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Arranged by :

Herra Fikriani Nurjanah (7101417070)

Rahayu Lestari (7101417918)
Alinda Putri Nur Rahmah (7101417204)
Mila Anggi Safitri (7101417195)
Dwi Rizqiyani Agustin (7101417244)

Faculty Of Economic Major Accounting Education


LOreal began in 1909 as the project of a young chemist, Eugene Schueller.

After discovering a formula for hair dye he began manufacturing his own products

and selling them on to Parisian salons. His work evolved into the founding of an

organisation, Societe Francaise de Teintures Inoffensives pour Cheveux (The

French Society for safe hair dyes). The societe was based upon the principles of

continuing research and innovation in the field of beauty, principles that are

instantly recognisable in its direct descendent LOreal.

By the end of 2012, the company employed over 72,000 people, including

around 2,000 chemists and researchers. All are striving to provide the latest

innovations in beauty and hair care. Over the past century the company has

developed beyond dyes to producing womens cosmetics, skincare and body care. It

has an advanced range of mens shaving, bathing and grooming and has led the way

in the innovation in male specific skincare and anti-ageing.

In 2005 LOreal released the Men Expert line, thought to be the largest and

most comprehensive range of its type. Speaking on the release of the Men Expert

line in 2005, LOreal president and general manager, Carol Hamilton, said: Men

Expert is a comprehensive male-focused line from the state-of-the art L'Oreal

labs. It's not just about after-shave balm; it's about total skin care. This is truly a

new generation of skin care designed specifically for men." The line was designed

to focus on the particularities of mens skin. Giving the care and attention that has

been enjoyed by women for generations.

"Men suffer from the same skin care issues as women: oiliness, clogged

pores, dry, rough skin and wrinkles and sagging, and these conditions tend to affect

them on the same time scale as women," says Dr. Lydia Evans, consulting

dermatologist for L'Oreal Paris. "However, the needs of men's skin differ from

women's, so L'Oreal used extensive research and technology to design a skin care

line for men's unique skin physiology. Unlike women, men have thicker and oilier

skin, more prominent pores, and their faces truly suffer from regular shaving."

In 2011, LOreal released the Men Expert Vita Lift line, with an advertising

campaign designed by Hugh Laurie, a distinguished male icon, the line initially

contained a single moisturiser and eye roll on. Which used together or

independently, visibly reduce the appearance of fine line and wrinkles.


1. Division of labor.

To ensure its development, LOral divides their labour into global Research

and Innovation centres, a unique portfolio of brands organized by distribution

channel and geographical zone, and an integrated industrial production.

2. Departmentalization.

LOral has a very clear range of departments. The most outstanding ones


Product departmentalization: groups jobs by product line. LOral has a

portfolio of international brands that cover all the lines of cosmetics: hair

care, coloring, skin care, make-up and perfume. Very complementary, these

brands are managed within the group by divisions that each have expertise in

their own distribution channel, which would be an example of cross functional

teams. This organization is one of LOral's major strengths. But, lets see

this variety of brands! Probably you will find a lot that you didnt think they

belonged to LOral.
Georaphical departmentalization: In this field LOral is very well

organized, from the top managers to factories. As we saw on the

introduction the boards comittee is formed by managers of different

geographical zones in whcih LOral is located. In addition, in the field of

innovation and research, which is strategically spreaded in different

countries, with very specialized employees (another example of cross-

functional teams divided into the disciplines of: biology, chemistry, physics,

optics, microbiology, statistical analysis , bioinformatics, ethnology,

sociology, dermatology: functional departmentalization), we can also find a

wide division.

Customer departmentalization: One of the ambitions of LOral is to make

customised products for all the diverse customers that we find worldwide

depending on the country they live, the lifestyle ...They think the diversity

of the teams is one of the success factors. Fostering the values of all forms

of multiculturalism and respect for differences, the group is enriched by

employees from various horizons that enable it to gain a better

understanding of the diversity of its consumers and markets. The huge

variety of brands we saw and its products is a testimony to its commitment

to enhance every type of beauty.

