l'oreal in china case study solution

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L'Oreal: Expansion in China

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L'oreal: expansion in china description.

The world's leading cosmetics companies are competing with--and buying--local cosmetics firms for a share of China's vanity cash. French cosmetics giant L'Oreal is grabbing a major share of the Chinese make-up market. The company recently announced its acquisition of Chinese cosmetic brand Yue-Sai. The surprising announcement came just 45 days after L'Oreal made a successful bid for Raystar Cosmetics (Shenzhen) Co. Ltd's skin-care brand, Mininurse, at the beginning of the year. L'Oreal has been very successful in China's high-end and middle-segment cosmetic markets. The recent two acquisitions, however, indicate that L'Oreal is focusing more on the mass market and shows its determination to step up the pace of its growth in China. It also indicates how red-hot the cosmetics trade has become in China. What competition is situation L'Oreal facing? How can L'Oreal retain its leading position in China? Is it through more acquisitions or improving on its own products? What will be the impact of the future tariff reduction?

Case Description L'Oreal: Expansion in China

Strategic managment tools used in case study analysis of l'oreal: expansion in china, step 1. problem identification in l'oreal: expansion in china case study, step 2. external environment analysis - pestel / pest / step analysis of l'oreal: expansion in china case study, step 3. industry specific / porter five forces analysis of l'oreal: expansion in china case study, step 4. evaluating alternatives / swot analysis of l'oreal: expansion in china case study, step 5. porter value chain analysis / vrio / vrin analysis l'oreal: expansion in china case study, step 6. recommendations l'oreal: expansion in china case study, step 7. basis of recommendations for l'oreal: expansion in china case study, quality & on time delivery.

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Case Analysis of L'Oreal: Expansion in China

L'Oreal: Expansion in China is a Harvard Business (HBR) Case Study on Strategy & Execution , Texas Business School provides HBR case study assignment help for just $9. Texas Business School(TBS) case study solution is based on HBR Case Study Method framework, TBS expertise & global insights. L'Oreal: Expansion in China is designed and drafted in a manner to allow the HBR case study reader to analyze a real-world problem by putting reader into the position of the decision maker. L'Oreal: Expansion in China case study will help professionals, MBA, EMBA, and leaders to develop a broad and clear understanding of casecategory challenges. L'Oreal: Expansion in China will also provide insight into areas such as – wordlist , strategy, leadership, sales and marketing, and negotiations.

Case Study Solutions Background Work

L'Oreal: Expansion in China case study solution is focused on solving the strategic and operational challenges the protagonist of the case is facing. The challenges involve – evaluation of strategic options, key role of Strategy & Execution, leadership qualities of the protagonist, and dynamics of the external environment. The challenge in front of the protagonist, of L'Oreal: Expansion in China, is to not only build a competitive position of the organization but also to sustain it over a period of time.

Strategic Management Tools Used in Case Study Solution

The L'Oreal: Expansion in China case study solution requires the MBA, EMBA, executive, professional to have a deep understanding of various strategic management tools such as SWOT Analysis, PESTEL Analysis / PEST Analysis / STEP Analysis, Porter Five Forces Analysis, Go To Market Strategy, BCG Matrix Analysis, Porter Value Chain Analysis, Ansoff Matrix Analysis, VRIO / VRIN and Marketing Mix Analysis.

Texas Business School Approach to Strategy & Execution Solutions

In the Texas Business School, L'Oreal: Expansion in China case study solution – following strategic tools are used - SWOT Analysis, PESTEL Analysis / PEST Analysis / STEP Analysis, Porter Five Forces Analysis, Go To Market Strategy, BCG Matrix Analysis, Porter Value Chain Analysis, Ansoff Matrix Analysis, VRIO / VRIN and Marketing Mix Analysis. We have additionally used the concept of supply chain management and leadership framework to build a comprehensive case study solution for the case – L'Oreal: Expansion in China

Step 1 – Problem Identification of L'Oreal: Expansion in China - Harvard Business School Case Study

The first step to solve HBR L'Oreal: Expansion in China case study solution is to identify the problem present in the case. The problem statement of the case is provided in the beginning of the case where the protagonist is contemplating various options in the face of numerous challenges that L'oreal Cosmetics is facing right now. Even though the problem statement is essentially – “Strategy & Execution” challenge but it has impacted by others factors such as communication in the organization, uncertainty in the external environment, leadership in L'oreal Cosmetics, style of leadership and organization structure, marketing and sales, organizational behavior, strategy, internal politics, stakeholders priorities and more.

Step 2 – External Environment Analysis

Texas Business School approach of case study analysis – Conclusion, Reasons, Evidences - provides a framework to analyze every HBR case study. It requires conducting robust external environmental analysis to decipher evidences for the reasons presented in the L'Oreal: Expansion in China. The external environment analysis of L'Oreal: Expansion in China will ensure that we are keeping a tab on the macro-environment factors that are directly and indirectly impacting the business of the firm.

What is PESTEL Analysis? Briefly Explained

PESTEL stands for political, economic, social, technological, environmental and legal factors that impact the external environment of firm in L'Oreal: Expansion in China case study. PESTEL analysis of " L'Oreal: Expansion in China" can help us understand why the organization is performing badly, what are the factors in the external environment that are impacting the performance of the organization, and how the organization can either manage or mitigate the impact of these external factors.

How to do PESTEL / PEST / STEP Analysis? What are the components of PESTEL Analysis?

As mentioned above PESTEL Analysis has six elements – political, economic, social, technological, environmental, and legal. All the six elements are explained in context with L'Oreal: Expansion in China macro-environment and how it impacts the businesses of the firm.

How to do PESTEL Analysis for L'Oreal: Expansion in China

To do comprehensive PESTEL analysis of case study – L'Oreal: Expansion in China , we have researched numerous components under the six factors of PESTEL analysis.

Political Factors that Impact L'Oreal: Expansion in China

Political factors impact seven key decision making areas – economic environment, socio-cultural environment, rate of innovation & investment in research & development, environmental laws, legal requirements, and acceptance of new technologies.

Government policies have significant impact on the business environment of any country. The firm in “ L'Oreal: Expansion in China ” needs to navigate these policy decisions to create either an edge for itself or reduce the negative impact of the policy as far as possible.

Data safety laws – The countries in which L'oreal Cosmetics is operating, firms are required to store customer data within the premises of the country. L'oreal Cosmetics needs to restructure its IT policies to accommodate these changes. In the EU countries, firms are required to make special provision for privacy issues and other laws.

Competition Regulations – Numerous countries have strong competition laws both regarding the monopoly conditions and day to day fair business practices. L'Oreal: Expansion in China has numerous instances where the competition regulations aspects can be scrutinized.

Import restrictions on products – Before entering the new market, L'oreal Cosmetics in case study L'Oreal: Expansion in China" should look into the import restrictions that may be present in the prospective market.

Export restrictions on products – Apart from direct product export restrictions in field of technology and agriculture, a number of countries also have capital controls. L'oreal Cosmetics in case study “ L'Oreal: Expansion in China ” should look into these export restrictions policies.

Foreign Direct Investment Policies – Government policies favors local companies over international policies, L'oreal Cosmetics in case study “ L'Oreal: Expansion in China ” should understand in minute details regarding the Foreign Direct Investment policies of the prospective market.

Corporate Taxes – The rate of taxes is often used by governments to lure foreign direct investments or increase domestic investment in a certain sector. Corporate taxation can be divided into two categories – taxes on profits and taxes on operations. Taxes on profits number is important for companies that already have a sustainable business model, while taxes on operations is far more significant for companies that are looking to set up new plants or operations.

Tariffs – Chekout how much tariffs the firm needs to pay in the “ L'Oreal: Expansion in China ” case study. The level of tariffs will determine the viability of the business model that the firm is contemplating. If the tariffs are high then it will be extremely difficult to compete with the local competitors. But if the tariffs are between 5-10% then L'oreal Cosmetics can compete against other competitors.

Research and Development Subsidies and Policies – Governments often provide tax breaks and other incentives for companies to innovate in various sectors of priority. Managers at L'Oreal: Expansion in China case study have to assess whether their business can benefit from such government assistance and subsidies.

Consumer protection – Different countries have different consumer protection laws. Managers need to clarify not only the consumer protection laws in advance but also legal implications if the firm fails to meet any of them.

Political System and Its Implications – Different political systems have different approach to free market and entrepreneurship. Managers need to assess these factors even before entering the market.

Freedom of Press is critical for fair trade and transparency. Countries where freedom of press is not prevalent there are high chances of both political and commercial corruption.

Corruption level – L'oreal Cosmetics needs to assess the level of corruptions both at the official level and at the market level, even before entering a new market. To tackle the menace of corruption – a firm should have a clear SOP that provides managers at each level what to do when they encounter instances of either systematic corruption or bureaucrats looking to take bribes from the firm.

Independence of judiciary – It is critical for fair business practices. If a country doesn’t have independent judiciary then there is no point entry into such a country for business.

Government attitude towards trade unions – Different political systems and government have different attitude towards trade unions and collective bargaining. The firm needs to assess – its comfort dealing with the unions and regulations regarding unions in a given market or industry. If both are on the same page then it makes sense to enter, otherwise it doesn’t.

Economic Factors that Impact L'Oreal: Expansion in China

Social factors that impact l'oreal: expansion in china, technological factors that impact l'oreal: expansion in china, environmental factors that impact l'oreal: expansion in china, legal factors that impact l'oreal: expansion in china, step 3 – industry specific analysis, what is porter five forces analysis, step 4 – swot analysis / internal environment analysis, step 5 – porter value chain / vrio / vrin analysis, step 6 – evaluating alternatives & recommendations, step 7 – basis for recommendations, references :: l'oreal: expansion in china case study solution.

