Analysis of Loreal and Its Competitive Environment and Recommendation of a Strategy

Analysis of LOREAL and its competitive environment and recommendation of a strategy

1. Introduction

L'OREAL group is the world famous and diversity cosmetics manufacturers, was founded by the French chemist's RenShu Lyle in 1907. L'OREAL is one of the world's three largest cosmetics group, and is also one of the world's most admired companies. L’OREAL becomes experts in cosmetic industry (LOREAL, 2015). It's all kinds of cosmetics in the best-selling all over the world, which was welcomed by many consumers. 

Strategic business unit is a unit or functional units of the company. It is strategy organization on the basis of independent products, industry, or market the enterprise service for, and constitute of several groups or some parts of group within the enterprise (Johnson G, Whittington R, Sholes K, Angwin D and Regner, P, 2014). As a successful diversified multinational enterprise, L'OREAL's business is covered the skin care products and cosmetics products. L’OREAL set up its branches and offices in more than 130 countries. At the same time, the L'OREAL group has comprehensive and complete sales channels, through department stores, supermarkets, shopping malls, cosmetics stores, duty-free shop and other channels and means, to sell the high quality of products all over the world (LOREAL, 2015).

This assignment provides a detailed analysis of the current operation environments of L’OREAL, and includes a critical summary which identifies key strategies for future development.

1. Current Internal Environment

1. VIRO framework

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1. Value Chain

Value chain analysis method can be seen as a series of input, conversion and output sequence of activities, each activity is likely to be relative to the final product to produce value-added, thereby enhancing enterprise's competitive position. Enterprises through the information technology and the key business process optimization can to realize enterprise strategy. Enterprises through the flexible application of information technology in the process of value chain can enhance the enterprise competitive ability.

The value chain as a tool can identify value by a company. In this regard, the company can use the process of evaluating its competitive position. The value chain considers the primary activities and support activities. Value creation also depends on the coordination between departments within corporation.

L'OREAL changed its supply chain model and its distribution rationalization when it faced a difficult in sales and profits. There are some measures include the purchase of domestic brands after it’s combined, L'OREAL has become the market leader. And now, it has three factories of network after it completed mergers and acquisitions.