Do you want to know more?

The chain of command in LOral is the continuous line of authority that

extends from upper organizational levels ( comittee and borad of directors) to the

lowest levels ( interns) and clarifies who reports to whom. For instance, inside the
upper levels, the board of directors make the decisions whcih are audited by the

comitee and then the one who makes the final decision is the CEO.

So we could say that authority, which refers to the rights inherent in a

managerial position to tell people what to do and to expect them to do it, is

practised by those upper levels of LOral. This really, facilitates decision making

and coordination, .This managers coordinate and integrate the work of employees,

but we can also make a division in here because as LOral is a huge company, it is

worlwide, so it divides the authority into the georaphic zones having one manager

for each one of them that makes decisions regarding their zone. And inside the

georaphic zone we find different divisions of labour such the ones we saw in the

map. Depending on which ones are present in each of the zones there would be

different submanagers and coordinators with different specialised employees.

Those employees assume an obligation to perform any assigned duties regarding

their fild of expertise.

This obligation or expectation to perform is known as responsibility. In

addition, LOral also include different areas in each of their companies which are

coordinated by managers of that area and in wich we can find lots of young people

that interact with different levels of authority including themselves. Those are:

Digital; Human Resources; Communication ; Business Development; Sales and Retail;

Marketing; Legal; Information systems and technology; Finance; Operations and

Research and Innovation.

However, employees throughout the organization can access information

that used to be available only to top managers in a matter of a few seconds.

Because for LOreal si very important to take into account their points of
view. Thats why they have jobs such as junior marketing manager, whcih is aimed

to young poeple and enables them to participate in the decision making toghether

with upper levels. so we could conlude that authority is not extreme but shared.

Make it visual with the span of control!!

Lets see some examples!!

L'Oral's Board of Directors, met on Monday, February 10th, 2014, to

authorize the acquisition by L'Oral from Nestl of a block of 48,500,000

L'Oral shares, representing 8% of its share capital. This acquisition, which

was announced in a press release on Tuesday, February 11th, 2014, was

conditioned upon the sale to Nestl of L'Oral's holding in Galderma. This

sale was authorized by L'Oral's Board of Directors, held on Thursday,

March 20th, 2014, after the employee representative bodies of the relevant

companies concerned have issued their opinion. On Friday, March 21st, 2014,
L'Oral and Nestl signed the share purchase agreement; the completion of

the sale is conditional upon the approval of the sale by the competition


Initial studies carried out by the Group in the late 1980s identified the

physical and biological characteristics of African hair that explain its great

fragility. To build on this knowledge, the Group opened The LOral

Institute for Ethnic Hair and Skin Research in the United States in 2003,

the first centre entirely dedicated to studying ethnic skin and hair.

Additionally, a centre in South Africa enables the group to evaluate formulas

for the specific needs of consumers in the region.

This expertise allows LOral to offer tailor-made products that are adapted

to different lifestyles, habits and levels of purchasing power. In this

example we can see how the upper level is receiving the feedback from the

lower levels of research to make the decision , so power is concentrated in

the lower level. In this case the one who reports information to the upper

level is Geoff Skingsley, Executive Vice President for Africa and the Middle


Evolution of the organizational structure:

In the begining L Oral was characterized by an organic structure because

it was bassically Eugene schuller and its laboratory, so there was quite flexibility.

Then it started to grow with more scientists till 1956 . In this period L Oral was

constructing its model but after this we welcome the expansion of L Oral.

consequently, there started to be high specialization, rigid departmentalization,

narrow spans of control, high formalization. For instance, in 1964 they bought
Lancome. nad in the end, they are nowadays the first in the beauty industry with a

lot of brands worldwide. Hence, it presents a mechanistic organization.

Lets see an example focused on the brands divisions:

Bureaucracy or adhocracy?

