Course Instructor: Dr.

Mohit Jamwal

Academic Task No.: 03 Academic Task Title: International Business Environment

Date of Allotment: 20 Aug, 2019 Date of submission: 22 Aug, 2019

Student’s Roll no: RQ1954A20 Student’s Reg. No: 11912296

Evaluation Parameters:

Learning Outcomes: In this academic task I came to learn about the international company
and their strategies in international market, PESTLE approach and expansion plan.

Declaration:

I declare that this Assignment is my individual work. I have not copied it from any other
student’s work or from any other source except where due acknowledgement is made
explicitly in the text, nor has any part been written for me by any other person.

Student’s Sign/Name: Vaishali Sonare

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 TABLE OF CONTENT
 INTRODUCTION
 COMPETITORS OF L’OREAL
 ANALYSIS
 EXPANSION PLAN
 PESTLE
 NEWS REFERNCES
 REFERNCES
L’OREAL IN INDIA
INTERNATIONAL BUSINESS ENVIRONMENT (MGN578)

VAISHALI SONARE

SECTION : Q1954
INTRODUCTION
L’Oreal was founded in the year 1909 by Eugene Schueller, a French chemist who
developed an innovative hair colour formula. Today, the L’Oreal Group is the world's largest
cosmetics and beauty company and it’s headquarter is in the Paris suburb of Clichy, France.
It got its start from the hair colour business but soon it developed activities in the field of
cosmetics, concentrating on skin care, sun protection, makeup, perfumes and hair care.
L’Oreal main branches are Cosmetics, The Body Shop and Dermatology. L'Oreal is active in
the dermatological and pharmaceutical fields, however Cosmetics is the key revenue
generator. It is also the top nanotechnology patent-holder in the United States. L’Oreal
famous advertising slogan is "Because I’m worth it". It has recently been replaced by
"Because you're worth it".

L’Oreal Products:
L’OREAL LUXE: L’Oreal Luxe products are available at department stores, cosmetics
stores, travel retail, but also own-brand boutiques and dedicated e-commerce websites.

CONSUMER PRODUCTS DIVISION: The Consumer Products Division brands are

distributed in retail channels.

PROFESSIONAL PRODUCTS DIVISION: The Professional Products Division distributes

its products in salons worldwide.

ACTIVE COSMETICS DIVISION: The Active Cosmetics Division brands are sold in
healthcare outlets worldwide, including, pharmacies, drugstores, and medic-spas.
Entering Into The International Market
L’Oreal present in India since 1994, L'Oreal grew quickly with an average annual
growth rate of 30% over the past 10 years.
L’Oreal has been present in India for 18 years and is considered a young player in the
cosmetics market. However, it is the fastest growing beauty company with an annual average
of +30.2% and representation in 750,000 points of sale. The Group is the third leading
operator in the Indian cosmetics market with an 8% market share in the urban areas and sales
of nearly €198 million in 2011.

In order to cater to this market optimally, the cosmetics Group has launched several brands
covering various product categories, including: mass consumer brands Garnier, L’Oreal Paris
and Maybelline New York; luxury brands Lancôme, Yves Saint Laurent, Kiehl’s, Ralph
Lauren, Giorgio Armani and Diesel; professional brands like L’Oreal Professional, Matrix,
Kerasotes and Kerstin Aesthetics for salons and pharmacy brands Vichy and La Roche-
Posey.

L’Oreal’s rapid success can be explained by its ability to adapt to the demands of a market
where cosmetic routines and purchases are firmly anchored in tradition. Due to the different
standards of living in India, there is a wide range of packaging options and therefore prices.
For instance, Garnier Fructose shampoos are available in sachets costing 1.5 rupees (€0.02).

COMPETITORS OF L’OREAL

 MAC
It is the leading professional makeup authority in the world. It has a wide range of
products for all ages. MAC cosmetics, is headquartered in New York , united states.
The MAC cosmetics focused to keep the makeup for long hours. The various products
are Fluid line, pro long wear foundations, lip-pencil and many more due to their
various products; MAC is considered as one of the top L’Oreal competitors.

 Maybelline
Maybelline is the top most cosmetics company in the United States. It helps women to
discover new looks and exhibits their own creativity and individuality. Maybelline
provides scientifically advanced formulas, radical textures and trendsetting shades to
enhance the beauty of women. It also produces accessories that are designed by the
 expert team of makeup artists and also provides makeup tips through their step by step
guidance in their tutorials. These all features make the company as one of the top
L’Oreal competitors.

