CASE ANALYSIS FOR LOREAL

PESTLE ANALYSIS
Political:
LOreals market presence is in various countries. LOreal adjust its company policy
according to the structures of government in these countries.
This diverse profile also adds risk to LOreal as any change and instability in these
countries may adversely affect functioning of company in that country.
Economic:
LOreal also has presence in countries with diverse economic profile. India, China,
Japan, US all these economies have quite different economic structure. LOreal has
customer base who belong to different economic strata of life.
Social:
LOreal takes great care for integration with the local culture. Its R&D departments
develops great Understanding of the local market customer (Psychographic and
psychological) and introduces these product in those markets.
LOreal also has gender specific product range. Moreover the marketing team of
LOreal has brand ambassadors from various countries. This makes LOreal true
Global brand with local societal soul.
Technological:
LOreal thrives on great technological innovation. It has highest R&D budget and
patents amongst its competitors.
LOreals research facilities helped it to tweak its product range according to the
local requirements.
LOreal digital marketing strategy shows it ability change and innovate according to
the technological advances.
Legal:
LOreal has presence in countries with different legal structures. This may lead to
complex legal repercussions in certain countries. Also some of these countries have
poor IPR regime which may lead to LOreal patented products being counterfeited.
Environment:
Countries all around the world have different environmental provisions. LOreal
being a global brand all its product have to meet these stringent standards. This
may lead to rise in the costs as products as they have to meet high quality
standards.

Data deciphering
Western Europe [From Exhibit 2a and 2b]
After the 2008 slowdown, the WE market has started picking up again in both
Professional/Consumer product sales.
Upward Trend.
And from exhibit 1, lot of opportunities and potential present.
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North America
Post slowdown, recovering well till 2010 from exhibit 2a 2b.
From exhibit 1, per capita cosmetics consumption is more
Exhaustive market with strong upward trend.
New Markets [from exhibit 2a 2b]
2008 slowdown didnt effect these markets
Strong upward trend in professional products line.
Slowdown possible in consumer line from 2010 - need for concentrated effects.
Heavy potential market [from exhibit 1]
Focus on China
Ad spending [exhibit 6]
Strong Potential
Emerging market
In 2005, research facility opened in pudong china, epic regional emphasis.
Ad Spending
Aggressive forward market/optimism.
% increase in ad spending w.r.t. competition - In 4 years, from '05 to '09, 64%
spending up, when P&G up 6% and Unilever 41%. (Derived from exhibit 5)

Notable Works
1. Maybelline acquisition by LOreal
Maybelline acquisition gave LOreal access to new emerging market. LOreal
undertook restructuring of Maybelline brand perception. Maybelline was launched
with bright color makeup collection to appeal younger customer base.
2. Ethnicity focused beauty market and fruitfully exploited.
To enter into some group of ethnics in US, It acquires Soft sheen products and
Carson products Co., which was already having image in markets. That acquisition
was a strategic move, which gives an exceptional opportunity for LOreal to deepen
their focus on the needs of people of color, initially in the United States and
ultimately in the rest of the world.
Then Targeting Chinese, It acquired Mininurse in 2003 which was one of the best
brand for skin care in china. Then it creates research center for especially Chinese
which creates a steps for LOreal to enter into Chinese market.
3. Joint Venture with Nestle a mutual benefit:
Both LOreal and Nestle got benefitted from cooperation of two joint ventures.
Galderma and Laboratories innov as well as joint efforts in research.
It is with the 6bn transaction under which LOreal is to buy back 8 per cent of its
stock from Nestl in exchange for 3.4bn in cash, plus its 50 per cent stake in
Galderma, the skincare joint venture of the French and Swiss companies. At least

four motives lie behind the structure and scale of this deal. None contradicts any of
the other three, but uncertainty lingers in some minds about what comes next.