L Oreal S ACD Supply Chain Puzzle Diagnosing The Root Causes of Underperformance Case Solution

L Oreal s ACD Supply Chain Puzzle
Diagnosing the Root Causes of

Underperformance Case Solution
Posted by Adam Hudson on Dec 20 2017
1. INTRODUCTION OF L Oreal s ACD Supply

Chain Puzzle Diagnosing the Root Causes of
Underperformance CASE SOLUTION
The Harvard business review has published the L Oreal s ACD Supply Chain Puzzle
Diagnosing the Root Causes of Underperformance Case Study. Like all HBR case
studies, the L Oreal s ACD Supply Chain Puzzle Diagnosing the Root Causes of
Underperformance Case is designed and drafted in a manner to allow the reader to
experience a real-world problem and solve it accordingly. The case study, like other
HBR case studies, will help the reader and students develop a broader, and a clearer
understanding of the business world and dynamics.
The L Oreal s ACD Supply Chain Puzzle Diagnosing the Root Causes of
Underperformance Case is based on a current managerial and strategic problem being
faced by the organization, which must be solved tactfully to allow progression, as well
as maintain a competitive position. This paper is written to facilitate the case solution
for the L Oreal s ACD Supply Chain Puzzle Diagnosing the Root Causes of
Underperformance Case Study.
The case solution for the L Oreal s ACD Supply Chain Puzzle Diagnosing the Root
Causes of Underperformance Case Study first identifies the central issue that is
elaborated on throughout the case. The case solution then analyses the case through
relevant strategic models and tools including the SWOT Analysis, Porter Five Forces
Analysis, PESTEL Analysis, VRIO analysis, Value Chain Analysis, BCG Matrix
analysis, Ansoff Matrix analysis, and the Marketing Mix analysis. This analysis is to
help in the identification of a feasible strategy and solution for the L Oreal s ACD
Supply Chain Puzzle Diagnosing the Root Causes of Underperformance Case Study.
Alternative solutions are also proposed in the case solution, primarily because
alternative solutions often act as contingency plans.
2. PROBLEM IDENTIFICATION
2.1. Harvard business school case studies
All case studies published by the Harvard business review comprise of a central
problem that is faced by the protagonist. This problem mostly holds implications for
managerial and strategic directions of the company. For readers and students of HBR
case studies, it is critical to identify the problem that the L Oreal s ACD Supply Chain
Puzzle Diagnosing the Root Causes of Underperformance faces. This problem is
usually hinted towards in the introduction of the case and develops along the way.
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2.2. Solving HBS case studies

As a result, for solving the L Oreal s ACD Supply Chain Puzzle Diagnosing the Root
Causes of Underperformance case, it is essential to read the case study thoroughly.
The identification of the problem correctly is vital for undergoing the analysis rightly,
and for developing relevant solutions for the L Oreal s ACD Supply Chain Puzzle
Diagnosing the Root Causes of Underperformance Case Study. It is also essential to
identify all the appropriate parties that are being impacted by the problem as well as
the decision. The correct problem identification will ensure that all the solutions
developed during the case analysis of the L Oreal s ACD Supply Chain Puzzle
Diagnosing the Root Causes of Underperformance Case Study are applicable and
pragmatic.
EXTERNAL ENVIRONMENT ANALYSIS

The external environment analysis is needed for the L Oreal s ACD Supply Chain
Puzzle Diagnosing the Root Causes of Underperformance Case Study to make sure
that it actively, and proactively responds to the macro-environment. The macro
environment or the external environment for the L Oreal s ACD Supply Chain Puzzle
Diagnosing the Root Causes of Underperformance Case includes those factors which
are not in control of the business or the company directly. As a result:
 The L Oreal s ACD Supply Chain Puzzle Diagnosing the Root Causes of
Underperformance cannot influence these factors in its favour, and in contrast,
these factors directly affect the operations and workings of the company.
 As a result, L Oreal s ACD Supply Chain Puzzle Diagnosing the Root Causes
of Underperformance must make sure to continually assess and review the
external environment to make sure that it responds to external factors, and take
them into account, during strategic decisions, and strategy devising.
Businesses like L Oreal s ACD Supply Chain Puzzle Diagnosing the Root
Causes of Underperformance make use of strategic model tools continually to
make sure that they are aware of the external environment.
 These include tools like the pestle analysis and Porter’s five force model, as
well as strategic group analysis and pentagonal analysis, to name a few.
The external analysis for the L Oreal s ACD Supply Chain Puzzle Diagnosing
the Root Causes of Underperformance Case Study will assess and will apply
the strategic models and tools to review the business environment for the
company.PESTEL Analysis
3.1.1. Political
Political factors and elements can have a direct and indirect impact on the business.
This is seen through the L Oreal s ACD Supply Chain Puzzle Diagnosing the Root
Causes of Underperformance Case Study.
3.1.1.1. Policy Makings
 Policymakers for the L Oreal s ACD Supply Chain Puzzle Diagnosing the Root
Causes of Underperformance Case are in all likelihood to intervene in the
business surroundings.
 Commercial restrictions and political stability are additionally integral factors
that will determine the success or failure of L Oreal s ACD Supply Chain Puzzle
Diagnosing the Root Causes of Underperformance.
3.1.1.2. Taxation
 Tax policy will influence the cost of doing business for L Oreal s ACD Supply
Chain Puzzle Diagnosing the Root Causes of Underperformance.
 An increase in organization taxation (on business profits) has a similar impact
as an expansion in expenses.
 Organizations can pass a portion of this increase on to shoppers in more
expensive rates, yet it will likewise influence the bottom line of the business.
3.1.1.3. Government Support
 The government helps organizations in two primary ways: monetary help and
regulatory.
 L Oreal s ACD Supply Chain Puzzle Diagnosing the Root Causes of
Underperformance can use government assistance and grants for purposes of
growing the business, advancement, exporting, and innovative work.
Underperformance can also be impacted by when Governments modify
regulations and laws.
3.1.1.4. Political Stability

 Lack of political stability in a country impacts business tasks. Political stability is
particularly essential for the organizations which work globally, such as L Oreal
s ACD Supply Chain Puzzle Diagnosing the Root Causes of
Underperformance.
 A forceful takeover could oust a legislature. The takeover could prompt mobs,
plundering and general issue in nature. These disturb business tasks for L
Oreal s ACD Supply Chain Puzzle Diagnosing the Root Causes of
Underperformance.
 Purchasing political risk insurance is a way for L Oreal s ACD Supply Chain
Puzzle Diagnosing the Root Causes of Underperformance to oversee political
hazard. Organizations that have worldwide activities utilise such as insurance
to lessen their risk presentation.
 The soundness of a political framework can influence the attractiveness of a
specific nearby market for L Oreal s ACD Supply Chain Puzzle Diagnosing the
Root Causes of Underperformance.
3.1.2. Economic
The economic factors are one of the most important of PESTEL factors and can
influence L Oreal s ACD Supply Chain Puzzle Diagnosing the Root Causes of
Underperformance in several ways.
3.1.2.1. GDP
 Economic components have the most evident effect on the profitability and
overall appeal of L Oreal s ACD Supply Chain Puzzle Diagnosing the Root
Causes of Underperformance.
 Even though GDP per capita is a useful economic factor, GDP per capita gives
just a fractional perspective on the economic factors that may influence L Oreal
Underperformance.
 Higher GDP leads to higher disposable income and hence higher sales for L
Underperformance.
3.1.2.2. Inflation
 Higher inflation will disintegrate the purchasing power of the consumer and the
shopper
 Higher inflation will also harm the costs of raw materials and other inputs that
are utilised by L Oreal s ACD Supply Chain Puzzle Diagnosing the Root
3.1.2.3. Interest Rates
 Fluctuations in interest rates may translate into higher or lower costs for the
purchase or sale of items and administrations provided by L Oreal s ACD
Supply Chain Puzzle Diagnosing the Root Causes of Underperformance.
 Higher interest rates hurt the disposable cash of consumers.
3.1.2.4. Unemployment Rate
 A high unemployment rate is also unadvisable as it dissolves dispensable

income of consumers, and will harm L Oreal s ACD Supply Chain Puzzle
Diagnosing the Root Causes of Underperformance ’s position.
 The high unemployment rate will lead to lower sales for L Oreal s ACD Supply
Chain Puzzle Diagnosing the Root Causes of Underperformance and impact its
overall profitability and revenues.
3.1.2.5. How can the L Oreal s ACD Supply Chain Puzzle Diagnosing the Root
Causes of Underperformance decrease the risk of economic instability?

Underperformance can work towards building economies of scale
 Maintaining business costs and controlling the final price of the product can
also help L Oreal s ACD Supply Chain Puzzle Diagnosing the Root Causes of
Underperformance fight economic instability
Underperformance can also work towards building a sustainably managed
workforce
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3.1.3. Social
Social influences will stem from social components of the macro environment. Under
the PESTEL Analysis, they can influence L Oreal s ACD Supply Chain Puzzle
Diagnosing the Root Causes of Underperformance in several ways:
3.1.3.1. Social patterns and consumer behaviour
 Social patterns affect work trends and patterns and are directly related to the
behaviours of consumers.
 Social patterns also have a direct influence on buyer tastes and inclinations,
and the specific kind, structure, and volume of interest for an item or service.
3.1.3.2. Social patterns and changing consumer needs

 The checking of social patterns will enable L Oreal s ACD Supply Chain Puzzle
Diagnosing the Root Causes of Underperformance to reposition its items or
administrations to meet the changing desires and needs of consumers.
3.1.3.3. Social trends in education
 Social trends of higher education have allowed firms like L Oreal s ACD Supply
Chain Puzzle Diagnosing the Root Causes of Underperformance to have
access to a pool of higher skilled talent – but at the same time, also face a
more criticising consumer base.
 Higher education has also made consumers more aware of different product
offerings by companies like L Oreal s ACD Supply Chain Puzzle Diagnosing the
Root Causes of Underperformance.
 consumers are also more educated and knowledgeable of different substitutes
of a product, as well as become more readily available at different touchpoints.
3.1.3.4. Social patterns make companies more consumer-centric
 Companies like L Oreal s ACD Supply Chain Puzzle Diagnosing the Root
Causes of Underperformance are expected to become more consumer-centric
than product-centric.
 Similarly, Market segmentation and consumer grouping are dynamically moving
towards measures of psychographics and lifestyles to understand the
consumer more.
3.1.3.5. How can L Oreal s ACD Supply Chain Puzzle Diagnosing the Root
Causes of Underperformance use social aspects for growth?
 Use consumer-centric means of segmentation and targeting.