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L’Oréal China – Case Study

L’Oréal was created in 1909 in the personal care industry in France. The company’s operations involve the production of various cosmetics and beauty items. The firm has managed to enter the global beauty and cosmetic market. L’Oréal ranks as the largest cosmetic organization worldwide. L’Oréal has adopted internationalization as one of its business strategies in order to maximize its profits.

Market Analysis: L’Oreal in China

L’Oréal has earned its place as a leader in the country’s beauty market where it sells 25 brands, has opened one research and innovation center, a training center, two plants in Yichang and Suzhou, and 5 distribution centers. L’Oréal has introduced most of its brands in the Chinese market such as Maybelline New York and Lancôme. In order to market its products successfully in the Chinese market, L’Oréal has adopted the concept of localization in its marketing processes.

Key Players of the Chinese Cosmetics Market

A large number of multinational cosmetics companies have entered China over the past twenty years. Some of the major players include Procter & Gamble, L’Oreal, Shiseido, Amway, and Unilever.

According to Qianzhan , foreign brands such as Procter & Gamble and L’Oréal accounted for approximately 50% of the market share in the cosmetics industry in China. Domestic firms (Chicmax, Pechoin, and JALA Group) occupied 17.97% of market share. However, it’s expected to grow because, from 2014 to 2017, the market share of Pechoin increased from 1.4% to 2.3%, and that of Chando increase from 1.3% to 1.7%. Read full post here: Top leading Cosmetics Brands in China and full strategy analysis

L’Oreal Strategy to conquering the Chinese Cosmetic Market

Buying out local brands brands.

In order to penetrate the Chinese market, L’Oréal adopted the concept of standardization, by the introduction of Yue-Sai in 1992. The product was initially owned by Yue Sai Kan and was specifically targeted towards Asian women. To meet the beauty and skincare needs amongst Asian women, L’Oréal identified Yue Sai as a potential brand that was designed for the Asian market, consequently, L’Oréal purchased Yue Sai.

The acquisition was in line with the firm’s mission, being “beauty for all”. The group later acquired another Chinese brand known as Mininurse , developing a strong market position in China through the acquisition and licensing of national brands.

After acquiring Yue Sai, L’Oréal undertook a complete product improvement and development in an effort to ensure that the product aligns with the Chinese skin consumer needs. This move led to the introduction of the Vital Essential line in 2007. The product was developed using Ganoderma mushroom extracts. In China, this mushroom is considered to have medicinal value and such a move illustrates the firm’s commitment to align its products to the Chinese culture.

Read too: Guide to China High-end Cosmetics Marketing

Market Targetting, segmentation, and strategic positionning

L’Oréal is very much aware of the importance of market targeting, segmentation, and positioning. In the process of entering the Chinese market, L’Oréal segmented the market by age as its core demographic market variable. During its initial market entry phase, the firm adopted a concentrated market targeting strategy. A concentrated targeting strategy entails selecting a specific market segment and concentrating the marketing efforts on the identified segment.

A concentrated targeting strategy enables organizations to understand the consumers’ motives, needs, and satisfaction levels. L’Oréal targeted women as the core customers to target. China has undergone significant transformation especially in regard to personal care and beauty over the past few decades.

The younger Chinese generation is more receptive to beauty and cosmetic products as compared to the older generation as is evidenced by the increase in consumer spending. Consumption of beauty and cosmetic products has increased significantly among young male and female consumers. It is estimated that the Chinese cosmetics and beauty market is growing at a rate of 13% annually and it is estimated that the country will continue growing at a rate of 10%.

L’oreal communication in China

L’Oréal ensured that aspects of Chinese traditional medicine were integrated into the process of producing YueSai items. The Chinese appreciate their cultural heritage and culture being integrated into their consumption process. Some of the elements that they hold in high esteem are related to health, medicine, and food.

The main marketing communication methods included advertising and public relations. In its advertising process, the firm has adopted the press and television as the main marketing communication channels. In a bid to reposition Yue Sai on the Chinese market, L’Oréal allocated a substantial number of its funds in its marketing communication budget.

The amount was used in its marketing processes especially through television and print media. The advertising campaign featured Du Juan, a renowned Chinese supermodel. In a bid to attract potential customers, the firm ensured that a high level of creativity and effective design was integrated into the television commercials. During the advertising campaign, the firm adopted the tagline “I hold my future in my hand.” The other slogan adopted included “I look forward to every day with confidence.” Consequently, the firm was in a position to appeal to the Chinese women’s emotions.

In its effort to create awareness through public relations, L’Oréal contracted renowned Chinese personalities and celebrities to endorse its products. Some of the major personalities included singers, athletes, actors, and actresses. 80% of the firm’s marketing communication efforts were focused on skincare products and 20% on makeup. The firm had not adopted an effective public relations channel as it had not adopted new media platforms especially Weibo, which is a very famous social media platform commonly used in China.

Targeting the Younger Chinese Cosmetics Consumers

The Chinese cosmetics market is changing at a quick rate and the young consumers, whose choices are drastically different from those of the previous generation, are becoming the driving force of this market. Young Chinese women wear make-up and eagerly track the latest trends. In recent years, L’Oréal China started targeting a younger audience by implementing a series of marketing campaigns directly aimed at them.

L’Oreal Paris announced Yuan Wang (18) Chinese idol, member of the boy band TFBoys, with nearly 40 million followers on Weibo, as its newest Chinese brand ambassador in 2018. Wang fans bought L’Oreal products worth more than 13.93 million yuan in March 2018, following the teen idol becoming the endorser for L’Oreal’s beauty.

Loreal on Chinese Social Media & Kols Campaigns

L’Oréal leverages social media, like Weibo, WeChat , to reach Chinese customers. Most of L’Oréal’s brands have their own official accounts on Weibo with a large number of followers. L’Oréal created a social media campaign with #我的选择我值得拥有(#I deserve it) to advertise their Women’s Day promotions through Weibo. In this campaign, women fans were encouraged to share their feelings and stories by uploading images to social media platforms Weibo using hashtags #我的选择我值得拥有. Also, many celebrities like Li Gong, Zhilei Xin (Chinese famous actresses) are joining the campaign to share their own words with Weibo users, which attracts more fans to participate and express their comments. There are around 24.8 million reads and 470 thousand discussions on Weibo #我的选择我值得拥有 topic.

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L’OREAL Company: Expansion in China Case Study

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Introduction (Problem, Objectives, and Resources)

Case study analysis, feasible recommendations, works cited.

L’Oréal is one of the most famous and purchased cosmetic brands in the world. The company produces many popular brands of cosmetics, perfumes, as well as hair and skincare products, including L’Oreal Paris, Garnier, Maybelline New York, Lancome, Giorgio Armani, Vichy, and others. This Group is represented in 130 countries all over the globe. The given case study focuses on the expansion of the mentioned company in China and presents three essential challenges that it encountered on the way to success. Namely, consolidation with the local market, integration issues, and differentiation may be noted among the problems.

The objectives of this paper are to analyze the case of expansion based on the current literature and provide reasonable solutions to the identified problems along with feasible recommendations. The paper will be based on the critical review of the existing evidence in the field of strategic management and L’Oréal’s brand management. In addition, the resources will include scholarly articles, books, and official websites presenting reliable statistics and any other important data. Such tools as strengths, weaknesses, opportunities, and threats (SWOT) and benchmarking will be employed to present the results of an in-depth analysis.

“Because you are worth it” is a famous phrase used in L’Oréal’s advertisement at the dawn of almost 40 years, and its authorship belongs to the advertising agency of McCann Erickson. Since then, the screen with a beautiful French accent was played by actresses Catherine Deneuve, Jennifer Aniston, Mila Jovovich, Beyonce Knowles, Kate Moss, and others. The men’s L’Oréal line was advertised by the Formula One pilot, Michael Schumacher, and the football player David Ginola (Hong and Yves 117). In 1996, there was an acquisition of Maybelline, a leader of the decorative cosmetics of the mass market in the US, which had strategic importance. It not only positioned L’Oréal as the undisputed leader of the key market all over the world but also turned the corporation into the world leader in the field of makeup tools for mass demand. Moreover, Maybelline was an entrance ticket for L’Oréal to the Asian market, especially in China, where there was a factory of this brand.

To engage consumers interactively with the products, L’Oreal has released the Makeup Genius application, which allows users to do makeup online. Girls use a smartphone as a mirror and try various make-up variations likewise filters on Instagram to find out the best option. This application was already downloaded more than 14 million times. In today’s China, goods and services for personal care, healthy lifestyles, and entertainment are quite popular. Three factors affect consumer behavior, including large families, bad ecology, and general Asian trend for personal hygiene and care. It should be stated that there are more men than women, but the female half of the population makes more purchases.

Traditionally, girls, even the younger generation, use cosmetics. Being in serious relationships, they often buy something for the family, parents, children, and husband. As for the age, the target audience is composed of people from 17 to 36 years old, who are called the generation of two thousand people or the generation of the millennium. This is a young generation of Chinese consumers who are versed in modern technology, who make 66 percent of all purchases on the Internet. All of them use social networks, and they are interested in new ideas as well as trying something new. Currently, L’Oreal Group follows a comprehensive strategy of promotion on Weibo and Wechat platforms.