Large French companies, such as LOral bear the weight of this

entrepreneurial "counter-culture", (entrepreneriual spirit comes from family and is

hard to start up), a phenomenon that is amplified by the size factor and its natural

corollary: bureaucratisation. The larger companies grow, the larger their volume of

trade, the more structured and rigid their rules and operating modes will become:

this means more control and formal coordination mechanisms, which is very visible

in LOral.

L'Oreal is a cosmetic and beauty company located in Paris. The company

manufactures cosmetic products like hair colors, skin care products, sun
protection, make-up, shampoos and other hair care products, perfumes and others.

As I stated in my introduction part, I shown that globalization is very

important in today's world. So for every company there should be a good global
marketing strategy. Here are some of the examples of global marketing strategy
of L'Oreal.

The four major strategies consists of four P's i.e. product, price, place, promotion


This is the one of the most important part for marketing strategy for loreal
to trade in countries which have all together a different economy.

L'Oreal has five worldwide research and development centers: two in France, one in
the U.S. New Jersey; one in Japan Kawasaki, Kanagawa Prefecture; and in 2005,
one was established in Shanghai, China. A future facility in the US will be in
Berkeley Heights, New Jersey. In 1920 the company has only 3 chemists and now it
is reaching the peak with a sum of 2000 chemists.

Five worldwide research and development centre shows how much dedicated team
is of L'Oreal to fulfill customer's satisfaction and make sure what should be the
product variations according to the countries.

The production and marketing of product Research and Development part has also
a lot of cultural problems. Many countries have liberal government and liberal
media. But in many part of the world research for new products according to the
environment are a sensitive area for L'Oreal to look for. Like in America group of
protestors from the NGO nature watch protested to Company that it continues to
test new ingredients on animals without proper measures. So there should be
research in proper manner so there should be no protest as it deviates the
consumer mind. Ultimately the company has to suffer the revenue with a loss.
Moreover selecting a product to sell according to countries is a much bigger task
for both the production department and the research and development


L'Oreal has spread its reach in 130 countries and trying to spread it more.
It is necessary to expand area to become global and company is best at it.
L'Oreal has 23 global brands which make it a versatile company for all consumers.
Large coverage is not of worth if there is not profit. And company is waving flag at
this corner, in 2009 it had total revenue of 17.5 billion dollar and in year 2010 it
reached to 19.5 billion dollar with increase in net profit. Increase in profit and
revenue in this competitive condition is very fruitful for country.

But the major emphasis of L'Oreal is on selecting a price band for all the products
which L'Oreal deals in countries like consider the Asian continent, in Asian
continent the price band for products is selected in the range of moderate to low
price depending on the country and in the united states the price band for
products is very high from the perspective of the Asian continent.

So the pricing structure should be the major factor that should be kept in mind
and also considering the quality that L'Oreal delivers.


It has 64,600 employees worldwide. This big dedicated and intelligent team
Of L'Oreal makes operation successful of company and delivers best product to

With large number of human resources also come a lot of problems. Like Problems
related to wages and many other issues are painful for any company. But L'Oreal is
handling this very well with no any employee problem that is picture perfect case
for L'Oreal.

L'Oreal has a very good employee base which is very highly qualified as their
training methodology is very good, L'Oreal picks up their employees from the
country itself within which they are trading. L'Oreal's strategy changes place to
place for ex its strategy of trading in the Asian continent is very much different
as that of the European continent and the north American continent as the peoples
of the European continent and the north American continent is very much obsessed
with the lifestyle and other things but the peoples of the Asian continent is not so
obsessed and not so much interested in the lifestyle products like cosmetics and
hair products. That is why L'Oreal has a totally different strategy depending on
places they are trading in.

To increase market cap sharply, acquisition is so important. So in March

2006, company bought "The body shop "in 652 million. And thereby promoted
themselves among various countries where the companies that L'Oreal acquainted

These acquisitions increased the brand value of L'Oreal too much. This is good for
global strategy of company also company is searching for new fresh opportunities
to acquire new few good companies.

