L'Oreal S.A.: Rolling out the Global Diversity Strategy SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Global Business
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 - – cloud computing is disrupting traditional business models, increasing commodity prices, increasing transportation and logistics costs, technology disruption, customer relationship management is fast transforming because of increasing concerns over data privacy, there is increasing trade war between United States & China, competitive advantages are harder to sustain because of technology dispersion,
banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing government debt because of Covid-19 spendings, 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 -
Cross disciplinary teams
– Horizontal connected teams at the Diversity L'oreal 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.
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.
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.
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.
Sustainable margins compare to other players in Global Business industry
– L'Oreal S.A.: Rolling out the Global Diversity Strategy firm has clearly differentiated products in the market place. This has enabled Diversity L'oreal to fetch slight price premium compare to the competitors in the Global Business industry. The sustainable margins have also helped Diversity L'oreal to invest into research and development (R&D) and innovation.
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.
Innovation driven organization
– Diversity L'oreal is one of the most innovative firm in sector. Manager in L'Oreal S.A.: Rolling out the Global Diversity Strategy Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
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.
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.
Effective Research and Development (R&D)
– Diversity L'oreal 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 S.A.: Rolling out the Global Diversity Strategy - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Strong track record of project management
– Diversity L'oreal is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
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 -
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study L'Oreal S.A.: Rolling out the Global Diversity Strategy, it seems that the employees of Diversity L'oreal 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.
Skills based hiring
– The stress on hiring functional specialists at Diversity L'oreal has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Capital Spending Reduction
– Even during the low interest decade, Diversity L'oreal 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.
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.
High operating costs
– Compare to the competitors, firm in the HBR case study L'Oreal S.A.: Rolling out the Global Diversity Strategy 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 Diversity L'oreal 's lucrative customers.
Increasing silos among functional specialists
– The organizational structure of Diversity L'oreal is dominated by functional specialists. It is not different from other players in the Global Business segment. Diversity L'oreal needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Diversity L'oreal to focus more on services rather than just following the product oriented approach.
Interest costs
– Compare to the competition, Diversity L'oreal has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Lack of clear differentiation of Diversity L'oreal products
– To increase the profitability and margins on the products, Diversity L'oreal needs to provide more differentiated products than what it is currently offering in the marketplace.
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 bargaining power of channel partners
– Because of the regulatory requirements, Ken Mark, Cara Maurer suggests that, Diversity L'oreal is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
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.
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 -
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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Diversity L'oreal 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 S.A.: Rolling out the Global Diversity Strategy, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Manufacturing automation
– Diversity L'oreal can use the latest technology developments to improve its manufacturing and designing process in Global Business 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.
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.
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.
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.
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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Diversity L'oreal 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 Diversity L'oreal to hire the very best people irrespective of their geographical location.
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 Diversity L'oreal 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.
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.
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.
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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Diversity L'oreal can use these opportunities to build new business models that can help the communities that Diversity L'oreal operates in. Secondly it can use opportunities from government spending in Global Business sector.
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 -
Increasing wage structure of Diversity L'oreal
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Diversity L'oreal.
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.
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 Diversity L'oreal in the Global Business sector and impact the bottomline of the organization.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Diversity L'oreal business can come under increasing regulations regarding data privacy, data security, etc.
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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Diversity L'oreal in the Global Business industry. The Global Business 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 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.
Environmental challenges
– Diversity L'oreal needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Diversity L'oreal can take advantage of this fund but it will also bring new competitors in the Global Business industry.
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.
Easy access to finance
– Easy access to finance in Global Business field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Diversity L'oreal can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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.
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.
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.
