MODULE CODE: 19MBA509A

MODULE NAME: STRATEGIC MANAGEMENT

PROGRAMME: MBA
DEPARTMENT: FMC
FACULTY: MANAGEMENT AND COMMERCE

Name of Student: CS Seshan

Registration Number: 19MCMS047016
Batch: 2019-2021
Module Leader: Dr. Devakumar G

i
 DECLARATION SHEET
Student Name CS Seshan
Reg. No 19MCMS047016
Course MBA Batch Full-Time 2019-2021
Module Code 19MBA509A
Module Title Strategic Management
Module Date 2nd March 2020 to 12th June 2020
Module Leader Dr. Devakumar G

Declaration

The assignment submitted herewith is a result of my own investigations and that I have
conformed to the guidelines against plagiarism as laid out in the Student Handbook. All
sections of the text and results, which have been obtained from other sources, are fully
referenced. I understand that cheating and plagiarism constitute a breach of University
regulations and will be dealt with accordingly.

Signature of the student Date 24/04/2020

Submission date stamp

(by Examination &
Assessment Section)
Signature of the Module Leader and date Signature of Reviewer and date
 Table of Contents
DECLARATION SHEET...............................................................................................................2
PART A......................................................................................................................................4
COMPANY OVERVIEW..............................................................................................................4
BCG MATRIX OF L’ORÉAL.........................................................................................................5
Quadrant 1 – Question Mark L’Oréal Luxe..........................................................................7
Quadrant 2 – Stars Consumer Products...............................................................................7
Quadrant 3 – Cash Cows Professional Products..................................................................8
Quadrant 4 – Dog L’Oréal Active Products..........................................................................8
PORTER’S FIVE FORCE MODEL:................................................................................................9
APPLICATION OF PORTER’S FIVE FORCE MODEL IN L’Oreal..............................................10
PORTER FIVE FORCES.........................................................................................................10
Bargaining Power of Suppliers (Internal)...........................................................................10
Bargaining Power of Customers (Internal)........................................................................10
Intensity of Existing Rivalry (External)...............................................................................10
Threat of Substitutes (External).........................................................................................10
Threat of New Competitors (External)..............................................................................11
SUGGESTIONS FOR BUSINESS SUSTAINAIBILITY....................................................................12
CONCLUSION..........................................................................................................................15
PART B....................................................................................................................................16
INTRODUCTION......................................................................................................................16
SPACE MATRIX OF SEPHORA.................................................................................................17
GE MATRIX FOR SEPHORA.....................................................................................................18
NINE CELL MATRIX FOR SEPHORA.....................................................................................23
SUGGESTION FOR BUSINESS STABILITY.................................................................................25
CONCLUSION..........................................................................................................................26
REFERENCES...........................................................................................................................27
PART A
COMPANY OVERVIEW

L’Oreal company was invented in (1907) by “Eugene Schueller” the young French
Chemist, who took a first move by creating the first hair dyes and started his sales by
selling them to the French hairdressers. This move made him focus and concentrate
on researching, starting for his investment to achieve the beauty for consumers and
to look forward with the name L’Oreal. L’Oreal is a listed company, as “Liliane
Bettencourt” and the Swiss food company “Nestle” are the founders as each of them
are controlling 30% (percent) of the shares.

In (1988-2000) the director and the chairman “Lindsay Owen-Jones” in (2006)

started the company with the cosmetic marketing. Therefore today L’Oreal is the 1st
Cosmetic group worldwide it has 27 International brands which is running globally in
almost 130 Countries with €20.3 Billion Euros with more than 68,900
Employees. L’Oreal company has a setup of 5 key division and activities which is
related with L’Oreal LUXE, CONSUMER Products, PROFESSIONAL Products, ACTIVE
Cosmetics and The BODY SHOP. There are some products which contains the highest
growth rates like Lancôme, Giorgio Armani, Kiehl’s, Kerastase, Maybelline New York
and La Roche-Posay contains a range of exceptionally high quality products that are
globally recognized all over the world.

Therefore, this success accomplished under his leadership Sir “Lindsay” who have
recognized to help the consumers individually by desiring them or getting them to be
beautiful, his mission was to achieve to create the effective growth strategy for their
brands in order for companies success.
BCG MATRIX OF L’ORÉAL

Boston Consulting Group (BCG) Matrix is a business planning tool which is used to
analyze the potential of business brand portfolio and suggest further investment
strategies. The business portfolio is categories into four quadrants based on industry
sales growth rate (industry attractiveness) and relative market share position
(competitive position).

One of the elements used to analyze business portfolio is industry sales growth rate.
High market growth results in higher revenues. Yet, it also require invest lots of cash
to stimulate further growth. Thus, organizations that achieve in fast-growing
industries are cash users.