 Dior
Christian Dior was a French fashion designer, who was the founder of the top fashion
houses called Christian Dior. It is currently owned by Group Renault. Their fashion
stores are available across the globe. The company hands out its products through the
Company-owned shops and licensed distributors situated across Europe, the United
States, Japan, and the Asia Pacific. Christian Dior has their business operations in
about 400 subsidiaries around the world. Their main products are fashion accessories
for men and women, fragrance, makeup products, skincare products, jewellery,
timepieces and baby products. Due to their wide reach and products, Christian Dior is
considered as one of the top L’Oreal competitors.

 Chanel
A private company of French, it was founded during the year 1990 by Coco Chanel.
The company is headquartered in Paris, France. This brand is considered as the valued
luxury brands across the world with their signature perfumes. It has a total brand
value of $7 billion. Chanel is a high luxury brand that manufactures products like
ready to wear clothes, luxury goods, and makeup and fashion accessories. The
company sells the products across North Central and South America, Europe, Asia,
Middle East and Oceania. It sells their product through their 120 boutiques available
across the globe. Apart from boutiques their products are also available in various
department stores and through online. Due to their brand value and their wide
reachability through through online and off-line stores, Chanel is considered as one of
the top L’Oreal competitors.

ANALYSIS
 According to L’Oreal, the Indian beauty market presents significant opportunity for
growth as beauty products still have a lower penetration – approximately 50% of the
Indian households use shampoo and close to 25% use skin care products.

 The global beauty market is estimated to double its size in the next 10 to 15 years
with the top markets being India, Brazil, and U.S. By the year 2020, over 50% of
beauty consumers will belong to tropical and hot climates and around 60% of the
global population will inhabit major urban areas that are prone to pollution. These
factors will increase the demand for good quality cosmetics products.

 According to a KPMG wellness sector report, India’s beauty and wellness sector will
nearly double from Rs41, 224 Crore (~$6 billion) in 2012-2013 to Rs80, 370 Crore
(~$12 billion) by 2017-2018. The hair care market size is estimated to be around
 Rs3, 630 Crore (~$500 million) with around a 20% average annual growth rate
as per AC Nielson.

 India Women’s Cosmetics Market Forecast & Opportunities, 2020, the market for
Women’s cosmetics is projected to grow between 2015 to 2020, at a 16% CAGR.

 The Indian women’s cosmetics industry faces stiff competition, and hence beauty
companies focus on innovation and attractive packaging to gain competitive
advantages over their peers. Another rising trend is the endorsement of beauty
products by female celebrities as the aspiration to follow a celebrity’s beauty regimen
in order to look like her, has been an important growth factor for sales of cosmetics in
India.

PESTLE ANALYSIS

Political Factors
The political factors include the rules and policies of the government in which the companies
like L’Oreal have been working. As the manufacturing company is in Paris so mostly the
governmental policies of France affect the company very much. Apart from this the several
import policies of the regions play a vital role in the success of the L’Oreal. With the advent
of globalization, the political factors have a positive role in the business industry like
L’Oreal.

Economic Factors

The economic factors include the Exchange rates of the state in which the company is
working. The recession element is also one of the mainstream elements in the upbringing of
the cosmetic organization like L’Oreal. Apart from these attributes pertaining to the
economic factors the Prices for the products also play an important role. This price of
products varies in different regions.

Social Factors
The social factors encompass the technical trends in the society. Certainly, the modern
societies are more interested in fashion trends and so in the L’Oreal products. The societies
who have a sense of latest technology and are always eager to adopt the contemporary
technical trends will always welcome the innovations by L’Oreal. There are certainly ethical
issues as well for instance the use of ingredients in the product, some states or the people of
society will consider it as holy sin to use such ingredient. All these social and ethical
pressures and trends play a prominent role in the business of L’Oreal.

Technological Factors
Technology has its ramifications in every sphere of life. For the companies like L’Oreal, the
technological attributes like innovation and trust have played a great role. The L’Oreal brand
is very much prone to innovation and has always followed the contemporary trends. The
technology gives it possible to spread the innovation within seconds and the fashionistas are
there to purchase the trendy products. Therefore, for the luxury products brands like L’Oreal
innovation is and should be the key feature to follow for the success.