 Use consumer-oriented and consumer-based marketing – which use emotional
appeals to influence consumers.
 Make products more accessible at different touch points common to target
consumers socially.
3.1.4. Technological
The technological factors can influence L Oreal s ACD Supply Chain Puzzle
Diagnosing the Root Causes of Underperformance in several ways:
3.1.4.1. Innovation
 The quick pace of technological change at L Oreal s ACD Supply Chain Puzzle
Diagnosing the Root Causes of Underperformance may be driven through
innovation.
 Business leadership at L Oreal s ACD Supply Chain Puzzle Diagnosing the
Root Causes of Underperformance tries to push the limits of present limitations.
3.1.4.2. The advent of the internet and online retailing
 The expansion of the Internet and online business has discarded many
intermediaries. L Oreal s ACD Supply Chain Puzzle Diagnosing the Root
Causes of Underperformance can communicate and retail directly to the
consumers now, or through modern intermediaries such as eBay as well, for
example.
Underperformance may also use current social networks to retail and use e-
commerce to boost sales.
3.1.4.3. Social media and business growth

Underperformance can make use of social media to interact and reach with
consumers
 Social media can also be used to reach the target market audience more
effectively
 Social media is cost-effective and strategically more influential for L Oreal s
ACD Supply Chain Puzzle Diagnosing the Root Causes of Underperformance
3.1.4.4. Improved value chain network
 For L Oreal s ACD Supply Chain Puzzle Diagnosing the Root Causes of
Underperformance, technological innovation can be utilised to build on
competitive advantage through several different ways.
Underperformance can incorporate less expensive production, improved
access to clients, improved marketing, improvement in product quality, and
increased levels of business intelligence than the competition.
3.1.4.5. Managing technology and the future for L Oreal s ACD Supply Chain
Puzzle Diagnosing the Root Causes of Underperformance
 To flourish in a business world that is quick paced and receptive to innovative

change, L Oreal s ACD Supply Chain Puzzle Diagnosing the Root Causes of
Underperformance must stay cautious.
 It must be always be updated on any technological developments in the
business and industry.
Underperformance should weary of how the company are probably going to
influence its future attractiveness and profitability.
3.1.5. Environmental
For L Oreal s ACD Supply Chain Puzzle Diagnosing the Root Causes of
Underperformance, the environmental aspects of the PESTEL analysis may include:
3.1.5.1. Environmental stability and business standards

Underperformance may be expected to incorporate maintainability standards
into their business methodologies and to help resource allocation choices.
Underperformance may also be subject to environmental laws – which will
impact and guide its operations to become more environmentally friendly.
3.1.5.2. Environmental stability and budget allocation
 Leadership in the L Oreal s ACD Supply Chain Puzzle Diagnosing the Root
Causes of Underperformance must measure the connection between natural
activities and budgetary execution.
Underperformance also strategically decides and assesses if the organization
have been estimating the monetary effect of natural and social activities.
3.1.5.3. Environmental sustainability

Underperformance also distinguishes and differentiates explicit zones of
concern and impediments to the coordination of environmental sustainability
into corporate performance and strategy
Underperformance also gives explicit direction concerning how organizations
can push toward a superior reconciliation of ecological and social activities in
their basic leadership procedures and tasks.
3.1.5.4. Environmental sustainability and business growth

Underperformance may use environmental issues to adjust financial, natural
and social performance.
 Concerns towards the environment will enhance the business image for L Oreal
Underperformance.
 Environmental sustainability within business goals and strategy will also reflect
corporate responsibility on the part of L Oreal s ACD Supply Chain Puzzle
3.1.5.5. Environmental sustainability and improved consumer relations
 Consumers will be more inclined towards the use of environmentally

sustainable products.
 Environmental sustainability in operations works towards improving the bottom
line and overall profitability for the business of L Oreal s ACD Supply Chain
Puzzle Diagnosing the Root Causes of Underperformance.
 Improvement of cost management and operations will be observed in the
business as well.
3.1.6. Legal
Legal components can influence L Oreal s ACD Supply Chain Puzzle Diagnosing the
Root Causes of Underperformance directly, and can likewise influence the instruments
through which an organization buys its stock or connects with the client. The L Oreal s
ACD Supply Chain Puzzle Diagnosing the Root Causes of Underperformance should
be mindful, for example, of the following legal aspects:
3.1.6.1. Labour law
 Labour law refers to the guidelines in regulations that set up minimum and
benchmark conditions.
 These include identifying with the work of people.
 Labour laws include aspects of minimum working age, least time-based
compensation, etc.
Underperformance must be mindful of these laws in routine business tasks
such as hiring, for example.
3.1.6.2. Discrimination law
 Under the discrimination law, L Oreal s ACD Supply Chain Puzzle Diagnosing
the Root Causes of Underperformance must ensure to avoid episodes of
unequal or uncalled for treatment based on an individual's age, inability, sex,
national source, race, religion, and sexual orientation.
Underperformance should train its human resource management team in
ensuring that there is no:
o Unequal hiring
o Discrimination in recruitment
o Internal discrimination in talent management
o Bias in training opportunities
o Unfair compensation systems
o Prejudiced promotions and succession management
3.1.6.3. Health and safety laws:
 Under this, L Oreal s ACD Supply Chain Puzzle Diagnosing the Root Causes of
Underperformance is required to give a protected work environment to their
workers.
 Working environment security and wellbeing laws build up guidelines intended
to dispense with individual wounds and injuries from happening in the work
environment.
 all operations of L Oreal s ACD Supply Chain Puzzle Diagnosing the Root
Causes of Underperformance should be designed to physically and emotionally
safeguard and protect the employees and the labour force employed
3.2. Porter’s five forces

 The five forces identified in Porter's model can effect L Oreal s ACD Supply
Chain Puzzle Diagnosing the Root Causes of Underperformance ’s ability to
serve its clients and make a profit.
 A change in any of the five forces may regularly require a business unit from L
Underperformance to reassess the market place given the general change in
industry data and dynamics. The general industry appeal and attractiveness.
Underperformance should apply and centre their skills, plan of action or
business models to accomplish profits above the business average. This may
be done in multiple ways, each distinguished in their application to the forces
individually as is elaborated below:
3.2.1. The threat of new entrants

3.2.1.1. Market and industry share
 New entrants to an industry bring new potential and a choice to increase the
market share and overall share of the pie that puts pressure on price, costs,
and the investment price essential to compete.
Underperformance, particularly while new entrants are diversifying from
different markets into the chief industry, they will be able to leverage existing
talents and cash flows to shake up the opposition.
3.2.1.2. Limitation on earning expectation and capability of firms in an

industry
 The threat of entry in the industry, consequently, puts a cap at the earning
capacity and profit capability for L Oreal s ACD Supply Chain Puzzle
 While the threat of new entreaty is high, L Oreal s ACD Supply Chain Puzzle
Diagnosing the Root Causes of Underperformance should maintain their prices
or increase funding and investment to discourage new competition.
3.2.1.3. The risk to new entrants because of high entry barriers

 The risk of entry in an industry depends upon on the peak of entry barriers and
limitations that are a blessing for players such as L Oreal s ACD Supply Chain
Puzzle Diagnosing the Root Causes of Underperformance and on the response
that new entrants can count on from existing players.
 If entry barriers are low and novices count on little retaliation from the
entrenched competition, the chance of entry is high, and profitability for L Oreal
s ACD Supply Chain Puzzle Diagnosing the Root Causes of Underperformance
will be moderated.
 It is the danger of entry, not whether the entry of new players takes place that
holds down profitability.
3.2.1.4. Some barriers to entry for new entrants in favour of L Oreal s ACD
Supply Chain Puzzle Diagnosing the Root Causes of Underperformance :
 Capital requirements: a strong barrier to entry as new entrants will require

strong financial and resource cushioning for operations to take off and be
sustained.
 Economies of scale: a strong barrier to entry as existing players in the industry
operate with high economies of scale, which new entrants will take time to
achieve.
 Product differentiation: the strong barrier of entry if products within the industry
have high levels of differentiation on which they operate and approach
customers.
 Access to distribution: a standard barrier to entry since new entrants will have
equal access to the retailers and distributing agents within the industry.
 Customer loyalty to established brands: a strong barrier to entry since customer
loyalties and perceptions are emotionally built and strongly enforced as long as
the brand continues to deliver on its core promise and quality.
3.2.1.5. What can L Oreal s ACD Supply Chain Puzzle Diagnosing the Root
Causes of Underperformance do to face this challenge?
 Build and invest in marketing to distinctly establish a point of differentiation in

customer perception as well as strengthen customer loyalty.
 Invest in research and development to make sure that it continues to have
competitive differentiation from other players at all times.
 Focus on building economies of scale in production and sales.
3.2.2. The threat of substitute products or services

3.2.2.1. Substitute form
 There are always different alternatives or substitutes for various products that
lead an industry.
 These substitutes may be direct or indirect– the direct substitutes are the same
category products. produced by different players; indirect substitutes are the
ones from different product categories that can replace the product for L Oreal
Underperformance.
3.2.2.2. Switching cost to substitutes for consumers
 Switching costs for direct substitutes is not very high for consumers.
 The per-unit-volume prices may be higher or lower.
 This makes the threat of substitute high.
3.2.2.3. Substitute and product benefit
 Alternatives to the product or substitutes may not be able to provide the same
benefits
 May often lead to additional costs incurred.
 Switching costs towards alternatives becomes higher, and consumers may not
switch to substitutes.
 This, in turn, will make the threat of substitutes low.
3.2.2.4. Substitutes and consumer behaviour
 From the point of view of the consumer, there are some differences between
the ways different products of the same or similar category are used, but many
consumption decisions are a matter of personal taste - this makes products
vulnerable to the threat of other substitutes.
 Overall, the threat of substitutes is assessed to be moderately high.
Causes of Underperformance combat the threat from substitute products?
 Focus on delivering consistently high quality.

 Focus on maintaining strong consumer relationships.
 Integrate strategic marketing to form an emotional connection with the
consumers and strengthen consumer loyalty.
 Invest in pop up stores owned by the company to stock the L Oreal s ACD
Supply Chain Puzzle Diagnosing the Root Causes of Underperformance brand
exclusively, and integrate it with brand characteristics and personality to attract
consumers.
3.2.3. Bargaining Power of Buyers

3.2.3.1. Who is the buyer?
 The buyer for L Oreal s ACD Supply Chain Puzzle Diagnosing the Root Causes
of Underperformance is not necessarily the group that consumes the product –
but rather refers to the group of customers that purchases the product from L
Underperformance to either distribute further, retail it, or even consume it.
 Hypermarkets and supermarkets, as well as independent retailers and
distribution agents to end consumers, are the core buyers for L Oreal s ACD
Supply Chain Puzzle Diagnosing the Root Causes of Underperformance that
make up the market’s volume.
 Supermarkets and hypermarkets, along with many food chains that are
concentrated, which increases the buyer power.
 Products are stocked with buyers and retailers by L Oreal s ACD Supply Chain
Puzzle Diagnosing the Root Causes of Underperformance based on consumer
demand.
3.2.3.2. Buyer power and costs

Underperformance will not experience switching costs for switching buyers.
 Multiple product offerings by buyers also increase buyer power.
3.2.3.3. Retail product differentiation
 Products offered by retailers are differentiated based on several characteristics

– not only reliant upon product characteristics but also consumer segment
characteristics. Because of this, retailers are expected to offer a wide range of
the same product category. This works towards negating and weakening the
overall buyer power.
 Buyer power is assessed to be moderate to high.
3.2.3.4. What can L Oreal s ACD Supply Chain Puzzle Diagnosing the Root
Causes of Underperformance do to ensure risks against high buyer power?