Issues Underlying the Problem

In partnership with Suzhou Medical College, one of the oldest Chinese universities, L’Oréal created Suzhou L’Oréal Beauty Products. In 1996, the industrial complex of Suzhou began the construction of the plant, which was opened in 1999, while two other factories were opened in the next decade to serve the rapid development of the Chinese market. Furthermore, to accelerate the development of the Garnier brand in China, which is already marketed by the Nutrisse brand, L’Oréal acquired Mininurse in 2003. This local brand, a leader of skincare products of a mass-market, already enjoyed great popularity and a powerful presence in the market. The first means of leaving Garnier were issued under the name Mininurse.

One of the challenges to entering the Chinese beauty market was associated with the overall value of the existing brands. In response to Chinese preference for these brands that take into account the specific nature of Asian skin type, L’Oréal acquired Yue-Sai – an affordable luxury brand of skincare and decorative cosmetics Yue-Sai that personified a modern resident of China and became a successful addition to the collection of the international portfolio of L’Oréal Group. However, the review of the literature shows that the company needed research and innovation to meet customers’ quality expectations and remain in-demand. In this regard, a new research center in China was launched. The main project of L’Oréal’s fourteenth research center in Pudong, near Shanghai, was the achievement of the perfection of knowledge about the skin and hair of the Asian type. Its paramount goal was to develop products that meet the needs of Asian descent around the world as well as the production of real geo-cosmetics that can cover the diversity of cultural and climatic features of Asia.

In August 2001, the face of the French company was the Chinese movie star Gong Li. Ginsheng Lan, PR Manager at L’Oréal in China, stated that over the past five years, the Chinese women’s attitude to beauty had changed dramatically since they began to spend a lot of money buying the products of Western cosmetic giants. The market was developing very fast, showing a growth of 10-20 percent per year. L’Oréal began to conquer the Chinese market in 1997, much later than Japanese cosmetics companies (for example, Shiseido). Fashion ideas are changing rapidly, and if earlier only black hair was considered beautiful, now Chinese women are experimenting with color, and L’Oréal is helping them in this with their products. When in 2002, L’Oréal began its expansion into China, its incomes grew by 61 percent, while the entire cosmetics market of this country grew by only 14 percent.

Today, almost all Chinese consumers use mobile payments every day, and many of them make up to eight payments a day. This is convenient since the payment can be made with one finger, with the help of voice commands, or even codes. There are also many commands for the cancellation of transactions, which provides security. The international brands that have already entered the Chinese market should focus their efforts on maintaining and developing the image of the brand through social media. Without this, one cannot be competitive in the market.

Desirable Solutions

To resolve the mentioned problems, L’Oreal also launched its largest Asian plant in China. Namely, the French manufacturer of cosmetics and perfumery, L’Oreal opened a new plant, the production facility of which was worth 200 million yuan ($32 million) and was located in Hubei Province. The plant, which area was about 70 thousand square meters was the largest manufacturing facility of a cosmetic company in Asia. Annually, it produces about 250 million units of cosmetic products and is expected to ensure the growing demand for care products. At the moment, China is the third-largest market in L’Oreal. Earlier this year, L’Oreal reported on the agreement on the acquisition of Chinese Magic Holdings International, specializing in cosmetics, for $ 840 million ( Expansion from France to International Markets ). In addition, the company stated that it is conducting exclusive discussions with the Japanese cosmetics manufacturer Shiseido about buying the cosmetics brands such as Decleor and Carita that belong to it.

By announcing the company’s new commitment to sustainable development, L’Oréal mentioned that a new type of customer has emerged that makes its choice, guided not only by the price of the product or brand but also by environmental friendliness. It seems that consumers are concerned about this because they are increasingly becoming conscious citizens. They have more information that is now open to absolutely anyone, and they understand the danger of depletion of natural resources, reduction of water quantity, environmental pollution, and degradation of biodiversity. In the cities of China, the situation is rather complicated. Therefore, the state of the environment becomes very important. Consumers understand that they are part of the world, and they cannot just forget about it when they make purchases.

Therefore, the consideration of sustainable development and some initiatives in this area is a useful way to attract more customers and also protect the environment. The problem is that there are many products on the market that are called eco-friendly or natural, but they are either quite expensive or not so good. By 2020, L’Oréal expects that 100 percent of its products will be environmentally-friendly or socially-oriented. At the same time, it is not proposed to create a new category of products that will be greener and more expensive, et cetera, but change the way of work. Until recently, the priority was to create effective and safe products of high quality. Now, the company adds one more property that seems to be valuable such as eco-friendly innovations and production.

Implementation Plan

The development of the Internet should be considered as one more factor affecting the company’s strategy. L’Oreal’s consumers have almost completely changed their habits in buying cosmetics and finding information about them. Beauty and everything connected with composing one of the most hotly debated topics in social media. For the company, this opens up new opportunities in interaction with customers. The digital revolution has created an unlimited space for consultations, serving people, and offering them new services. L’Oreal can form a new level of interaction with its consumers, who want to be able to make a purchase anytime and anywhere. The majority of customers still buy in traditional stores, but more and more shopping is tracked through websites and mobile applications. Many of L’Oreal’s brands have e-commerce platforms that present great potential for a serious increase in sales. For some brands, for example, Kiehl’s, the share of e-commerce is about ten percent of the total turnover in the world.

It is additional values that form loyalty to the brand, thus making it successful. The band performs the following functions for the consumer: it provides a value proposition and confidence in the firm’s branded products. In L’Oreal, the essence of the brand is the central idea presented to a consumer. It reflects the most important meaningful signs of the brand, that is, it represents a core of brand content. Therefore, it is advisable to consider the brand as a dialectical unity of its form and content. If the external identifiers shape a form, then the internal identifiers, by which a consumer determines the correspondence of the brand values to their settings, constitute the content of the brand. To ensure brand effectiveness, the company needs to strive for compliance between the form and content of the brand. Modern successful brands are empirical brands that are the result of empirical marketing. In empirical marketing, the emphasis is transitioned to the experiences of a client, which generates values of the sensory, emotional, cognitive, and behavioral nature.

With the development of technologies, it becomes increasingly difficult for companies to maintain the functional values of brands for a long time as the benefits-oriented on functional properties become relatively simple to copy. Without a strong brand, a company cannot move forward. Therefore, one should ensure seamless communication with customers on all possible platforms. A consumer expects companies to be available at three in the morning on Sunday in his favorite application, for example. Companies that plan to sell their products to the Chinese market from other countries should start building relationships with the local bloggers and opinion leaders. The SWOT table can be created to summarize the analysis (see Figure 1).

The potential implementation plan may be based on the method of benchmarking. An important feature that determines the conduct of business in the context of globalization is the intensification of competition. A significant challenge for L’Oréal is the search for new ways and tools to improve competitiveness as a strong competitive position is a basis for its successful operation in the long term. Benchmarking helps to identify problems in the organization of the company’s activities and areas of backwardness as well as identify ways to overcome them. In this case, L’Oréal itself can serve as a standard, and its practices will be used for subsequent implementation. It is useful to apply benchmarking to improve business processes, the characteristics of their products, reduce costs, and achieve the best performance indicators based on a benchmark comparison of their activities with that of other leading companies.

Benchmarking implies comparing a company’s activities with those of others that have the best practices in the areas of business that are of interest. The first stage refers to the collection of the required information. This phase involves not only the collection of qualitative and quantitative data but also the study of the content of the market along with processes or factors that explain productivity (Hill et al. 109). Identifying potential partners for benchmarking is another step in the research phase. It is more coherent to apply the experience of enterprises operating under similar conditions, steadily setting high goals for themselves. To identify a potential partner, several methods may be used to find who best satisfies the needs of consumers and have the best processes to be evaluated. The most obvious would be to look for the industry leaders among direct competitors. The difficulty of this situation is that some companies are not yet ready to share the experience with their competitors and did not realize that such a procedure is mutually advantageous.

The next stage of benchmarking is the analysis of information. This stage puts forward great demands on the creative and analytical abilities of the participating sides in the process of analysis of superiority, thus promoting awareness of the similarities and differences and understanding their relationship (Hill et al. 110). In addition, it is necessary to identify effects that can complicate comparisons and falsify results. The purposeful implementation of the information received, namely, not only the implementation of the developed opportunities for improvement but also further development of the organization of the enterprise should be followed. In this case, the point is not copying yet creating an incentive for further innovative development of the company.

The analysis of only one category of data will not give a complete picture of the company’s activities, while every indicator should be compared with a similar one of the partner company’s performance. In this regard, there are two questions: how critical is the dissimilarity between the compared companies, and how much technology does the partner apply (Hill et al. 109). In case the data regarding the partner firm can be compared with similar data on the initiating company, the benefits of the results obtained are great. Even if the initiator company outperforms the partner on most indicators, there will always be something to be learned. Nevertheless, as a partner in benchmarking, it is more logical to choose a company that exceeds in this or that field of activity. Repeating the analysis results in an adjusted manner completes the process of benchmarking.

Legal and Ethical Considerations

The media and current literature support the image of a growing high-potential cosmetics market in China, but its effectiveness does not always depend only on the size. The customers should not only want to buy but also have to have money for this. Although there are many buyers in China, and their incomes are rising, many people remain below the poverty line and are unable to acquire what they want. First of all, it is clear that the aspirations of customers are growing, the desire is ahead of opportunities, and the traditional areas of modernization are not always applicable. Taking into account the vastness of China’s territory, ethnic diversity, and a rapid pace of change, it should be noted that China’s traditional culture is not respected all the time and in all places. Today, Chinese business ethics should instead be seen as a so-called “pot” of modern Western ideas and traditional Chinese values with several paradoxes. The ethical considerations should consider the superficial Western framework that is built on deeply entrenched Confucian values, while the goals of economic efficiency are created by people who are oriented towards the ideology and the traditions of social responsibility.

