Primary internal and external influences to LOreal

Primary internal and external influences to LOrealThese influences as in internal and external stack be determined by analysing the Strengths of organisation in terms of avail commensurate resources same(p) skilled staffs, financial capability,core postulatent of organisations, innovation, people say your strengths today mighty be your weakness tomorrow in the international business environment, Weakness of organisation can be scummy technology and systems in implement, lack of marketplace orientation, lack of research and development, uncompetent personnel, poor type and range of proceedss, which will lead the orgainisation in to poor peformance non achieving companionships goals. The opportunities in social and cultural aspects example Loreal in United States, economic favour example new emerging market exchangeable Africa, Asia, Europe, radical techology . Threats of organisation is changes in business environment where a firm is trial running its business, the compe tion from other competitors, policy-making issues, change in customers life style,supplies shortage.According to casestudy shows number of influences to LOreal as subjected. In internal and external influences were about to build the organisation twist which can be global administration and cope with the external global environment by stabilising their resources so they can be competent to gain the capability to compete against other competitors. They been equal to build up the organisation strengths with carefully plans scheme of acquring other cosmetics companies so they can spread up their wings in the international markets by using strong and potential brands in their new and existing global markets ,which some of the brands were Loreal origin brands like lancome and other adopted brands like matrix, Maybelline, Kiehls, soft sheen and carson. Also moving business system from domestic strategy to international strategy that will enable the company to compete in global env ironment, The marketing failure during 1953 after projecting U.S market through the company formed licensee Cosmair Inc. to distribute LOreal carrefours(pg3 on the case study) this made the corporate focal point of LOreal to body structure their corporate plans from failure to success, But management did able to consider company redisign to gain key success through designing good dispersal channels, flaxible management development of internal structure and culture so they can cope with outside business environment to maintain stability, example LOreal managent under Dalle able to take the company to public(1963), sold off the companys soap unit and as well did able to respond in political issues of state control of frances top companies(pg3 on case study).The current organisational structure were doing well in terms of achieving goals in case study it shows they had good reputation and market parting in france and also in europe even though they were selling their carrefours to customers in premium price and later they manage expand organisation structure through acquiring other cosmetics company in europe so they can enter in U.S market . plaque were recruiting skilled and talented staffs can able to run up the company to successful point in future time without looking location of individual, example Lindsay Owen Jones who was CEO british born(case study pg 4). Good apportionment of resources to invest in distant markets enables LOreal to gain other oppotunities apart from U.S market. Example Loreal management after bought the brand of Helena Rubinstein was best opportunity to go tautological miles to gain other markets which are outside of U.S like Europe,Japan and Asia and brand has very good market awereness to its customers. Through acquisation Loreal company were able to access available resources from other company like scattering channels, skilled staffs.Because of global marketing environment Lindsay Owen Jones the CEO of LOreal he sensor y facultyted to redisgn the corporate strategy so the company can able to cope with the international geographical environment of where will operates, below here shows the strategic Choices of certain company can use four basic strategies to enter and compete when decide to operate in international market like follows-Pressure for LocalGLOBAL schemaTRANSNATIONALSTRATEGYINTERNATIONALSTRATEGYMULTI-DOMESTICSTRATEGYHighCost pressureLowLow Pressure for local anaesthetic anesthetic HighTransnational Strategy.This strategy firms must exploit experience cut off live economies and location economies, transfer distinctive competencies within the firm and pay attention for pressures for localisation. To do this their take to be flows of knowledge from the parent to subsidiaries, flow from foreign subsidiaries to the home country, and from foreign subsidiaries to foreign subsidiaries, a process that known as global learning. The approach of transnationals is not appropriate in all situation s, nor is it without costs. Where demands for local responsiveness are low, a global strategy may still be the most appropriate . The coordination and management challenges of a transnational also fix highschool cost and benifits than with one of the more traditional strategies. A transinational strategy makes sense when a firm faces high pressure for cost reductions, high pressures for local responsiveness, and where on that point are significant opportunities for leveraging valuable