire other companies as part of their expansion and through this they have kept the constancy of the leading company with acquisitions of many small companies. 4. In the 1980s they started their globalization into new markets all around the globe by acquiring new companies that would form the cosmetics that we know today. The main strategy was to adopt new companies and expand it from within believing that the brand could be taken globally and benefit their overall brand portfolio. The main role of acquisitions was to increase and lengthen the internal growth rate. LOreal started acquiring companies from the beginning of their name. They started with the basics of their own brands such as LOreal Professional, LOreal Paris, Kerastase, and Club des Createurs de Beaute.

5.

In the 1960s LOreal consumed some other companies such as Garnier, Lancome Paris, and Biotherm. In the 1980s LOreal took full possession of two companies, Ralph Lauren Fragrances and Helena Rubinstein which was a cosmetic maker that distributed internationally. Maybelline is another brand that LOreal consumed because they were in need to be restored. LOreals research and development teams came in and work miracles within Maybelline.

6. LOreal made its biggest acquisition by purchasing Redken which allowed them to reassess the whole hair care division. Redken was well known for its extensive network of salon educators. LOreal soon realized that Redken had global potential as an American brand of American origin. 7. The last acquisition that stands out above all the others is the purchase of Kiehls. They are a New York based specialty store that sells high end cosmetics which gives LOreal a new advantage into another market of the luxury division with the goal of selling in higher end stores. As you can see all these acquisitions play an important role in the growth LOreal and how they became the worlds largest beauty company.

SWOT ANALYSIS

STRENGTHS 1. The primary strength of the Company is the continuing research and innovation in the interest of beauty which assures that the LOreal Cosmetics offers the best to their consumers. 2. LOreal Groups is the developed activities in the field of cosmetics as well as in the dermatological and pharmaceutical fields in order to put more concentration in their particular activities. 3. LOreals advertising strategy also plays a major part to its growth. Through adapting to the culture of their target market as the main tool of their advertisement, the Company brought LOreal products within reach of other women from different parts of the world.

WEAKNESSES 1. The company has a decentralized organizational structure. 2. Due to the many subdivisions of the Company, there is also the difficulty in the control of LOreal. 3. The profit margin of LOreal is comparably low than that of the other smaller rivals. 4. Due to its worldwide marketing strategy, there are also dissimilarities brought about in the campaign of LOreal products as to what image they are to project.

OPPORTUNITIES

1. The growing demand for beauty products gives LOreal the opportunity to focus in their field of specialization, particularly on hair styling and color, skincare, cosmetics and perfumeries. 2. The market is growing that ranges from the affluent, the aging and also the masses of the developed countries. 3. It has greater market share because of the numerous patents registered by the Company. This enables them to have the top of the line products only to their name.

THREATS

1. Due to the ongoing addition to the field of cosmetics, there is still the danger that other brands could surpass the profit of LOreal. 2. The economic downturn that is quite evident in other countries. Such could thus hurt the possibility of higher profit for the company. 3. While the LOreal Group may be producing the best of its line, people may find that their products are not of their basic needs and would skip buying LOreal products.