L'Oreal: Global Brand, Local Knowledge SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Sales & Marketing
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of L'Oreal: Global Brand, Local Knowledge
Worldwide, and in the U.S. marketplace in particular, the French cachet of L'OrA?al was one of its most powerful marketing tools. However, with the opening up of emerging markets, L'OrA?al had to cater to a diverse customer base: an aging population in the West, ethnic groups, aspiring and younger customers in the East, emerging markets, and growing interest in health and beauty care among men all over the world. Employing both traditional and innovative marketing techniques, L'OrA?al worked to double its customer base to two billion by 2020 and increase to half from a third its share of sales from emerging markets.
Swot Analysis of "L'Oreal: Global Brand, Local Knowledge" written by Rebecca Henderson, Ryan Johnson includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that L'ora Al facing as an external strategic factors. Some of the topics covered in L'Oreal: Global Brand, Local Knowledge case study are - Strategic Management Strategies, Collaboration, Communication, Competition, Competitive strategy, Innovation, Intellectual property, Market research and Sales & Marketing.
Some of the macro environment factors that can be used to understand the L'Oreal: Global Brand, Local Knowledge casestudy better are - – banking and financial system is disrupted by Bitcoin and other crypto currencies, challanges to central banks by blockchain based private currencies, increasing commodity prices, increasing transportation and logistics costs, there is increasing trade war between United States & China, digital marketing is dominated by two big players Facebook and Google, technology disruption,
there is backlash against globalization, cloud computing is disrupting traditional business models, etc
Introduction to SWOT Analysis of L'Oreal: Global Brand, Local Knowledge
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in L'Oreal: Global Brand, Local Knowledge case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the L'ora Al, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which L'ora Al operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of L'Oreal: Global Brand, Local Knowledge can be done for the following purposes –
1. Strategic planning using facts provided in L'Oreal: Global Brand, Local Knowledge case study
2. Improving business portfolio management of L'ora Al
3. Assessing feasibility of the new initiative in Sales & Marketing field.
4. Making a Sales & Marketing topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of L'ora Al
Strengths L'Oreal: Global Brand, Local Knowledge | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of L'ora Al in L'Oreal: Global Brand, Local Knowledge Harvard Business Review case study are -
Ability to lead change in Sales & Marketing field
– L'ora Al is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled L'ora Al in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Cross disciplinary teams
– Horizontal connected teams at the L'ora Al are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Successful track record of launching new products
– L'ora Al has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. L'ora Al has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Low bargaining power of suppliers
– Suppliers of L'ora Al in the sector have low bargaining power. L'Oreal: Global Brand, Local Knowledge has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps L'ora Al to manage not only supply disruptions but also source products at highly competitive prices.
Organizational Resilience of L'ora Al
– The covid-19 pandemic has put organizational resilience at the centre of everthing that L'ora Al does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Training and development
– L'ora Al has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in L'Oreal: Global Brand, Local Knowledge Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Highly skilled collaborators
– L'ora Al has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in L'Oreal: Global Brand, Local Knowledge HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Superior customer experience
– The customer experience strategy of L'ora Al in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
High brand equity
– L'ora Al has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled L'ora Al to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Innovation driven organization
– L'ora Al is one of the most innovative firm in sector. Manager in L'Oreal: Global Brand, Local Knowledge Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Digital Transformation in Sales & Marketing segment
- digital transformation varies from industry to industry. For L'ora Al digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. L'ora Al has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Effective Research and Development (R&D)
– L'ora Al has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study L'Oreal: Global Brand, Local Knowledge - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Weaknesses L'Oreal: Global Brand, Local Knowledge | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of L'Oreal: Global Brand, Local Knowledge are -
Aligning sales with marketing
– It come across in the case study L'Oreal: Global Brand, Local Knowledge that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case L'Oreal: Global Brand, Local Knowledge can leverage the sales team experience to cultivate customer relationships as L'ora Al is planning to shift buying processes online.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study L'Oreal: Global Brand, Local Knowledge, in the dynamic environment L'ora Al has struggled to respond to the nimble upstart competition. L'ora Al has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High operating costs
– Compare to the competitors, firm in the HBR case study L'Oreal: Global Brand, Local Knowledge has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract L'ora Al 's lucrative customers.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the L'Oreal: Global Brand, Local Knowledge HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though L'ora Al has relatively successful track record of launching new products.
Capital Spending Reduction
– Even during the low interest decade, L'ora Al has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Need for greater diversity
– L'ora Al has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
Products dominated business model
– Even though L'ora Al has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - L'Oreal: Global Brand, Local Knowledge should strive to include more intangible value offerings along with its core products and services.
Slow decision making process
– As mentioned earlier in the report, L'ora Al has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. L'ora Al even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
Lack of clear differentiation of L'ora Al products
– To increase the profitability and margins on the products, L'ora Al needs to provide more differentiated products than what it is currently offering in the marketplace.
High cash cycle compare to competitors
L'ora Al has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study L'Oreal: Global Brand, Local Knowledge, it seems that the employees of L'ora Al don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
Opportunities L'Oreal: Global Brand, Local Knowledge | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study L'Oreal: Global Brand, Local Knowledge are -
Better consumer reach
– The expansion of the 5G network will help L'ora Al to increase its market reach. L'ora Al will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Leveraging digital technologies
– L'ora Al can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Using analytics as competitive advantage
– L'ora Al has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study L'Oreal: Global Brand, Local Knowledge - to build a competitive advantage using analytics. The analytics driven competitive advantage can help L'ora Al to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Sales & Marketing industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. L'ora Al can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. L'ora Al can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Building a culture of innovation
– managers at L'ora Al can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Sales & Marketing segment.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help L'ora Al to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for L'ora Al to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for L'ora Al to hire the very best people irrespective of their geographical location.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for L'ora Al in the consumer business. Now L'ora Al can target international markets with far fewer capital restrictions requirements than the existing system.
Manufacturing automation
– L'ora Al can use the latest technology developments to improve its manufacturing and designing process in Sales & Marketing segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Loyalty marketing
– L'ora Al has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, L'ora Al can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, L'Oreal: Global Brand, Local Knowledge, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, L'ora Al can use these opportunities to build new business models that can help the communities that L'ora Al operates in. Secondly it can use opportunities from government spending in Sales & Marketing sector.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects L'ora Al can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Threats L'Oreal: Global Brand, Local Knowledge External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study L'Oreal: Global Brand, Local Knowledge are -
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study L'Oreal: Global Brand, Local Knowledge, L'ora Al may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Sales & Marketing .
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for L'ora Al in the Sales & Marketing sector and impact the bottomline of the organization.
High dependence on third party suppliers
– L'ora Al high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. L'ora Al will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, L'ora Al can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study L'Oreal: Global Brand, Local Knowledge .
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for L'ora Al in the Sales & Marketing industry. The Sales & Marketing industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents L'ora Al with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. L'ora Al needs to understand the core reasons impacting the Sales & Marketing industry. This will help it in building a better workplace.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of L'ora Al.
Regulatory challenges
– L'ora Al needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Sales & Marketing industry regulations.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Shortening product life cycle
– it is one of the major threat that L'ora Al is facing in Sales & Marketing sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Weighted SWOT Analysis of L'Oreal: Global Brand, Local Knowledge Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study L'Oreal: Global Brand, Local Knowledge needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study L'Oreal: Global Brand, Local Knowledge is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study L'Oreal: Global Brand, Local Knowledge is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of L'Oreal: Global Brand, Local Knowledge is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that L'ora Al needs to make to build a sustainable competitive advantage.