Legal Factors
There have been many competitors to L’Oreal. For the company like L’Oreal in order to
maintain the graph of success, it is incumbent to fulfil all the legalities of the region in which
it is working. The world has now become a global village and people have become very
much vigilant about the legal aspects of the products. L’Oreal is the brand of the upper
middle class or the elites of every society and they are very much concerned about all the
legit stuff. This factor is therefore very important when it comes to brands like L’Oreal.

Environmental Factors
L’Oreal has been one of the leading international brands. It is always best to understand the
external as well as the internal factors that affect the company as a whole. The
aforementioned factors are the crux of the analysis done for the brand. Therefore, it is always
a good strategy to consider these factors while determining the policies for the company. In
the same way, the future policies of the company could also be made as per the contemporary
trends.

INTERNATIONAL BUSINESS NEWS

RELATED TO L’OREAL
 L’Oreal beats Godrej Consumer in urban hair colour race.
French company's share in India's urban hair colour market grows to 25.8% in value
terms, outpacing Godrej's on back of Garnier Black Naturals.
 L’Oreal SA has emerged as the largest hair colour marketer in urban India in value ahead of
Godrej Consumer NSE 4.45 % Products, riding on mass brand Garnier Black Naturals, which
is now the French personal care firm’s highest selling hair colour brand globally.

L’Oreal had 25.8% market share in the urban hair colour market in value terms last calendar
year against Godrej’s 24%. In 2017, Godrej had 26.3% share against L'Oreal's 25.3%, they
said. Godrej remains the market leader across India and controls the bulk of the mass-end
market.

 L'Oreal in joint venture talks with Lotus Herbals.

French cosmetics firm L'Oreal and Indian herbal skincare products maker Lotus
Herbals are in talks to form a joint venture.
French cosmetics firm L'Oreal and Indian herbal skincare products maker Lotus Herbals are
in talks to form a joint venture to target the Rs7, 000 crore beauty salon industry in the
country.
The Rs 200-crore Lotus Herbals-which has a portfolio of 250 products including skin
whitening cream, colour cosmetics and hair care. The Rs 200-crore Lotus Herbals-which has
a portfolio of 250 products including skin whitening cream, colour cosmetics and hair care-
has created a niche for itself on the herbal platform and is growing at a rate of 35%-40% a
year.

Several big companies including American premium cosmetics maker Estee Lauder,
Japanese cosmetics giants Shiseido and Kose Cosmetics and Indian firm Dabur have showed
interest in the company over the past two years.
Analysts say an alliance, if it works out, could prove a win-win. It will help home-grown
Lotus Herbals access one lakh beauty salons already serviced by L'Oreal. And for the French
firm, adding Lotus will make its package more appealing to salon owners, particularly
because its skincare range has wider range.

EXPANSION PLAN
L’Oreal is planning on ramping up its investments in India. The company’s target is to
make India one of its top 5 global hubs and it also aims to increase the export of products
and technologies from the country to the greater Asia-Pacific region. The increasing spending
power of women on cosmetics, the rising consciousness among men for grooming products,
and India’s soon to be a $10 billion beauty market might be some of the reasons for the
company to increase its focus on India.

 L’Oreal’s $1 Billion Revenue Target In India By 2020

 L’Oreal’s 2020 roadmap in India is to become a billion dollar company
in terms of revenues.
 The R&I centres in Mumbai and Bangalore are striving towards
sustainable innovation, in order to meet the company’s target of
reducing carbon emission by 60%.
 It aims to generate revenues to the tune of Rs7,000 Crore(~1
billion)from India by 2020.

 L’Oreal Is Planning On Increasing Investments In India

 In 2011, L’Oreal invested Rs1,000 Crore in India for a five-year
period. Now L’Oreal India is valued at Rs2,100 Crore currently and
the division grew at 18% in 2014.
 The company has 500,000 retail outlets in India, it aims to grow this
numbers with increased penetration into lower-tiered Indian cities.

 L’Oreal Will Ramp Up Export Opportunities From India

 L’Oreal is planning to increase its export of products and technology
from India into the Southeast Asia and larger Asia Pacific region.
 India is a key hub for L’Oreal’s South Asia-Pacific region , which
includes Australia, New Zealand , Cambodia, Indonesia, Singapore
,Malaysia, Myanmar, India and the Philippines.

REFERNCES
 WWW.L’Oreal.co.in

 www.lorealparis.co.in

 www.marketing60.in

 Economics Times Newspaper