Underperformance can focus on differentiating its product and increasing its
demand with the end consumers through different marketing tactics, this will
increase the demand of the product with different buyers, and will work towards
moderating buyer power.
Underperformance should employ economies of scale to manage costs of
production. If it offers products at moderate prices to buyers, it will again be
able to attract a large number of buyers for its product, and in this way, will be
able to break off the high bargaining power.
3.2.4. Bargaining Power of Suppliers

3.2.4.1. Who is the supplier?
 Supplier power refers to the power that is held by the suppliers in terms of
pricing of the raw materials and inputs used for the business.
3.2.4.2. Sources of production for L Oreal s ACD Supply Chain Puzzle
Diagnosing the Root Causes of Underperformance
 The main sources for production are the following:

 Supplies from vendors – sourcing from independent suppliers.
 Own manufactured equipment and resources: this model is practised by
companies that are well integrated backwards and forwards.
3.2.4.3. Independent suppliers
Underperformance, there are numerous independent suppliers within the
industry, and all comprise of a few pretty small operations that lead to
weakened overall supplier power.
 Independent sellers and suppliers, however, can locate different opportunities
and invest in alternative markets – which can be a challenge for L Oreal s ACD
Supply Chain Puzzle Diagnosing the Root Causes of Underperformance.
3.2.4.4. Supply quality and business dynamics
 Suppliers can integrate forward into the decision making and business
dynamics themselves as well.
 Also, to the buyers, the quality of the supplies and the raw materials is of
utmost importance.
 However, in an industry with a high number of suppliers, L Oreal s ACD Supply
Chain Puzzle Diagnosing the Root Causes of Underperformance can switch to
different suppliers at any time without experiencing any costs of the business.
 Overall bargaining power of suppliers is assessed to be moderate.
Causes of Underperformance deal with the challenge?
 Get contracts with multiple suppliers and get resources and raw materials from
them accordingly.
 Invest in manufacturer controlled production facility to maintain consistency in
quality.
3.2.5. Competitive Rivalry among Existing Firms.

3.2.5.1. Nature of fragmentation
 The market is highly fragmented, which makes it more competitive.

 The market is never too concentrated, and as a result, it has players of varying
size of operation – from very small to big players.
3.2.5.2. Brand management

 Producers have begun to make use of brand management techniques and
contemporary merchandising by launching bold brands, label designs and
marketing campaigns to become more identifiable to the public.
3.2.5.3. Diversification
 Purchasers and buyers have a wide range of products to choose from, with
relatively low switching costs. These factors tend to intensify rivalry.
 Though players in the industry may off niche or premium products, they also
continue to operate in the mass markets at large, which again leads to high
competition.
3.2.5.4. High business costs
 The high fixed cost and the high bargaining power of the buyers, which can
lead to the lowering of the prices from manufacturers add to the highly
competitive nature of the industry.
 The overall rivalry is assessed to be high.
Causes of Underperformance combat rivalry and competitive forces of the
industry?
 Focus on research and development to identify market niche as well as to be

able to add differentiating factors t its products. This will increase its shield
against influence from competitive forces and their actions.
 Build a strong and loyal consumer base by focusing on quality and marketing
strategies.
 Focus on capturing new markets – in the same region as well as new regions to
avoid saturation of resources in one market only.
3.3. Pentagonal analysis

3.3.1. The threat of new entrants
3.3.1.1. Restriction into industry
 The ease of entry into the industry is restricted.

 There are high barriers to entry.
 These are government policies, consumer loyalty, brand differentiation etc.
3.3.1.2. Switching costs for consumers

 The high number of direct and indirect alternatives available also make L Oreal
vulnerable to the high threat of substitutes.
 Low to negligible switching costs experienced on the part of the consumers and
buyers.
3.3.1.3. Profitability
 New entrants are attracted to the industry because of high profitability.

 If there are high barriers to industry, the industry will continue to maintain high
profitability
 Low barriers to entry will result in a lower average of industry profits.
 Lower entry barriers will also lead to higher operational costs because it will
increase the intensity of competition within the industry.
3.3.2. The threat of substitute products/services

3.3.2.1. Increased competition
 High threat of substitutes.

 This is because of higher competition.
 The higher competition leads to imitation of products and systems.
 This imitation makes substitute products similar to each other – as much as
possible.
3.3.2.2. The offering of similar benefits
 Consumers readily adopt alternative and substitute products.

 They offer similar benefits.
 They have similar functional benefits and features.
3.3.2.3. Low costs of switching
 Consumers often experience a low cost of switching between substitute

products.
 Low switching costs are also developed because competition often produces at
lower operational costs.
 Low switching cost results in lower overall product prices for the consumer.
 Industry players, therefore, also start competing on aspects of price.
3.3.3. Bargaining power of buyers

3.3.3.1. Market fragmentation
 The industry in which L Oreal s ACD Supply Chain Puzzle Diagnosing the Root
Causes of Underperformance operates is highly fragmented.
 It has numerous local and international players.
 It is not very likely for players in the industry to integrate forward into on-trade or
retail businesses.
 This results in the players experiencing high bargaining power of the buyers
from the market.
3.3.3.2. The concentration of retailing agents
 It also results in a high concentration of individual retailing agents.

 Retailing is also done through hypermarkets and supermarkets.
3.3.4. Bargaining power of suppliers

3.3.4.1. Backward integration by producers
 Backward integration from producers is more commonly observed and seen,

 Many players in the industry have their own production facilities for raw
materials as well.
 The industry has seen a large number of players needing to outsource
resources and raw materials.
3.3.4.2. Outsourcing raw materials
 This outsourcing is done by third-party manufacturers.

 A large number of suppliers present lowers the bargaining power of suppliers.
 Players in the industry have low switching costs between suppliers.
 Suppliers usually are contracted by producers.
 Producers may change suppliers frequently.
3.3.5. Industry rivalry

3.3.5.1. Intensity of competition
 There are strong competition and rivalry in the industry.

 There is a high number of players.
 All players provide similar products.
 Switching costs for consumers is low, which increases competition.
3.3.5.2. Differentiation
 Platers try to differentiate products on different aspects.

 Functional aspects and appeals for all products across the industry remain the
same.
 Competitors and players use emotional appeals, and modern brand
management techniques for differentiation.
 Industry players try to gain consumer loyalty by developing strong emotional
bonds and ties.
Figure
1 Pentagonal analysis for L Oreal s ACD Supply Chain Puzzle Diagnosing the Root
Causes of Underperformance
3.4. Placement of the business along the

industry life cycle
3.4.1. Identifying where L Oreal s ACD Supply Chain
Puzzle Diagnosing the Root Causes of Underperformance
is on the Industry Life Cycle Curve
Identification of the place and placement on the industry lifecycle is important as it will
help L Oreal s ACD Supply Chain Puzzle Diagnosing the Root Causes of
Underperformance make important decisions and strategies for the future.
3.4.1.1. Strategic decision making
 Expansionary plans and investment decisions.

 Decide on various marketing strategies and tactics for targeting different
consumer segments to establish and establish the product.
 Selection of new geographic regions for expansion and exploration of new
consumer bases.
3.4.1.2. Budget allocation
 Resources and alternative routes for future growth and establishment.

 Exploration of different diversification options.
Figure 2 PLC Placement along the Industry Lifecycle curve
3.4.2. Introductory stage

3.4.2.1. Firm strength
 The industry is in the infancy stage.

 Firms are generally small, entrepreneurial and compact during this stage.
Underperformance will be focused on research and development during this
phase.
3.4.2.2. Financial Position
 Looking for investment and funds for growth.
3.4.2.3. Nature of product
 Products offered during this stage re doubtful as success and life of the product
is unproven and not known.
Underperformance will use a focused strategy during this phase to emphasise
the uniqueness of the product.
 The product or the brand will have a small market of consumers – known
largely as early adopters
 Marketing strategies adopted by the company will focus on generating
awareness of the product and therefore, will largely use a functional appeal.
3.4.3. Growth stage

3.4.3.1. Financial position
Underperformance will require high capital during this stage.
Underperformance will need investment and funds for launching strategic
marketing campaigns.
 Funds will also be required for fuelling physical growth of the company in the
form of investment in equipment and property to facilitate growth.
3.4.3.2. Growth factors
 Companies may increasingly encourage economies of scale because of

standardisation experienced during this stage.
 Consumer feedback from the introductory phase will be incorporated, and
research and development will be conducted to make appropriate changes in
the product design and offering.
 Success in this stage for L Oreal s ACD Supply Chain Puzzle Diagnosing the
Root Causes of Underperformance will lead to growing demand, which in turn
will fuel sales demand.
3.4.3.3. Nature of Product
 Products in this stage have high growth and high market share.
 There is also increasing competition and rivalry in the market – new entrants
will enter and compete looking at the success of products during this stage.
3.4.4. Maturity stage

3.4.4.1. Sales and growth

Underperformance will experience slowing growth during this stage of the
industry life cycle.
 Sales will be expanding, and earning will be growing – however, the rate will be
slower than the growth stage.
 Competition from late entrants will be present, and obvious during this stage –
who will all try to fight for L Oreal s ACD Supply Chain Puzzle Diagnosing the
Root Causes of Underperformance ’s share of the market.
3.4.4.2. Strategic Marketing
 The marketing strategies must now focus on building loyalty.

 Marketing tactics must be strong and should focus on the uniqueness of the
product. Increasingly emotional appeals may be used.
3.4.4.3. Firm size

 Firm size is generally larger and is more dominant over players if successful-
compared to growth stage.
 Innovations continue but are stable and not radical.
3.4.5. Decline stage

3.4.5.1. Industry changes
 New technological changes and upgrades may make an industry obsolete.

 Players within an industry may also fall back and lose on market share if they
do not keep up with innovations, and investment in research and development.
3.4.5.2. Sales and Competition
 Sales during this phase are decreasing at a high rate.

 Competing players also exit the industry because of the changes and low
demand.
3.4.5.3. Surviving in the decline cycle

Underperformance may also experience mergers and acquisitions during this
phase.
 Diversifications are also most common during this phase as a means of
survival.
3.5. Strategic Group Analysis

3.5.1. L Oreal s ACD Supply Chain Puzzle Diagnosing the
Root Causes of Underperformance and strategic group
formation
 The strategic group analysis will look at an industry’s players' situations in
focused conditions and scenarios.
 It will assess different players competing with L Oreal s ACD Supply Chain
Puzzle Diagnosing the Root Causes of Underperformance through the basic
strategic factors that will decide an organization's profitability, similar to how the
profitability will also be impacted and influenced by the competitive nature of
the industry.
 The strategic group analysis will describe the procedures of every single
noteworthy competitor of L Oreal s ACD Supply Chain Puzzle Diagnosing the
Root Causes of Underperformance along different strategic dimensions.
 These dimensions of comparison differentiate players into strategic groupings
and must be selected as the basis of comparison by taking into account
industry structure, productivity factors, and the venture issues being tended to.
3.5.2. Different aspects of strategic grouping

Key strategic groupings of players within an industry can be made based on numerous
different aspects, such as:
 Specialization
 Brand identification
 Push versus pull strategies
 Channel determination
 Product quality
 Technological position
 Vertical joining
 cost position
 Service
 Price strategy
 Financial or working influence
 Parent organization relationship
 Government relationship
Despite the various aspects available for comparison of competing players, it is often
important to differentiate strategic groupings of players of aspects of how they
compete with each other, and on aspects of where they compete as well
3.5.3. Procedure for strategic group analysis for L Oreal s

ACD Supply Chain Puzzle Diagnosing the Root Causes of
Underperformance
1. Collect results of the player’s analysis.
2. Determine aspects of comparison for strategic groupings.
o Distinguish the players and pick the most important aspects that
separate the players into strategic groups comparing to the issues being
tended to.
o Dimensions may include price strategy and product quality.
3. Group the players: position L Oreal s ACD Supply Chain Puzzle Diagnosing the
Root Causes of Underperformance and rivals along with the matrix.
4. Evaluate group mobility and direction. Assess the key purpose of individual
organizations competing with L Oreal s ACD Supply Chain Puzzle Diagnosing
the Root Causes of Underperformance, similar to assessing industry patterns
and barriers to entry/exit to be able to decide potential developments inside and
between groupings.
3.5.4. How will strategic group planning help L Oreal s
ACD Supply Chain Puzzle Diagnosing the Root Causes of
Underperformance
Underperformance, strategic group analysis is important because it will:
3.5.4.1. Strategic industry dynamics
 Help in reviewing the strategic dynamics and shifts in the industry.

