SWOT characteristics that put the organisation on a

SWOT characteristics that put the organisation on a

SWOT analysis The SWOT analysis is a strategic planning method which takes into account both internal and external factors. The internal factors are the strengths and weaknesses internal to the organisation, while the external factors are the opportunities and threats external to the organisation. * Strengths: characteristics of the organisation that give it an advantage on competitors.

* Weaknesses: characteristics that put the organisation on a disadvantage relative to competitors. * Opportunities: external chances to make greater sales or profits in the environment. Threats: external elements in the environment that could be problematic for the organisation. STRENGHTS * Strong Brand Image * Diversified Brand Portfolio * Innovative Products * Economies of scale| WICKNESSES * Bad reputation among environmentalists and animal rights activists * Profit margin * Decentralised organisational structure| OPPORTUNITIES * New potential markets * Strategic Acquisitions * Rise of Organic and Natural Cosmetics| THREATS * Change in Consumer Preferences * Intensive Competitive Environment * Global Economic Crisis| Strengths Strong Brand Image L’oreal is leader in the cosmetic market, and its brand image is well recognised and perceived from customers through all the world. as an high value brand. The company’ slogan “because you’re worth it”, despite some little changes (see the company history paragraph), is immediately recognized and linked to the brand;it is fully implemented in the image the company wants to communicate to its consumers: we sell high quality products, created to satisfy any consumer in its uniqueness, and you deserve to buy our products because you’re worth it. Diversified Brand Portfolio The company’s brand portfolio is diversified by price and image (cultural or lifestyle); we can see it as a pyramid: * at the bottom of the pyramid there are the consumer product, which target the mass market (for example L’Oreal Paris, Maybelline and Garnier) and have a lower price; * in the middle we found those which the L’Oreal calls professional product and active cosmetics: Vichy, Kerastase and Redken, for example; these products are sold for an higher price in pharmacies and hair salons; * at the top f the pyramid there are the luxury products, such as Lancome, Helena Rubinstein and Biotherm; these brands are sold exclusively in retail outlet, high-end department stores and specialised boutiques.

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Each L’oreal brand is different from the others not only for the price or the distribution channel, but also for their own unique personality: L’Oreal Paris is a high-performance technology brand, Maybelline New York is fashion driven and Garnier is seen as a natural brand. Innovative Products Innovation is one of the core values for L’Oreal, which invests a lot on Research ; Development with € 665 million dedicated to cosmetic and dermatological research on 2010, and 1/3 of the R;I budget devoted to Advanced Research. The company has 18 research centres across the world with 612 patents filed in 2010 and 100 cooperation agreements with leading academic and research institution.Weaknesses * Bad reputation among environmentalists and animal rights activists Green oriented consumer avoid L’Oreal products in consequence of its synthetic and not natural ingredients, preferring organic competitors; whilst animal rights activists, vegetarian and vegan consumers boycott the company’s product for the reason that some ingredients are still tested on animals.This negative perception of the company extends to all its brands, including some which could be satisfying for this kind of consumers (such as The Body Shop or Garnier), but are avoided for ethical reasons (more radical consumers prefer not to give money to a brand related to any company which tests on animals). * Profit margins lower than competitor’s Due to advertising, research and general administrative costs higher than its smaller competitors, the company experiment a lower profit margin: for first-half 2011 the operating margin fell to 16.

% from 17. 3%. The company suffered for higher raw materials costs in the first half of the year, and has increased advertising costs in last years to push the impact of its new product launches. * Decentralised Organisational Structure The several subdivision and brands within the Group couse a difficulty in the control of the Company, resulting in a slowdown of production and decision process, due to the necessity of giving reference to other Board members and Directors.This problems concern also the control of advertising and brand image through the worldwide market, causing dissimilarities in advertising campaign wich could affect the brand image.

Opportunities * New Potential Market Growing markets such as the aging and the affluent from developed countries could be a good opportunity for L’oreal growing market that ranges from the affluent, the aging and also the masses of the developed countries. * Strategic Acquisitions * Rise of Organic and Natural Cosmetics Threats Change in Consumer Preferences * Intensive Competitive Environment * Global Economic Crisis Financial Soundness The L’Oreal Group is a multinational company Within the L’Oreal group there are twenty different Brands divided in: * Consumer Product wich comprehend L’Oreal Paris, Garnier, Maybelline NY and Softsheen. Carson brands and Club des createurs de beaute; * Professional Product L’Oreal professional, Redken, Kerastase, Matrix, Pureology, Shu Uemura Art of Hair, Mizani, Keraskin Esthetics; * Luxury ProductLancome, Giorgio Armani, Yves Saint Laurent, Biotherm, Kiehl’s, Ralph Lauren, Shu Uemura, Cacharel, Helena Rubinstein, Diesel, Viktor ; Rolf, Maison Martin Margiela, Stella McCartney; * Active Cosmetics Vichy, La Roche-Posey, SkinCeuticals, Inneov, Sanoflore, Roger ; Gallet; * The Body Shop € 17.

5 billion consolidated sales in 2009 23 global brands* 130 countries 64 600 employees 674 patents filed in 2009 * These brands’ annual sales are superior to 50 million euros 2009 annual results Sales: € 17. 5 billion Operating profit: € 2. 5 billionNet earnings per share (1): € 3. 42 Dividend (2): € 1. 55 (1) Diluted net earnings per share based on net profit excluding non-recurrent items after minority interest. (2) Dividend to be proposed to the Annual General Meeting of Shareholders on April 27th 2009 Current and Potential Sales & Income Trends ——————————————– 1 . Source: http://www.

loreal. co. uk/_en/_gb/index. aspx? direct1=00004&direct2=00004/00001 2 . Source: the Wall Street Journal (http://online.

wsj. com/article/SB10001424053111904332804576540692825636266. html)

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