L'Oreal S.A.: Rolling out the Global Diversity Strategy SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
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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 - – there is increasing trade war between United States & China, wage bills are increasing, cloud computing is disrupting traditional business models, competitive advantages are harder to sustain because of technology dispersion, geopolitical disruptions, there is backlash against globalization, banking and financial system is disrupted by Bitcoin and other crypto currencies,
technology disruption, talent flight as more people leaving formal jobs, 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 -
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.
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.
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.
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.
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.
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.
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.
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 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.
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.
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.
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 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.
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.
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.
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.
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 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.
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.
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.
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.
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.
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.
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 -
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.
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.
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.
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.
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.
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.
Leveraging digital technologies
– Diversity L'oreal can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
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.
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.
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.
Better consumer reach
– The expansion of the 5G network will help Diversity L'oreal to increase its market reach. Diversity L'oreal will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
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.
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 -
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.
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.
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.
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 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.
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.
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 .
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.
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.
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.
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.
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.
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.
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.