As for legal considerations, it is rather important to register the product and then export it. Contacting Chinese representatives and getting a license for a product from the State Food and Drug Administration (SFDA) requirements. Now, China has simplified rules for the import of goods into the country, which allows foreign retailers to sell their products on the territory of ten free trade zones without passing checks and customs clearance. According to the law from June 30, 2014, ordinary cosmetics testing on animals, which is produced and sold in China, becomes optional. However, there is no answer to the question of whether products are to be sold in China, but it is evident that Chinese law no longer forces to test cosmetics on animals. In the article of Humane Society International, it is explained that the changes in the Chinese legislation of 2014 will largely affect all cosmetic companies. According to these changes, some products are not required to be tested on animals by law, but this does not guarantee that they will not be tested. Companies can also decide to test animal cosmetics in China because this is legal.

Speaking of my role as a researcher of the given case study, I would like to emphasize that my role is mainly theoretical. Namely, I can analyze this case and apply various strategies in an attempt to suggest some relevant strategies and use appropriate tools. At the same time, this may provide essential grounds for conducting scholarly research regarding the current situation of L’Oréal in the Chinese market. The review of the existing evidence demonstrates that the company moves forward and tries to follow the current trends in social, economic, and cultural issues. Therefore, it seems that the new research would contribute to the theory of strategic management associated with the expansion to foreign markets.

Lessons Learned

In my point of view, this assignment is rather useful as it provides the opportunity to understand and interpret a real-life situation on the example of L’Oréal’s acquisition of the Chinese cosmetic brands. I have learned that it is significant to pay attention to a full range of factors that may either improve or weaken the company’s condition in terms of a foreign market. I have understood that it is essential to figure out what attracts the Chinese as their cosmetic tastes and needs are different from Western addictions. For example, Europeans and Americans prefer to purchase artificial tan cream, and the Chinese adore bleaching (Xie and Zhang 540). In other words, all the local specific cultural, ethical, and legal peculiarities are to be taken into account.

More to the point, this assignment allowed integrating information presented by the case study and those obtained from the recent evidence. Based on the credible sources, I have suggested several strategies to resolve the problems outlined in the case and also offered several recommendations on how L’Oréal may enhance its positions in China, focusing on technology, social media, and brand awareness. It should be stressed that writing the report about this case study required following a specific format that is important for an academic style.

In conclusion, one should emphasize that L’Oréal is a large and promising company that operates in the field of cosmetics. On the Chinese market, it encountered both challenges and opportunities, which may foster its expansion and improve the positions. Consolidation with the local market, integration issues, and differentiation problems were revealed in the course of the analysis. It was determined that the company should follow the current trends and apply technology and innovation to remain competent and competitive. Brand management strategies and social media coverage were recommended as the relevant ways to resolve the above problems. More to the point, it should be stressed that proper investigation of the local customer preferences may significantly contribute to the expansion of this cosmetics company.

Given the mentioned issues and solutions, it is possible to suggest several recommendations that may improve the performance of L’Oréal in the Chinese beauty market. The company should change a lot in production, focusing on the concept of products as well as the choice provided to customers. It seems that this is what is now expected from manufacturers all over the world. Since it strives to increase the number of loyal consumers, people who buy this product should be fully confident that they make a responsible choice. China is an extremely important beauty market for the whole world. L’Oreal in China has been present for many years and it is successful there. What is important, the market has great potential as there is a tradition of beauty.

Speaking about new consumers, in the presentation of the company for employees and investors, one may note the statement that the company should follow the current changes in the world. In particular, one of the economic trends such as the formation of the middle class, the main request of which is a good and affordable product. With the recent development of countries such as Mexico, China, Brazil, and others, a middle-class stratum appears in them, and people need access to good products as buying safe and effective cosmetic products is a very simple way to improve the quality of life. Therefore, the company should gain an audience by being where customers are looking for the identified cosmetic products.

There is a huge offer of different brands on the market, every year it becomes more difficult to stand out, and a consumer seems to be simply disoriented. To manage to compete, L’Oreal should understand that this is the price of this game – in free markets people have a choice. The cosmetic industry provides the widest range of products, which is generally good, but a brand can be successful only if it is a product of high quality. Without this, it can be popular for a very short period. Therefore, it is necessary to constantly focus on research, innovation, and science to constantly improve and anticipate customers’ expectations. For example, environmental friendliness and as well as skin reconstruction may be recommended as the areas for development. Some part of turnover should be invested in research and development more than competitors can do. This will allow being sure that by trying products, a consumer will return to them again.

Another recommendation may be formulated as follows: be active on the Internet. It is possible to run a blog and write articles regularly to allow consumers to receive the latest news promptly. The posts should inform about the company and its products, and also contain reviews of satisfied customers to prove that the brand can be trusted. Activity in social networks is another part of this recommendation as the Chinese do not part with their smartphones, and they need innovation and authenticity. Of the 630 million Internet users in China, about 90 percent use social networks to gather information about brands. The most popular social networks in China are Weibo microblogging and WeChat messenger, which have a news line. This popular platform will allow turning the target audience into the brand’s followers.

Opinion leaders are popular bloggers and stars who advise about the skincare and selection of a suitable product. To make the company’s positions even more stable, it is possible to consider concluding a partnership with them. If the leader of opinion tells about the brand, it will become a well-known brand among numerous followers. For example, the Chinese are deeply in love with the British actress Emma Watson, who is the face of the Lancôme brand. She has fair skin, and all Chinese women want to be like her. When expanding to the Chinese market, it is important to know exactly what the target audience is. By examining customers’ needs and expectations, it is essential to regularly update information about the brand along with the current trends.

Expansion from France to International Markets . 2018. Web.

Hill, Charles WL, Gareth R. Jones, and Melissa A. Schilling. Strategic Management: Theory: An Integrated Approach . Cengage Learning, 2015.

Hong, Hae-Jung, and Yves Doz. “L’Oreal Masters Multiculturalism.” Harvard Business Review , vol. 91, no. 6, 2013, pp. 114-118.

Tao, Zhigong. L’Oreal: Expansion in China. Harvard Business Review . 2018. Web.

Xie, Qinwei, and Meng Zhang. “White or tan? A Cross-Cultural Analysis of Skin Beauty Adv ertisements Between China and the United States.” Asian Journal of Communication , vol. 23, no. 5, 2013, pp. 538-554.

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IvyPanda. (2021, May 30). L'OREAL Company: Expansion in China. https://ivypanda.com/essays/loreal-company-expansion-in-china/

"L'OREAL Company: Expansion in China." IvyPanda , 30 May 2021, ivypanda.com/essays/loreal-company-expansion-in-china/.

IvyPanda . (2021) 'L'OREAL Company: Expansion in China'. 30 May.

IvyPanda . 2021. "L'OREAL Company: Expansion in China." May 30, 2021. https://ivypanda.com/essays/loreal-company-expansion-in-china/.

1. IvyPanda . "L'OREAL Company: Expansion in China." May 30, 2021. https://ivypanda.com/essays/loreal-company-expansion-in-china/.

Bibliography

IvyPanda . "L'OREAL Company: Expansion in China." May 30, 2021. https://ivypanda.com/essays/loreal-company-expansion-in-china/.

L’Oréal in China: Marketing Strategies for Turning Around Chinese Luxury Cosmetic Brand Yue Sai

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2023 The Case Centre Best-selling Classic Case in the Category 'Marketing'

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Restricted Material for Instructors

The case shows the challenges that even very successful multinational firms experience when doing business in China. Specific topics discussed include: 1. Functional vs. emotional branding. Can all brands become “passion” brands? Should they? 2. Effects of country of origin, national pride, traditions and cultural beliefs in today’s China. 3. Marketing “masstige” (affordable luxury) brands. How to leverage brand heritage while staying current and relevant in a fast-moving market.

advertising
European Competitiveness

L’Oréal in China: Marketing Strategies for Turning Around Chinese Luxury Cosmetic Brand Yue Sai (Chinese)

By Haiyang Yang , Pierre Chandon

L’Oréal in China: Marketing Strategies for Turning Around Chinese Luxury Cosmetic Brand Yue Sai (French)

Haiyang Yang

Pierre Chandon

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L'Oreal: Expansion in China
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Definition of PESTEL / PEST / STEP Analysis

What is PESTEL / PEST / STEP Analysis? How you can use PESTEL Analysis for L'Oreal: Expansion in China

At EMBA PRO , we specialize at providing professional PESTEL analysis & other strategic management MBA resources. L'Oreal: Expansion in China case study PESTEL analysis includes macro environment factors that impact the overall business environment – Political, Economic, Social, Technological, Environmental, and Legal factors. L'Oreal: Expansion in China case study (referred as “L'oreal Cosmetics” for purpose of this article) is a Harvard Business School (HBR) case study covering topics such as Strategy & Execution and strategic management. It is written by Zhigang Tao, Li Dongya and shed light on critical areas in field of Strategy & Execution, Emerging markets, Growth strategy, Mergers & acquisitions that the protagonist in the case study is facing. Managers at L'oreal Cosmetics need to examine three inter-related environments in order to come up with an effective strategy. The three inter-related environments are – industry environment in which the company operates in, the geographic market or country in which company operates, and wider socio economic / macro environment. PESTEL analysis is mainly the assessment of macro environment factors.

