Case Assignment: Differences between Coty and L’Oréal

L’Oréal and Coty
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Executive summary
L’Oréal is a giant cosmetics company headquartered in France which has been operating in the last century. The company is largely owned by Bettencourt family and Nestle who together control nearly 60% shareholding. It has grown its product line to have about 39 products for various uses. The company revenue has been rising steadily in the last decade. Coty is also a giant cosmetics company headquartered in New York. It started over a century ago and though it has diversified its products, it is still nearly a third of the revenue earned by L’Oréal. This article uses Coty to show why L’Oréal needs to pay higher consultation fees. Their differences are enormous and add to the cost of the consultation. The notable differences are the scale of their workforce and the depth of the company structure (Shown in figures1, 2 &3) in appendices. Revenue is also another indicator of the differences between the two companies that can be substantially quoted to claim a higher consultation fee. Thirdly, L’Oréal has been involved in many controversies that hurt its brand and therefore the consultation fees include the strategies that can help build the brand. Finally, the differences in products and brands owned by each of the companies coupled with their investment in research highlight the more subtle differences that necessitate heftier remuneration for consulting for L’Oréal relative to Coty.
Introduction
L’Oréal has grown to become a global leader in cosmetics and it has been strategizing on how to dominate the cosmetic industry the world over. The overarching goal is to grow the company market and increase its revenue in a sustainable and cost-effective way. A simple comparison of the similarities and differences of L’Oréal and any other company in the industry is can help demonstrate why its consultation fees need to be higher.
Differences between Coty and L’Oréal
One of the reasons why L’Oréal needs to pay heftier fees for consultancy is because of its size. First, its revenue is nearly triple that of Coty whose remuneration rates for human resource is relatively higher than that of L’Oréal. In 2018, L’Oréal sales volume was $ billion.
Coty Revenue in US$ millions
Source: CITATION Mac19 \l 1033 (Macrotrends, 2019)
Source: CITATION LOr19 \l 1033 (L’Oréal, 2019)
On the other hand, Coty topped at US$ 9.4 billion. These numbers show that L’Oréal is a more successful and bigger company than Coty. The income also illuminates on the size of the two companies. The employee stats show the difference in the size of the companies. L’Oréal boasts of nearly 86,000 employees worldwide while Coty has only 20,000. This shows the difference in the operational size and depth of the two company structures. The operating income and revenue earned by these two companies coupled with the size of their workforce illuminate on their performance and size. With size, comes greater responsibility of steering the company and aligning it with its strategic objectives. More has to be taken into account to ensure that the company continues posting positive results in a sustainable way. Thus, a consultant to L’Oréal has to be paid higher as he/she has to deal with more variables.
The other major difference is the product line of these companies which highlight their deep-seated difference that warrant higher remuneration standards by L’Oréal for their consultancy. Coty 33 total brands.
Source: CITATION Meg17 \l 1033 (Willett & Gould, 2017)
33 products produced by Coty
Some of its top products include OPI Products, Rimmel, and Covergirl, and it's behind celebrity toiletries from Katy Perry, David Beckham, and Beyoncé, among others. These products are still relatively less compared to the L’Oréal company.
Source: CITATION Meg17 \l 1033 (Willett & Gould, 2017)
L'Oréal has a total of 39 beauty brands, including major staples like Lancôme, Maybelline, Urban Decay, Garnier, Essie, and The Body Shop. It also has expensive skin-care and hair-care brands, including Pureology, La Roche-Posay, and Skinceuticals. More brand products come with more advertising, higher costs of product development and other related costs such as product testing. These weigh in heavier for L’Oréal than on Coty.
L’Oréal has a major weakness that has been part of its history since inception and has hurt its market share. The company has been embroiled in controversies in the last century since inception. In its early days, the company founder, Eugène Schueller was a Nazi sympathizer and allegedly helped fund the party and its extremists’ views CITATION Bec17 \l 1033 (Brothman, 2017). It is a story that has not aged well for the company and some people still perceive it to be anti-Semitic to date. The antisemitism and racism connotations to the company were compounded by the controversial case of where L’Oréal’s headquarters were located since the 1960s throug...