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L'Oreal: Competitive Advantage and Strategic Alternatives

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Based on L'Oreal Corporation, answer the following:

1. What is your impression of the world wide operation of the company?

2. Conduct a SWOT Analysis of the company. For this section, complete EFAS and IFAS ONLY

3. Does the company have a competitive advantage and/or a competitive strategy? Justify your answer. Porter's model would be applicable here (Five Forces of Competitiveness & Competitive Advantage model).

4. Choose one of L'Oreal products and describe the components of the company's value chain. This section should be discussing the concept of Value Chain relevant to the company.

5. What strategic alternatives are open to the company? Explain and justify your answer. Explain and justify your answer. This section should discuss alternative strategies and recommendation (strategies such as growth, retrenchment, differentiation, stability, and horizontal, vertical, forward, backward integration). Additional research is necessary for justification of your answer.

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Solution Preview

1. What is your impression of the world wide operation of the company?

The L'Oréal Group is headquartered in the Paris suburb of Clichy, France and is now the world's largest personal care company. L'Oréal has developed activities in the field of cosmetics, concentrating on hair color, skin care, sun protection, make-up, perfumes and hair care. L'Oréal is active in the dermatological and pharmaceutical fields. L'Oréal is also the top nanotechnology patent-holder in the United States. (Wikipedia)

Its mission is:
"Right to be beautiful day after day: L'Oreal strives to make this a reality within a reach for every men and women."

Board of directors
Current members of the board of directors of L'Oréal are: Francisco Basco, Werner Bauer, Liliane Bettencourt, Peter Brabeck-Letmathe, Jean-Louis Dumas, Xavier Fontanet, Bernard Kasriel, Marc Lacharrière, Françoise Meyers, Jean-Pierre Meyerss Schweitzer.

Its world wide operations are successful because of its strong financials and high brand equity. Their consolidated sale in 2006 is 15.8 billion Euros and has got 19 strong brands (www.loreal.com).

2. Conduct a SWOT Analysis of the company. Please see the attached Excel document for more information.

Strengths:
- Strong presence across the cosmetics and personal care value chain
- Strong production and distribution channel
- Market leader
- Good growth with high profitability
- Aggression expanding strategy
- Long lasting business relationships
- It has got lots of recognitions and awards
- Valuable human resource

Weaknesses:
- Rigidity
- False claims in advertising and litigation for racial discrimination
- Rising costs

In May 2007, L'Oréal was one of several cosmetic manufacturers ordered by the Therapeutic Goods Administration in Australia to withdraw advertising regarding the wrinkle removal capabilities of their products. In July 2007, the Garnier division and an external employment agency were fined $30,000 for recruitment practices that excluded non-white women from promoting its shampoo (Wikipedia).

Opportunities:
- ...

Solution Summary

This solution discusses competitive advantages and strategies of L'Oreal Corporation. It also conducts a SWOT analysis.

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