skills within a multinationals global electronic network of operation. In some ways companys that pursue a transnational strategy are trying to simultaneously achieve cost and differentiation usefulnesss. As attractive as this may sound, the strategy is not easy to pursue. Pressure for local responsiveness and cost reductions place conflicting demand on a firm, being locally responsive raises costs.Global Strategy.Firms that pursue a global strategy focus on increasing profitability by reaping th e cost reductions that come from experience curves effects and location economies. That can be called a company prosecute low cost strategy. The harvest-tideion, marketing and research and development activities of firms pursuing a global strategy are concentrated in a few genial locations. Global firms tend not to customise their product offering and marketing strategy to local conditions because customisation raises cost, it involves shorter production runs and the duplications of functions.Multidomestic StrategyCompay pursue this strategy orient themselves toward achieving maximum local responsiveness. The key distinguish feature of multidomestic firms is that they extensively customise both their product offering and their marketing strategy to match different national conditions. unvarying with this they also tend to establish a complete set of value creation activities.International StrategyIn this strategy company try to create value by transferring valuable skills and pr oducts to foreign markets where indigenous competitors lack those skills and products. Most international firms have created value by transferring differentiated product offerings developed at home to new markets overseas.Analysis of how globalisation influences policies and decision making in LOreal.LOreal able to increase acquisation to maintain market assign against other competitors so the company can stay into its business. protect creation were made into LOreal products by renovate those brands they were so strong in the market and had very good perception to its customers because if there is more value in the product that means there is value and trust between two parties, firm and customer. Because of globalisation LOreal did able to design the Organisation structure which will fit on the global environment the firm is facing. Barlett and Goshal outline a range of organisation structures developed by multinationals to meet these global challenges, Like as follows below.Gl obal Co-ordinationLow HighInternationalDivisionsGlobal ProductsCompaniesInternationalSubsidiariesTransinationalCorporationalLowLocal IndependenceAndResponsivenessHighInternational DivisionsThe structure is appropriate where there is little requirement for global coordination and little need to tailor products to local requirements.Global Product CompaniesThe need for greater global consolidation has seen many multinationals moving towards global product structures with product divisions integrating activities on a world gigantic basis from component supply, through manufacturing to research and development. This structure creates many opportunities to achieve cost efficiencies and transfer resources that are parasitical upon sophisticated planning and control systems. However the pressures to respond to local needs seem to be increasing in many global markets. In case study page 10, CEO Owen Jones said that Loreal to be truly global company they need to promote around the world A merican brands because that was other great alternative in the beauty industry and also they didnt accept only local brands, by trying to put all LOreal brand everywhere by selling United states to Americans, Nipponese, Chinese and Italian elegance to the Japanese, French beauty to Africans, and also Japanese chic to Brazillians.International SubsidiariesMany organisations are structured around international subsidiaries that respond more closely to the needs of the local market, often at the disbursement of control from the centre and a uniform organisational structure. However, whilst this structure has been appropriate in the past, as global competition becomes more intense, there may now be a need to look at greater global integration.Transnational CorporationsThe increasing pressures of global competition upon companies to both globally co-ordinate activities and respond to local needs has led to the emergence of the transnational organisation . The traditional multinational structures are seen to be converging upon a new organisational structure that depends upon an integrated network of interdependent resources.Also LOreal company according to case studies shows the numbers of responds to change the products offering to its customers through understanding their customers and the life styles they have. By using Ansoff four strategicalal options, he claimed that in marketing we can only ever be talking about products and markets, and that these can only be old, or existing, and new, or potential. below is a figure shows Ansoff Matrix get in strategic choice.ProductsPresent New classet PenetrationLOW RISKProduct Developmentspiritualist RISKMarket DevelopmentMEDIUM RISKDiversificationHIGH RISKExistMarketsNewMarket penetrationOn this strategy range product and present market will be appropriate when a market is growing and not yet saturated, example Loreal company when was marketing in France market before decide to go abroad market. By attracting non users of the product, or