 Identify the closest competition and competing players for the business; help in
assessing the strategic direction of these competing players; and lastly, aid in
developing strategies to stay ahead of the competition.
3.5.4.2. Assessment of market position
 The strategic group analysis is also important for L Oreal s ACD Supply Chain
Puzzle Diagnosing the Root Causes of Underperformance because it will assist
in analysing the current market position of players, as well as help in assessing
future strategic moves and directions of the competition in the market.
 Assists in evaluating and identifying different underlying factors that will
influence the company’s profitability.
 Makes use of standard comparison aspects between different players in an
industry to group them as per strategic directions as well as strategic
dimensions.
3.5.4.3. Identification of barriers to entry in an industry
 Different strategic dimensions along the matrix of strategic groupings are often
characterized by barriers to entry and exit along the strategic groups’
dimensions, as well as by mobility barriers.
 These barriers make it difficult for companies to move along, and in between
different strategic dimensions – often forcing it to stay in place with the same
competition.
3.6. Scenario planning

Scenario planning for L Oreal s ACD Supply Chain Puzzle Diagnosing the Root
Causes of Underperformance’s strategic direction will take form through speculation
and contingency form – methods used by the military for strategic planning and
direction.
3.6.1. L Oreal s ACD Supply Chain Puzzle Diagnosing the
Root Causes of Underperformance ’s Utilization of
Scenario planning
Underperformance, scenario planning comprises of making suppositions of what's to
come, of what will be and how the business condition will adapt, fluctuate, change, and
respond to the future conditions, and changes in the futuristic strategic planning.
3.6.1.1.1. Identify the driving forces of the business:
 Changes in the macro environment

 Changes in technology
 Changes in the economic trade system
 Changes in production methods
 Changes in consumer demands and tastes
 changes in technology and economy
3.6.1.1.2. Identify basic vulnerabilities:
 After L Oreal s ACD Supply Chain Puzzle Diagnosing the Root Causes of
Underperformance has identified the possible uncertainties of the macro
environment, L Oreal s ACD Supply Chain Puzzle Diagnosing the Root Causes
of Underperformance should decide on any two only. These can be:
o Changes in technological advancements and developments. These
changes can be in the form that the industry has progressed to install
more modern and contemporary technological developments.
o Changes in consumer demands and needs.
 These two uncertainties of the future are those that will have the largest impact
and influence on the business.
3.6.1.1.3. Develop a scope of conceivable situations:

Underperformance will now be able to place these two uncertainties along a
matrix.
 Depending on the intensity and direction of the uncertainties and vulnerabilities,
the business will be able to chalk out four possible scenarios as probable plans
of action for the future. For L Oreal s ACD Supply Chain Puzzle Diagnosing the
Root Causes of Underperformance, these can be:
o Install new technology, or update current technology to be on par with
new technology.
o Do market research.
o Engage in innovative marketing to influence consumers.
o Change vertical and backward integrated systems to ensure in-house or
out-house production of technology to stay ahead of the competition.
3.6.1.1.4. Discuss the suggestions:
 Each scenario should be discussed in detail.

 Possible strategic direction and responses for each scenario should be
developed.
 Realignment of business goals and direction, as well as a mission during each
scenario, should also be done to ensure future resilience.
4. ANALYSIS OF RESOURCES AND

COMPETENCES
 This inner analysis and assessment of L Oreal s ACD Supply Chain Puzzle
Diagnosing the Root Causes of Underperformance decide the centre skills
based on the resource based view (RBV) of the premium company.
 Utilizing its core capabilities and capacities, L Oreal s ACD Supply Chain
Puzzle Diagnosing the Root Causes of Underperformance can maintain a
competitive distinction, and leadership over other local as well as international
players in the industry.
 In the VRIN analysis and assessment, L Oreal s ACD Supply Chain Puzzle
Diagnosing the Root Causes of Underperformance makes use of its core
capacities to strengthen its worth and the to continue to deliver the promise of
consistent quality and taste to consumers – as well as guarantee futuristic and
long term gains in the industry.
The following section presents a brief analysis of the VRIN strategic tool as it is applied
to L Oreal s ACD Supply Chain Puzzle Diagnosing the Root Causes of
Underperformance and its impact on the strategic direction.
4.1. VRIN analysis

4.1.1. Valuable
4.1.1.1. International distribution network
The company has an international distribution system with agents and contracts in
countries across the world. This helps the company in making sure that its products
are widely available and easily accessible to all consumers.
4.1.1.2. Experience in expansion to other countries
The experience of expansion to other countries directly as well as indirectly has
allowed the company to gain exposure and experience in international business,
culture and trades.
4.1.1.3. Marketing skills
The company has a unique blend of marketing skills, which allows it to reach
consumers directly through various channels, in a creative way. This is a valuable
resource for the company as it allows the company to ward off potential competition.
4.1.1.4. Market research
The company invests in market research regularly, which allows it to stay updated with
market trends, consumer needs, demands, as well as the changes that take place in
different markets and consumer groups. This is also valuable as it then allows L Oreal
s ACD Supply Chain Puzzle Diagnosing the Root Causes of Underperformance to
make changes in product and service offering accordingly.
4.1.2. Rare
4.1.2.1. Use of progressive technology
The company makes use of progressive technology and invests in new technology to
help it make the business more effective and efficient. This is important for maintaining
competitive differentiation. The technology used by the company also allows lower
chances of human error and increases precision.
4.1.2.2. Use of progressive harvesting methods
The company makes use of modern as well as new and innovative means of cropping
and harvesting as well. The means of production are important for a business to
maintain cost efficiency. This allows lower levels of spoilt raw materials and enhances
the quality as well as the feel of the final product. Also, it allows the company to
maintain the product quality in-house, and maintain consistency in the raw material.
4.1.2.3. Efficient use of economies of scale in production
The company’s effective and efficient use of resources has allowed it to maintain
economies of scale. The company uses economies of scale as a rare resource
available to maintain costs, enhance production, and increase sales – all the while
maintaining a high focus on premium quality and consistency of taste.
4.1.2.4. The uniqueness of product portfolio
The company has a unique and diversified portfolio. This has allowed it to penetrate
different consumer groups. And maintain income from different streams. Into urn, that
gives a strong financial cushioning to the business.
4.1.3. Inimitable
4.1.3.1. Human resource management
The company has taken part in exemplified human resource management in all its
function – from recruitment to training of talent management. This has allowed the
company to develop an inimitable resource that is aligned with the organizational
goals, and mission, and which is synonymous to the organization itself.
4.1.3.2. R&d - new product development
The company’s continued investment in r&d allows it to generate ideas for new
products, as well as test these new products in limited market settings. This allows the
company to assess the viability of new ideas, as well as generate feedback for
improvement where needed. This is an inimitable resource for the company because it
has become part of the company’s system and culture.
4.1.3.3. Innovation
The innovation at L Oreal s ACD Supply Chain Puzzle Diagnosing the Root Causes of
Underperformance is an inimitable resource that allows the company to stay ahead of
the competition as well as maintain high leadership in the industry by having the first
mover advantage in its product portfolio continuously.
4.1.3.4. Organizational culture
The organizational culture at L Oreal s ACD Supply Chain Puzzle Diagnosing the Root
Causes of Underperformance is supportive and innovative. Employees share
information freely. The organizational hierarchy is flatter, which makes leadership and
follower relation smooth and easy. This organizational culture and its aspects cannot
be imitated by competition.
4.1.3.5. Cost control
The company has employed progressive means of controlling costs and maintaining
economies of scale. In this way, prices of the products are maintained and controlled,
and very few cost increases are passed to the consumers. This allows the product to
be easily affordable by the company’s target audience.
4.1.4. Non-substitutable
4.1.4.1. Brand recognition
The brand value and brand recognition enjoyed by L Oreal s ACD Supply Chain
Puzzle Diagnosing the Root Causes of Underperformance is a non-substitutable
resource. The high brand recognition across different consumer group’s in different
countries allows the brand to enjoy high consumer ship, high sales, and a unique bond
with the consumers. This cannot be imitated at all by the competition as the brand
recognition and resonance has been built over the years through hard work and quality
deliverance.
4.1.4.2. Brand equity
Underperformance enjoys high brand equity. This has been developed through the
different stages presented by Keller in his model for brand equity. The high brand
equity also reflects a high emotional appeal that L Oreal s ACD Supply Chain Puzzle
Diagnosing the Root Causes of Underperformance has for the consumers.
4.1.4.3. Emotional affiliation with consumers
This means that the brand fulfils not only functional but also emotional and
psychological needs of the consumers. Again, this is an inimitable resource which the
company has developed because of its honest and trusted relationship with the clients
over some time.
4.2. VRIO ANALYSIS