L'Oreal is also serving society in many ways .This part is also important in global
marketing since these things attaches customers to the company. Company is
encouraging an outstanding researcher every year for scientific progress with
"L'Oreal-UNESCO Awards for Women in Science". It also organizes L'Oreal
Brainstorm every year with prize money $10000 for students in 43 countries. Thus
delivering a message of a company with human values, this helps in promoting
themselves around the globe as a descent companies and thus help L'Oreal to
promote themselves and trade healthy business across the globe.

These society serving cause make a good relationship with customers also the tag
line is important. The companies is changing it as per customers initially the slogan
was "because I'm worth it" now has been changed to "because we're worth it". The
shift of us from I makes customer feel nearer. This is best for the company, since
company faithful customers are heart of the company.

According to the concept of globalization, a company which is guided by and run on

the global marketing orientation or philosophy is generally referred to as a global
company and so is L'Oreal a global company according to the concept. The global
market analysis says that L'Oreal should have to focus on a standardized
marketing strategy that can be implemented across the boundaries.


Asian continent

Consider for ex Asia, most of the countries in the Asian continent are
developing countries like India, china, Indonesia, and sri lanka etc. the economies
of these countries are considered developing. And in the future these countries
like India and china promises to be a fully developed and one of the biggest
economies. And moreover India is one of the hot spots for global cosmetic players
like L'Oreal.

Therefore L'Oreal needs to definitely look upon to the pricing strategies and
product specifications in great details; moreover there are some more objectives
that L'Oreal need to look upon to improve their business in India.

L'Oreal has various strategies and concerns that needs to be sharpen, L'Oreal is
focusing on to adopt local culture for the development and promotion of their
product in the Asian subcontinent.

The major business of L'Oreal in the Asian continent is divided in two parts first in
the developed countries like Japan, Singapore, and UAE etc. and second in the
developing countries that majorly includes India and china.

L'Oreal is having a very good strategy for selling their products in the European
continent. As the peoples of the Asian continent is not so obsessed with the
premium products and is satisfied with simple daily use products of L'Oreal,
therefore L'Oreal is having emphasis on only selling their regular use products in
the Asian continent and not very much obsessed with selling their premium
products in the Asian continent.

Therefore L'Oreal is developing strategies for trading in these countries, for e.g.
take India for consideration, L'Oreal is going local on all levels for trading in India,
as they have a totally different pricing structure for the peoples of India plus
they are having an Indian brand ambassador for promoting their brand in the

These strategies are enabling L'Oreal to improve their trading in the Asian
continent. The major thing that L'Oreal is focusing right now is the promotion of
their brand on a grand level so that they can trade with more and more countries
of Asia.

L'oreal in India

L'Oreal entered into the India market in the year 1997 in order to capture
the loophole in the hairdressing industry in the country as there was not a sniff of
structure in this industry. At present the hair industry of the country has Rs. 200
Crore business and L'Oreal is the market leader in the hairdressing industry in the
country. L'Oreal professional products are very well known in the country and the
company spends a big amount of the manufacturing into the research and
development of the products.

The main strategy on which the company works in India is that it skims top 100
cities of the country and created largest salon bases which contribute around 40
percent of the total revenue by L'Oreal. Many of the competitors in the country
try to follow same strategies but could not reach the same level (L'Oreal's success
story in India, 2005).

European continent

As European continent is the base and the major market of L'Oreal

therefore L'Oreal is focusing more and more on trading in the European continent
that includes majorly Paris, England, Germany, and the Italy.

These countries i.e. Italy and France are considered as the fashion capital of the
world and as L'Oreal is based in the France therefore the major emphasis of
L'Oreal is to deliver best in quality products for the peoples of the European
continent so as to earn customer satisfaction and also to promote them.

The major emphasis of L'Oreal is to make a firm base in the European cosmetics
market and the pricing structure of L'Oreal is also of premium category in the
European market as the peoples of Europe is considered rich and wealthy in terms
of economy and moreover the lifestyle of the peoples in the European continent is
such that L'Oreal can make at most advantage of that in terms of sales and
promotion. According to figures the European continent is the biggest consumer of
the products made by L'Oreal.

