L'Oreal S.A.: Rolling out the Global Diversity Strategy SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
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Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of L'Oreal S.A.: Rolling out the Global Diversity Strategy
L'Oreal S.A. is in the process of implementing a global diversity strategy. The firm's Europe diversity director is working with various country units to roll out the strategy. The director faces obstacles such as cultural differences between countries and, generally, low awareness of the benefits a diversity strategy can bring.
Swot Analysis of "L'Oreal S.A.: Rolling out the Global Diversity Strategy" written by Ken Mark, Cara Maurer includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Diversity L'oreal facing as an external strategic factors. Some of the topics covered in L'Oreal S.A.: Rolling out the Global Diversity Strategy case study are - Strategic Management Strategies, Motivating people and Global Business.
Some of the macro environment factors that can be used to understand the L'Oreal S.A.: Rolling out the Global Diversity Strategy casestudy better are - – increasing household debt because of falling income levels, technology disruption, increasing commodity prices, central banks are concerned over increasing inflation, increasing inequality as vast percentage of new income is going to the top 1%, increasing government debt because of Covid-19 spendings, there is backlash against globalization,
digital marketing is dominated by two big players Facebook and Google, supply chains are disrupted by pandemic , etc
Introduction to SWOT Analysis of L'Oreal S.A.: Rolling out the Global Diversity Strategy
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in L'Oreal S.A.: Rolling out the Global Diversity Strategy case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Diversity L'oreal, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Diversity L'oreal 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 S.A.: Rolling out the Global Diversity Strategy can be done for the following purposes –
1. Strategic planning using facts provided in L'Oreal S.A.: Rolling out the Global Diversity Strategy case study
2. Improving business portfolio management of Diversity L'oreal
3. Assessing feasibility of the new initiative in Global Business field.
4. Making a Global Business topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Diversity L'oreal
Strengths L'Oreal S.A.: Rolling out the Global Diversity Strategy | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Diversity L'oreal in L'Oreal S.A.: Rolling out the Global Diversity Strategy Harvard Business Review case study are -
Superior customer experience
– The customer experience strategy of Diversity L'oreal in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Successful track record of launching new products
– Diversity L'oreal has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Diversity L'oreal 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.
High brand equity
– Diversity L'oreal has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Diversity L'oreal to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Training and development
– Diversity L'oreal has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in L'Oreal S.A.: Rolling out the Global Diversity Strategy 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.
Ability to lead change in Global Business field
– Diversity L'oreal 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 Diversity L'oreal in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Highly skilled collaborators
– Diversity L'oreal 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 S.A.: Rolling out the Global Diversity Strategy HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
High switching costs
– The high switching costs that Diversity L'oreal has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Organizational Resilience of Diversity L'oreal
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Diversity L'oreal does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Low bargaining power of suppliers
– Suppliers of Diversity L'oreal in the sector have low bargaining power. L'Oreal S.A.: Rolling out the Global Diversity Strategy has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Diversity L'oreal to manage not only supply disruptions but also source products at highly competitive prices.
Digital Transformation in Global Business segment
- digital transformation varies from industry to industry. For Diversity L'oreal digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Diversity L'oreal 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.
Operational resilience
– The operational resilience strategy in the L'Oreal S.A.: Rolling out the Global Diversity Strategy Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Ability to recruit top talent
– Diversity L'oreal is one of the leading recruiters in the industry. Managers in the L'Oreal S.A.: Rolling out the Global Diversity Strategy are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Weaknesses L'Oreal S.A.: Rolling out the Global Diversity Strategy | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of L'Oreal S.A.: Rolling out the Global Diversity Strategy are -
Slow to strategic competitive environment developments
– As L'Oreal S.A.: Rolling out the Global Diversity Strategy HBR case study mentions - Diversity L'oreal takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Diversity L'oreal supply chain. Even after few cautionary changes mentioned in the HBR case study - L'Oreal S.A.: Rolling out the Global Diversity Strategy, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Diversity L'oreal vulnerable to further global disruptions in South East Asia.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the L'Oreal S.A.: Rolling out the Global Diversity Strategy 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 Diversity L'oreal has relatively successful track record of launching new products.