4.2.1. Strong global presence
4.2.1.1. Valuable
Having a strong worldwide presence is significantly valuable for an organization
attempting to expand its size, deals, and piece of the overall industry. It is a
competitive and sustainable method to acquire incomes from new and existing buyers.
4.2.1.2. Rare
L Oreal s ACD Supply Chain Puzzle Diagnosing the Root Causes of
Underperformance is one of the greatest company all inclusive. Even though there are
other worldwide and international chains of competing companies, L Oreal s ACD
Supply Chain Puzzle Diagnosing the Root Causes of Underperformance has made a
distinct name for its quality and offers.
4.2.1.3. Non-substitutable
For the time being, no competition of L Oreal s ACD Supply Chain Puzzle Diagnosing
the Root Causes of Underperformance could match such an enormous international
presence in terms of quality and consistency. It would require critical investment and
assets to achieve this.
4.2.1.4. Organized to exploit
Underperformance is effectively exploiting this capacity.
4.2.2. Claim to premium products
4.2.2.1. Valuable
Underperformance offers numerous exceptional and fulfilling products that different
contenders don't offer all the time. L Oreal s ACD Supply Chain Puzzle Diagnosing the
Root Causes of Underperformance additionally incorporates information and detailed
ingredients for its products to interest an assortment of clients.
4.2.2.2. Rare
Other competition also offers different products that are offered by L Oreal s ACD
Supply Chain Puzzle Diagnosing the Root Causes of Underperformance, which means
that it is not a rare resource for the company. This is because other players also have
access to similar products and portfolios.
4.2.2.3. Inimitable
Considering other businesses and players are now using this capacity as a means of
expansion and penetration, it can, therefore, be imitated.
4.2.2.4. Organized out to exploit
By offering an assortment of choices and ceaselessly changing the portfolio through
active innovation and new product development, L Oreal s ACD Supply Chain Puzzle
Diagnosing the Root Causes of Underperformance is exploiting this resource. With
plenty of alternatives, the vast majority can discover something they like, and
individuals who like to attempt new products and services every now and again can
undoubtedly do as such with L Oreal s ACD Supply Chain Puzzle Diagnosing the Root
4.2.3. Upscale brand name
4.2.3.1. Valuable
Underperformance brand name enables clients to enjoy and feel a bond of association
with the brand. This allows consumers to feel emotionally attached with the brand, and
experience it as an extension of themselves as well. As such, this becomes a valuable
asset for the company.
4.2.3.2. Rare
Underperformance is a contemporary brand name that has a premium touch to it and
is upscale, modern and lively. Most other companies and competing brands don't have
the quality and packaging to urge clients to engage in a way they do with L Oreal s
ACD Supply Chain Puzzle Diagnosing the Root Causes of Underperformance.
4.2.3.3. Non-substitutable
It would be generally simple for other companies to revamp their packaging and
duplicate the plan of action of L Oreal s ACD Supply Chain Puzzle Diagnosing the
Root Causes of Underperformance. In this way, the upscale and comfortable promise
of the offering by L Oreal s ACD Supply Chain Puzzle Diagnosing the Root Causes of
Underperformance could be imitated.
4.2.3.4. Organized out to exploit
Underperformance is effectively using this resource and enhancing the brand and the
brand promise that numerous clients altogether appreciate. The organization is
exploiting the stylish way of life that is right now present in numerous urban
communities where the brand’s products are widely appreciated and consumed.
4.3. Porter’s value chain

4.3.1. L Oreal s ACD Supply Chain Puzzle Diagnosing the Root Causes of
Underperformance: drawing value from VRIN/VRIO
 The core competencies and strengths of L Oreal s ACD Supply Chain Puzzle
Diagnosing the Root Causes of Underperformance are organizational sources
and capacities that enable the business to flourish regardless of substantial
challenge and strategic difficulties in local and international markets.
 As the VRIO/VRIN analysis have shown and highlighted, the important core
abilities depend on intellectual properties and related propriety data or related
technological structures.
 Different resources and abilities appeared in the VRIN/VRIO analysis and
review that are non-core, and non-central skills but that help the business and
its value chain.
Underperformance ’s core abilities are strong yet restricted.
 In the resource based view, this constraint presents key difficulties, as the
organization wards off competing players from local and international markets.
 The core capabilities in the VRIN/VRIO analysis assume critical jobs in L Oreal
’s value chain. Considering the resource based view and Michael E. Doorman's
value chain conceptualization, L Oreal s ACD Supply Chain Puzzle Diagnosing
the Root Causes of Underperformance ’s value chain gives reasonable and
tasteful products to target buyers.
 The accompanying outline shows the value chain for L Oreal s ACD Supply
Chain Puzzle Diagnosing the Root Causes of Underperformance and its
situation in the bigger value arrangement of the industry:
Figure 3 Value chain for L Oreal s ACD Supply Chain Puzzle Diagnosing the Root
4.3.2. Value framework
Underperformance ’s value chain is a segment of the business' value framework. The
value framework is made out of different other value chains of the speciality units of all
associations included, for example, the organization's producers and the remainder of
the inventory network. In the value chain representation, L Oreal s ACD Supply Chain
Puzzle Diagnosing the Root Causes of Underperformance works directly, as well as
through contracted third parties.
4.3.3. Example from value framework for L Oreal s ACD Supply Chain Puzzle
Diagnosing the Root Causes of Underperformance
 The organization has an internal transportation system of vehicles for making

deliveries to other companies that are in business with stocking and serving L
Underperformance products – in the local markets.
 In this value chain and value framework, L Oreal s ACD Supply Chain Puzzle
Diagnosing the Root Causes of Underperformance ’s competitive advantage
and abilities are distinguished through the VRIO/VRIN assessment are huge in
how the organization's procedures offer some incentive and advantage to the
consumers.
4.3.4. Value chain activities

Brief details of L Oreal s ACD Supply Chain Puzzle Diagnosing the Root Causes of
Underperformance ’s value chain are discussed in the next section:
4.3.4.1. Primary activities
4.3.4.1.1. Inbound logistics
The inbound logistics for L Oreal s ACD Supply Chain Puzzle Diagnosing the Root
Causes of Underperformance refers to producers in different designated and
appointed locations by the company. Also, it also refers to selecting the finest quality
raw materials from in-house production as well as from third-party contractors. These
are transported to the storage sites after which the raw materials are used for
producing different products by the company.
4.3.4.1.2. Operations
Underperformance operates internationally directly or indirectly. The company has
owned offshore shops, as well as stocks its products with other shops across different
countries.
4.3.4.1.3. Outbound logistics
The company has contracted agents in offshore countries and sites to manage product
selling. However, a majority of the products are sold directly to licensed sellers and
shops locally as well as internationally.
4.3.4.1.4. Marketing and sales
Underperformance produces and invests in high quality and premium products. It also
invests in a high level of customer servicing and marketing. All its marketing activities,
however, are based on strong market research and market data.
4.3.4.1.5. Service
Underperformance invests in customer service to develop customer loyalty and build
strong relations with its clients. The company invests in gaining and incorporating
customer feedback and in solving customer queries effectively.
4.3.4.2. Support activities
4.3.4.2.1. Infrastructure
This includes different departments like management, finance, legal, etc. which are
required to keep the company’s business running.
4.3.4.2.2. Human resource management
The company’s committed and trained workforce is considered to be a valuable and an
inimitable resource that has played a vital role in the success and growth of L Oreal s
ACD Supply Chain Puzzle Diagnosing the Root Causes of Underperformance the
employees of the company are motivated, professional, trained, and work alongside
the company’s mission and goals.
4.3.4.2.3. Technology development
Underperformance has been commended and celebrated for the use of effective
technology not only production but also to make the overall system of production and
sale, as well as in house production more effective and efficient. Also, the company
also uses technology to communicate and connect with its consumers effectively.
4.3.4.2.4. Procurement
This involves purchasing the raw material for the final product. The company has
appointed agents that work for the company in different countries and regions to
purchase consistently high quality raw material so that the company can produce the
finest product qualities for delivering to the consumers.
4.3.4.2.5. Bottom line
The concept of the value chain for L Oreal s ACD Supply Chain Puzzle Diagnosing the
Root Causes of Underperformance helps in understanding how value is added in each
process and stage of the value chain. It also helps to understand and separate useful
activities from those that are not useful as such. This improves the overall bottom-line
of the company and increases the profit margins for the company as well.
4.3.4.3. Virtual chain
4.3.4.3.1. Customer-centrism
 Renewed and enhanced way of engaging with consumers.

 Installation of sophisticated consumer data management systems.
 Made use of artificial intelligence to enhance the value chain.
4.3.4.3.2. Improved technological use
 Installed progressive technology for primary and support activities.

 The overall purpose is to provide a better experience to consumers.
 Allows the company to predict future market conditions, and prepare strategic
contingencies accordingly.
 Allows understanding of consumer behaviour and market movements.
4.3.4.4. Generic strategies
 Managed to establish core competitive strategy in the market.

 Competes in the premium sector.
 Does not engage in competition with other cost groups.
 Worked towards improving the service of premium target groups.
 Consumers understand and perceive the brand as a high quality and premium.
 The brand is appreciated for its focused strategy and standing.
 The brand is appreciated and engaged in for its offerings.
5. INTERNAL ENVIRONMENT ANALYSIS

5.1. Porter’s Strategic Options
 Leading organizations such as L Oreal s ACD Supply Chain Puzzle Diagnosing
the Root Causes of Underperformance have obtained sustainable competitive
advantage and have had the option to achieve the strategic position.
 There can be different sources of sustainable competitive advantage for L
Underperformance. A firm can depend on innovation to decrease its overall
production costs and would then be able to pass this advantage on to its
clients.
Underperformance can also concentrate on making a differentiated item or
administration to increase its overall share of the pie.
Underperformance can generate considerable sustainable competitive
advantage utilizing these systems. This is done through means of traditional as
well as modern procedures embraced by L Oreal s ACD Supply Chain Puzzle
Diagnosing the Root Causes of Underperformance to competitive advantage
hand and increase its share of the pie.
5.1.1. Differentiation strategy

5.1.1.1. Organizational Leadership
Underperformance has made use of the differentiation factor to maintain higher
leadership and differentiation from industry competition. Differentiation of effective
leadership may be achieved through different forms and basis.
5.1.1.2. Broad product portfolio
5.1.1.2.1. Product Quality
Moreover, this differentiation can fluctuate from item to item, market to market and
industry to industry. Generally, the essential bases of differentiation are quality,
durability, usefulness and in a few consumer loyalty, and brand image. L Oreal s ACD
Supply Chain Puzzle Diagnosing the Root Causes of Underperformance has
differentiated its items and products dependent on the quality and set a completely
different, and engaging consumer experience. Brand image
5.1.1.2.2. Brand Image
Aside from these things, it has developed a distinct and distinguished brand image
which is additionally a premise of differentiation and encourages L Oreal s ACD Supply
Chain Puzzle Diagnosing the Root Causes of Underperformance to advertise, promote
and market its products and brand better than the competing players in the local and
international markets.
5.1.2. Focus strategy
5.1.2.1. Overall Quality of product and service
The essential premise of differentiation for L Oreal s ACD Supply Chain Puzzle
Diagnosing the Root Causes of Underperformance is quality and premium taste. It
serves just premium quality products, which enables it to charge a top notch and a
premium cost. It has embraced the most astounding measures as far as the nature of
its raw materials used for producing its products. At each progression, L Oreal s ACD
Supply Chain Puzzle Diagnosing the Root Causes of Underperformance puts forth an
admirable attempt to guarantee that its product fulfils the most noteworthy quality
guidelines.
5.1.2.2. Value addition at each step of the value chain
However, the account of value does not finish at getting incredible quality of raw
materials. It goes more remote from that point. A great deal of contrast originates from
the readiness. L Oreal s ACD Supply Chain Puzzle Diagnosing the Root Causes of
Underperformance prepares its product diligently to draw out the quality.
5.1.2.3. Human resource management
Rest of the credit goes to the human resource and employees at L Oreal s ACD
Supply Chain Puzzle Diagnosing the Root Causes of Underperformance. The brand
carefully picks its raw materials - just when they in ideal condition. Products are tested
from each cluster in any event thrice before endorsement. This is how L Oreal s ACD
Supply Chain Puzzle Diagnosing the Root Causes of Underperformance makes the
quality that each client looks forward to, and is excited about.
5.1.3. Leadership and differentiation through cost
Porter’s traditional methodologies are methods for increasing and developing a
sustainable competitive advantage for L Oreal s ACD Supply Chain Puzzle Diagnosing
the Root Causes of Underperformance - as it was, building up the "edge" that will get
the company the ideal position and differentiates it from the industry rivals. There are
two primary methods for accomplishing this inside a cost leadership methodology:
 Increasing profits by decreasing expenses, while charging industry-average

