L'oreal Case Study

Transcript

Nova School of Business and Economics International Business L’Oréal and the Globalization of American Beauty Professor: Violetta Gerasymenko Alessio Gennari Diana Henriques Ana Rita Amaral Jorge Duarte Alessandro Taddei Michele Gallo Grabriele Beccu #104 #!"# #"$$ #!!! #104! #104% #104" Question 7. How did L'Oreal become the world’s largest beauty company? a) What is the role o ac!uisitions in this process? Question ". What are the international opportunities or #iehl’s? a) $hould #iehl’s ollow a multi%domestic or a global strategy? How did L'Oreal become the world’s largest beauty company? L% real is a &renc! #ased multinational founded in '()* #y t!e c!emist +ugene Sc!ueller$ ,urrently, it is t!e world%s largest cosmetics and #eauty company$ Several successful, smart and well designed strategically steps transformed L’ real from t!e world’s first synt!etic !air"color producer, to its actual largest #eauty company condition$ How did L'Oreal become the world’s largest beauty company? o &ast grow and success in +uropean -arket. o In '(/0 entered t!e 1$S$ market #y a licensee wit! ,osmair Inc$ o 1nlike t!e perfumes, &renc! prestige did not !elp selling !air"coloring products in t!e 1$S$ Initial roblems! - 2ifferent distri#ution c!annels t!at re3uire a relations!ip - 4esistance to t!e products due to t!e lack of #rand awareness How did L'Oreal become the world’s largest beauty company? Introduction of a ne" conce#t by $ran%ois &alle! Be present on several c!annels of distri#ution, eac! of w!ic! corresponded to different:     +conomic levels Psyc!ograp!ic levels Psyc!ological levels Purc!asing !a#its 'eachin( and servin( effectively each of these mar)et "as necessary to (ain a si(nificant #resence on the mar)et* How did L'Oreal become the world’s largest beauty company? 5o #uild its presence in t!ese c!annels: Ac+uisitions of several &renc! #rands  Lanc6me 7'(89:  Garnier 7'(89:  P!armaceutical company " Synt!;la#o 7'(*0: " mamerican #rands$ How did L'Oreal become the world’s largest beauty company? A series of "ell #lanned and strate(ically timed ac+uisitions! How did L'Oreal become the world’s largest beauty company? A series of "ell #lanned and strate(ically timed ac+uisitions! How did L'Oreal become the world’s largest beauty company? A series of "ell #lanned and strate(ically timed ac+uisitions! Between '((? and @))): SoftSheen12arsom & >t t!at time t!e leading 1$S$ producer of et!nic !air"care products. & >frican">merican well"known #rand & >frican >mericans 7'0= 1$S$ population: spent @ to 0 times more per capita on !air care t!an any ot!er 1$S$ et!nic group. & -any distri#ution c!annels. & 5!ere were no national c!ains t!at served t!is market. & It was very fragmented and difficult to serve market. How did L'Oreal become the world’s largest beauty company? A series of "ell #lanned and strate(ically timed ac+uisitions! How did L'Oreal become the world’s largest beauty company? In 3404- the com#any "as in 0st #lace in ran) of the 5orld’s 04 lar(est 2osmetics 2om#anies How did L'Oreal become the world’s largest beauty company? 'esearch and &evelo#ment  L’ r;al’s continuous commitment to researc! and development is considered t!e firm’s most distinctive value, and a comparative advantage over competitors$  L’ r;al promoted close relations!ips #etween 4A2 and international #rand teams$ How did L'Oreal become the world’s largest beauty company? 5!e result was a company t!at covers all aspects of #eauty, and is a#le to reac! different needs and preferences #y its wide distri#utions c!annels and products$ Question 7. How did L'Oreal become the world’s largest beauty company? a) What is the role o ac!uisitions in this process? Question ". What are the international opportunities or #iehl’s? a) $hould #iehl’s ollow a multi%domestic or a global strategy? How did L'Oreal become the world’s largest beauty company? a) What is the role of acquisitions in this process? 5!e eBpansion of L’ real !as #een c!aracteriCed #y mass ac3uisitions, t!e possi#ility of reac!ing new c!annels t!roug! gaining economies of scales and scopes, and #y t!e a#ility of learning ways of doing #usiness from t!e ac3uired companies$ &rom eac! company L’ real ac3uired, it gained :  5!e #rand value 7given #y #rand awareness, #rand recognition and #rand reputation:.  5!e c!annel positioning, and conse3uently t!e market s!are and penetration.  5!e organiCational, productive and selling skills 7peculiar of eac! company:. How did L'Oreal become the world’s largest beauty company? a) What is the role of acquisitions in this process? & 2espite ac3uisitions !ave #een a key factor in L’ real eBpansion, #asically t!ey were only a strategic or tactical tool, re3uired c3uisitions !ave played a relevant role: t!e strategic a#ility of rolling up small local #rands into larger glo#al #rands wit!in t!e L’ r;al’s continuously eBpanding product portfolio. How did L'Oreal become the world’s largest beauty company? a) What is the role of acquisitions in this process? Besides ac3uisitions, anot!er important succeeding, factor stated #y an >merican L’ real manager, is: D>t L’ real t!ere is a great degree of continuity wit!in t!e management$ 5!is means t!at t!e strategies are well understood and potential opportunities can #e evaluated efficiently$ Similarly, t!e teams eBecuting t!e transactions and integrating t!e ac3uired #rands are