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 inequality as vast percentage of new income is going to the top 1%, increasing transportation and logistics costs, supply chains are disrupted by pandemic , digital marketing is dominated by two big players Facebook and Google, technology disruption, talent flight as more people leaving formal jobs, increasing commodity prices,
there is increasing trade war between United States & China, 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 -
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 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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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 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.
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.
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.
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.
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.
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.
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.
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.
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 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.
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.
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 -
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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 -
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.
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.
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.
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.
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.
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.
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 .
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.
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.
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.
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.
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 .
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.