purchasing rate of existing customers. The strategy can be implemented through increasing activity on one or more of the mix elements. Example aggressive promotion, pricing, using more intensive distribution.Product development.The strategy deals with New product at existing market, an organisation develops a new product to sell at its existing market. Sometimes can be simply the product refinement, could be change of taste or packaging. Product development is most prevalent when branding exists. Promotional aspects will be emphasise the added qualities of the new product and link it specifically to the security of and confidence in the brand. This strategy builds up customer loyalty and the benefits to be gained by purchase and other mix elements like distribution may remain unchanged.Market DevelopmentOn this strategy is about the company sells the existing product at new market, is often pitch when a regional business wishes to expand or if new markets are emerging because of changes in consumer habits. It can also occur when a new use has been discovered for an existing product. Implentention of this strategy involves appealing to markets sectors not currently catered for and many mean a re nonplusing of products, new distribution methods or channels.DiversificationThis strategy is where new product will be sold in the new markets sometimes introduced so that the firm will not become too dependent on its existing strategic business units (SBUs), this is kind of insurance for future of the company incase of any disaster that would happen due to drastic environmental changes in future where the company is run it business. This can be considered as means of growth and expansion of power to against competitors. The new product can me all innovated which has never been seen in the marketplace, or the product is new to the firm but has already been the in the marketplace. Diversification can be Horizontal integration acquisation of other organisation which has a desired features, the firm that is acquired mighty use similar production methods, its distribution channels may highly effective and prove beneficial or has got great capacity. Or Vertical Integration where involves acquisition of some other enterprises in the chain of distribution between manufacturer and customer,can be precedent towards customer or backwards towards the source of materials. Other diversification also can be Conglomeration where moves a company away from the its existing product market situation into an entirely new area in order to satisfy a basal objective.Critical evaluation of the effectiveness of LOreal response to globalisation. delinquent to global environment has its complexity and uncertainties, LOreal did able to respond through building organsation which will cope with changes in business environment by competing with other firms operating in the same beauty industry, LOreal was selling a products (e.g Lancome in cosme tics and LOreal professional in hair care) which targeting in high income customers by selling their products in high price, which limited the company to expand into international markets. Also their brands where only potential in Europe and not USA and the price strategy they were using were not accessible. This made LOreal management to review their marketing strategies into global level. LOreal had market entry strategy in USA market, first was licensee to cosmair to supply Loreal products after the strategy didnt perfom better, consequently Loreal management did apply another strategy which was acquisition strategy. There are different entry strategy to foreign markets a business company can use, entry strategy can be Turnkey project, Exporting, Franchising, Licensing or Joint ventures. Licensing agreement is at arrangement where by a licensor grants the rights intangible properry to another entity (the licensee) for a specified period, and in return the licensor receives a roy alty fee from the licensee. Intangible property includes patents, inventions, formulas, Trade label, processes and designs. Acquisation is about one firm buys another firm. Hamills model, Motives for acquisation are economic motives, strategic motives, finance motive and behavioral and managerial motive.Economic motives can be synergy in value chain,economies of measure, improved efficiency, purchase of managerial skills and unique resources.Strategic motives this can aslo be diversification,competitive by gaining market control or remove competitors or both, buy rather than build market share, or instant growth.behavioural and managerial motives also this can be increasing management utility and gross revenue growth, personal goals of senior managers, separation of ownership from control. financial motives is about Financial engineering,Valuation gap theory and increasing share nurtureer value.In Addition of popular American brands such as Maybelline, Redken, Matrix, SoftSheen-Car son, and Ralph Lauren Fragrances to its portfolio of french brands, LOreal had created an international brand portfolio for consumers with a wide range of incomes and tastes in 140 countries.Because the market in France and part of Europe maybe were seems to be saturated, and LOreal perhaps was facing a bit competition from extend to companies in france and other part of Europe made it to seek other new attractive market which was USA market to extend its market share and increase the revenue.By using Boston Consultancy Group