The main advantage that L'Oreal enjoys of trading in the European continent is
that the culture of the peoples of the European continent is very advanced and
they could pay whatever it takes for a cheerful and healthy lifestyle. Not only the
women but mans are also very much obsessed about the living lifestyle in terms of
looks and presentation.

L'Oreal is having a lot of consumers for the consumption of their premium

products in the European continent therefore they have no need to change
strategies to deal on the premium products in the European continent.
L'Oreal is getting a very good competition from other brands in this field,
therefore they needs to focus on their pricing and promotional strategies to trade
in the European continent.

L'Oreal in Italy

In order to get success in the beauty product sector, L'Oreal employed

more than 2000 employees and got more than one billion Euros. Company created
several offices all around the world. The problem with the directors of L'oreal in
Italy was to manage the information as there was not effective flow of information
and also decision making in the company was poor.

In order to give a dramatic impact on the productivity of L'Oreal in Italy,

management of the company proposed a better management of the email and
improvement in access to the corporate data in order to improve the informational
flow and decision making of the company so that the productivity of the company
could be better. This was the main strategy played by L'Oreal in Italy (Lano,

North American continent

Like the European continent, the peoples of the north American continent is
also very much obsessed about their looks and presentation, therefore L'Oreal has
a very good chance to trade in this country and that is what L'Oreal is doing for
past many decades, the major consumers of L'Oreal in the north American
continent is from the united states of America and the Canada.

As the United States of America is the biggest economy till date therefore
L'Oreal's business is blooming in the states. The major states of the USA such as
New York which is one of the fashion capitals of the world and the Las Vegas and
the Los Angeles which is considered as one of the most happening cities of the
world where people is highly obliged to fashion, L'Oreal has the biggest market in
the US after the European countries like France and Italy.

L'Oreal is also facing a great challenge from other major competitors of the
USA but still they are finding themselves at the top of the list because of their
policies of products, promotion and pricing according to the place. The peoples of
the north American continent can afford premium products therefore the main
source business of L'Oreal in the north American continent is the premium
products unlike the Asian continent where people are not very much interested in
the premium products.

The peoples of the North American continent mainly youths are very much
impressed with the products offered by L'Oreal, and the pricing structure of the
products of L'Oreal is also very nominal in these countries therefore people are
keen to use these products.

L'Oreal in US

L'Oreal success in US mainly depends on the anti aging cream which has been
launched in recent time in the country. It is predicted that future success of
L'Oreal in the country mainly depends on this product by L'Oreal. Main reason
behind this is that anti aging skin care cream has the marketing leading growth in
the country and there is more and more number of competitors emerging with this
product in the market. Hence, it has become necessary for the company to keep a
real focus on the anti aging cream segment.

Skin care segment in US is heavily competitive and hence L'Oreal research team is
trying to maintain its share in the market of 13.5 percent and is not focusing to
increase the share (Pitman, 2010).

L'Oreal in Mexico

In order to get success in the beauty industry in Mexico, L'Oreal Mexico

has chosen Digimind for the marketing and intelligence need for the company.
Company mainly focuses on the innovation and creating a large customer base with
new and successful product line for the customers. In Mexico, L'Oreal has been
one of the leading cosmetic companies and has a real quest for the innovation and
excellence. Digimind has been hired by the company which is considered as one of
eh most profitable company since its inception and has a constant growth rate of
50 percent (L'Oreal Mexico trusts Digimind for its Competitive Intelligence
system, 2010).


Oceania includes countries such as Hawaii, Philippines, and some minor islands
such as Bonin Islands etc.
The trading links of L'Oreal is not so much in these countries but it is increasing
day by day since the concept of globalization is introduced, L'Oreal promises to
have a very good trade in these countries in the future as the trade of L'Oreal is

The major product that is consumed in these countries includes sunscreen and
other products like body lotions and other sun blocking creams. The strategy of
L'Oreal to deal in the Oceania subcontinent is quite different from what we have
discussed earlier.