prices and costs from consumers
 Increasing share of the overall industry by charging lower costs, while at the
same time making a sensible profit on every trade since L Oreal s ACD Supply
Chain Puzzle Diagnosing the Root Causes of Underperformance has controlled
and reduced expenses.
The cost-based strategy and system are that – it includes L Oreal s ACD Supply Chain
Puzzle Diagnosing the Root Causes of Underperformance being the pioneer regarding
cost in the industry and market where it operates. Just being among the most minimal
cost producers isn't adequate, as the company leaves itself wide open to aggressive
attacks by other producers and players in the industry. These players may undermine
Underperformance’s costs and in this way hinder the company’s endeavours towards
the expansion of its share of the overall market pie.
5.1.3.1. Achieving cost differentiation
Based on this, L Oreal s ACD Supply Chain Puzzle Diagnosing the Root Causes of
Underperformance should be sure that it can accomplish and keep up the leading
position before deciding on choosing the cost leadership strategy. L Oreal s ACD
Supply Chain Puzzle Diagnosing the Root Causes of Underperformance will be able to
become effective in accomplishing cost differentiation by having:
 Access to the capital expected to put resources into innovation that will cut
expenses down.
 Very proficient coordination’s.
 A minimal effort base (work, materials, offices), and a method for economically
cutting expenses beneath those of different competing players.
5.1.3.2. Achieving cost leadership

However, L Oreal s ACD Supply Chain Puzzle Diagnosing the Root Causes of
Underperformance should ensure contingency for imitation by competition, as well as
be prepared for competing payers to imitate its cost-effectiveness strategy to decrease
and control their costs, and increase the overall share of the pie for their products as
well. It is therefore important that L Oreal s ACD Supply Chain Puzzle Diagnosing the
Root Causes of Underperformance does not only settle for one means of cost
leadership but continually improves. This can be done through several different
methods:
 Engaging and applying the Japanese technique of kaizen

 High efficiency
 High limit use
 Use of dealing capacity to arrange the least costs for generation inputs
 Lean production techniques (for example JIT)
 Effective creation process
 Effective dissemination channels
5.1.3.2.1. Overall Cost Effectiveness through Cost Leadership and Cost Differentiation
 Cost differentiation and leadership strategy for L Oreal s ACD Supply Chain
Puzzle Diagnosing the Root Causes of Underperformance will be based on the
nitty-gritty.
 Cost initiative endeavours towards slicing expenses to a base to give clients
lower costs and in this manner will help the company of L Oreal s ACD Supply
Chain Puzzle Diagnosing the Root Causes of Underperformance to reserve
funds.
 Cost leadership strategy requirements regularly identify with high specialized
abilities and access to capital
 The company should also resource into innovation and guarantee economies of
scale.
5.2. SWOT Analysis

Underperformance maintains its competitiveness as one of the best and the
most premium locally and internationally through inventive systems that use
business strengths in overcoming the weaknesses present in the business
inherently.
 Also, they make use of these internal strengths and weaknesses to make use
of opportunities and ward off potential threats, for example, the dangers in the
business condition and market.
 These factors can be distinguished, assessed, and analysed through the
strategic SWOT tool.
 The SWOT analysis and review for L Oreal s ACD Supply Chain Puzzle
Diagnosing the Root Causes of Underperformance talk about the strengths and
weaknesses (internal core strategic components) intrinsic in tasks in the
business, and for the L Oreal s ACD Supply Chain Puzzle Diagnosing the Root
Causes of Underperformance organization.
 The assessment and analysis of SWOT likewise look at the opportunities and
threats (external key variables) identified with the nature of competitiveness in
the market and industry, which is mostly founded based on the level and
intensity of competition and rivalry – as may be gauged through Porter's Five
Forces analysis of L Oreal s ACD Supply Chain Puzzle Diagnosing the Root
5.2.1. The need for SWOT because of expanded operations of L Oreal s ACD
Supply Chain Puzzle Diagnosing the Root Causes of Underperformance

Underperformance is present and operational in different markets, and each of
the markets poses unique yet various difficulties in developing the business.
Underperformance and its portfolio in these many markets have expanded over
time and as the organization grows, more items are added to its portfolio in
addition to its pioneer product.
 With regards to the SWOT analysis model, these circumstances of multiple
operations and multiple presences in various markets make a difficult business
situation where the organization needs to utilize various arrangements of skills
that match different markets.
 Core elements of different nature – both internal and external to the
organization, can help increment L Oreal s ACD Supply Chain Puzzle
Diagnosing the Root Causes of Underperformance ’s accomplishment in
contending with different companies and other businesses – both locally and
internationally.
 The SWOT analysis for L Oreal s ACD Supply Chain Puzzle Diagnosing the
Root Causes of Underperformance is presented below:
Underperformance Strengths (Internal Strategic Factors)
This section of the SWOT analysis model works with the inner variables that the
organization can use as competencies and strengths to address shortcomings and
ensure the business against rivalry. For this situation, L Oreal s ACD Supply Chain
Puzzle Diagnosing the Root Causes of Underperformance ‘primary qualities are:
5.2.2.1. Strong brand image

Underperformance is one of the world's most premium, well known and most
famous brands.
 The organization has a developing populace of steadfast clients, which adds to
the soundness of the business.
5.2.2.2. International distribution network
 In the SWOT analysis model, the global distribution network through directly
owned subsidiaries, or contracts with third-party agents further strengths L
Underperformance by supporting activities.
 For instance, the organization has a worldwide system of providers that are
deliberately chosen dependent on criteria relating to quality, for example, of raw
materials as has been discussed in the value chain - primary and supporting
activities.
5.2.2.3. Strong investment in research and development, and high focus on

innovation
 The focus on innovation not only keeps the company apart but also facilitates
its industry leadership.
 The internal core strengths and competent variables recognized in this section
of the SWOT analysis of L Oreal s ACD Supply Chain Puzzle Diagnosing the
Root Causes of Underperformance demonstrates that the business has
qualities that advance strength through expansion and a worldwide production
network.
5.2.2.4. Focus on market research
 Additionally, the organization steadily expands its business

 This is done through contracts with offshore agents and licenses. Also, the
company continues to broaden its portfolio by adding new products based on
market research and consumer data.
Underperformance Weaknesses (Internal Strategic Factors)
Business weaknesses or shortcomings are recognized in this part of the SWOT
analysis. Shortcomings are inward factors that diminish or cut off business capabilities
and strengths. L Oreal s ACD Supply Chain Puzzle Diagnosing the Root Causes of
Underperformance shortcomings are as per the following:
5.2.3.1. Premium prices for most portfolio products

Underperformance has a premium brand image attached, and thus all its
products in the portfolio are priced highly
 This expands overall revenues yet decrease the affordability of its items.
 This internal key factor is a shortcoming since it confines the organization's
share of the overall industry, particularly in territories with generally lower
disposable earnings
5.2.3.2. Standard and benchmarked regulations and business procedures for all
portfolio items
5.2.3.2.1. Generalization
 Likewise, this SWOT analysis highlights that generalized standards for all
portfolio products may be a weakness because it restrains the adaptability of
these products and items in the business.
5.2.3.2.2. Imitability
 What's more, numerous L Oreal s ACD Supply Chain Puzzle Diagnosing the
Root Causes of Underperformance items are imitable.
 Several items in the portfolio have been imitated by completion, and are also
being provided by them at different price points.
 Though the quality is unique to L Oreal s ACD Supply Chain Puzzle Diagnosing
the Root Causes of Underperformance, the competing players have also
developed close enough, and acceptable products.
 This business condition engages competition, as has been highlighted already.
5.2.3.3. Fighting the challenge of imitation
 The internal factors in this section of the SWOT analysis of L Oreal s ACD
Supply Chain Puzzle Diagnosing the Root Causes of Underperformance
demonstrate that the business must create qualities to diminish the
unfavourable impacts of impersonation and the impact of high value focuses on
the organization's share of the overall industry in the international and local
business.
5.2.4. Opportunities for L Oreal s ACD Supply Chain Puzzle Diagnosing the
Root Causes of Underperformance (External Strategic Factors)
This section of the SWOT analysis and strategic model focuses on external
components that opportunities for business development and advancement. For this
situation, the key opportunities accessible to L Oreal s ACD Supply Chain Puzzle
Diagnosing the Root Causes of Underperformance are:
5.2.4.1. Green business products
 With an increased focus and awareness of health and wellness lifestyles by

consumers, it is important that L Oreal s ACD Supply Chain Puzzle Diagnosing
the Root Causes of Underperformance recognizes this as a viable business
opportunity.
 Increased numbers of consumers are shifting to the green lifestyle of
consuming environmentally friendly and organic products.
Underperformance should focus on the expansion of the product portfolio:
inclusion of green products and environmentally sustainable services are
suggested.
5.2.4.2. Expansion in emerging markets

Underperformance can expand its income streams through expansion and
developing presence in emerging markets – such as Brazil, China and India.
 This opportunity draws consideration far from the U.S. region, where the
majority of the organization's incomes are created.
5.2.4.3. Business enhancement
 Likewise noteworthy in this SWOT analysis of opportunities is the opportunity of

business enhancement and further business development.
 This can help improve the long term position of L Oreal s ACD Supply Chain
Puzzle Diagnosing the Root Causes of Underperformance.
 For instance, through higher diversification of the portfolio and the overall
business, the L Oreal s ACD Supply Chain Puzzle Diagnosing the Root Causes
of Underperformance organization can diminish its reliance on its present
enterprises, and along these lines work towards improving its general income
development.
5.2.4.4. Partnerships with different firms

5.2.4.4.1. Diversification through Partnerships
 Diversification is right now a minor strategy as can be observed from L Oreal s
ACD Supply Chain Puzzle Diagnosing the Root Causes of Underperformance
’s competitive strategy and its overall directive strategy as well.
 The business environments likewise display the chance to enhance the
organization's competencies and strengths
 This will also increase its share of the overall industry through the association’s
s with different firms. For example, a partnership with real retailers improves
dispersion.
5.2.4.4.2. Development of corporate clientele
 The company can also formulate new B2B relations and contracts with other
companies and corporate entities.
 The external key factors in this section of the SWOT analysis demonstrate that
Underperformance can improve its industry position by building up its activities
to make use of the opportunities in the international business markets.
5.2.5. Threats facing L Oreal s ACD Supply Chain Puzzle Diagnosing the Root
Causes of Underperformance (External Strategic Factors)
Threats against the L Oreal s ACD Supply Chain Puzzle Diagnosing the Root Causes
of Underperformance business are distinguished in this piece of the SWOT analysis.
Threats are external components that decrease or breaking point of business
execution. In this case of L Oreal s ACD Supply Chain Puzzle Diagnosing the Root
Causes of Underperformance, the following section looks at, and assesses threats that
apply to the organization in question:
5.2.5.1. Price wars by competition

