Prior to the establishment of facial cosmetics, L’Oréal can be identified as a hair-color 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’Oréal. Scheuller began exporting his products, which was then limited to hair-coloring products. It is focused engaged in the field of Production and Marketing of concentrating on hair colors, skin care, perfumes, and fragrances, makeup and styling products. So, what is explained: SWOT Analysis for the cosmetic company of L’Oréal.
The Concept of L’Oréal SWOT Analysis, Why? L’Oréal is the world’s biggest cosmetics and beauty products company.
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’Oréal Group is present worldwide through its subsidiaries and agents. L’Oréal started to expand its products from hair-color to other cleansing and beauty products.
The L’Oréal Group today markets over 500 brands and more than 2,000 products in the various sectors of the beauty business. Such include hair colors, permanents, styling aids, body and skincare, cleansers and fragrances. Indeed, the L’Oréal Group have reached the peak that all cosmetic brands sought after. Many factors contribute to the success of the Company. Since L’Oréal 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.
What is a SWOT Analysis?
S.W.O.T. is an acronym that stands for Strengths, Weaknesses, Opportunities, and Threats. A SWOT analysis is an organized list of your business’s greatest strengths, weaknesses, opportunities, and threats.
Existing businesses can use a SWOT analysis, at any time, to assess a changing environment and respond proactively. In fact, I recommend conducting a strategy review meeting at least once a year that begins with a SWOT analysis.
New businesses should use a SWOT analysis as a part of their planning process. There is no “one size fits all” plan for your business, and thinking about your new business in terms of its unique “SWOTs” will put you on the right track right away, and save you from a lot of headaches later on.
SWOT Analysis for L’Oréal:
The SWOT analysis framework involves analyzing the strengths as “S” and weaknesses as “W” of the L’Oréal’s internal factors, and the opportunities as “O” and threats as “T” of its external factors of performance.
Through this analysis, the weaknesses and strengths within L’Oréal 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 organization can derive an effective strategy by taking advantage of its opportunities by using its strengths and neutralize its threats by minimizing 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 of L’Oréal:
The ongoing success of the L’Oréal Group is without if not for the ingenuity of the concept of their vision as a team. L’Oréal Chairman and CEO Lindsay Owen-Jones consider 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’Oréal 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. The strength of the L’Oréal 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’Oréal are divided into five groups. First is the Consumer Product Division which encompasses all the brands distributed through mass-market channels, ensuring that L’Oréal 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’Oréal Group’s dermatological activities are linked with Galderma, which is basically a dermatological firm that contributes to the innovation of the L’Oréal Group’s products.
The pharmaceutical activities of L’Oréal are also handled by Sanofi-Aventis. These divisions and subdivisions ensure the quality that the L’Oréal Group offers to its customers. To further add to the enumerated strengths of the company, L’Oréal’s advertising strategy also plays a major part in its growth. Through adapting to the culture of their target market as the main tool of their advertisement, the Company brought L’Oréal products within reach of other women from different parts of the world.
Weaknesses of L’Oréal:
Perhaps one of the weaknesses that a big company faces is the decentralized organizational structure. This is also part of the difficulties that L’Oréal is facing. Due to the many subdivisions of the Company, there is also the difficulty in the control of L’Oréal. This slows down the production of the Company because of the need for giving reference to the other Board members and directors of the Company. L’Oréal will also have a difficulty in finding out what division is accountable for the possible pitfalls of the Company. Another weakness that L’Oréal faces is their profit.
The profit margin of L’Oréal is comparably low than that of the other smaller rivals. While L’Oréal projects the 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’Oréal. Due to its worldwide marketing strategy, there are also dissimilarities brought about in the campaign of L’Oréal products as to what image they are to project.
Opportunities for L’Oréal:
The L’Oréal Company concentrates on cosmetic products that enhance women of all ages. The growing demand for beauty products gives L’Oréal the opportunity to focus in their field of specialization, particularly on hair styling and color, skin care, 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’Oréal 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 for L’Oréal:
A threat to the L’Oréal 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’Oréal. 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’Oréal are within the reach of the citizens of developed countries, but L’Oréal may have problems reaching out even to the average people from the underdeveloped countries.
Also, a threat to the L’Oréal Group is the spending habits of consumer and the economic crunch that most countries are experiencing as of present. While the L’Oréal 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’Oréal products. However, with the growth of the market, the damage could be far from taking place.