1.

0 Vision and Mission statement of L’Oreal

1.1 Vision

L’Oreal does not have a vision statement

Recommendation: L’Oreal can use their motto “Because I’m worth it” to represent as their vision

1.2 Mission

L’Oreal offering all women and men worldwide the best cosmetics innovation in terms of
quality, efficacy and safety

1.3 Objectives

 L’Oreal to further expand and penetrate globally

 At the same time, L’Oreal also planning to develop their strategic plan for future.
 To join the emerging economics with Avon

1.4 Strategies

From L’Oreal case study, we see that L’Oreal strategy is to improve their selling operations
online. These because, their customer coming from worldwide. So, they think if they improve
their selling online, it’s could help to gain more customers to buy their products. At the same
time, L’Oreal planning to expanded its sales by joint venture with Saudi Arabia companies.

Develop vision and mission statement for the organization

Elements
Self-concept
Product and

profitability
Technology

growth and

Employees
Philosophy
Customer

Survival,
Market
service

Public
image

L’Oreal √ √ √ √ √ √

L’Oreal has 6/9 elements of mission statement that support L’Oreal to improve their
company reputations.
Propose mission statement

To offering all women and men in the world the best cosmetics from L’Oreal in terms of
everyone could fulfill their desire about beauty needs in their infinite diversity.

2.0 Identify the organization’s external opportunities and threats

Opportunities

1. 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.
2. Greater market share because of the numerous patents registered by the Company.
3. Product mix expansion.
4. Revival of Body shop.
5. Global brand recognition.
6. Further innovation.
7. A rise in demand for organic and nature cosmetics.
8. Coty Inc. could fit well with the L’Oreal portfolio.
9. Avon that is struggling financially.

Threats

1. The growing competition within the field of cosmetic brands.

2. Estee Lauder Company is the global license for fragrance or cosmetic sold under brand
name, consist of upscale department stores.
3. L’Oreal faced was competing against leading U.S beauty makers.
4. Coty’s Rimmel Scandaleyes mascara, over the top lashes are hot and are almost mainstream
in early 2012.
5. Avon leading its revenue in Brazil on 14 November 2012.
6. The global Mary Kay independent sales force exceeds 2.4 million women in 1963.
7. Direct sellers in many countries are Avon’s key competitive advantage.
8. Revlon’s beauty aids are distributed more than 100 countries, through the USA as its largest
markets.
9. Avon’s has a business model that is especially suited to emerging economies.

3.0 Construct a Competitive Profile Matrix (CPM)

An Actual CPM for L’Oreal

L’Oreal Estèe Lauder Revlon

Critical Success Factors Weight Rating Score Rating Score Rating Score

1. Price Competitiveness 0.20 4 0.80 4 0.80 2 0.40

2. Demographic 0.15 4 0.60 4 0.60 3 0.45
3. Advertising 0.20 2 0.40 3 0.60 1 0.20
4. Growth 0.20 3 0.30 4 0.40 2 0.20
5. Customer Loyalty 0.25 4 1.00 2 0.50 2 0.50
Totals 1.00 3.10 2.90 1.75

Conclusion

The CPM analysis shows that L’Oreal scores 3.10, Estèe Lauder scores 2.90 and Revlon 1.75.
Thus, L’Oreal is the strongest company among three companies with strength on price
competitiveness, demographic and customer loyalty. This proven that L’Oreal still got trusted
from customers to buy their products.

5.0 Construct an External Factor Evaluation (EFE) Matrix

Opportunities Weight Rating Weighted Score

1. The growing demand for beauty
products gives L’Oreal the
opportunity to focus in their field of
specialization, particularly on hair 0.10 3 0.30
styling and color, skincare, cosmetics
and perfumeries. (pg.606)
2. Greater market share because of the
numerous patents registered by the 0.02 1 0.02
company. (pg.606)

3. Product mix expansion. (pg.606) 0.07 3 0.21

4. Revival of Body Shop. (pg.609) 0.04 2 0.08
5. Global brand recognition. (pg.606-
607) 0.10 3 0.30
6. Further innovation. (pg.607) 0.10 3 0.30
7. A rise in demand for organic and
nature. (pg.606) 0.10 2 0.20
8. Coty,Inc could fit well with the
L’Oreal portfolio.(pg.613) 0.05 2 0.10
9. Avon that is struggling
financially.(pg.613) 0.05 2 0.10

