L Oreal Essay

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1. Through a series of strategic and tactical acquisitions, a diversified asset portfolio, matrix organizational structure, marketing strategies, unique culture, and heavy investment in R&D, L’Oreal rose to a global leader in the beauty products industry. Exhibit 1 presents all the acquisition from 1964 to 2004 that L’Oreal undertook to foster its internal growth. The company understood the importance of being present in various distribution channels and thus acquired Lancôme and Garnier in 1964, entering the upscale cosmetics and hair-care channels. The company then began the quest to build its US Operations through a 2 Phase strategy. During Phase 1, the company acquired Ralph Lauren and Helena Rubinstein. Ralph Lauren successfully aided …show more content…
L’Oreal’s related constrained diversification corporate-level strategy lead to the company’s rise as a global leader. This diversification was achieved through strategic and tactical acquisitions which were intended to foster internal growth. Strategic acquisitions such as Maybelline and Redken were carried out to establish global presence. Tactical acquisitions, such as Ralph Lauren’s, filled gaps in existing brand categories. As Exhibit 4 shows, the acquisitions successfully transformed L’Oreal into a global leader. While only 19.7% of sales were generated in North America in 1992, this number increased to 30.3% by 2002. This growth was enabled by the Redken and Maybelline strategic acquisitions. Sales in the rest of the world increased as well from 8.7% in 1992 to 19.8% in 2002 due to the strategic acquisitions of Helena Rubinstein, Xxxxxx xxxxxx L’Oreal Case Analysis xx xxx, xxx Giorgio Armani, and SoftSheen-Carson, as show in Exhibit 5. All these acquisitions also led to L’Oreal’s engagement in multipoint competition, where the company competed with other diversified firms such as P&G and Estee Lauder, as shown in Exhibit 8. The diversification achieved through the multiple international acquisitions was value-created. The company discovered, through a value chain analysis, that it could share the production practices of Maybelline with the rest of the brands, as Maybelline manufactured mascara at a much lower cost. L’Oreal’s purchasing costs decreased to 19% of sales, drastically lower compared to competitors, which helped the company gain market power. This corporate-level strategy also allowed the company to transfer core competencies such as R&D and marketing among all its businesses, resulting in economies of scope and high quality products of great value for the end

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