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, talent flight as more people leaving formal jobs, wage bills are increasing, central banks are concerned over increasing inflation, there is backlash against globalization, competitive advantages are harder to sustain because of technology dispersion, there is increasing trade war between United States & China,
increasing commodity prices, geopolitical disruptions, 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 -
Diverse revenue streams
– Diversity L'oreal is present in almost all the verticals within the industry. This has provided firm in L'Oreal S.A.: Rolling out the Global Diversity Strategy case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Learning organization
- Diversity L'oreal is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Diversity L'oreal is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in L'Oreal S.A.: Rolling out the Global Diversity Strategy Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
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.
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.
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.
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.
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.
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.
Analytics focus
– Diversity L'oreal is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Ken Mark, Cara Maurer can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
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.
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.
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.
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 -
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.
Low market penetration in new markets
– Outside its home market of Diversity L'oreal, firm in the HBR case study L'Oreal S.A.: Rolling out the Global Diversity Strategy needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study L'Oreal S.A.: Rolling out the Global Diversity Strategy, in the dynamic environment Diversity L'oreal has struggled to respond to the nimble upstart competition. Diversity L'oreal has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
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.
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.
Need for greater diversity
– Diversity L'oreal 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.
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.
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.
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.
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.
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.
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.
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.
Loyalty marketing
– Diversity L'oreal 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.
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.
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.
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.
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.
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.
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.
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.
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 Diversity L'oreal in the consumer business. Now Diversity L'oreal can target international markets with far fewer capital restrictions requirements than the existing system.
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.
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 -
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.
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 S.A.: Rolling out the Global Diversity Strategy, Diversity L'oreal may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Global Business .
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.
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.
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, 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 .
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.
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.
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.
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.
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.
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.
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.
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.