practiced and are t!erefore a#le to work 3uickly and communicate well toget!er$E Question 7. How did L'Oreal become the world’s largest beauty company? a) What is the role o ac!uisitions in this process? Question ". What are the international opportunities or #iehl’s? a) $hould #iehl’s ollow a multi%domestic or a global strategy? What are the international opportunities for Kiehl’s? & 5!roug! L’ r;al’s recognition and #rand name, Fie!l’s can: Gave a #etter access to a wider num#er of customers. Improve t!eir #rand awareness. >c!ieve a larger volume of sales and, increase t!e num#er of visits on t!eir we#site. & 5ake advantage of economies of scale, scope and learning. & Hit! L’ r;al #usiness Iknow !ow’ t!ey can easily eBpand to new markets. & Be a#le to meet increasing demand t!anks to L’ real supply possi#ilities, #ot! locally and internationally$ & Identify an appropriate location: first stores outside 1S opened in cities c!aracteriCed #y international"#ased culture 7eg$ London, Gong Fong:. What are the international opportunities for Kiehl’s? & L’ real !as a matriB structure, w!ic! !ig!lig!ts also t!e differences among different markets in t!e world$ 5!e single regions will !ave an appropriate knowledge of local segmentation, and t!is can #e used to: 2ifferentiate it from ot!er luBury #rands, usually standardiCed around t!e world, t!anks to adaptive positioning in every region 7every store !as t!e same !ardware, #ut different software:, and #y focusing on t!e feeling communication 7w!ic! is uni3ue around t!e glo#e:. Initiate Fie!l’s to advertising J may#e not t!roug! t!e mainstream, #ut using particular, region"specific tools, in order to reac! enoug! customer #ase wit!out diluting t!e #rand sense of ;lite. - & Since Fie!l’s is mostly #ased on owned stores, L’ real !as t!e cas! power to easily finance new stores opening 7even if we consider de#t financing, !uge companies !ave definitely #etter What are the international opportunities for Kiehl’s? roblems "ith Internationalization! & H!en associated to L’ real, Fie!l’s may lose its status: ' People tend to associate L’ real wit! medium"low 3uality cosmetic products due to its strong presence in supermarkets and grocery stores. Gow is it possi#le to communicate t!e #rand’s simplicity and integrity if t!ese values c!ange around t!e worldK ' & &ind a compromise #etween Fie!l’s organiCational structure and !ow L’ real !as #een eBpanding #rands from previous ac3uisitions 7eg$ #y association to t!e -ay#elline #rand: What are the international opportunities for Kiehl’s? a) hould Kiehl’s follow a multi!domestic or a global strategy? Global Strate(y DIs an organiCation%s strategic guide to glo#aliCation$ > glo#al strategy may #e appropriate in industries w!ere firms are faced wit! strong pressures for cost reduction #ut wit! weak pressures for local responsiveness$E What are the international opportunities for Kiehl’s? a) hould Kiehl’s follow a multi!domestic or a global strategic? In order to DGlobalize American BeautyE, F!iel’s s!ould not c!ange too muc!$ 5!e goal s!ould #e to sell t!e #rand as " more t!an an >merican #rand " a Lew Morker one, t!us consumers would #e supposed to perceive t!e #rand’s identity t!is way$ &or t!is to !appen, a global strategy is more effective than a multidomestic one, since t!e local adaptations, in!erently to t!is last one, would make !arder for t!e consumers to perceive Fei!l’s as a Lew Morker$ What are the international opportunities for Kiehl’s? a) hould Kiehl’s follow a multi!domestic or a global strategic? 5hy (lobal strate(y6 & Products remain wit! t!e same composition, formula and packaging: differences #etween countries are not !uge, concerning t!e #eauty industry and its consumers needs, so it does not re3uire #ig transformations. & Stores resem#le t!e Lew Mork’s one in order to keep t!e #rand’s identity, only small differences are allowed in t!e store’s environment according to eac! store location 7to connect wit! t!e local communities:. & Fie!l’s !as glo#al competitors so a glo#al strategy will #e more efficient to compete in t!e market place. What are the international opportunities for Kiehl’s? a) hould Kiehl’s follow a multi!domestic or a global strategic? A Global Strate(y as a "ay of ac+uirin( a com#etitive advanta(e! & 4eputation and #rand awareness on a worldwide scale 7also to L’ real:. & Learning opportunities in eac! market t!at can #e s!ared and applied uniformly t!roug!out t!e organiCation. & ,entraliCed control in t!e 1S #rings coordination advantages J little decision"making aut!ority on t!e local level  assures t!at Fie!l’s is t!e same everyw!ere and do not loose its Lew Mork personality. & ,ost advantages since t!ere is no need to duplication across countries and financial control. & +na#les faster product development t!an t!e multi"domestic strategy and a 3uicker entrance in t!e market since t!e w!ole adaptation is less. What are the international opportunities for Kiehl’s? a) hould Kiehl’s follow a multi!domestic or a global strategic? roblems "ith Global Strate(y & Preservation of t!e #rand’s inte(rity w!en take it worldwide is !arder. & 2ifficulties in order to replicate t!e Igrass"roots neig!#or!ood culture’ at a glo#al level. & 4eproducing t!e essence of t!e Lew Mork store and at t!e same time creating a sense t!at is connected wit! store’s location. & -ig!t lose its sincerity and authenticity;