Pauline BlaisInes Ben RehoumaAriane EdjetmaiNicholas KuggeHussein JaffalFanny Braut

Presentation & Analysis of L’Oréal

L’Oréal Corporation1. Mission2. Brief History3. Facts & Figures

Strategic Issue

Mission

“L’Oreal’s mission is to make innovative products that enhance the beauty and well-being of men and

women around the world. Their fundamental mission is to provide superior beauty and personal care products for their employees, consumers, salon

professionals and retail partners”

Brief History

Created in 1907 by Eugène Schueller

First synthetic hair dyes: Auréole

Société Francaise des Teintures Inoffensives pour Cheveux

Diversification&Expansion

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

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

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

Solution Part 1 : Focusing on Brazil

Analysis of the BRIC 1. Economic aspects2. Social aspects3. Political aspects4. Why Brazil ?

Expansion Methods1. Mergers and acquisitions2. Joint Venture

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

Economic Aspects (cont.)COUNTRIES COSMECTICS MARKET GROWTH

Brazil 15%

Russia 11%

India 17,5%

China 18,7%

Social Aspects

Beauty standards with globalization

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

Political Aspects

China positive regulatory environment fueled Cosmetic Industry growth

Brazil Cosmectic Industry self-regulated

India Difficulties to enter, but Government less reluctant to new foreign actors

Why Brazil ?• More developed & Industrialized for cosmetic

products

• Increasing purchasing power

• Rising fashion consciousness

• L’Oréal well appreciated Use of geocosmetics

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

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

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)

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

Solution part 2 : Sustainable Development

Sustainable Development in the Luxury industry

L’Oréal, a sustainable company?

The Brazilian Model

Sustainable Development in the Luxury industry

A new trend: linking Money and Sustainability

A rising Social and Environment awareness

A Win/Win game

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

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