Threats Weight Rating Weighted Score

1. The growing competition within the
field of cosmetic brands. (pg.610) 0.05 3 0.15
2. Estee Lauder company is the global
license for fragrance or cosmetics sold
under brand name, consist of upscale 0.05 3 0.15
department stores.
3. L’Oreal faced was competing against
leading U.S beauty makers. (pg.612) 0.10 3 0.30
4. Coty’s Rimmel Scandaleyes mascara,
over the top lashes are hot and are 0.01 1 0.01
almost mainstream in early 2012.
5. Avon leading its revenue in Brazil on
14 November 2012 (pg.613) 0.02 2 0.04
6. The global Mary Kay independent
sales force exceeds 2.4 million women 0.02 2 0.04
in 1963.
7. Direct sellers in many countries are
Avon’s key competitive advantage 0.02 2 0.04
(pg.612)
8. Revlon’s beauty aids are distributed
more than 100 countries, through the 0.05 2 0.10
USA as its largest market. (pg.612)
9. Avon’s has a business model that is
especially suited to emerging 0.05 3 0.15
economies. (pg.613)
TOTAL 1.00 2.59

Conclusion

The total weighted score for external factor is 2.59 which is indicates good external factor for
L’Oreal. So, by see the weighted score of L’Oreal, we know that L’Oreal rely their products to
improves the company reputations.
6.0 Identify the organization’s internal strengths and weaknesses

Strengths of L’Oreal

1. Open the largest hair color production plant in the world in 2012
2. 50% sales generated outside Europe
3. Has 2,250 retail store worldwide
4. L’Oreal LUXE sales increase 8.1%, Consumer products 5.5%, and Body Shops sales growth
increase 5.3%
5. In 2012, L’Oreal has won approval from six shareholders with 62.3% from Magic Holding
Shares
6. L’Oreal has 5 worldwide Research and Development
7. L’Oreal has manufactured 84% their product globally in 2012
8. L’Oreal has a portfolio of 27 international diverse, and complementary brands in 2012
9. In, 1920, L’Oreal employee 3 chemist
10. L’Oreal currently market more than 500 brands

Weaknesses of L’Oreal

1. In 2013, L’Oreal professional products sales were down 0.4%

2. Too many subdivision in L’Oreal
3. L’Oreal has lack of skill in advertisement
4. L’Oreal LUXE sales has slowed slightly in a market 2013
5. In 2011, L’Oreal has long term debt
6. L’Oreal have to faced condemnation regarding to their mascara branding
7. L’Oreal in the ranks of 4th place in Vigeo’s Europe Index over 120 companies in 2012
8. L’Oreal doesn’t have websites for purchase online
9. L’Oreal does significant business in Indonesia
10. L’Oreal has lack of skill to promote their products for kids
7.0 Construct an Internal Factor Evaluation (IFE) Matrix

Strengths Weight Rating Weighted Score

1. Open the largest hair color 0.15
production plant in the world in 0.05 3
2012. (pg.607)
2. 50% sales generated outside 0.28
Europe. (pg.606) 0.07 4

3. Have 2,550 retail stores 0.08 3 0.24

worldwide. (pg.606)
4. L’Oreal LUXE sales increase 0.20
(8.1%), Consumer products
(5.5%) and Body Shops sales 0.05 4
growth increase (5.3%). (pg.608-
609)
5. In 2012, L’Oreal has won 0.15
approval from six shareholders
with 62.3% from Magic Holding 0.05 3
Shares. (pg.606)
6. L’Oreal has 5 worldwide 0.07 4 0.28
Research and Development.
(pg.606)
7. L’Oreal has manufactured 84% 0.06 4 0.24
their product globally in 2012.
(pg.607)
8. L’Oreal has a portfolio of 27 0.08 3 0.24
international diverse and
complementary brands in 2012.
(pg.606)
9. In 1920, L’Oreal employs 3 0.06 3 0.18
chemists. (pg.606)
10. L’Oreal currently market more 0.05 3 0.15
than 500 brands. (pg.606)
Weaknesses
1. In 2013, L’Oreal professional 0.05 2 0.10
products sales were down 0.4%.
(pg.609)
2. Too many subdivisions in 0.06 2 0.12
L’Oreal. (pg.608)
8.0 (a) Prepare a Strengths-Weaknesses-Opportunities-Threats (SWOT) Matrix