Underperformance competes with a wide assortment of firms in the local as
well as the international market.
 For instance, the organization competes against significant premium
companies as well as against cheaper companies that offer cheap priced items
and products.
 This external but important factor in the SWOT assessment undermines L Oreal
because such competing players can lessen the organization's share of the
overall industry by competing based on low prices and overall low costs of
production.
5.2.5.2. Increased competition
 Additionally, this SWOT assessment also analyses increased competition as a

noteworthy threat against the business.
 In light of the organization's shortcomings, the risk of imitation includes firms
that attempt to duplicate the taste, look and feel of L Oreal s ACD Supply Chain
Puzzle Diagnosing the Root Causes of Underperformance items.
 Saturated market place and industry can also lower sales of the organization
and shrink its share of the overall pie
 Increased competition can also lead to the increased cost of doing business for
the organization if they bring innovative processes, and implement novice
systems to control costs
5.2.5.3. Independent players
 The industry environment and profitability are liable to invite independent

developments, and small-scale players.
 These players may not have high levels of integration and may be retailers and
marketers for items produced during backward integration.
 Strategic marketing techniques and promotional communications are expected
to neutralize the impacts of these patterns.
 This section of the SWOT analysis of L Oreal s ACD Supply Chain Puzzle
Diagnosing the Root Causes of Underperformance recognizes external key
factors that force difficulties to international expansion and growth of the
company as well as highlight market infiltration.
5.3. TOWS Matrix

TOWS analysis will allow L Oreal s ACD Supply Chain Puzzle Diagnosing the Root
Causes of Underperformance to identify and understand the strategic choices and
future strategic options and directions available to the company. The TOWS matrix
and analysis will help L Oreal s ACD Supply Chain Puzzle Diagnosing the Root
Causes of Underperformance to look at various possible future and long term
situations, and ill force L Oreal s ACD Supply Chain Puzzle Diagnosing the Root
Causes of Underperformance to look at these options by questioning strategic
directives such as:
 How will L Oreal s ACD Supply Chain Puzzle Diagnosing the Root Causes of
Underperformance make the most of its strengths and core competencies?
Underperformance Circumvent its weaknesses and shortcomings?
Underperformance capitalize on the various opportunities present in the
business environment?
Underperformance ward off, and manage the threats that are present in the
external business environment?
The analysis of the SWOT and the subsequent assessment and development of the
TOWS matrix will allow the L Oreal s ACD Supply Chain Puzzle Diagnosing the Root
Causes of Underperformance to be able to identify the following answers:
 Strengths and Opportunities (SO) – How would L Oreal s ACD Supply Chain
Puzzle Diagnosing the Root Causes of Underperformance be able to utilize on
its strengths to exploit the opportunities?
 Strengths and Threats (ST) – How would L Oreal s ACD Supply Chain Puzzle
Diagnosing the Root Causes of Underperformance be able to exploit its
strengths and core competencies to keep away from genuine and potential
threats?
 Weaknesses and Opportunities (WO) – How would L Oreal s ACD Supply
Chain Puzzle Diagnosing the Root Causes of Underperformance be able to
capitalize on its opportunities to overcome the weaknesses that L Oreal s ACD
Supply Chain Puzzle Diagnosing the Root Causes of Underperformance is
encountering?
 Weaknesses and Threats (WT) – How would L Oreal s ACD Supply Chain
Puzzle Diagnosing the Root Causes of Underperformance be able to limit its
weaknesses and evade threats?
5.3.1. TWOS matrix visual presentation

Table 1 TWOS matrix for L Oreal s ACD Supply Chain Puzzle Diagnosing the Root
L Oreal s ACD Supply Strengths Weakness

Chain Puzzle Diagnosing
the Root Causes of  Leading premium company  Major dependence on the ma
Underperformance that operates internationally as the country of origin mark
TWOS Matrix  Leading presence across  Despite being in operation fo
countries decades, has standard proced
 Reasonable control over and regulations for all portfo
production and distribution items
due to backward and forward  Imitability possible by
integration competition
Opportunities SO strategies WO Strategies
 New South Asian and  Expanding into Asia Pacific  Increasing more stores outsid
Asia Pacific regions region and stabilizing country of origin, and in oth
available for emerging markets by opening parts of the world – especial
expansion – emerging new stores and developing emerging markets such as In
markets new products China and Brazil
 Acquisition of
medium-sized similar
companies and shops
in developing
countries
Threats ST strategies WT strategies
 Increased marketing  Improving the ambience of  Increase budget for marketin

from competing service, focusing on communications, and strateg
players, which might augmented service levels promotions and pursue a
affect sales negatively when providing products and moderate expansion strategy
 An increasing number adapting to local culture.
of independent
producers and
marketers
 Increased and
saturating competition
 The TOWS Matrix is a moderately basic strategic tool used by L Oreal s ACD
Supply Chain Puzzle Diagnosing the Root Causes of Underperformance for
producing key alternatives and identifying key strategic alternatives that may be
pursued by L Oreal s ACD Supply Chain Puzzle Diagnosing the Root Causes
of Underperformance.
 By utilizing it, L Oreal s ACD Supply Chain Puzzle Diagnosing the Root Causes
of Underperformance can take a look towards understanding that it can best
exploit the opportunities present, while at the same time also limit the effect of
shortcomings and ensure itself against threats.
5.4. ANSOFF Matrix

Underperformance has viably utilized this instrument to develop a procedure for
accomplishing competitive advantage in the industry and various markets it
operates in.
 Recently, L Oreal s ACD Supply Chain Puzzle Diagnosing the Root Causes of
Underperformance has made use of the four strategies of Ansoff matric to
maintain competitive advantage and leadership position. These strategies are
o Market development
o Market penetration
o Product development
o Product penetration
The following section highlights the various strategies that may be used through the
Ansoff matrix. These strategies have been highlighted and identified through vigorous
research methodologies, as well as through expert analyst data and opinion.
5.4.1. Market development strategies
5.4.1.1. Advertising and promotion of products
 One of the most popular means of developing a market is to use marketing
strategically.
 By making use of advertising and marketing communications, the company will
be able to disseminate information about its product, and the various benefits of
consumption to its target market easily.
 Also, the use of social media for marketing will, at the same time allow the
company to communicate directly with the consumers, and answer their
queries.
5.4.1.2. Education about product consumption.
 The company can make use of widespread marketing campaigns using

traditional means as well as means of social media to increase awareness of
their product amongst the target market.
 This task of educating the markets will give the company a first-mover
advantage, as well as develop important functional appeals for the product.
5.4.2. Market penetration strategies

5.4.2.1. Geographical expansion
 The company can expand into other markets through its previous experience,
as well as through partnerships and contracts with other agents and parties.
 The company can also develop subsidiaries, as well as offer its products
through franchising as well as licensing.
 The geographical expansion is suggested into emerging economies because of
the favourable income levels of the consumers, as well as the growing
infrastructure.
5.4.2.2. Increased number of retail outlets and retail presence
 The company can penetrate existing markets by offering more shops or making
its product more widely available.
 This may be done through increasing the accessibility of the product at places
where the target consumers are expected to purchase from, as well as
improving the interaction of the product with consumers at different touchpoints.
5.4.2.3. Online retailing
 Another means of improving market penetration is through online retailing. L

Underperformance can stock its products on online retailing sites locally and
internationally.
 This would help the company improve sales, accessibility, as well as reach
higher levels of target consumers. All of this, in turn, would increase market
penetration.
 Besides, it would also help the company maintain and control costs for L Oreal
Underperformance, and thereby help it achieve cost leadership in the industry
5.4.3. Product development strategies

5.4.3.1. Research and development
 To be able to develop new products, the company should have a focused

interest and budget sending allocated to new product research and
development.
 This research would take a basis in the consumer market and the overall
market trends, to identify the gap in consumer demands, and market availability
of different products.
 The new product would then generally be aimed towards fulfilling this gap.
5.4.3.2. New product development labs
 The company should have dedicate incubation labs for the development of new
products.
 This means that this development should be a focused and separate entity that
should focus on the company’s innovation.
 The company should also hire the right talent for business development and
innovation to be able to achieve targets and goals accordingly.
5.4.3.3. Market testing
 New products should follow PD cycles for testing before launching in a market.
 This will ensure that the company can fix any loopholes present in the product,
as well as incorporate positive feedback.
5.4.3.4. Strategic Marketing
 The company should also have a focused and strategic budget for marketing
and communications allocated for new product development.
 This is because the company will need to increase the appeal, as well as
develop functional and emotional appeals and characteristics of the new
product.
 Communicate with the consumers to enhance sales as well as increase
likeability and rate of consumption and trial.
5.4.4. Product penetration strategies

5.4.4.1. Acquiring personally owned retail to strengthen its presence.
 One way of increasing product penetration is that the company directly

manages and controls sales operation through owned retail.
 This will give the campy leverage over communication, as well as product
stocking and placement.
5.4.4.2. Diversification of portfolio
 The company can further expand its portfolio as a means of product

penetration.
 The expansion of the portfolio will allow the company to reach a different and
diverse target group, thereby increasing the overall share of the pie for the
company
 This will also increase L Oreal s ACD Supply Chain Puzzle Diagnosing the Root
Causes of Underperformance ’s products’ accessibility to different consumers.
5.5. SAF criteria

5.5.1. How L Oreal s ACD Supply Chain Puzzle Diagnosing the Root Causes of
Underperformance can strengthen its strategic position using SAf criteria
 When L Oreal s ACD Supply Chain Puzzle Diagnosing the Root Causes of
Underperformance is deciding upon a certain strategic direction for the future, it
will face challenges.
 Choosing the right strategy at the right time can be a daunting task for
managers.
 It is therefore important that managers look at the strategy from aspects of its
value and viability.
 The principal thing the managers of L Oreal s ACD Supply Chain Puzzle
Diagnosing the Root Causes of Underperformance will have to do is settle on a
foundation by which to evaluate the different strategic alternatives.
 They will also need to choose a viable methodology is to assess the different
strategies independently.
 Strategies can be evaluated and assessed using criteria of suitability,
acceptability and feasibility (SAF).
 The following section weighs different strategies and possible future directives
for L Oreal s ACD Supply Chain Puzzle Diagnosing the Root Causes of
Underperformance based on the SAF criteria.
5.5.2. Creation of a menu for high-income groups

5.5.2.1. Suitability
5.5.2.1.1. New market development
 This strategy is suitable because it will allow L Oreal s ACD Supply Chain
Puzzle Diagnosing the Root Causes of Underperformance to develop new
markets by tapping into new consumer groups.
 At the same time, it will allow the company to penetrate higher into existing
markets.
 Both these possibilities can be realized because L Oreal s ACD Supply Chain
Puzzle Diagnosing the Root Causes of Underperformance invests in consumer
research and has a strong financial standing.
5.5.2.2. Acceptability
5.5.2.2.1. Alignment with organizational goals
 The strategy is acceptable because it is in line with the company’s goals and
mission.
 Also, it is also in line with the internal marketing and culture of the organization.
5.5.2.2.2. Financial risk
 As such, the strategy does not pose any risk – financially and otherwise and is
also palatable for stakeholder reactions.
 Lastly, the strategy promises to give high returns. Overall, the strategy appears
to be highly acceptable.
5.5.2.3. Feasibility
5.5.2.3.1. Market research and financial cushioning
 This strategy is highly feasible.

