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  1. 1. Pauline BlaisInes Ben RehoumaArianeEdjetmaiNicholas KuggeHussein JaffalFanny Braut
  2. 2. Presentation&Analysis of L’Oréal L’Oréal Corporation 1. Mission 2. BriefHistory 3. Facts& Figures Strategic Issue
  3. 3. Mission  “L’Oreal’s mission is tomakeinnovativeproductsthatenhance the beauty and well-being of men and womenaround the world. Theirfundamental mission is to providesuperior beauty and personal care products fortheiremployees, consumers, salon professionals and retailpartners”
  4. 4. Brief History Created in 1907 by EugèneSchueller First synthetic hair dyes: Auréole SociétéFrancaise des TeinturesInoffensivespour Cheveux Diversification&Expansion
  5. 5. Facts and Figures A century of expertise in cosmetics €20.3billion consolidated sales in 2011 27 global brands* 130 countries 68 900 employees 613 patents filed in 2011
  6. 6. Strategic Issues L’Oréal stagnation of its market shares in developed countries Negative growth in Eastern Europe: -2.8% Outstanding growth in emerging economies  Latin American markets: 13.2%  Asian markets: 13% Difficulty to attract new customers in Europe and North America
  7. 7. Strategic Issues L’Oréal’s products in their mature stage of life cycle in old markets In contrast, cosmetics is a growing industry in emerging economies L’Oréal needs to focus on new markets Brazil and importance of beauty rituals
  8. 8. Solution Part 1 : Focusing onBrazil Analysis of the BRIC 1. Economic aspects 2. Social aspects 3. Political aspects 4. WhyBrazil ? Expansion Methods 1. Mergers and acquisitions 2. Joint Venture
  9. 9. Economic Aspects Brazil • 6th world largest economy (+24%) • Average purchase power 11800$ / year • Average of 240$/ year spend on beauty products India • 10th world largest economy (+25%) • Average purchase power 3650$/year Russia • 9th world largest economy (+25%) • Average purchase power 21250$/year China • 2nd world largest economy (+22%) • Average purchase power 8450$/ year
  10. 10. Economic Aspects (cont.)COUNTRIES COSMECTICS MARKET GROWTHBrazil 15%Russia 11%India 17,5%China 18,7%
  11. 11. Social Aspects Beauty standards withglobalization Cosmetics  Luxury & social code Middle class in BRICS : • discovery of a new purchasing power • tend to show off the social class • High demand French cosmetic products: French Touch
  12. 12. Political Aspects China  positive regulatoryenvironmentfueledCosmeticIndustr ygrowth BrazilCosmecticIndustryself-regulated IndiaDifficulties to enter, but Governmentlessreluctant to new foreignactors
  13. 13. WhyBrazil ?• More developed&Industrialized for cosmeticproducts• Increasingpurchasing power• Risingfashionconsciousness• L’Oréal well appreciated  Use of geocosmetics
  14. 14. Mergers& Acquisitions Pros • Quick to execute ( Brazil 119 days, by The World Bank) • Ideal to preempt their competitors • Less risky than building a business from scratch • Increases market shares/ builds an important presence in the market • Synergy of resources • Acquisitions of profitable and known source of revenue from properties
  15. 15. Mergers& Acquisitions (Cont) Cons • Overpayment of assets • Clash between cultures/ management conflict • Fail attempts to realize synergies • Inappropriate operations and management due to geographical differences • Failure to adapt product to the local market
  16. 16. Joint Venture Pros • Opportunities to gain or learn new expertise or capacity skills • Enable companies to enter into related business activities • Sharing costs or risks with local partners • Politically acceptable (Leite. G & Rodriguez. A.T, 2009)
  17. 17. Joint Venture (cont.) Cons • Lack of control over technology • Inability to engage in global strategic coordination • Internal conflict for control • May give away important know-how to partner • Image easily at risk in case of a partners error
  18. 18. Solution part 2 :SustainableDevelopment Sustainable Development in the Luxury industry L’Oréal, a sustainable company? The Brazilian Model
  19. 19. Sustainable Development in the Luxury industry A new trend: linking Money and Sustainability A rising Social and Environment awareness A Win/Win game
  20. 20. L’Oréal a sustainable company? Sustainability a roadmap for the future Sustainability in action • Innovation => Green chemistry • Products => Eco-design • Process => Sustainable plants The animal testing controversy
  21. 21. The Brazilian Model A showcase of L’Oréal’s environmental and ethical progress Eco-responsible plants and workers Diversity part of the dynamic management Commitment to social inequalities