Strengths Weaknesses

3. L’Oreal has lack of skill in 0.05 2 0.10

advertisement. (pg.608)
4. L’Oreal LUXE sales have slowed 0.03 1 0.03
slightly in a market 2013.
(pg.608)
5. In 2011, L’Oreal has long term 0.05 2 0.10
debt. (pg.609)
6. L’Oreal has to face condemnation 0.02 1 0.02
regarding to their mascara
branding. (pg.607)
7. L’Oreal in the ranks of 4th place in 0.02 1 0.02
Vigeo’s Europe Index over 120
companies in 2012. (pg.608)
8. L’Oreal doesn’t have websites for 0.03 2 0.06
purchase online. (pg.606)
9. L’Oreal does significant business 0.04 2 0.08
in Indonesia. (pg.607)
10. L’Oreal has lack of skill to 0.03 1 0.03
promote their products for kids.
(pg.608)
TOTALS 1.00 2.77

Conclusion

The total weighted score for internal factor is 2.77 which is indicates good internal factor for
L’Oreal. So, by see the weighted score of L’Oreal, we know that L’Oreal has strong brand image
and loyalty customers. Furthermore, L’Oreal should make online business, so that their
customers can purchase online and at the same time, it could make easier for their customers.
 11. Open the largest hair color
production plant in the world
in 2012
12. 50% sales generated outside
Europe
13. Has 2,250 retail store
worldwide
14. L’Oreal LUXE sales increase
8.1%, Consumer products
5.5%, and Body Shops sales
growth increase 5.3%
15. In 2012, L’Oreal has won
approval from six
shareholders with 62.3%
from Magic Holding Shares
16. L’Oreal has 5 worldwide
Research and Development
17. L’Oreal has manufactured
84% their product globally in
2012
18. L’Oreal has a portfolio of 27
international diverse, and
complementary brands in
2012
19. In, 1920, L’Oreal employee 3
chemist
20. L’Oreal currently market
more than 500 brands
Opportunities SO Strategies
10. The growing demand for
1. Open new in stores and
beauty products gives L’Oreal
increase productions by
the opportunity to focus in their 10% in Indonesia
(S3,O7)
field of specialization,
particularly on hair styling and 2. Improve product quality of
L’Oreal especially lipstick
color, skincare, cosmetics and
and market it at Indonesia.
perfumeries. (ex: Avon Headquarter
places)
11. In 2013, L’Oreal professional
products sales were down
0.4%
12. Too many subdivision in
L’Oreal
13. L’Oreal has lack of skill in
advertisement
14. L’Oreal LUXE sales has
slowed slightly in a market
2013
15. In 2011, L’Oreal has long
term debt
16. L’Oreal have to faced
condemnation regarding to
their mascara branding
17. L’Oreal in the ranks of 4th
place in Vigeo’s Europe Index
over 120 companies in 2012
18. L’Oreal doesn’t have websites
for purchase online
19. L’Oreal does significant
business in Indonesia
20. L’Oreal has lack of skill to
promote their products for
kids
WO Strategies
1. Join venture with Estée
Lauder Companies to avoid
loss
(W1,O9)
2. Send flyers directly to
potential customers such as
teenagers and young woman
(W3,O7)
11. Greater market share because (S6,O4)
3. Create website page or social
of the numerous patents
3. Produces more natural media such as Instagram or
registered by the Company. skincare products Facebook to attract customers
(S3,O7) (W8,O6)
12. Product mix expansion. Such as
fragrances, skincare, and other
beauty care products.
13. Avon doesn’t have clear
strategy plan.
14. Mary Kay’s business model is
similar to the Avon business
model .
15. For Avon, the direct selling
business model has waned in
the USA .
16. A rise in demand for organic
and nature cosmetics.
17. . A rise in demand for organic
and natural cosmetics
18. Avon is today struggling to
recover from poor management
strategies
19. Avon that is struggling
financially.
Threats ST Strategies WT Strategies
10. The growing competition
1. Focus on products 1. Join venture with Revlon’s
within the field of cosmetic
improvements such as beauty to expand the market
brands. make up products (W3,T8)
foundations for target
11. Estee Lauder Company is the
group of teenagers and
global license for fragrance or young women
(S6,T1)
cosmetic sold under brand
name, consist of upscale
department stores.
2. Advertise the cosmetics 2. Provide advertising courses to
12. L’Oreal faced competitor products such as give free marketing workers
samples among Indonesia (W3,T7)
against leading U.S beauty
consumers
makers. (S7,T1)
13. Coty’s Rimmel Scandaleyes
mascara, over the top lashes are
 hot and are almost mainstream
in early 2012.
14. Avon leading its revenue in
Brazil on 14 November 2012.
15. The global Mary Kay
independent sales force exceeds
2.4 million women in 1963.
16. Direct sellers in many countries
are Avon’s key competitive
advantage.
17. Revlon’s beauty aids are
distributed more than 100
countries, through the USA as
its largest market
18. Avon’s has a business model
that is especially suited to
emerging economies.
 b. Strategic Position and Action Evaluation (SPACE) Matrix

