The L'Oreal Group, a French-based beauty and cosmetics company is headquartered in Clichy. Its registered office is in Paris and is one of the largest cosmetic companies in the world. One of the major products that the company deals with is the L'Oreal shampoo, used for the treatment and beautification of a human hair. The main function of the L'Oreal shampoo is to treat the hair and remove any build-ups that are unwanted without stripping out sebum, enabling the user to make the hair manageable. The product is recommended for people with dandruff, wheat allergies or gluten who prefer using an organic, all natural or a botanical product to treat their hair. The shampoo can be used by both adults and young children because baby shampoo is customized so that it is less irritating. For those who love animals, there are some shampoo products that can be used for grooming them. Such products contain insecticides and can treat parasite infections (("L'Oreal-LOreal Group," 2016). The L'Oreal shampoo can be used by applying it to the hair while wet, massaging and then rinsing it. Some of the shampoo products that the company produces include the Nutri-Gross and EverPure. There are different shampoos customized for divergent roles depending on the needs of the customer. Some of the shampoos are meant for hair care, hair color, and maintaining a standard hairstyle.
Internal (Micro) Analysis: Customer, Competitor, and Company
The internal environment of an organization is basically composed of all the elements within it, enabling the organization to exert influence on them. Some of these elements include the current employees, the corporate culture, the management and customer feedback that the management can act on. However, the influence that the internal environmental factors have primarily depends on the reactions from the management as they have the organizations machinery and power to make decisions that can drive it forward to prosperity and ensuring timely achievement of goals (Nizzia, O'Leary, Ton, & Mulligan, 2013). The company deals with divergent customers because its product, L'Oreal shampoo has different uses. As a result, it has incorporated innovative strategies to satisfy all the customers. There are those who use the products for enhancing hair color, hair treatment to remove dandruff (hair care) and hair style. Therefore, during the manufacturing process, the management must factor all these variables and ensure that every customer niche has been satisfied with the services rendered to ensure that it has attracted and retained more customers to guarantee organizational sustainability. The company has a strong marketing campaign in all its branches across the world, creating awareness and increasing the market share. Additionally, because the company deals with customers of different age groups, it has ensured that the shampoo products for the children are less irritating tom guarantee a good experience the first time and avoid many complaints from its valued customers. Otherwise, some of the customers will be tempted to try products from competitor companies.
Searching for a perfect shampoo that meets the customers needs is a risky process as they must keep on trying different products until they find the one that fits them. If the hair is thin due to illness, it may get dull and start to split at its ends. The L'Oreal shampoo gives customers a different feeling and level of experience as it makes the hair thicker, split end free and even shiner. This is one of the strengths of using the L'Oreal shampoo as the customer is assured of an instant impact. Additionally, the product lathers well and has a great smell (Kuratko, Hornsby, & Covin, 2014). However, the product should not be used for a long time continuously because it will start to make the hair look thin! The management should, therefore, look for a solution for this problem because loyal customers may opt to use other brands, making L'Oreal lose a considerable amount of revenue.
External (Macro) Analysis
The external environment encompasses all those factors that affect the operations of the organization but the management has no direct influence on them. These factors include economic, political, socio-cultural, legal issues, environmental, and technological variables. The management can manipulate some of these elements while others require restructuring or change of business and marketing strategies. For instance, if the customers complain about their safety when using the products because of a number of chemical components in the shampoo, the management must reduce them to the customers accepted standards (Porter, 2013). Additionally, if there is a change in government regulations as pertains to the use of one of the shampoo product, the company will either be compelled to stop its production or change its components to make it acceptable. The management must, therefore, monitor the external environmental variables and make regular adjustments to fit the ever changing marketing demands.
L'Oreal produces and sells its shampoo products in various countries which have divergent restrictions and policies that must be obeyed. The political challenge of the company is to conform to the leadership styles and business demands of the countries that it operates within. If for instance one of the countries in which the company operates decides to make changes and come up with new policies on the percentage of the components used in the manufacturing process for the shampoo product, the company must comply with the new restrictions. Otherwise, it will lose its market. Some of the chemical components that the company has been restricted to use in the production of EU based products include Phthalates is considered to be carcinogenic. These restrictions have made the company to produce products which are safe for use, meaning that they should not contain harmful substances. Additionally, the company cannot make a misleading advertisement for the sake of making more sales. All these regulations must be complied with by the company for it to maintain its market base.
