SWOT Analysis LOreal Company

L'Oréal Company
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* Introduction
L'Oréal is a French-based company which specializes in the production of cosmetic products. The company was founded in 1909 by Eugène Paul Louis Schueller, and since then the company has become the number one cosmetic group in the world. L'Oréal owns several well-known consumer and luxury brands which include Garnier, Maybelline, Lancome, and Kiehl. The company also produces perfume brands which include Giorgio Armani and Ralph Lauren among others. The company also produces salon products, skin care, and nail polish products. This paper analysis L'Oréal Company using three strategies which are SWOT analysis, PESTLE and five forces analysis.
* External Environment
Industry overview and analysis
Industry trend
Enhancement and innovations in technology are impacting the beauty industry. Digital transformations affect how business operates, and it also affects the way a business interface with its consumers. At L'Oréal, the clients' experiences are being used as the yardsticks of the company's digital transformation. L'Oréal has embarked on its digital transformation which is aimed at accelerating the design of its products, by managing shorter product lifecycles (L'Oréal, 2018). Additionally, the company has also developed new technologies which speed up design and production processes such as approving of prototypes during in the project phase.
The company also aims at using technology to develop more connected products which make goods more traceable and also provide the customers with greater transparency. Most importantly, enhanced technology will enable the company to deploy more flexible production lines. This is critical for the company since the consumer demand is ever-changing and therefore, it is necessary to be able to switch easily from one production run to another in response to shifting trends (L'Oréal, 2018). Customization is another major trend in the cosmetic industry today. Technology may enable a company to produce more personalized products such as letting customers manufacture their cosmetic products and having their names engraved on their fragrance bottle.
L'Oréal Competitor discussion
The cosmetic market is huge since it comprises many products ranging from face creams, soaps, hair care, make-up and perfumes among others. L'Oréal faces severe competition in the market from other major players such as Dior, which engages in the production and distribution of cosmetic products. Dior is a French-based company which focuses on producing commodities which range from makeup products, skin care, and jewelry among others. Another major competitor is Chanel a French private company headquartered in Paris, and it produces luxury brands like makeup, ready to wear clothes and fashion accessories. Other competitors include Nivea, a German brand that produces various products such as body washes, lotion, and men body products. Maybelline is also a top cosmetic company based in the United States, and it provides a wide range of commodities, including eyeshadows, eyeliner, mascara, foundation, and concealers among others.
L'Oréal Five Forces Analysis
Porter's Five Forces is a simple but powerful tool that helps in examining and comprehending the competitiveness of a company's business environment, and it also helps in understanding the profitability of a given strategy. The five distinct categories of this framework include:
Bargaining power of suppliers
This assesses how easy it is for a supplier to drive up the prices of products in the market. This force is affected by factors such as the number of suppliers and the uniqueness of the products supplied to the market. L'Oréa has higher supplier power than its competitors because the company is recognized for producing products that match with the frequently changing trends thus meeting the needs of its customers.
Bargaining power of buyers
This force assesses the ability of the buyers to drive prices of commodities down. It may be affected by the number of buyers in the market, the number of substitutes and the cost of witching the supplier (Wu, Tseng & Chiu, 2012). For L'Oréa brand, the customers may dictate the terms and decide the prices because the company is more focused on producing customized products that suit the needs of specific customers. This is different from the company's competitors because most of their products are homogeneous, so customers may not dictate the terms since they can easily switch from one supplier to another.
Intensity of competition
The main factor, in this case, is the number and the capabilities of the present competitors in the market. The availability of many competitors providing undifferentiated products may reduce market attractiveness. The cosmetic industry has many competitors, but L'Oréa has remained competitive because it provides unique products courtesy of its research and innovation.
Threat of substitutes
This threat occurs when there exist competitors' substitutes that may be used in place of another company's products (Wu, Tseng & Chiu, 2012). L'Oréa faces severe competition from its close competitors such as Dior, Nivea, and Maybelline. There is a huge threat since these competitors are providing products that are almost similar to L'Oréa brand in nature and functionalities.
The threat of new entrants
The cosmetic industry is profitable, and it attracts many entrants, and this may erode the market profitability. However, since players in this industry require huge capital to start, L'Oréa is safe from the dangers posed by these new companies.
* Internal analysis
Core competency
One of the main core competency associated with L'Oréal Company is its product innovation. The company is determined by examining and introducing extra features of its products that are unavailable in its competitors’ products. To attain this, the company has set enough resources to conduct research aimed at helping in the product development. It is also important to note that this has significantly differentiated the company’s products from those of other players in the cosmetic industry.
L'Oréal SWOT Analysis
SWOT analysis is a tool that companies use for strategic planning and management. Güre & Tat (2017, p.995), explain that when used effectively SWOT analysis may help a company develop a competitive organizational strategy. It helps in analyzing both internal and external factors which may affect the operations of the organization.
Strengths of L'Oréal
L'Oréal has a good reputation for launching and providing innovative products which satisfy consumers from different parts of the world. The company has digitalized its laboratories to intensify and open new horizons. L'Oréal has also established research and development teams to help in providing new data processing techniques that use artificial intelligence to foster discoveries.
Additionally, the company has a strong presence in almost all major markets in different continents. This provides an excellent opportunity to the company to attract more new customers thus gaining dominance of the cosmetic industry. L'Oréal also provides a diversified range of products that other competitors such as Dior and Nivea and this makes it possible for the company to attract more customers than its closest competitors.
The commitment of the company has facilitated the good reputation of the L'Oréal is evaluating the requirements of its different consumers through research and using its technological capability to produce products that are in line with users expectations. This is not common in many companies. Besides, the company has also esta...