L’Oreal: Global Brand, Local Knowledge
1. Outline the various conflicting demands on L’Oreal in the international context and their relative importance. What tradeoffs do you see among them? The conflicting demands are:
Leveraging knowledge (local to Global)
L’Oreal is one of the world's most progressive companies and it is being honored for creating a corporate culture that embraces and drives diversity throughout the company. L’Oreal’s strength comes from the diversity of its teams, to be a global company, it’s needed first have to be global from within. So people from different cultures and origins are a real asset for the company. L’Oreal experience is that diverse teams are actually more creative and innovative. The company is aware of the necessity of recognizing the diversity of its customers. L’Oreal does not try to export or impose a single view of beauty. On the contrary, all the brands must reach out to people of very different types around the world. Local responsiveness:
One of the most conflicting demands that L'Oreal is experiencing the different needs of customers according to the local needs, sometimes a country asks for a product that fits perfectly for them but not for the other country. For a company that is dedicated to beauty care, it is essential to study the needs of the market and be able to adapt the business to them. L'Oreal has been able to adapt to the demands of different local markets and has become one of its competitive advantages by studying the needs and development of products specially designed for each market. Leveraging knowledge:
L’Oreal leverage the valuable knowledge is obtained from the research made in 18 Investigation centers. L’Oreal has a deep understanding of how the group makes local country studies and has an international focus and a global vision. From my point of view, this helps them to leverage the knowledge and adapt it worldwide. 2. Analyse L’Oreal’s global strategy using the AAA framework outlines in the “Managing Differences” paper. Aggregation:
L’Oreal, in order to expand and minimize competition, considers each of the markets to know its maximum competitors either specific products or global brands. And they try to absorb other international brands, giving them a new makeover, improve product quality, introducing technology to alter its advertising and technifying its production. This is how they cover the market with all brand diversification controlled by the main company L'Oreal. In this way their own brands compete with each other and thus control the entire market covering all types of products: consumer products, luxury products, professional products and active cosmetics.
L'Oreal knows the people from different countries and cultures have their own particular needs, different habits, different dreams and desires. So, one product does not fit for everyone.
To boost the sales of a product it’s needed to power something that could be palatable by the society in a particular culture. This component has to associate the product with an element such as beauty, nutrition, purity, hygiene, elasticity...
The poor association of any new product to a component that is not well accepted by the society will create an absolute rejection and will force to remove that product from the market.
For that, L'Oreal has 18 research centres R&D called "Geocosmetics", with 3.100 employees and 12 evaluation centres.
The mission of this people and institutions is to offer men and women around the world the best cosmetic innovation in terms of quality, efficacy and safety. They seek to achieve this goal in response to the needs and desires of the infinite diversity of beauty anywhere in the world being that beauty is universal.
From my point of view, L'Oreal has a lack of progress on the arbitration front. It is not a main principle of the company....
References: Case: L’Oreal: Global Brand, Local Knowledge
Managing Differences: The Central Challenge of Global Strategy, (Harvard Business Review – March 2007)
Please join StudyMode to read the full document