Another of the elements is relative market share position. Higher market share
represents in higher cash returns. This is because the organizations that are gain
higher market share can control more market proportion than other competitors.

Quadrant 1 is question marks. They are operating in a high growth industry by

holding low market share. It has potential to gain market share and become stars, or
eventually become cash cows when market growth slow. However, question marks
require much close consideration or purse an intensive strategy because it does not
always succeed after large amount of investment and has the possible become dogs.

Quadrant 2 is stars which show the business operate in high growth market and
achieve high market share. It represents the company’s best long run opportunity for
growth and profitability. Thus, they require heavy investment to maintain its large
market share but also generate large amount of cash from their strong relative
market share.

Quadrant 3 is cash cows. They are the business with low growth rate and high
market share. They are generating cash in excess of their needs to maintain the
business. Thus, they are should be “milked” by investing as little cash as possible to
maintain their strong position.
Quadrant 4 is dogs. Dogs have a low market share in a slow-growing market. In
general, they are generating cash just to break-even and barely enough cash to
maintain their business. Hence, businesses in this quadrant are often divested or
sold off.

In this section, we compare the product line of L’Oréal to see which product line falls
into what quadrant in the BCG matrix.

Operational Division Sales (€ M)

Professional Products 3,350.4
Consumer Products 12,118.7
L’Oréal Luxe 8,471.7
Active Cosmetics 2,082.9

Quadrant 1 – Question Mark L’Oréal Luxe

L’Oréal Luxe is in the segment of ‘Question Marks’ of the BCG matrix. Question Mark
means that the company has a low market share and high growth. Question marks
are products which may give high returns but at the same time may also flop and
may have to be taken out of the market. From here, the products do have the
potential to become a ‘cash cow’ as it has lower competition and high market share.
The products require significant investment to increase customer interest and attract
people to buy the product. However, if not utilizing the amount of cash as the
growth reach to its end, this can result in potentially wasted funds. The best strategy
for converting Question marks to Stars or Cash cows is new customer acquisition
strategy. Moreover, time to time market research also helps in determining
consumer psychology for the product as well as the possible future of the product
and a hard decision might have to be taken if the product goes into negative
profitability.

Quadrant 2 – Stars Consumer Products

L’Oréal consumer products located in the quadrant ‘Star’ of the BCG matrix. Star
represents the division that has a high relative markets share and high future
growth.
With a high relative markets share and high future growth, it indicates that L’Oréal
consumer products have high potential in generating high revenue and attractive
marketplace with plenty of competitors. As a consequences, a huge investment is
necessary to defend the position of L’Oréal in the marketplace. L’Oréal should focus
on the implementation in marketing strategy to increase or retain the markets share
being taken over by the competitors. The investment included expanding the
product line, penetrating into new geographic market, attracting new customers and
retaining the existing customers.
As the impact of the product life cycle takes effect and the market growth rate slows
the product will move from the star position of high growth to the Cash Cow position
of low growth and high share.
Quadrant 3 – Cash Cows Professional Products
L’Oréal professional products division located in the quadrant “Cash cows” of the
BCG matrix. Cash Cow is one of the four segment of the BCG growth-share matrix
which represents the division that has a large market share in slow-growing industry
or in mature market. The cash cows are the most stable segment for business and
strategy usually include retention of the market share.
As the market is growing, slowly acquisition is less and customer retention is high.
Although the market is growing slowly, the cash cows generate surplus cash to
reinvest in professional products division as well as other division of the business
such as the consumer products which require large investment. It means that the
revenue earned in professional product is more than investment required in
professional product.
Therefore, L’Oréal can implement customer retention strategy such as customer
satisfaction programs, loyalty programs, and other such promotional methods to
maintain customer retention and prevent them to switch to consume competitor
product.

Quadrant 4 – Dog L’Oréal Active Products

L’Oréal active cosmetics are classified as dogs, which means a low market share
located in a low growth industry. Dogs quadrant are considered as cash traps
because businesses have money tied up in them, even though they are bringing back
basically nothing in return. L’Oréal has to make a decision whether they should
divest these products or they can revamp them and thereby make them saleable
again which will subsequently increase the market share of the product. Therefore,
L’Oréal can either divest the product altogether or it can revamp the product
through rebranding or adding features on its products. Dog has potential to move to
Question Marks if the L’Oréal add values and feature to the current product. As the
consumer are more concern about the environmental issue, L’Oréal is encouraged to
produce more organic product by using natural resources that is safe to the user and
reduce harm to the environment.
PORTER’S FIVE FORCE MODEL:

Named after Michael E. Porter, this model identifies and analyzes 5 competitive
forces that shape every industry, and helps determine an industry's weaknesses and
strengths. 