Case Description of L'Oreal: Expansion in China Case Study

Case Authors : Zhigang Tao, Li Dongya

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Importance of PESTEL Analysis in Strategy Management & Planning Process

Strategy planning process often requires five steps – 1. Choosing the vision, mission and the reason of existence for L'oreal Cosmetics. 2. Analyze the L'oreal Cosmetics external competitive environment to identify opportunities and threats. PESTEL analysis is critical to understand the external threats & opportunities arising because of the macro environment developments. Changes in macro environment forces can impact the Porter Five Forces & industry attractiveness. Thus significantly impacting the ability of L'oreal Cosmetics to build sustainable competitive advantage 3. Analyze Strengths and Weaknesses of L'oreal Cosmetics. 4. Developing strategies that can capitalize on L'oreal Cosmetics strengths and help mitigate weaknesses and impact of threats of macro-environment. 5. Execution of the strategy and building a feedback loop, using which managers at L'oreal Cosmetics can fine tune processes and strategies going forward. The Industrial Organization (I/O) approach advocates that for sustainable competitive advantage external factors are as important as internal factors of the L'oreal Cosmetics. According to Michael Porter organizational performance is to large extend determined by various industry forces.

What are Political Factors in PESTEL / PEST Analysis

The political factors play a huge role in not only investment decision by transnational corporations but also by companies such as – L'oreal Cosmetics. Political environment and other factors not only impact the cost of doing business but also long term sustainability. Some of the political factors are – governance system, democracy & institutions, military coup chances, probability of armed conflict, law and order in market etc.

Political Factors that Impact L'Oreal: Expansion in China

- Unrest within the Country & Chances of Civil Unrest – We don’t think that L'oreal Cosmetics business operations are facing any dangers from any kind of civil unrest or internal militant operations in the country.

- Threat of Terrorist Attacks – We believe in the world of post 9/11, corporations such as L'oreal Cosmetics have to live with operating under the shadow of a terrorist attack. The prudent policy should be to take insurance and other types of hedging instruments to mitigate the losses occurring because of the terrorist attacks.

- Size of Government Budgets – both Local Governments and National Government – The government at both national level and local levels are running deficit budgets which is boosting growth in the short term but may lead to increase in inflation over medium term. The bond rating of national government is investment grade.

- Role of Non-Government Organization, Civil Society & Protest Groups – The country has a vibrant civil society community and L'oreal Cosmetics should build bridges with them and seek out areas of co-operations. Civil society groups are influential not only in policy making but also in building a society wide narrative.

- Political Governance System – Based on the information provided in the L'Oreal: Expansion in China case study, it seems that the country have a stable political system. L'oreal Cosmetics can make strategies based on the stable political environment.

- Segregation of Political Responsibilities between Different Government Agencies – There are numerous government agencies which reduces the risk of overwhelming pressure by one agency. But on the flip side it does increases both time and cost of doing business and getting certifications and clearances.

- Role Local Governments Play – Local governments are highly influential in the policy making process and implementation as most of the policies and regulations are implemented by the local government as enforcement agencies mostly report to local government in their own states regarding various laws.

- Government Regulations and Deregulations – The government is adhering to all the rules and regulations under World Trade Organization norms. There is consistency in both policy making and implementations of those policies.

What are Economic Factors in PESTEL / PEST Analysis

Economic factors of a country and region have a direct impact on the potential attractiveness of a given market. Some of the economic factors that L'oreal Cosmetics should evaluate both in the present market and one in which it wants to enter are – inflation rate, GDP growth rate, disposable income level etc.

Economic Factors that Impact L'Oreal: Expansion in China

- Employment Rate – If the employment rate is high then it will impact L'oreal Cosmetics strategies in two ways – it will provide enough customers for L'oreal Cosmetics products, and secondly it will make it expensive for L'oreal Cosmetics to hire talented & skillful employees.

- Financial Market Structure and Availability of Capital at Reasonable Rates – The quantitative easing policy of Federal Reserve has led to liquidity flooding all across the global financial markets. L'oreal Cosmetics can borrow cheaply under such circumstances. But this strategy entails risks when interest rate will go up.

- Fiscal and Monetary Policies – The Republican government tax break culture has increased the deficit and it can lead to fiscal trouble for the economy in coming years.

- Inflation Rate – The inflation rate can impact the demand of L'oreal Cosmetics products. Higher inflation may require L'oreal Cosmetics to continuously increase prices in line of inflation which could lead to lower levels brand loyalty and constant endeavors to manage costs. Cost Based Pricing could be a bad strategy under such conditions.

- Foreign Exchange Rate – Number of companies have incurred losses in past few years because of forex risk in – Venezuela, Brazil, and Argentina. L'oreal Cosmetics should be careful about the history of forex risk before entering new market. Many US companies have incurred losses in Mexico in regular forex crisis in that country.

- Inequality Index / Ranking on Gini Index – Gini Index and level of inequality are a great barometer for harmony and development of a society. If there is huge income inequality in the society then the likelihood of conflict and crime increases. It can lead to uncertainty and suppression of consumption in both short term and long term.

- Level of Household Income and Savings Rate – Increasing consumption and stagnant household income in United States had led to credit binge consumption. It has decimated the culture of savings as people don’t have enough to save. L'oreal Cosmetics needs to be careful about building marketing strategy that is dependent on “Purchase on Credit” consumer behavior.

What are Social Factors in PESTEL / PEST Analysis

Social factors such as demography trends, power structure in the society, women participation in workforce etc have immense impact over not only the country's economy but also on workforce talent availability and level of consumer demand.

Social Factors that Impact- L'Oreal: Expansion in China

- Power Structure in Society – L'oreal Cosmetics should carefully analyze both - What is the power structure in the society? How it impacts the demand in the economy. For example the power structure in US economy is slowly moving towards the older generation as that generation has higher disposable income compare to the younger generation.

- Gender Composition in Labor Market L'oreal Cosmetics can use gender composition of labor market to understand the level of liberal nature of the society, women rights, and women’s say in matter of societal issues and consumption decisions. The gender composition of labor market is a good indicator of disposal income of household, priorities of the households, and related needs.

- Attitude towards Authority – Various cultures in different part of the world have different attitude towards authority. In Asia authority is respected while in west it is something to rebel against. L'oreal Cosmetics should carefully analyze the attitude towards authority before launching a marketing campaign for its products and services.

- Attitude towards Savings – The culture of saving in US and China is totally different where savings rate in China is around 30% , it is well below 15% in United States. This culture of consumption and savings impact both type of consumption and magnitude of consumption.

- Attitude towards Leisure – L'oreal Cosmetics should conduct an ethnographic research to understand both attitude towards leisure activities and choice of leisure activities. Experience economy is one of the fastest growing segments both among millennials and among baby-boomers.

- Level of Social Concerns & Awareness in Society – Higher level of social concerns in the society often result higher consumer activism and pressure from non-governmental organizations, & pressure groups.

- Immigration Policies and Level of Immigration – What are the immigration policies of the country, what is the level of immigration, and in which sectors immigration is encouraged. This will enable the L'oreal Cosmetics to determine – if required can it hire talent globally to work in that particular market.

- Nature of Social Contract between Government & Society – Before entering into a market L'oreal Cosmetics needs to understand the nature of social contract between government and society. For example it has been extremely difficult for US companies to enter UK health market as UK health system is a nationalized system and everything goes through contracts at national level.

What are Technological Factors in PESTEL / PEST Analysis

Technology is fast disrupting business models across various industries. Some of the technology trends that are impacting the macro environment are – developments in artificial intelligence, use of machine learning and big data analytics to predict consumer behavior, growing importance of platforms over service providers etc.

Technological Factors that Impact L'Oreal: Expansion in China

- Transparency & Digital Drive – L'oreal Cosmetics can use digitalization of various processes to overcome corruption in the local economy.

- Research and Development Investment Levels – If there is high level of investment in technology development sector then there are high chances of building a self sustaining ecosystem that drives innovation. L'oreal Cosmetics can leverage such a situation to hire the best people in business.

- Technology transfer and licensing issues for L'oreal Cosmetics – laws and culture of licensing of IPR and other digital assets should be analyzed carefully so that L'oreal Cosmetics can avoid shakedowns and IPR thefts.

- Intellectual Property Rights and Patents Protection – Before entering new market L'oreal Cosmetics should focus on the environment for intellectual property rights.

- E-Commerce & Related Infrastructure Development – As E-Commerce is critical for L'oreal Cosmetics business model. It should evaluate the e-commerce infrastructure, technology infrastructure etc before entering a new market.

- Empowerment of Supply Chain Partners – L'oreal Cosmetics should analyze areas where technology can empower supply chain partners. This can help L'oreal Cosmetics to bring in more transparency and make supply chain more flexible.

- Level of Acceptance of Technology in the Society – L'oreal Cosmetics has to figure out the level of technology acceptance in the society before launching new products. Often companies enter the arena without requisite infrastructure to support the technology oriented model.

- Integration of Technology into Society & Business Processes – Uber failed in China because it tried to enter before smartphone were widespread in China. L'oreal Cosmetics should build a strategy that can integrate societal values, infrastructure, and L'oreal Cosmetics business model.

What are Environmental Factors in PESTEL / PEST Analysis

Environmental factors are fast gaining traction not only among consumers but also among regulators and policy makers. Climate change and changing ecosystem is leading to the extinction of more than 20% of species on the planet by the turn of this century.

Environmental Factors that Impact L'Oreal: Expansion in China

- Environmental Standards and Regulations both at National & Local Levels – Often the environment policy at national and local level can be different. This can help L'oreal Cosmetics in numerous decisions such as plant location, product development, and pricing strategy.

- Environmental Regulation Impacting Absolute Cost Advantage Dynamics in the Industry.

- Recycle Policies – What are the recycle policies in prospective market and how L'oreal Cosmetics can adhere to those policies.

