Loreal Swot Analysis

1 January 2017

The ongoing success of the L’Oreal Group is without if not for the ingenuity of the concept of their vision as a team. The primary strength of the Company is the continuing research and innovation in the interest of beauty which assures that the L’Oreal Cosmetics offers the best to their consumers. Their dedication to their continuous research makes them the leader in the growing cosmetics industry despite the competition in the market. L’Oreal’s strengths include the fact that it is the largest seller of haircare and beauty products in the world.

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It is the market leader, concentrating on 12 core brands which account for 90% of its sales. Some of these products are diversified by price, and some by cultural image. The company has taken advantage of economies of scale in packaging and advertising, enabling improvements in profit margins. Its net profit has doubled every 5 years during the last decade. L’Oreal provides significant funding to research and development, uses and develops leading-edge technology, and regularly and successfully introduces new products onto the market. 2) Weaknesses

Perhaps one of the weaknesses that a big company faces is the decentralized organizational structure. Due to the many subdivisions of the Company, there is also the difficulty in the control of L’Oreal. This slows down the production of the Company because of the need of giving reference to the other Board members and directors of the Company. Another weakness that L’Oreal faces is their profit. The profit margin of L’Oreal is comparably low than that of the other smaller rivals. While L’Oreal projects certain rise in digits as their profit, the result does not usually meet the expectations (Sang, 2003).

Perhaps, this is also due to the high-end advertising and marketing as well as the width of the Company. Finally, the coordination and the control of the activities and image in the worldwide market are also viewed as a weakness in the part of L’Oreal. B. External Analysis 3) Opportunities The L’Oreal Company concentrates on cosmetic products that enhance women of all ages. The growing demand for beauty products gives L’Oreal the opportunity to focus in their field of specialization, particularly on hair styling and color, skincare, cosmetics and perfumeries. Being the leading cosmetic brand gives them the edge for their well-known image.

Opportunity also emanates from their growing market that ranges from the affluent, the aging and also the masses of the developed countries. Another opportunity that L’Oreal must take advantage of is their greater market share because of the numerous patents registered by the Company. 4) Threats A threat to the L’Oreal group is also the growing competition within the field of cosmetic brands. Due to the ongoing addition to the field of cosmetics, there is still the danger that other brands could surpass the profit of L’Oreal. Another threat to the Company is the economic downturn that is quite evident in other countries.

Such could thus hurt the possibility of higher profit for the company. Most products of L’Oreal are within the reach of the citizens of developed countries, but L’Oreal may have problems reaching out even to the average people from the underdeveloped countries. Also a threat to the L’Oreal Group is the spending habits of consumer and the economic crunch that most countries are experiencing as of present. While the L’Oreal Group may be producing the best of its line, people may find that their products are not of their basic needs and would skip buying L’Oreal products. (Source: LOREAL, 2008)

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