L’Oreal Group SWOT Analysis

SWOT Analysis L’Oreal Group
Student’s Name
Institutional Affiliation
Swot Analysis L’Oreal Group
Introduction
L’Oreal is a leading organization in the beauty and cosmetics world. The extensive portfolio of the company includes hair, skin, and makeup products. L’Oreal tends to be the only brand that is giving many inexpensive and luxurious beauty options. The organization is available in the whole world through different agents. The company has over 500 brands and over 2,000 items in the beauty sector. The products include hair colors, styling aids, ski, and body care, fragrances, and cleansers. It is evident that the group has been able to achieve that all the cosmetic companies are aiming at and also has discovered factors that lead to their success. In the 1980s, the company was able to achieve great distribution globally, which was not even in the sight of the managers (Shabanova, Ismagilova, & Salimov, 2015). At this point, the company was known as a France leading beauty organization; its international presence was limited because many had the belief that the Parsian beauty was expensive and high culture. Some of the decisions made within the organization are usually influenced by factors that are from outside the company, which are, at times, hard to resist. L'Oreal group is also subject to these aspects, as summarized in the SWOT analysis below.
External environment
Industry overview and analysis
Industry trend
Recently according to the research done, the consumers in the L'Oreal group have undergone a great transformation in the last three years. To keep up with the trend, the company has to respond to customer needs in not more than six months. The company is now getting to a fast fashion-type approach where more young individuals are paying attention to the images that their predecessors did. Also, the customers are now demanding transparency, where they expect that the brands will be able to tell where the products come from and the process of manufacturing. With the digital transformation, the company has to be agile and provide the required information to the customers.
Competitor’s discussion
The L'Oreal Group is facing great completion from the Procter and Gamble Company, which is a billion-dollar brand that deals with health and home. The company is competing with the L'Oreal group because it is profiled as the largest world maker for the consumer packaged goods, and its business is well divided into five global segments, which comprise of family, oral, baby care, hair and skin products. The company tends to sell the product in over 180 nations.
Five forces
The threat of new entrance
The L'Oreal group has a low threat to the new entrance. This is because there is a huge cost of entrance, and the development of unique cosmetic products needs a lot of resources in terms of growth and also research. The competition that exists in the industry is also another factor that discourages new entry.
Threats of substitutes
This arises whenever there are some items that are made by the competitors that satisfy the needs in the market. In the industry of cosmetics, there are many competitors, thus a high threat of having substitute items. If the company is selling items at a high price, the clients can purchase a substitute product from their competitors.
Bargaining power of customers
The power that the customers have to bargain usually relates to the price changes in the industry. The factor usually analyzes the power that the clients have in manipulating the prices because of the shifts that occur in demand. The company has a higher bargaining power for the clients because of the increased competition and the availability of cosmetic items from different producers.
Bargaining power of the suppliers
Suppliers with high power in bargaining can influence the price changes by the use of techniques such as the manipulation of the market through the restraining supply. There tend to be many different products that are produced by small and large scale producers. Because of the huge supply, the consumers usually have the power to influence the market prices as opposed to the suppliers.
The intensity of the competition
There is a great concentration of competition in the emerging markets and the nations that are developing. It is thus advisable that the company should develop an affordable price for their products so as to maintain and achieve a competitive advantage. The organization should also ensure that the quality of their products is not compromised.
SWOT Analysis
The SWOT analysis is a tool that involves analyzing the internal and external aspects affecting the company. The factors include strengths, weaknesses, opportunities, and threats. Through the analysis, the strength and weaknesses tend to correspond to the threats and opportunities in the business environment in order to develop effective strategies. Following the analysis, an organization can be able to deliver a good strategy by taking advantage of the opportunities and applying the strengths that help in neutralizing the threats by reducing the effects of the weaknesses.
Strengths
* Variety of products
L’Oreal has the biggest share in beauty products and the cosmetic industry. Many organizations have tried to branch to the company with similar products, but L'Oreal tends to be fully taken over in that space since it was established. The L’Oreal product portfolio is astounding, and thus, it dominates the industry since they have been able to acclaim high profile.
* quality and safety
Apart from offering an inexpensive product, the company has also shifted to the luxury brand that offers good quality products to individuals that shop on a richer budget. The cosmetic industry is always required to comply with safety regulations and laws (Pluchevskaya, 2017). The company thus monitors any impacts that can arise when the product is in the market by the application of the cosmetic-vigilance network. The network is in charge of compiling, validating, and analyzing any effect that is related to the application of the product allowing the effective measures to be applied is need arises.
* International market
L’Oreal group has brands everywhere throughout the world, and it is found in not less than 120 nations. The organization can fabricate and disperse items in mass, which is more affordable contrasted with purchasing little amounts o...