 This is because the company already operates along with this mission, and has
high levels of market research and information regarding high-income groups.
 This information could be utilized for creating a suitable menu for high-income
groups.
 At the same time, the company also has the financial power to introduce
premium menu items for the higher class – to expand its menu accordingly.
5.5.3. Creation of a healthy menu for existing target consumer groups

5.5.3.1.1. Diversification of product portfolio
 This strategy would require a high diversification of the product portfolio.

 This is suitable because the company has the resources and the information to
make strategic decisions about diversification.
5.5.3.1.2. Innovation
 Moreover, the company also innovates regularly, which can be an added

benefit for the suitability of the strategy.
5.5.3.2.1. Risk of financial investment
 This strategy appears to be moderately acceptable.
 This is because it poses a risk through diversification with high levels of
finances invested, the company can never be too sure of the consumer
reactions.
5.5.3.2.2. Risk of new product development
 Therefore, the risk of new product development and consumer reaction would
be there.
 Also, the acceptability is also low because of stakeholder reaction – who might
not all agree with the expansion of the portfolio horizontally – i.e. The
broadening of the portfolio away from the core offerings.
 Lastly, if the strategy works, it promises high returns, which make sit low to
moderately acceptable.

 This strategy is also feasible for the company.

 This is because of the company’s strong financial position, as well as its ability
to researching into different market trends and patterns.
 The identification of these trends and patterns is important for being able to
decide which market and industry to diversify into for the company.
5.5.4. Increasing existing advertising expenditure

5.5.4.1.1. Focused budgeting
 This strategy is suitable because the company has high and focused budgeting
for marketing and communications.
 This would also allow L Oreal s ACD Supply Chain Puzzle Diagnosing the Root
Causes of Underperformance to withdraw from failing markets or markets that
have a weak share, and gain access to rising markets.
5.5.4.1.2. Strategic marketing
 The company will be able to exploit its research and development for strategic
marketing
Underperformance will also make use of existing systems and products to
reach new consumer groups through marketing.
5.5.4.2.1. Return on investment
 The strategy is acceptable because it poses a low risk in terms of investment in
strategic marketing.
 Also, it promises high returns on investment in marketing through the promise
of increased awareness, increased penetration, increased brand recall and
brand recognition – all of which will translate into higher sales.
 Lastly, stakeholders will also not frown upon this strategy, which makes it more
acceptable to implement.
 The strategy is highly feasible because the company has a strong financial
standing.
 This means that the company can afford to increases budget for marketing
purposes.
 However, for the stagey to be successful, it is important that the company aces
sure that all promotional campaigns developed are in sync with consumer
needs, demands and behaviour.
 This is again possible for the company because of its investment in research
and development.
6. FINAL RECOMMENDATIONS
Based on the overall internal and external analysis done for L Oreal s ACD Supply
Chain Puzzle Diagnosing the Root Causes of Underperformance, this section will offer
recommendations which will help the company take on strategic directions that will
enhance its core competencies and capabilities, as well as reduce its chances for risks
and threats? The following recommendations are thus made for L Oreal s ACD Supply
Chain Puzzle Diagnosing the Root Causes of Underperformance :
6.1. Strengthen distribution network

6.1.1. Control
This is an important strategic recommendation as it will allow higher control to the
company over its products in different markets. The company will be able to control
where its products are placed, and thereby, will also be able to enhance the
accessibility and easy availability of its products.
6.1.2. Stronger relation with consumers
At the same time, the strengthening of the distribution network will allow the company
to work more closely with end consumers by being able to reach them with the same
high quality of products across different markets.
6.2. Develop unique marketing tactics

6.2.1. Higher penetration
This strategic recommendation will help the company reach a higher number of
consumers and penetrate deeper into target consumer groups. Also, this strategy will
allow the company to increase trial and consumption and sales of its products.
6.2.2. Forming a partnership with consumers
Unique marketing tactics will involve new and informed strategic means of
communicating with the consumers and engaging them with the brand. One way that
this can be done is by making consumer co-producers for the brand. Another way that
Underperformance can do this is through co-branding with other similar, yet dissimilar
brands and companies to enjoy higher market visibility amongst target consumers.
6.3. Adapt to different cultural aspects of different

markets
6.3.1. Identify different consumer group characteristics
Each market and target group has distinct characteristics. This recommendation is
suggested so that the company can connect better with different target groups in
different markets.
6.3.2. Adapt to and respond to characteristics
By adapting to different cultural and regional characteristics, the company will be able
to present itself better to target consumers – who would then feel a greater affinity, and
more likeliness of consuming the product and the service.
6.4. Expand into new regions

6.4.1. Market expansion
Another strategic recommendation for L Oreal s ACD Supply Chain Puzzle Diagnosing
the Root Causes of Underperformance is to expand into newer regions and markets.
This can be done by expanding into new markets, firstly. This expansion will give the
company exposure to new consumer groups. Increase the overall consumption rate,
as well as diversify income streams. Also, it will give the company related expansion
exposure regionally as well as internationally.
6.4.2. Product diversification
Another means of expansion is through product diversification. By adding new
products, the company will be Abe to penetrate deeper into existing markets bye
exploring new consumer groups, and new target consumer groups. This will also
diversify income streams for the company, and increase its overalls hare of the market.
6.5. Strengthen value network

By strengthening the value network further, and by adding quality and enhanced
elements at different stages, the company will be able to maintain competitive
advantage, as well as put off new players from the industry by increasing barriers to
entry. This will allow the company to maintain sustainable competitiveness over other
players, as well as maintain a possible leadership position in the local and international
markets and industry.
7. References
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Journal of Management, 11(3), p. 209–224.
Cole, G., 2003. Strategic Management. Boston: Cengage Learning EMEA.
Collier, D. & Evans, J., 2009. Operations Management. Boston:MA: Cengage
Learning.
Haron, A., 2016. Standardized Versus Localized Strategy: The Role of Cultural
Patterns in Society on Consumption and Market Research. Journal of Accounting and
Marketing, 5(1).
Hartline, M. & Ferrell, O., 2006. Marketing Strategy. Boston:MA: Cengage Learning.
Keller, L., 2006. Strategic Brand Management Process, in Perspective of Modern
Brand management. s.l.:s.n.
Kotler, P., 1997. Marketing management: Analysis, planning, implementation and
control. New Jersey: Prentice-Hall.
Kotler, P., 211. Reinventing marketing to manage the environmental imperative.
Journal of Marketing, 75(4), pp. 132-135.
Kotler, P., Armstrong, G., Adam, S. & Denize, S., 2014. Principles of Marketing.
Melbourne: Pearson, Australia.
Kotler, P. & Keller, K., 2009. Marketing Management. New Jersey: Prentice Hall.
Lehman, D. & Winer, R., 2005. Product Management. New Delhi: McGraw-Hill
Education.
Murray, A., 1988. A contingency view of Porter's “generic strategies”. Academy of
management review, 13(3), pp. 390-400.
Reddi, C., 2009. Effective Public Relations and Media Strategy. New Delhi: PHI
Learning Pvt. Ltd.
Schivinski , B. & Dabrowski , D., 214. The Effect of Social Media Communication on
Consumer Perceptions of Brands. Journal of Marketing Communications, Volume 12,
pp. 1-26.
Thompson, J. & Martin, F., 2010. Strategic Management: Awareness & Change.
Hampshire: Cengage Learning EMEA.
Weng, X., 2002. Local Brand Strategy. Hangzhou: Zhejiang People’s Publishing
House.
Wirtz, J., 2016. Winning in Service Markets: Success through People, Technology and
Strategy. Singapore: World Scientific.
Witcher, B. & Chau, V., 2010. Strategic management: Principles and practice.
s.l.:Cengage Learning EMEA.
Witcher, B. J. & Chau, V. S., 2010. Strategic Management: Principles and Practice.
Boston: Cengage Learning EMEA.

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L Oreal s ACD Supply Chain Puzzle

Diagnosing the Root Causes of

1. INTRODUCTION OF L Oreal s ACD Supply

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SAMPLES PLACE ORDER OUR SERVICES

2.2. Solving HBS case studies

EXTERNAL ENVIRONMENT ANALYSIS

3.1.1.3. Government Support

3.1.1.4. Political Stability

3.1.2.3. Interest Rates

3.1.2.4. Unemployment Rate

 A high unemployment rate is also unadvisable as it dissolves dispensable

 L Oreal s ACD Supply Chain Puzzle Diagnosing the Root Causes of

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3.1.3.2. Social patterns and changing consumer needs

3.1.3.3. Social trends in education

3.1.3.4. Social patterns make companies more consumer-centric

 Use consumer-centric means of segmentation and targeting.

3.1.4.3. Social media and business growth

 L Oreal s ACD Supply Chain Puzzle Diagnosing the Root Causes of

3.1.4.4. Improved value chain network

 To flourish in a business world that is quick paced and receptive to innovative

 L Oreal s ACD Supply Chain Puzzle Diagnosing the Root Causes of

3.1.5.2. Environmental stability and budget allocation

3.1.5.3. Environmental sustainability

 L Oreal s ACD Supply Chain Puzzle Diagnosing the Root Causes of

3.1.5.4. Environmental sustainability and business growth

 L Oreal s ACD Supply Chain Puzzle Diagnosing the Root Causes of

3.1.5.5. Environmental sustainability and improved consumer relations

 Consumers will be more inclined towards the use of environmentally

3.1.6.2. Discrimination law

3.1.6.3. Health and safety laws:

3.2. Porter’s five forces

3.2.1. The threat of new entrants

3.2.1.2. Limitation on earning expectation and capability of firms in an

3.2.1.3. The risk to new entrants because of high entry barriers

 Capital requirements: a strong barrier to entry as new entrants will require

 Build and invest in marketing to distinctly establish a point of differentiation in

3.2.2. The threat of substitute products or services

3.2.2.2. Switching cost to substitutes for consumers

3.2.2.3. Substitute and product benefit

3.2.2.4. Substitutes and consumer behaviour

 Focus on delivering consistently high quality.

3.2.3. Bargaining Power of Buyers

3.2.3.2. Buyer power and costs

 L Oreal s ACD Supply Chain Puzzle Diagnosing the Root Causes of

3.2.3.3. Retail product differentiation

 Products offered by retailers are differentiated based on several characteristics

 L Oreal s ACD Supply Chain Puzzle Diagnosing the Root Causes of

3.2.4. Bargaining Power of Suppliers

 The main sources for production are the following:

3.2.4.3. Independent suppliers

3.2.4.4. Supply quality and business dynamics

3.2.5. Competitive Rivalry among Existing Firms.

 The market is highly fragmented, which makes it more competitive.

3.2.5.2. Brand management

3.2.5.4. High business costs

 Focus on research and development to identify market niche as well as to be

3.3. Pentagonal analysis

 The ease of entry into the industry is restricted.

3.3.1.2. Switching costs for consumers

 New entrants are attracted to the industry because of high profitability.

3.3.2. The threat of substitute products/services