Internal Strengths Position External Strengths Position

FP
Competitive (CP) Industry (IP)

-1 High product quality for customers +5 Productivity is 84% of its production

-1 Revenue increase 29% , thus make +7 Easy of entry into market by expand
customer loyalty increase by 10% their products
-3 Market share is 0.96 million +4 Financial stability increase 29%

Average: -1.67 Average: +5.33

Total axis X score: 3.66
Financial (FP) Stability Position (SP)

+5 Working capital is 1.28 million -1 Technological changes in natural

+5 Earnings per share is 1.12 million
+6 Liquidity is 0.15 million
cosmetics
-1 Competitive pressure is direct sellers in
many countries
-4 Barriers to entry into market with long-
term debt and no online channel for
customers

Average: +5.33 Average: -2.00

Total axis Y score: 3.33

+7
Aggressive
+6
+5
+4
+3
+2
+1
0
CP IP
-7 -6 -5 -4 -3 -2 -1 0 +1 +2 +3 +4 +5 +6 +7
-1
-2
-3
-4
-5
-6
-7
SP
 c. Boston Consulting Group (BCG) Matrix

Division Revenues Percent Profit Percent Relative Industry

Revenues Profits Market Growth Rate
Share (%)
1. Professional 755.6 14 536.476 14 0.13 -0.4%
Products

2. Consumer 2769.5 50 1966.345 51 0.49 5.5%

Products

3. L’Oréal LUXE 1315.5 24 934.005 24 0.23 8.1%

4. Active 468.6 9 322.706 8 0.08 6.2%

Cosmetics

5. The Body Shop 180.4 3 128.084 3 0.03 0.8%

TOTAL 5489.6 100 3887.616 100 - -

High Medium Low

1.0 .50 0.0

High +20

3 4

2 5
Medium 0

Low -20
 d. Quantitative Strategic Planning Matrix (QSPM)
Open new Send flyers
in stores to potential
customers
(teenager
and young
woman)
Opportunities Weight AS1 TAS1 AS2 TAS2
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 0.10 4 0.40
Greater market share because of the numerous patents registered by the company 0.02 3 0.06
Product mix expansion such as fragrances, skincare and other beauty products 0.07 3 0.21
Avon doesn’t have clear strategy plan 0.04 4 0.16
Mary Kay’s business model is similar to the Avon business model 0.10 4 0.04
Avon direct selling business model has waned in the USA 0.10 4 0.40
A rise in demand for organic and nature cosmetics 0.10 4 0.40
Avon is struggling to recover from poor management strategies 0.05
Avon is struggling financially 0.05
Threats
The growing competition within the field of cosmetic brands 0.05 3 0.15
Estee Lauder company is the global license for fragrance or cosmetic sold under brand name, 0.05 3 0.15
consist of upscale department stores
L’Oreal faced was competing against leading U.S beauty market 0.10 3 0.30
Coty’s Rimmel Scandaleyes mascara, over the top lashes are hot and almost mainstream in early 0.06 2 0.12
2012
Avon leading its revenue in Brazil on 14 November 2012 0.02
The global Mary Kay independent sales force exceeds 2.4 million women in 1963 0.02 2 0.04
Direct sellers in many countries are Avon’s key competitive advantage 0.02 3 0.06
Revlon’s beauty aids are distributed more than 100 countries, through the USA as its largest 0.05 3 0.15
market
Avon’s has a business model that is especially suited to emerging economies 0.05
Total 1.00
Strenghts
Open the largest hair color productions plant in the world in 2012 0.05 4 0.20
50% sales generated outside Europe 0.07
Has 2,250 retail store worldwide 0.08 3 0.24
L’Oreal LUXE sales increase 8.1%, Consumer products 5.5%, and Body Shops sales growth 0.05 4 0.20
increase 5.3%
In 2012, L’Oreal has won approval from Magic Holding Shares 0.05 3 0.15
L’Oreal has 5 worldwide Research and Development 0.07 3 0.21
L’Oreal has manufactured 84% their product globally in 2012 0.06 4 0.24
L’Oreal has a portfolio of 27 international diverse and complementary brands in 2012 0.08 4 0.32
In 1920, L’Oreal employee 3 chemist 0.06 3 0.18
L’Oreal currently market more than 500 brands 0.05 3 0.15
Weakness
In 2013, L’Oreal professional products sales were down 0.4% 0.05
Too many subdivision in L’Oreal 0.06 3 0.18
L’Oreal has lack of skill in advertisement 0.05
L’Oreal LUXE sales were slowed slightly in a market 2013 0.03 4 0.12
In 2011, L’Oreal has long term debt 0.05 3 0.15
L’Oreal have to faced condemnation regarding to their mascara branding 0.02 2 0.04
L’Oreal in the ranks of 4th place in Vigeo’s Europe Index over 120 companies in 2012 0.02 3 0.06
L’Oreal doesn’t have websites for purchase online 0.03 3 0.09
L’Oreal does significant business in Indonesia 0.04 4 0.16
L’Oreal has lack of skill to promote their products for kids 0.03 2 0.06
Total 1.00 3.11 2.28
9. (a) Recommend specific strategies

