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Key Facts and Figures 1st cosmetic group worldwide
1 century of expertise in cosmetics
23 international brands
19.5 billion euros of sales in 2010
130 countries
66,600 employees
612 patents registered in 2010
DIVERSIFICATION STRATEGY
Entering three kinds of industry:
Cosmetics
The Body Shop
Dermatology “Closely-related”
Offering different product lines through four market lines:
COSMETICS INDUSTRY Professional Products
COSMETICS INDUSTRY Consumer Products
Luxury Products
COSMETICS INDUSTRY
COSMETICS INDUSTRY Active Cosmetics
THE BODY SHOP
A chain of cosmetic stores specializing exclusively in hair and skin care products
based on natural ingredients.
Operated a total of 2,550 stores in 62 countries worldwide by the end of 2009.
DERMATOLOGY
Galderma Laboratories: a joint venture with Nestle. It
boasts three of the top 25 best-selling drugs.
It specializes in skin diseases and skin infections.
REASONS OF DIVERSIFICATION
Part of L’Oreal Long Term Strategy
Meet Consumer Needs
Exploiting Relevant Economies of Scope
Strengthening External Growth
1
3
2
Internal Growth
Resources
Asset
External Growth
Diversification (M & A)
Alliances
STRATEGIC CHOICE
GROWTH STRATEGY “Merger and Acquisition”
Reaching a critical size for exploiting
economies of scale.
Satisfying local needs.
Creating a portfolio of distinctive but complementary products and brands.
Quickly acquiring new resources and technologies.
Overcoming the entry barriers.
Objectives:
Operating in different geographical markets from those in which L’oreal is already operating.
CHARACTERISTICS OF COMPANIES ACQUIRED
Offering products that complete the L’oreal portfolio brands or products.
The Body Shop: Enters India Easily
ROGER&GALLET: Produces Pharmacy Fragrance
Operating in geographical markets in which L’oreal intends to
reach leadership position.
Having high technology and competences related with L’oreal products.
CHARACTERISTICS OF COMPANIES ACQUIRED
Inneov: Number 1 in Spain
Vichy: Advanced Skincare Technology
ACQUISITION PREPARATION FLOWCHART
Preparation (Gather
information)
Similarities with L’oreal
Characteristics
What is the Objectives?
Final Preparation
Decision (Implementation)
IMPLEMENTATION
L’Oreal has acquired more than 25 brands with different market segments (see acquisition timeline).
Each brands contributes a different advantage for L’Oreal long term strategies.
The Body Shop makes L’Oreal distribution broader.
ACQUISITION TIMELINE
Professional Products
Consumer Products
Luxury Products
Active Cosmetics
The Body Shop
1990 1995 2000 2005 2010
RISK MITIGATION STRATEGY Innovation and Patent
2001 2003 2005 2007 2009
Registered patents
493 515 529 576 674
R&D expenditures (mill. Euros)
432 480 496 560 609
R&D employees 2,743 2,921 2,903 3,095 3,313
Increasing patent rights on its inventions.
Rebuild the products to get customers’ attention.
Patents, R&D Expenditures and Employees at L’Oreal
MARKETING MITIGATION Market different product with different target market.
Develop a clear positioning statement as a current market leader.
Try to be the first mover – to gain more market share before other.
MARKETING MITIGATION
PRODUCTS STRATEGY Collaboration with Channel Partners
Market Research Agencies
Licensee
Hair Salons Mass Market
Department Stores,
Perfumeries
Pharmacies, Dermatologists
Retail Partners
-50% GREENHOUSE
GAS EMISSION
‘ALIGNING WITH NATURE’ STRATEGY
Reducing impact on natural capital.
Responsible sourcing.
Eco-designing new ingredients.
Addressing controversy on ingredients.
Protecting the global system.
Commitment to Sustainable Development:
-50% WASTE
GENERATED PER FINISHED PRODUCT
-50% WATER
CONSUMPTION PER FINISHED
PRODUCT
Target for 2015
Target for 2015
Biomethanisation Unit at Libramont Plant: 100% Green Energy
NEWEST ACQUISITION: PACIFIC BIOSCIENCE LABORATORIES
Date of Acquisition: Dec 15th, 2011.
Intermediated by L’Oreal USA (the franchisee).
Products: Sonic Skin Care Devices (Patented).
Channels: Dermatologists and Prestige Retail. Main Market: US. Reasons behind Acquisition:
Pacific Bioscience Laboratories’ Expertise in Devices.
QUESTIONS? Thank You for Your Attention