Prior to the establishment facial cosmetics, L’Oreal can be identified as a hair-colour formula which has been introduced by a French chemist known as Eugene Schueller in 1907. It was then known as”Aureole”. Schueller formulated and manufactured his own products which were sold to Parisian hairdressers. It was only in 1909 that Schueller registered his company as “Societe Francaise de Teintures Inoffensive pour Cheveus”, the future L’Oreal. Scheuller began exporting his products, which was then limited to hair-coloring products. There were 3 chemists employed in 1920. In 1950, the research teams increased to 100 and reached 1,000 by 1984. Today, research teams are numbered to 2,000 and are still expected to increase in the near future. Through agents and consignments, Scheuller further distributed his products in the United States of America, South America, Russia and the Far East. The L’Oreal Group is present worldwide through its subsidiaries and agents. L’Oreal started to expand its products from hair-color to other cleansing and beauty products. The L’Oreal Group today markets over 500 brands and more than 2,000 products in the various sectors of the beauty business. Such includes hair colors, permanents, styling aids, body and skincare, cleansers and fragrances. Indeed, the L’Oreal Group have reached the peak that all cosmetic brands sought after. Many factors contribute to the success of the Company. Since L’Oreal was known to be France’s leading beauty company, it was international presence was so limited that many believed and had a conception of Parisian beauty as being expensive and high culture.
SWOT Anlysis
The SWOT analysis framework involves analysing the strengths (S) and weaknesses (W) of the L’Oreal’s internal factors, and the opportunities (O) and threats (T) of its external factors of performance. Through this analysis, the weaknesses and strengths within L’Oreal can correspond to the opportunities and threats in the business environment so that effective strategies can be developed. It follows from this, therefore, that an organisation can derive an effective strategy by taking advantage of its opportunities by using its strengths and neutralise its threats by minimising the impact of its weaknesses. Moreover, SWOT analysis can be applied to both a whole company as well as a specific project within a company in order to identify new company strategies and appraise project feasibility.
Strengths
The ongoing success of the L’Oreal Group is without if not for the ingenuity of the concept of their vision as a team. L’Oreal Chairman and CEO Lindsay Owen-Jones considers passion as the key to the well-renowned accomplishment of the said Company. The primary strength of the Company is the continuing research and innovation in the interest of beauty which assures that the L’Oreal Cosmetics offers the best to their consumers. Their dedication to their continuous research makes them the leader in the growing cosmetics industry despite the competition in the market.
Strength of the L’Oreal 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. The cosmetics activities of L’Oreal are divided to five groups. First is the Consumer Product Division which encompasses all the brands distributed through mass-market channels, ensuring that L’Oreal quality is available to the maximum number of consumers. The Luxury Products Division includes the prestigious international brands selectively distributed through perfumeries, department stores and duty-free shops. The Professional Products Division offers specific hair care products for use by professional hairdressers and products sold exclusively through hair salons. The Active Cosmetics Department creates and markets products for selective distribution through pharmacies and specialist health and beauty outlets. The L’Oreal Group’s dermatological activities are linked with Galderma, which is basically a dermatological firm that contributes to the innovation of the L’Oreal Group’s products. The pharmaceutical activities of L’Oreal are also handled by Sanofi-Aventis. These divisions and subdivisions ensure the quality that the L’Oreal Group offers to its customers. To further add to the enumerated strengths of the company, L’Oreal’s 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 L’Oreal products within reach of other women from different parts of the world.
Weaknesses
Perhaps one of the weaknesses that a big company faces is the decentralized organizational structure. This is also part of the difficulties that L’Oreal is facing. Due to the many subdivisions of the Company, there is also the difficulty in the control of L’Oreal. This slows down the production of the Company because of the need of giving reference to the other Board members and directors of the Company. L’Oreal will also have a difficulty in finding out what division is accountable for the possible pitfalls of the Company. Another weakness that L’Oreal faces is their profit. The profit margin of L’Oreal is comparably low than that of the other smaller rivals. While L’Oreal projects certain rise in digits as their profit, the result does not usually meet the expectations. Perhaps, this is also due to the high-end advertising and marketing as well as the width of the Company. Finally, the coordination and the control of the activities and image in the worldwide market are also viewed as a weakness in the part of L’Oreal. Due to its worldwide marketing strategy, there are also dissimilarities brought about in the campaign of L’Oreal products as to what image they are to project.
Opportunities
The L’Oreal Company concentrates on cosmetic products that enhance women of all ages. The growing demand for beauty products gives L’Oreal the opportunity to focus in their field of specialization, particularly on hair styling and color, skincare, cosmetics and perfumeries. Being the leading cosmetic brand gives them the edge for their well-known image. Opportunity also emanates from their growing market that ranges from the affluent, the aging and also the masses of the developed countries. Another opportunity that L’Oreal must take advantage of is their 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 and therefore would lead costumers only to them for they could not find any of the said cosmetics in other brands.
Threats
A threat to the L’Oreal group is also the growing competition within the field of cosmetic brands. Due to the ongoing addition to the field of cosmetics, there is still the danger that other brands could surpass the profit of L’Oreal. Another threat to the Company is the economic downturn that is quite evident in other countries. Such could thus hurt the possibility of higher profit for the company. Most products of L’Oreal are within the reach of the citizens of developed countries, but L’Oreal may have problems reaching out even to the average people from the underdeveloped countries. Also a threat to the L’Oreal Group is the spending habits of consumer and the economic crunch that most countries are experiencing as of present. While the L’Oreal 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 L’Oreal products. However, with the growth of the market, the damage could be far from taking place.