Matrix(BCG) theory based on Market share and Market growth rate of the Small patronage Units(SBUs).Boston Consultancy Group Matrix.STARSQUESTION MARKSCASH COWSDOGSHighMarket growthLowRelative Market Share brain MarkAre products which have low market share and are in high growth markets. The product has not yet reached a dominant position in the market. Although it may be generating funds, it still requires a lot of investment for development and the company m ust decide if they to keep investing.StarIf Question marks succeed they become stars, leaders in high growth markets. Stars are the providers of tomorrow and the company with no stars should worry. On the figure above shows two star products, one which has the leading share in its market and one which has only slightly more share than its leading competitor. Efforts should be made to increase the share of the second product in order to secure its future profitability, particularly as the market has a very high growth rate this could be where future earnings lie. Also this stage may involve investment in promotion and distribution incase of competition, and Star can also aver revenue and use resources which may lead to break even.Cash CowWhen market growth reaches a stable level, Stars become cash cows providing they hold a leading share of the market. If they lose any market share to the competition they will slip into either being a marginal Question Mark or at very worse,a Dog or sometimes if a firm continued to support other categories and neglegeted its cash cow thence its could eventually become a dog. Cash Cows seduce good revenue, do not require high investment and often mean the economies of scale can be gained. The money earned from cash cows should be utilize to invest into other products.DogDogs have a weak market share in low growth or stable markets. These products can often take up more time than they are worth. They usually produce low profits and very often incur losses. They will always consume cash, even if it is just in the time taken to manage them. foot be dropped by firm but is not wise to do immediately because they might still poduce profit and can also be used retention to customers.LOreal responded by creating competitive advantage against other competitors in beauty industry.Michael Porter Generic Strategy explained how the company can gain competitive advantage through differentiation, differentiation focus, cost leadership, an d cost focus. LOreal management were able to differentiate their products through product divisions ( Consumer, Professional and Luxury products division). Also Loreal used cost leadership and cost focus, by created products range according to consumer classes, by selling them with different range of price, based on ethinic life styles from white to black people.Also Value Chain Analysis can be useful here to determine the response of Loreal beauty company to globalisation,Value Chain DiagramPlanning modelComputer Electronic CustomerAided Design marketing ProfilingresearchOnlineProcurementsAutomated Flexible Automated order Tele marketing After sales services,Warehouse manufacturing Processing ComputeriseddeliveryscheduleFirm infrastructureHR ManagementTechnology ManagementProcurementInbound Operations Outbound Marketing and Serviceslogistics logistics SalesPrimary activities.Inbound logistics, dealing with storing, receiving and distributing the inputs to the product or service. Material handling, controlling stock and transport. Operations, concern of transform different inputs into final products or service, assembly and testing.Research and development, concerning about gathering useful information from the market like competitors in that market,customers, developing new product or lowering the cost of production ( LOreal, Research and development activities allowed the firm to reduce production costs). In the case study (pg11), Its says LOreal had strong commitment to research and development that many insiders considered to be among the firms most distinctive values and a comparative advantage over competitors. Through research and development they did able to discover the new hair Fructis shampoo product made from fruit sugar called fructose.Production can be creation of goods or services, example Fructis shampoo.Out bound logistics through local distribution channels which the company had control with it, acquisation enabled LOreal management to gain competence in distributing products to consumers.The Marketing and sales provide the means whereby consumers/users are made aware of the product or service and are able to purchase, Loreal provided product mix, enough advertising to their customers so the can be aware of their products offering to the market.Service, service includes all those activities which deepen or maintain the value product or service, such as training, installation, repair and spares.Support Activities in the value chain give inputs that allow the primary activities to occur, can materials management, human resource management by dealing with recruiting, training, development and rewarding people within the organisation, example in the case study Loreal guide people early in their careers and educate them so that they can become the future leaders of the company (i.e LOreal CEO, Lindsay Owen Jones and Kiehls president, Philip Clough). Information systems, and company infrastructure this can be the structur e of organisation, control stystems and culture of the firm.