L'Oreal

L’Oreal

1. How did L’Oreal become the world’s largest beauty company? What was the role of acquisitions in this growth?

L’Oreal is the largest beauty company in the world and in the past 100 years that it has expanded, it has supplied to 130 countries with offices in 58 different countries. This global company is the number one premium cosmetic product in the world today and has taken the core and beauty of people’s everyday lives since 1907, the beginning of L’Oreal. The superior leadership of a guy named Eugene Schueller started this strategic company with basic products such as hair care and also the first man-made hair color product. Five years later you could find these products in Austria, Italy, and the Netherlands. In 1934 Eugene invented the first mass market of soap less shampoo and this led the success of L’Oreal in the country of Europe which soon recognized them as the leader in body care and hair coloring products. Finally soon after World War II L’Oreal moved into the United States and the company seemed to change. When L’Oreal expanded the competition was more involved and more growth was needed in order for the company to be more successful. With problems like this, the strategy and planning that has been applied in L’Oreal has been huge for the success of the company. L’Oreal realized they needed to expand in other fields of the beauty market and target markets in order to stay alive and successful. This would mean that L’Oreal would need to acquire other companies as part of their expansion and through this they have kept the constancy of the leading company with acquisitions of many small companies. Finally in the 1980s they started their globalization into new markets all around the globe by acquiring new companies that would form the cosmetics that we know today. Although the role of acquisitions has never been the main focus of the company, internal growth and strategy was the number one reason for L’Oreal becoming such a big name. The main strategy was to adopt new companies and expand it from within believing that the brand could be taken globally and benefit their overall brand portfolio. The main role of acquisitions was to increase and lengthen the internal growth rate. L’Oreal started acquiring companies from the beginning of their name. They started with the basics of their own brands such as L’Oreal Professional, L’Oreal Paris, Kerastase, and Club des Createurs de Beaute. These departments were beneficial but as we already stated, expansion needed to happen in the company. In the 1960s L’Oreal consumed some other companies such as Garnier, Lancome Paris, and Biotherm. In the 1980s L’Oreal took full possession of two companies, Ralph Lauren Fragrances and Helena Rubinstein which was a cosmetic maker that distributed internationally. At first the quality of these products suffered in the United States but did fairly well in other countries. L’Oreal then wanted to make these products more of upscale brand. The acquisition of Ralph Lauren was put in place to seal an opening in the luxury division. Maybelline is another brand that L’Oreal consumed because they were in need to be restored. L’Oreal’s research and development teams came in and work miracles within Maybelline. The company had huge potential so L’Oreal found a new face for it and also was able to change advertising and marketing schemes to make the products more attractive to a younger crowd. After this happen competitors knew L’Oreal was turning into a strong competition in the US market. L’Oreal made its biggest acquisition by purchasing Redken which allowed them to reassess the whole hair care division. Redken was well known for its extensive network of salon educators. L’Oreal soon realized that Redken had global potential as an American brand of American origin. L’Oreal knew how to apply its approach of acquiring US brands to match its existing European ones. L’Oreal saw its competition and learned how that company functioned. Then they would find a better way to manage the competition and they would buy them and make an even better stature of the brand. The last acquisition that I want to talk about that stands out above all the others is the purchase of Kiehl’s. They are a New York based specialty store that sells high end cosmetics which gives L’Oreal a new advantage into another market of the luxury division with the goal of selling in higher end stores. As you can see all these acquisitions play an important role in the growth L’Oreal and how they became the world’s largest beauty company.

2. L’Oreal offers consumers worldwide “American” and “French” concepts of beauty. Are there any limits to the national beauty images it can globalize?

With L’Oreal being such a widespread company they really don’t have many limits to the national beauty images that it can globalize. However there are complications with this issue. One of L’Oreal’s main goals is to become a complete global corporation and sell there brands everywhere. If they only observed the perception of beauty through just American and French consumers they would have issues. They would need to view beauty from all other countries in order to reach all different types of ethnicity. L’Oreal did not want to just focus on local brands and this is where they have complications when trying to sell globally and put their name around the world. In order for L’Oreal to do that they would use a matrix organizational structure and this would help delegate leaders and teams to run a multinational company. In this structure they have international brand teams, chief regional leaders, and other forms of teams that make it up. A limit that might be placed on global beauty is that different countries around the world may not be able to afford L’Oreal because of their