The pricing structure of the products of L'Oreal is very much in accordance to the
needs and demands of the peoples of the Oceania subcontinent.

The Oceania subcontinent is still to be explored by L'Oreal and L'Oreal is promised

to do a good trading business in the subcontinent as the needs of peoples in this
subcontinent is shifting from mere sun screen to other products offered by

Understanding of different cultural distinctions for international market

The knowledge of different cultures is very important for L'Oreal in order to make
a firm base in the market of any country. The different factors that are very
important for L'Oreal to look upon are:

The effect of culture of the country is one of the major aspects that L'Oreal
needs to look upon as cultural factors like whether the country is agriculture based
or industry based country had a direct impact on the survival of the company in the
targeted country, the understanding of the cultural variations is also very
important for any company in order to make business and forming a firm base for
their products in an economy. The success of any multinational company or a
specific product depends very much on the purchasing power of the peoples of that
country and also the effect and success of the product in the country. For ex.
L'Oreal is having a different pricing structure for different country and also the
product specification changes according to the culture for e.g. the product used in
England may be of no use in Asian country and vice-versa. Therefore before making
a trade with any organization or country it is very important for L'Oreal to check
out the feasibility of the product in that country and the end user.
Effect of geography is also a very important factor that should be kept in mind
while trading with any country. For L'Oreal especially this factor is of immense
importance in deciding the feasibility of trade with the country because there are
many things that should be kept in mind while doing any trade within any country
like checking out the feasibility of the transportation and goods to places like
countries in which terrains are very rocky and full of mountains and plateau it is
very hard for L'Oreal to transport its products through any mode of road and by
air if there is not an efficient air transport services in the country, though it is
easy for the storage of cream and related products in such type of areas in which
the temperature are low. On the other hand if the road transport system is good in
some place then there is a possibility that the place lies in a tropical region where
the temperature is very high therefore it would be very difficult for the company
to have a proper storage at a low temperature. Therefore feasibility of the trade
in geography like this should also be considered (Wahlen, 2006).

Technology and economics should be considered while having a trade between any
countries. I.e. the project manager who is working on to check the feasibility and
the trade chances with the country should also see if the country have enough
technological advancement so that they can store and produce their goods at the
place itself i.e. constructing a manufacturing unit rather than importing the
product from the head manufacturing unit in the parent company. Thus this is very
important for L'Oreal to make sure if the companies to whom they are going to
make trade relations are equipped with advanced technology so that they can
produce the products in the quantity they want to without having many problems.
Another important thing that should be kept in mind is the economic condition of
the country i.e. the company has to be made sure that if they are investing some
money in a project of establishing a business in a country than they are getting
enough returns in turn, and that could only be defined by the economic condition of
the country like in the western European countries like France and England and in
the united states where the economy is very solid and established it is very easy to
L'Oreal to have a better customer base, and likewise L'Oreal can invest much
money in the developing countries like India, china or Latin American countries
where the lifestyle of peoples is enhancing and peoples are more keen to use
products that are considered luxury and of a very high quality.

Another major point that L'Oreal should kept in mind while doing trade within any
different country is the political economy of that country i.e. the policies of doing
trade within that country like for e.g. the united states are having a very open
trade policy which allows any company to trade within the country without having
much restrictions of trading, but in some countries like the china and Japan who is
not so open in terms of open trading and lays emphasis on selling their own country
made products rather than supporting some foreign brand, therefore it would be
very difficult for L'Oreal to have a business base in these countries, and in
countries like India which is a developing economy and which allows trading without
having much restrictions and peoples of whom are developing with the developing
economy with change in the lifestyle (Comezz).

Therefore the major things that should be kept in mind for L'Oreal while doing
business in the global market according to the very concept of globalization is to
form an effective global strategic team for defining the trading policies to work in
any country, the globalization strategy should comprises of major factors like
cultural differences, economic policies of the country etc. moreover the changing
lifestyles of the peoples and the rapidly changing economies should also be kept in
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