- Influence and Effectiveness of Environmental Agencies – The role of environment standards enforcement agencies is critical in safeguarding norms. But often in emerging countries these agencies delay the process as a tactic to extract bribes. L'oreal Cosmetics should be aware of presence of such practices in a country.

- Focus & Spending on Renewable Technologies – How much of the budget is spend on renewable energy sources and how L'oreal Cosmetics can make this investment as part of its competitive strategy.

- Influence of Climate Change – How climate change will impact L'oreal Cosmetics business model and supply chain. For example if the supply chain is not flexible it can lead to bottlenecks if shipments from one part of the world are delayed because of sudden climate shift.

- Paris Climate Agreement and Commitment of National Government under the Agreement – What are the commitments of the country under the Paris Agreement and what is the general level of consensus regarding Paris Climate Agreement in the country. For example Trump not standing by US commitments created an environment of uncertainty.

What are Legal Factors in PESTEL / PEST Analysis

Legal factors often govern – conditions to enter the market, laws to operate in the market, and procedure to resolve any dispute with other stakeholders. If the legal system is not strong then L'oreal Cosmetics can face numerous challenges – from consumer petitions to shakedowns from authorities.

Legal Factors that Impact L'Oreal: Expansion in China

- Securities Law – What are the securities law in the country and what are the conditions to list the company on national or regional stock exchange.

- Time Taken for Court Proceedings – Even if the country has best of the laws, it doesn’t mean much if they can’t be enforced in a timely manner. L'oreal Cosmetics should do a primary research regarding how much time it often takes to conclude a court case in the country given the sort of legal challenges L'oreal Cosmetics can face.

- Data Protection Laws – L'oreal Cosmetics needs to assess what are the data laws in the country and what it needs to do to comply with them. For example most of EU countries now want the EU citizen data to be saved in EU countries only.

- Business Laws – Before entering into new market – L'oreal Cosmetics has to assess what are the business laws and how they are different from home market.

- Intellectual Property Rights Protection – L'oreal Cosmetics should assess the level of protection that intellectual property rights get under the legal system of the country.

- Adherence to Common Law – Is the country following common law which is uniform for all parties – whether domestic or international. If there is arbitrariness in the judicial process then L'oreal Cosmetics can’t be sure of the judgments.

- Consumer Protection Laws – L'oreal Cosmetics needs to know what are the consumer laws, what is the rate of enforcement, what is the attitude of authorities towards consumer protection laws, and what is the role activist groups in enforcement of consumer protection laws.

5C Marketing Analysis of L'Oreal: Expansion in China

4p marketing analysis of l'oreal: expansion in china, porter five forces analysis and solution of l'oreal: expansion in china, porter value chain analysis and solution of l'oreal: expansion in china, case memo & recommendation memo of l'oreal: expansion in china, blue ocean analysis and solution of l'oreal: expansion in china, marketing strategy and analysis l'oreal: expansion in china, vrio /vrin analysis & solution of l'oreal: expansion in china, pestel / step / pest analysis of l'oreal: expansion in china, case study solution of l'oreal: expansion in china, swot analysis and solution of l'oreal: expansion in china, references & further readings.

Zhigang Tao, Li Dongya (2018) , "L'Oreal: Expansion in China Harvard Business Review Case Study. Published by HBR Publications.

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What is Harvard Business School (HBS) Case Method

Harvard Business School (HBS) Case Method, a renowned approach to business education, using business case studies in the field of marketing, sales, leadership, technology, finance, enterpreneurship, human resources, and more .

Core Principles:

Real-World Dilemmas: HBS cases delve into genuine business challenges faced by companies, exposing students to the complexities and uncertainties of real-world decision-making.
Active Participation: Students are not passive recipients of knowledge. The case method emphasizes active participation through case discussions, fostering critical thinking and analysis.
Developing Judgment: There are often no single “correct” answers in case studies. The focus is on developing sound judgment by weighing evidence, considering various perspectives, and making well-supported recommendations.
Diversity and Collaboration: Diverse backgrounds and experiences enrich case discussions. Students learn from each other as they analyze the case from different viewpoints.

Structure and Implementation:

Pre-Class Preparation: Effective case study learning hinges on thorough preparation. Students are expected to read and analyze the case beforehand, identifying key issues, conducting research, and formulating potential solutions.
Case Discussion: The case discussion in class is the heart of the method. The instructor facilitates a dynamic discussion, encouraging active participation from all students.
Open-Ended Questions: Instead of spoon-feeding answers, instructors pose open-ended questions that stimulate critical thinking and analysis.
Cold Calling: The HBS method is known for its “cold calling” technique, where professors randomly call on students to respond, promoting active engagement and preparation.
Socratic Dialogue: Instructors often employ the Socratic method, asking probing questions to challenge assumptions, encourage deeper analysis, and draw out student reasoning.

Benefits of the HBS Case Method:

Develops Critical Thinking Skills: Grappling with complex business problems and analyzing diverse perspectives strengthens critical thinking abilities.
Enhances Communication Skills: Active participation and clear articulation of ideas within case discussions hone communication skills.
Sharpens Analytical Abilities: Students learn to dissect complex situations, identify key drivers, and weigh evidence effectively.
Promotes Decision-Making Confidence: The case method fosters the ability to make well-reasoned decisions under uncertainty.
Builds Leadership Skills: Active participation in discussions and persuasively advocating for solutions develops leadership potential.
Prepares Students for Real-World Business: The case method equips students with the knowledge and skills to navigate the complexities of real-world business environments.

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A top-tier Harvard Business School (HBS) case study solution comprises a thorough analysis, strategic insights, and actionable recommendations. The solution is not just an academic exercise but a practical approach to solving real-world business problems. Here’s an illustration of what the best Harvard case study solutions comprise, along with a detailed checklist to ensure excellence.

Key Components of a Harvard Case Study Solution

Comprehensive Understanding of the Case

Summary of the Case : Provide a concise summary that outlines the key issues, stakeholders, and objectives. This sets the stage for deeper analysis.
Problem Identification : Clearly define the main problem or decision point that the case presents. This includes understanding the underlying causes and the broader business context.

Detailed Analysis

Qualitative Analysis : Evaluate qualitative factors such as organizational culture, leadership styles, and market conditions. This helps in understanding the non-quantifiable aspects that impact the business scenario.
Quantitative Analysis : Use data and financial metrics to analyze the business performance. This includes profit margins, cost structures, revenue streams, and other relevant financial indicators.
SWOT Analysis : Conduct a SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis to provide a structured view of the internal and external factors affecting the business.

Strategic Alternatives

Generation of Alternatives : Develop multiple strategic alternatives to address the identified problem. Each alternative should be feasible and align with the company’s goals and resources.
Evaluation of Alternatives : Assess each alternative based on criteria such as cost, feasibility, impact, and alignment with the company’s strategic objectives. Use quantitative data where possible to support the evaluation.

Checklist for a Great Harvard Case Study Solution

Comprehensive Understanding

Clearly summarized the case
Identified the main problem and stakeholders
Understood the broader business context
Conducted qualitative analysis (organizational culture, market conditions, etc.)
Performed quantitative analysis (financial metrics, data analysis)
Completed a SWOT analysis
Generated multiple feasible alternatives
Evaluated alternatives based on relevant criteria
Supported evaluations with data and logical reasoning
Selected the most viable alternative with a strong justification
Developed a detailed and practical implementation plan
Created a contingency plan to manage potential risks
Reflected on the case study process
Identified key lessons learned
Discussed future implications for the industry and business practices

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Filling the form and uploading guidelines.

This initial step is critical as it sets the direction for the entire project. Clear and detailed guidelines ensure that the writer understands the scope, objectives, and specific requirements, reducing the risk of misalignment and ensuring a focused approach.

Uploading the Case Study PDF

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Requesting Improvements

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Case Code	:	MKTG214	For delivery in electronic format: Rs. 300; For delivery through courier (within India): Rs. 300 + Shipping & Handling Charges extra \
Case Length	:	16 Pages
Period	:	1996-2008
Pub Date	:	2009
Teaching Note	:	Not Available
Organization	:
Industry	:
Countries	:	China

France based L'Oréal entered China in 1996 after the government relaxed the norms for foreign investment in the country. It formed a subsidiary named L'Oréal China and began its operations in 1997. The case details how the products of L'Oréal China gained popularity in the country. Encouraged with its early success, the company introduced more international brands in China in order to gain market share. The case also highlights other strategies adopted by L'Oréal China to increase market share like investing in research to develop new products that suited the Chinese hair and skin type, recruiting local employees and capturing the mass market segment through acquisition of local brands etc. The case also includes a note on the cosmetics market in China and presents the challenges faced by the company in the country.

» Analyze the opportunities and challenges presented by an emerging, fast growing market for cosmetic products like China. » Understand the entry and expansion strategies of L'Oréal in China. » Study the unique characteristics of a rapidly growing cosmetics market like China. » Examine the benefits and challenges of managing a multi-branded cosmetics business in a developing country.

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L'Oréal, L'Oréal China, Localization Strategies, Cultural Differences, Diversified Product Portfolio, Brand Innovation, Brand Awareness, Multi-brand strategy, Market Segments, Product Segments, Advertising, Brand Acquisitions, Mass Market, Cosmetics, Economic Environment, P&G in China, Cosmetics Industry in China, Maybelline, Research and development, Chinese consumers, Celebrity Endorsement, Distribution, Counterfeit products

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Home » Management Case Studies » Case Study: L’Oreal International Marketing Strategy

Case Study: L’Oreal International Marketing Strategy

L’oreal is the world’s biggest cosmetics and beauty products company. Basically it’s a French based company and its headquartered in Paris. It is focusly engaged in the field of production and marketing of concentrating on hair colours, skin care, perfumes and fragrances, make up and styling products. L’oreal products also based on dermatological and pharmaceutical fields. Their products are made for Individual and professional customers. This company operates over 130 countries like Asia, America, East and West Europe through 25 international brands.

