L'Oreal Company Analysis

One of the biggest names in the make-up industry is L’Oreal. L’Oreal runs a massive worldwide operation employing nearly 62,000 men and women of various races, backgrounds and religions across nearly 60 countries. Part of the reason for the corporation’s success has been its sensitivity not only to its consumers but also to each and every one of its employees. The corporation has made sure that all their employees have opportunities to develop themselves both personally and professionally. This commitment by the corporation to take care of their own employees has resulted in L’Oreal being rated by the European business school students as The Employer of Choice for the year 2006 (L’Oreal Corporation, n.d.).

With over a century of experience in the cosmetics industry, L’Oreal has established 19 global brands and produces them in 40 factories across the world. These factories are all state of the art and ISO 140001 certified and all of their industrial sites are audited with the standard SA 8000 (L’Oreal Corporation, n.d.). The corporation makes sure that every product that rolls out from their factories complies with their own high standards and meet or exceed quality and safety standards set by local governmental agencies such as the Food & Drug Administration of the United States of America.

L’Oreal’s success in the cosmetic industry is due not only to their high quality, but also to the corporation’s marketing efforts to make sure their various brands have a strong market presence. There are generally five categories for L’Oreal’s products. Beginning with the Consumer product line, these products are normally sold thru mass-market retail stores. These are competitively priced and are marketed under brands such as L’Oreal Paris, Maybelline New York and Garnier. L’Oreal’s Professional Products are made to meet the high requirements of customers such as beauty salons, stylists and hairdressers. These are marketed under the brands such as L’Oreal Professional, Mizani and Redken 5th Avenue New York. L’Oreal’s Luxury Products line is composed of well-known brands such as Lancome, Giorgio Armani, Ralph Lauren and Diesel. These are the prestigious brands that are sold in specialty stores, high-end retail stores and in travel retail outlets. The Active Cosmetics line of L’Oreal are composed of pharmaceutical products sold in pharmacies and specialist retail stores. In general, these are dermatological products to improve, cure or prevent skin disorders. The last category of L’Oreal’s products is The Body Shop. The beauty products sold in all the body shop stores are made from natural ingredients. This product line caters to the individuals who are environmentally conscious (L’Oreal Corporation, n.d.).

SWOT Analysis

Strengths

As on of the biggest names in the beauty industry, L’Oreal demonstrates its strengths in various ways. The investment of spending of L’Oreal can be used to analyze the company. With over 533 million euros invested in research and development in 2006, L’Oreal’s products are continuously improved on and future products are created, tested and perfected. 4,783 million euros spent on advertising and promotions created strong market awareness for the corporation’s products. There is also strength that could be observed in the cultural diversity of L’Oreal. The corporation’s belief in diversity is a recognized to be a key factor in its success. There are 112 different nationalities in the managerial staff positions alone. L’Oreal makes sure that on every level in the corporation, their teams are well diversified so that creativity and sensitivity to consumer needs and wants are increased (L’Oreal Corporation, n.d.).

Weaknesses

There may be some notable weaknesses for L’Oreal. This would involve the sales outside of Western Europe and North America. Although very successful the world over, L’Oreal’s sales outside of North America and Western Europe make up less than 30% of their total sales. Marketing of the products in the areas outside of North America and Western Europe are not as strong and are reflected in the sales percentages. Furthermore, there are also other notable weaknesses applicable to L’Oreal. Another weakness point is the existence of false claims in advertising. In May of 2007, L’Oreal was ordered by the Therapeutic Goods Administration of Australia to retract their claims on the wrinkle removing capabilities of their products (Anti Aging Wrinkle Creams are a Rip Off).

Opportunities

One of the areas of opportunity for L’Oreal is its increased supply of ecologically and environmentally friendly ingredients. L’Oreal can increase their supply of ecologically and environmentally friendly ingredients by furthering their Sustainability Assessment Framework and working even more closely with current and new suppliers to address predetermined concerns (L’Oreal Corporation, n.d.).

Another point of opportunity for the company is to increase its sales of its Active Cosmetics product line. For 2006 alone, The Active Cosmetics product line of L’Oreal made up 7.5% in total revenue for the corporation. L’Oreal has recognized the growth in demand for active cosmetics, that is why the corporation has been acquiring companies in the active cosmetics line. By increasing their marketing and product line up for active cosmetics, L’Oreal can reach a wider range of consumers (L’Oreal Corporation, n.d.).

A third area of opportunity for L’Oreal is that it could work on purchasing of more successful cosmetics companies. L’Oreal’s successful strategy has been to acquire local cosmetics companies and then markets it to the rest of the world. By purchasing an already successful brand name, L’Oreal accomplishes two things immediately. First, it eliminates a rival in the industry and second, L’Oreal increases its market share by taking over the market share of the purchased corporation (L’Oreal Corporation, n.d.).

Threats

Consumers may be turned off if L’Oreal maintains a marketing strategy of using only Caucasian models to promote their products. This may also force existing and potential