The economic element is another factor that greatly affects the business practices of L'Oreal. Because it is a multinational company, it has to adjust its economic targets to fit into the divergent markets but maintain its overall goal. One economy can be shrinking while another is growing and these entirely depend on the type of readership in the respective countries. These are an external environmental factor because it cannot be controlled by the management. The only obligation for the management is to predict the future economic conditions of the respective markets and determine the amount of L'Oreal shampoo products that should be manufactured to avoid over or under production as the two has some cost implications. For instance, the company has been investing in the Chinese market because the management had predicted to have a significant market share in the country in comparison to other regions. As a result, it went ahead and bought Magic Holding International Ltd as a strategy to maintain its share of the market. The management has an objective of increasing its market share in china and the purchase is a step forward to make it happen.
Technology includes all the components, knowledge and skills that make it possible to transform raw materials into finished products. For the company to keep its shampoo business growing, it must incorporate modern technology into its production and business processes. Some of these products are used by ladies, who are believed to be possessed by their beauty and product side effect or weakness that will make them think that it has been outdated will automatically lead to a decline in sales. The increased sophistication in hair care amongst the ladies presents the best opportunity for the company to explore and make more sales. However, because the quality is always expensive, the companys product prices are relatively higher in comparison to those of competitors and this represents one of its weaknesses in the market. L'Oreal has been maintaining and increasing its market base because of the incorporation of newer efficient ways of producing customized shampoo products that meet customer expectations. For instance, there are different sizes of the shampoo products to enable customers to choose from different sizes and brands that fit their needs.
The socio-cultural environment includes attitudes, behavioral changes and beliefs of the current and potential customers. The management must analyze the market and understand the beliefs and practices of its target market for it to gain their attention. The demographic patterns represent the number of people who have specific skills that can enable the company to maintain its market base. In every department, L'Oreal has employed skilled and experienced staff who understands what they do and have the ability to change the production should process on a short notice. Additionally, because of its diversity, it has ensured that there is a customer support team in every region to facilitate customer experience. The support team understands the cultural beliefs and needs of every market segment under their jurisdiction, enabling the company to maintain the sales base of its shampoo products (Campion, Barre, & Gilbert, 2013). One of the strategies is the production of shampoo products based on age in the western countries market because of the presence of the age gap in the western populace. However, the company faces a challenge in its shampoo business because of the [presence of locally based companies that deals with the manufacture of similar products. the management is therefore compelled to be smarter in their operational processes to have a competitive advantage over these locally based companies.
SWOT: Strengths, Weaknesses, Opportunities, and Threats
SWOT analysis reviews and examines the internal environmental variables that can influence an organizations profitability and operations as well. The analysis acts as a powerful tool for strategic management and other processes that are aimed to put the company in a competitive advantage over its core competitors.
Strengths and Weaknesses
The company deals with a diverse range of products that acts as facilitators for the attraction of more customers. Additionally, it packages the shampoo products in different sizes to ensure that all customers are satisfied. There are those who need large quantities of the product and those who need them in small amounts. The company has catered for all these group of customers to ensure full satisfaction. Also, there are different brands and categories of shampoo conditioners and treatments (Hollensen, 2015). However, one of the weaknesses of the company is severe competition from localized firms that offer considerably lower prices. Even if the company has incorporated technological innovation in its shampoo production process, there are several companies that produce substandard products and sell them at cheaper prices in the local market.
Opportunities and Threats
Due to the ever increasing beauty possessiveness by ladies, different sophisticated hair care styles has come up that require the use of shampoo products. As a result, L'Oreal stands a chance of increasing its market share by just doing a small market campaign to increase product awareness for starters. Additionally, the company manufactures products that do not damage the skin, making it possible for the customers to rely on them, presenting the best opportunity for L'Oreal to increase its market base considerably. However, one of the threats that the organization has been facing is the stiff competition from localized industries. The consumers tend to prefer local industries because of various reasons (Ming, & Ke,...
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