The success of L’Oreal lies in the fact that the company succeeded in reaching out to the customers of different countries of the world, across different income ranges and cultural patterns, giving them the appropriate product they are worthy of. The area of expertise of L’Oreal being that it succeeded almost in every country that it entered. The strategies of L’Oreal was varied enough to help it and stop itself from restricting itself in a single country. L’Oreal sold its product on the basis of customer demand and country want rather than keeping the product identical across the globe. It built ample number of brands or mammoth brands entrenched to the restricted culture and which appealed to a variety of segment of the universal market instead of generalising the brand and edible in innumerable culture. L’Oreal went on to being a local product in every international market. The brand extension of L’Oreal also came in the same sector or the same segment of market . L’Oreal believed in growing its expertise in the segment it is conscious of rather than going into a completely new sector of market.

L'Oreal International Marketing Strategy

International marketing strategy is more in-depth and broadened in one sense of the term. It is simply a principle of marketing however on a global scale. Setup of global marketing strategy has a lot to do with understanding the nature of global market itself, and most importantly the environment. Business environment across the globe has different economic, social and political influence. Thus, it is believed that selecting a global market target for examples when strategizing is a good idea.

International marketing strategy of L’Oreal is concentrated on a cross cultural arena spanning four market destinations. They are namely, 1.) Asian Market, 2.) European Market, 3.) North America Market and 4.) The African, Orient and Pacific Region.

Marketing Strategy of L’Oreal in Asia

Marketing strategy of l’oreal in european market.

L’Oreal is the only company which uses the strategies which also supports the people in many ways and not only in providing good quality products at cheaper rates. L’Oreal used different strategies of marketing in the European market like they used the strategy of nurturing self-esteem of the people with beauty. In France, L’Oreal created the programs like “Beauty from the heart” for helping the people made helpless by illness or any kind of negative life experiences. In the countries like UK and Germany, many of the women and also the young people regain their confidence and their self image gradually by using the cosmetics which are provided by L’Oreal. In European countries L’Oreal also used the marketing strategies like taking calculated amount of risk etc but most of the strategies are related to the growth of the people mentally and not only for the beauty or the fashion purpose. Various innovative treatment programs are launched by L’Oreal for the young people of European countries and this company also launches the free skincare and make-up workshops for the women suffering from cancer. For example in France a programme named as “La Vie, de Plus Belle” offers the free skincare and makeup for the cancer suffering women in all over the France. This helps them to cope with the treatment’s side effects and it also helps them to retain their self esteem which is very important for a patient. In the European countries L’Oreal generally uses the strategy of the management of brand by which L’Oreal had made a large amount of brands which are rooted in the local culture and which all appeals to the various segments of the global market. By using these social types of strategies for the people of Europe has helped L’Oreal in expanding their business in the whole Europe.

Marketing Strategy of L’Oreal in North American Market

North American markets are considered as a perfect place for the companies like L’Oreal, Olay, ponds etc. The best business of L’Oreal comes from the market of US. The reason for this much success is that L’Oreal uses very good global marketing strategies in North America and the other countries like Canada etc. One of the successful strategies of L’Oreal in US market is brand extensions which includes the extensions of the brands after doing a complete research. For example when L’Oreal launched a shampoo for kids they firstly made a complete research and also debated about the new launch or for an extension. In US and Canada L’Oreal uses the strategy of frequent advertisements and promotions. As we know in the present scenario proper advertisements and promotions are very important for any company because people follow the promotions and due to which the demands of the products like hair colour increases at a very rapid rate. We can clearly understand the advertisement and the promotions of L’Oreal through their media budget. L’Oreal has the twelfth largest media budget in the world which is much more than the other companies of this field. For example in the late 1990’s the expenditure of L’Oreal advertising and promotion was jumped from the 37% to around 47% of the total amount of sales. The global ad spending of L’Oreal was increased to $1.25 billion which was on par with the company named as coca cola. The best thing about this company is that they have a separate and very distinct policy of promotion in the market of US. Matrix is the number one brand of L’Oreal in US and the main reason behind the success of matrix is the frequent and distinct advertisement and promotion of the cosmetic and the hair products. The people of countries like Canada like to use new products that mean they like changes in their product after some interval of time. So by keeping this thing in mind L’Oreal uses the strategies of modifications which mean they modify their existing products according to the latest tastes and fashion of the local people. According to latest surveys of the people of L’Oreal company, majority of the profits of this company is because of US and these perfect strategies used by this company in US is the reason behind this type of success specially in north American market. (Helping vulnerable people)

Marketing Strategy of L’Oreal in Africa, Orient and Pacific Region

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L Oreal Expansion in China Case Analysis and Case Solution

Posted by Peter Williams on Aug-09-2018

Introduction of L Oreal Expansion in China Case Solution

The L Oreal Expansion in China case study is a Harvard Business Review case study, which presents a simulated practical experience to the reader allowing them to learn about real life problems in the business world. The L Oreal Expansion in China case consisted of a central issue to the organization, which had to be identified, analysed and creative solutions had to be drawn to tackle the issue. This paper presents the solved L Oreal Expansion in China case analysis and case solution. The method through which the analysis is done is mentioned, followed by the relevant tools used in finding the solution.

The case solution first identifies the central issue to the L Oreal Expansion in China case study, and the relevant stakeholders affected by this issue. This is known as the problem identification stage. After this, the relevant tools and models are used, which help in the case study analysis and case study solution. The tools used in identifying the solution consist of the SWOT Analysis, Porter Five Forces Analysis, PESTEL Analysis, VRIO analysis, Value Chain Analysis, BCG Matrix analysis, Ansoff Matrix analysis, and the Marketing Mix analysis. The solution consists of recommended strategies to overcome this central issue. It is a good idea to also propose alternative case study solutions, because if the main solution is not found feasible, then the alternative solutions could be implemented. Lastly, a good case study solution also includes an implementation plan for the recommendation strategies. This shows how through a step-by-step procedure as to how the central issue can be resolved.

Problem Identification of L Oreal Expansion in China Case Solution

Harvard Business Review cases involve a central problem that is being faced by the organization and these problems affect a number of stakeholders. In the problem identification stage, the problem faced by L Oreal Expansion in China is identified through reading of the case. This could be mentioned at the start of the reading, the middle or the end. At times in a case analysis, the problem may be clearly evident in the reading of the HBR case. At other times, finding the issue is the job of the person analysing the case. It is also important to understand what stakeholders are affected by the problem and how. The goals of the stakeholders and are the organization are also identified to ensure that the case study analysis are consistent with these.

Analysis of the L Oreal Expansion in China HBR Case Study

The objective of the case should be focused on. This is doing the L Oreal Expansion in China Case Solution. This analysis can be proceeded in a step-by-step procedure to ensure that effective solutions are found.

In the first step, a growth path of the company can be formulated that lays down its vision, mission and strategic aims. These can usually be developed using the company history is provided in the case. Company history is helpful in a Business Case study as it helps one understand what the scope of the solutions will be for the case study.
The next step is of understanding the company; its people, their priorities and the overall culture. This can be done by using company history. It can also be done by looking at anecdotal instances of managers or employees that are usually included in an HBR case study description to give the reader a real feel of the situation.
Lastly, a timeline of the issues and events in the case needs to be made. Arranging events in a timeline allows one to predict the next few events that are likely to take place. It also helps one in developing the case study solutions. The timeline also helps in understanding the continuous challenges that are being faced by the organisation.

SWOT analysis of L Oreal Expansion in China

An important tool that helps in addressing the central issue of the case and coming up with L Oreal Expansion in China HBR case solution is the SWOT analysis.

The SWOT analysis is a strategic management tool that lists down in the form of a matrix, an organisation's internal strengths and weaknesses, and external opportunities and threats. It helps in the strategic analysis of L Oreal Expansion in China.
Once this listing has been done, a clearer picture can be developed in regards to how strategies will be formed to address the main problem. For example, strengths will be used as an advantage in solving the issue.

Therefore, the SWOT analysis is a helpful tool in coming up with the L Oreal Expansion in China Case Study answers. One does not need to remain restricted to using the traditional SWOT analysis, but the advanced TOWS matrix or weighted average SWOT analysis can also be used.

Porter Five Forces Analysis for L Oreal Expansion in China

Another helpful tool in finding the case solutions is of Porter's Five Forces analysis. This is also a strategic tool that is used to analyse the competitive environment of the industry in which L Oreal Expansion in China operates in. Analysis of the industry is important as businesses do not work in isolation in real life, but are affected by the business environment of the industry that they operate in. Harvard Business case studies represent real-life situations, and therefore, an analysis of the industry's competitive environment needs to be carried out to come up with more holistic case study solutions. In Porter's Five Forces analysis, the industry is analysed along 5 dimensions.

These are the threats that the industry faces due to new entrants.
It includes the threat of substitute products.
It includes the bargaining power of buyers in the industry.
It includes the bargaining power of suppliers in an industry.
Lastly, the overall rivalry or competition within the industry is analysed.

This tool helps one understand the relative powers of the major players in the industry and its overall competitive dynamics. Actionable and practical solutions can then be developed by keeping these factors into perspective.