L'Oreal needs a clear strategy for the future. L'Oreal is suggested to improve its selling operation
online, such as offering details introduction of its product features. Categorizing the men and
women related product. In addition, customer service̖ after-sales service can solve varies problem
with effectively with professional attitude, and express the product with safety and shortest time
on customer hand. By develop this strategy can help to increase its customer loyalty, profitable
and market share.

(b) Long-term objectives

- Expand new nature product

- Increase 15% market share by the end of three years
- Being the biggest and best brand at year-end 2015

(c) Cost of recommendation

10. Projected Financial Statements

2012 2013 2014 2015

revenue 22,462.7 23,361.2 24,762.8 26,743.8
Total revenue 22,462.7 23,361.2 24,762.8 26,743.8
Cost of revenue 6587.7 6937.2 7412.8 8001.7
Gross profit 15,875.0 16,424.0 17,350.0 18742.1
Selling, general, administrative expenses 11,387.2 12,210.4 13,096.7 14,163.5
Research and development 790.5 810.2 841.5 868.2
Depreciation and amortization 0.0 0.0 0.0 0.0
Interest expense, net operating 0.0 0.0 0.0 0.0
Unusual expenses 93.7 100.7 63.1 102.4
Other operating expenses 30.1 50.2 49.7 38.1
Operating income 3,753 3901.1 4374.1 4526.9
Interest income(expenses) 0.0 0.0 0.0 0.0
Gain on sales of assets 0.0 0.0 0.0 0.0
Other, net -7.8 -10.2 -9.7 -6.3
Income before tax 3,875.9 4024 4504.1 4658.1
Income tax, total 1,005.5 1,034.7 1,143.8 1,321.0
Income after tax 2,870.4 2,989.3 3,360.3 3,337.1
Minority interest -2.7 -2.5 -2.6 -2.9
Equity in affiliates 0.0 0.0 0.0 0.0
U.S.GAAP Adjustment 0.0 0.0 0.0 0.0
Net income before extraordinary items 2,867.7 2,986.8 3,357.7 3,334.2
Total extraordinary items 0.0 0.0 0.0 0.0
Net income 2,867.7 2,986.8 3,357.7 3,334.2

11. Recommend Annual Objectives

1. 2 th quarter of the year sales increase by 5.3% in 2014

2. Increase the brand positioning by 10% in 2014

3. Increase brand awareness 15% in 2014

4. Achieving a higher quality products 20% in 2014, 2015 and 2016

5. Recruiting the chemist 5% for produce the quality products 2015

HR Policies

1. Workplace safety procedures such as using gloves when in lab to prevent the quality of the
products.
2. Attendance and time off. Only certain number of employee can be absence within a specified
time frame
3. Recruitment and selection process. Employer need to choose and recruit candidate that have
potential to be employment.
4. Substance abuse. Prohibition to all staff of using drugs, alcohol and tobacco products during
working hours.
12. Recommend procedures for strategy review and evaluation