No frontier risks strategy
– After analyzing the HBR case study L'Oreal S.A.: Rolling out the Global Diversity Strategy, it seems that company is thinking about the frontier risks that can impact Global Business strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Aligning sales with marketing
– It come across in the case study L'Oreal S.A.: Rolling out the Global Diversity Strategy 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 S.A.: Rolling out the Global Diversity Strategy can leverage the sales team experience to cultivate customer relationships as Diversity L'oreal is planning to shift buying processes online.
Products dominated business model
– Even though Diversity L'oreal 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 S.A.: Rolling out the Global Diversity Strategy should strive to include more intangible value offerings along with its core products and services.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Diversity L'oreal is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study L'Oreal S.A.: Rolling out the Global Diversity Strategy can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Slow decision making process
– As mentioned earlier in the report, Diversity L'oreal 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. Diversity L'oreal 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Diversity L'oreal needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
High cash cycle compare to competitors
Diversity L'oreal 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study L'Oreal S.A.: Rolling out the Global Diversity Strategy, is just above the industry average. Diversity L'oreal needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Opportunities L'Oreal S.A.: Rolling out the Global Diversity Strategy | 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 S.A.: Rolling out the Global Diversity Strategy are -
Learning at scale
– Online learning technologies has now opened space for Diversity L'oreal to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Diversity L'oreal is facing challenges because of the dominance of functional experts in the organization. L'Oreal S.A.: Rolling out the Global Diversity Strategy case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Developing new processes and practices
– Diversity L'oreal can develop new processes and procedures in Global Business industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Diversity L'oreal can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Global Business industry, but it has also influenced the consumer preferences. Diversity L'oreal can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Building a culture of innovation
– managers at Diversity L'oreal 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 Global Business segment.
Using analytics as competitive advantage
– Diversity L'oreal 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 S.A.: Rolling out the Global Diversity Strategy - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Diversity L'oreal to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Low interest rates
– Even though inflation is raising its head in most developed economies, Diversity L'oreal can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Global Business industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Diversity L'oreal 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. Diversity L'oreal 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Diversity L'oreal can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Creating value in data economy
– The success of analytics program of Diversity L'oreal has opened avenues for new revenue streams for the organization in the industry. This can help Diversity L'oreal to build a more holistic ecosystem as suggested in the L'Oreal S.A.: Rolling out the Global Diversity Strategy case study. Diversity L'oreal can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Diversity L'oreal in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Global Business segment, and it will provide faster access to the consumers.
Buying journey improvements
– Diversity L'oreal can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. L'Oreal S.A.: Rolling out the Global Diversity Strategy suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Threats L'Oreal S.A.: Rolling out the Global Diversity Strategy 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 S.A.: Rolling out the Global Diversity Strategy are -
High dependence on third party suppliers
– Diversity L'oreal 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.
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.
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.
Stagnating economy with rate increase
– Diversity L'oreal can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Diversity L'oreal 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 S.A.: Rolling out the Global Diversity Strategy .
Consumer confidence and its impact on Diversity L'oreal demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
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. Diversity L'oreal needs to understand the core reasons impacting the Global Business 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 Diversity L'oreal.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Diversity L'oreal with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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. Diversity L'oreal 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.
Technology acceleration in Forth Industrial Revolution
– Diversity L'oreal has witnessed rapid integration of technology during Covid-19 in the Global Business industry. As one of the leading players in the industry, Diversity L'oreal needs to keep up with the evolution of technology in the Global Business sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Regulatory challenges
– Diversity L'oreal 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 Global Business industry regulations.
Shortening product life cycle
– it is one of the major threat that Diversity L'oreal is facing in Global Business sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Weighted SWOT Analysis of L'Oreal S.A.: Rolling out the Global Diversity Strategy 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 S.A.: Rolling out the Global Diversity Strategy 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 S.A.: Rolling out the Global Diversity Strategy 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 S.A.: Rolling out the Global Diversity Strategy 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 S.A.: Rolling out the Global Diversity Strategy 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 Diversity L'oreal needs to make to build a sustainable competitive advantage.