PESTEL Analysis of L Oreal Expansion in China

Another helpful tool that should be used in finding the case study solutions is the PESTEL analysis. This also looks at the external business environment of the organisation helps in finding case study Analysis to real-life business issues as in HBR cases.

The PESTEL analysis particularly looks at the macro environmental factors that affect the industry. These are the political, environmental, social, technological, environmental and legal (regulatory) factors affecting the industry.
Factors within each of these 6 should be listed down, and analysis should be made as to how these affect the organisation under question.
These factors are also responsible for the future growth and challenges within the industry. Hence, they should be taken into consideration when coming up with the L Oreal Expansion in China case solution.

VRIO Analysis of L Oreal Expansion in China

This is an analysis carried out to know about the internal strengths and capabilities of L Oreal Expansion in China. Under the VRIO analysis, the following steps are carried out:

The internal resources of L Oreal Expansion in China are listed down.
Each of these resources are assessed in terms of the value it brings to the organization.
Each resource is assessed in terms of how rare it is. A rare resource is one that is not commonly used by competitors.
Each resource is assessed whether it could be imitated by competition easily or not.
Lastly, each resource is assessed in terms of whether the organization can use it to an advantage or not.

The analysis done on the 4 dimensions; Value, Rareness, Imitability, and Organization. If a resource is high on all of these 4, then it brings long-term competitive advantage. If a resource is high on Value, Rareness, and Imitability, then it brings an unused competitive advantage. If a resource is high on Value and Rareness, then it only brings temporary competitive advantage. If a resource is only valuable, then it’s a competitive parity. If it’s none, then it can be regarded as a competitive disadvantage.

Value Chain Analysis of L Oreal Expansion in China

The Value chain analysis of L Oreal Expansion in China helps in identifying the activities of an organization, and how these add value in terms of cost reduction and differentiation. This tool is used in the case study analysis as follows:

The firm’s primary and support activities are listed down.
Identifying the importance of these activities in the cost of the product and the differentiation they produce.
Lastly, differentiation or cost reduction strategies are to be used for each of these activities to increase the overall value provided by these activities.

Recognizing value creating activities and enhancing the value that they create allow L Oreal Expansion in China to increase its competitive advantage.

BCG Matrix of L Oreal Expansion in China

The BCG Matrix is an important tool in deciding whether an organization should invest or divest in its strategic business units. The matrix involves placing the strategic business units of a business in one of four categories; question marks, stars, dogs and cash cows. The placement in these categories depends on the relative market share of the organization and the market growth of these strategic business units. The steps to be followed in this analysis is as follows:

Identify the relative market share of each strategic business unit.
Identify the market growth of each strategic business unit.
Place these strategic business units in one of four categories. Question Marks are those strategic business units with high market share and low market growth rate. Stars are those strategic business units with high market share and high market growth rate. Cash Cows are those strategic business units with high market share and low market growth rate. Dogs are those strategic business units with low market share and low growth rate.
Relevant strategies should be implemented for each strategic business unit depending on its position in the matrix.

The strategies identified from the L Oreal Expansion in China BCG matrix and included in the case pdf. These are either to further develop the product, penetrate the market, develop the market, diversification, investing or divesting.

Ansoff Matrix of L Oreal Expansion in China

Ansoff Matrix is an important strategic tool to come up with future strategies for L Oreal Expansion in China in the case solution. It helps decide whether an organization should pursue future expansion in new markets and products or should it focus on existing markets and products.

The organization can penetrate into existing markets with its existing products. This is known as market penetration strategy.
The organization can develop new products for the existing market. This is known as product development strategy.
The organization can enter new markets with its existing products. This is known as market development strategy.
The organization can enter into new markets with new products. This is known as a diversification strategy.

The choice of strategy depends on the analysis of the previous tools used and the level of risk the organization is willing to take.

Marketing Mix of L Oreal Expansion in China

L Oreal Expansion in China needs to bring out certain responses from the market that it targets. To do so, it will need to use the marketing mix, which serves as a tool in helping bring out responses from the market. The 4 elements of the marketing mix are Product, Price, Place and Promotions. The following steps are required to carry out a marketing mix analysis and include this in the case study analysis.

Analyse the company’s products and devise strategies to improve the product offering of the company.
Analyse the company’s price points and devise strategies that could be based on competition, value or cost.
Analyse the company’s promotion mix. This includes the advertisement, public relations, personal selling, sales promotion, and direct marketing. Strategies will be devised which makes use of a few or all of these elements.
Analyse the company’s distribution and reach. Strategies can be devised to improve the availability of the company’s products.

L Oreal Expansion in China Blue Ocean Strategy

The strategies devised and included in the L Oreal Expansion in China case memo should have a blue ocean strategy. A blue ocean strategy is a strategy that involves firms seeking uncontested market spaces, which makes the competition of the company irrelevant. It involves coming up with new and unique products or ideas through innovation. This gives the organization a competitive advantage over other firms, unlike a red ocean strategy.

Competitors analysis of L Oreal Expansion in China

The PESTEL analysis discussed previously looked at the macro environmental factors affecting business, but not the microenvironmental factors. One of the microenvironmental factors are competitors, which are addressed by a competitor analysis. The Competitors analysis of L Oreal Expansion in China looks at the direct and indirect competitors within the industry that it operates in.

This involves a detailed analysis of their actions and how these would affect the future strategies of L Oreal Expansion in China.
It involves looking at the current market share of the company and its competitors.
It should compare the marketing mix elements of competitors, their supply chain, human resources, financial strength etc.
It also should look at the potential opportunities and threats that these competitors pose on the company.

Organisation of the Analysis into L Oreal Expansion in China Case Study Solution

Once various tools have been used to analyse the case, the findings of this analysis need to be incorporated into practical and actionable solutions. These solutions will also be the L Oreal Expansion in China case answers. These are usually in the form of strategies that the organisation can adopt. The following step-by-step procedure can be used to organise the Harvard Business case solution and recommendations:

The first step of the solution is to come up with a corporate level strategy for the organisation. This part consists of solutions that address issues faced by the organisation on a strategic level. This could include suggestions, changes or recommendations to the company's vision, mission and its strategic objectives. It can include recommendations on how the organisation can work towards achieving these strategic objectives. Furthermore, it needs to be explained how the stated recommendations will help in solving the main issue mentioned in the case and where the company will stand in the future as a result of these.
The second step of the solution is to come up with a business level strategy. The HBR case studies may present issues faced by a part of the organisation. For example, the issues may be stated for marketing and the role of a marketing manager needs to be assumed. So, recommendations and suggestions need to address the strategy of the marketing department in this case. Therefore, the strategic objectives of this business unit (Marketing) will be laid down in the solutions and recommendations will be made as to how to achieve these objectives. Similar would be the case for any other business unit or department such as human resources, finance, IT etc. The important thing to note here is that the business level strategy needs to be aligned with the overall corporate strategy of the organisation. For example, if one suggests the organisation to focus on differentiation for competitive advantage as a corporate level strategy, then it can't be recommended for the L Oreal Expansion in China Case Study Solution that the business unit should focus on costs.
The third step is not compulsory but depends from case to case. In some HBR case studies, one may be required to analyse an issue at a department. This issue may be analysed for a manager or employee as well. In these cases, recommendations need to be made for these people. The solution may state that objectives that these people need to achieve and how these objectives would be achieved.

The case study analysis and solution, and L Oreal Expansion in China case answers should be written down in the L Oreal Expansion in China case memo, clearly identifying which part shows what. The L Oreal Expansion in China case should be in a professional format, presenting points clearly that are well understood by the reader.

Alternate solution to the L Oreal Expansion in China HBR case study

It is important to have more than one solution to the case study. This is the alternate solution that would be implemented if the original proposed solution is found infeasible or impossible due to a change in circumstances. The alternate solution for L Oreal Expansion in China is presented in the same way as the original solution, where it consists of a corporate level strategy, business level strategy and other recommendations.

Implementation of L Oreal Expansion in China Case Solution

The case study does not end at just providing recommendations to the issues at hand. One is also required to provide how these recommendations would be implemented. This is shown through a proper implementation framework. A detailed implementation framework helps in distinguishing between an average and an above average case study answer. A good implementation framework shows the proposed plan and how the organisations' resources would be used to achieve the objectives. It also lays down the changes needed to be made as well as the assumptions in the process.

A proper implementation framework shows that one has clearly understood the case study and the main issue within it.
It shows that one has been clarified with the HBR fundamentals on the topic.
It shows that the details provided in the case have been properly analysed.
It shows that one has developed an ability to prioritise recommendations and how these could be successfully implemented.
The implementation framework also helps by removing out any recommendations that are not practical or actionable as these could not be implemented. Therefore, the implementation framework ensures that the solution to the L Oreal Expansion in China Harvard case is complete and properly answered.

Recommendations and Action Plan for L Oreal Expansion in China case analysis

For L Oreal Expansion in China, based on the SWOT Analysis, Porter Five Forces Analysis, PESTEL Analysis, VRIO analysis, Value Chain Analysis, BCG Matrix analysis, Ansoff Matrix analysis, and the Marketing Mix analysis, the recommendations and action plan are as follows:

L Oreal Expansion in China should focus on making use of its strengths identified from the VRIO analysis to make the most of the opportunities identified from the PESTEL.
L Oreal Expansion in China should enhance the value creating activities within its value chain.
L Oreal Expansion in China should invest in its stars and cash cows, while getting rid of the dogs identified from the BCG Matrix analysis.
To achieve its overall corporate and business level objectives, it should make use of the marketing mix tools to obtain desired results from its target market.

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L’OREAL Company: Expansion in China Case Study

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Case Authors : Zhigang Tao, Li Dongya

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