1. Competition in the industry

2. Potential of new entrants into industry
3. Power of suppliers
4. Power of customers
5. Threat of substitute products

It is frequently used to identify an industry's structure in order to determine

corporate strategy, Porter's model can be applied to any segment of the economy to
search for profitability and attractiveness.

APPLICATION OF PORTER’S FIVE FORCE MODEL IN L’Oreal

PORTER FIVE FORCES

It exists with the intensity of the following Rivalries, Threat of Substitutes, Threat of
new competitors, Bargaining power of Suppliers, and Bargaining power of
Customers. It is essential to understand the many different risk and rewards of an
industry.

Bargaining Power of Suppliers (Internal)

Suppliers is the business that supply materials and other products into the industry
.if suppliers have a high range of bargaining power then the company gets less
attraction. It has a high power when many buyers and few dominators supply not
differentiated. High valued products (Switching cost Substitute products are
unavailable in the market place.

For Example: –

Raw Materials

Packaging

Point of Sales

Equipments

So that mean L’Oreal has many suppliers in producing their products. So therefore,
their bargaining power is low.

Bargaining Power of Customers (Internal)

When buyers are less sensitive to prices, prices can increase and buyers will still buy
the product. Inelastic demand positively affects L’Oreal Paris.

When there are large numbers of customers, no one customer tends to have
bargaining leverage. Limited bargaining leverage helps L’Oreal Paris.

Intensity of Existing Rivalry (External)

Government policies and regulations can dictate the level of competition within the
industry and will have a long term negative impact on this entity, which subtracts
from the entity value.

Threat of Substitutes (External)

Threat for substitute products refer to produce in other industries. It exists when a
product demand is affected by the price change of a substitute product there are
number of chemicals in shampoo and other bath and body products which is
frightening.

As essentially, whatever toxics to put or use in your mouth toxics on your skin as
well.

Threat of New Competitors (External)

The important entry is for the Barriers quality, pricing and marketing which can
overcome with the barriers in many different ways. Also new firms sometimes is
easy to enter the industries because of high-quality products, lower price and
substantial marketing resources. L’Oreal’s main competitors are the cover girls,
Avon, Revlon etc.

The main Threats for L’Oreal is their products are luxuries which could be hurt by an
economic downturn however they are able to be global and act locally. Also it may
affect their distribution system.

SUGGESTIONS FOR BUSINESS SUSTAINAIBILITY

By 2020, we will innovate so that 100% of products have an environmental or social
benefit. Every time we invent or update a product, we will improve its environmental
or social profile against at least one of the following criteria:

• The new formula reduces the environmental footprint.

• The new formula uses renewable raw materials that are sustainably sourced or
raw materials derived from Green chemistry.

• The new packaging has an improved environmental profile

• The new product has a positive social impact.

By 2020, we will reduce our environmental footprint by 60% from a 2005 baseline
whilst bringing beauty to one billion new consumers.

• We will reduce CO2 emissions at our plants and distribution centres by 60% in
absolute terms, from a 2005 baseline.
• We will reduce our water consumption by 60% per finished product unit, from a
2005 baseline.

• We will reduce waste by 60% per finished product unit, from a 2005 baseline.

• We will send zero waste to landfill.

• We will reduce our CO2 emissions from transportation of products by 20% per
finished product unit from a 2011 baseline.

By 2020, we will empower every L’Oréal consumer to make sustainable consumption

choices while enhancing the beauty of the planet.

• We will use a product assessment tool to evaluate the environmental and social
profile of 100% of new products, and all brands will make this information available
to allow consumers to make sustainable lifestyle choices.

• All L’Oréal brands will assess where they have the biggest environmental and social
impact, and make commitments to improve their footprint. Every brand will report
on its progress and raise awareness among consumers about sustainable lifestyle
choices.

• Our consumers will be able to influence our sustainability actions through our
consumer sustainability panel.

By 2020, L’Oréal employees will have access to health care, social protection and
training, wherever they are in the world.

• We will provide health coverage for employees which is aligned with the best
practice of the country they are based in.

• We will provide financial protection for all employees if unexpected life events
such as incapacity or permanent disability occur.

• Every L’Oréal employee will have access to at least one training session per year
wherever they are in the world.

By 2020, 100% of our strategic suppliers will be participating in our supplier

sustainability programme.

• All strategic suppliers will be evaluated and selected on social and environmental
performance.

• All strategic suppliers will have completed a self-assessment of their sustainability

policy with our support. • All suppliers will have access to L’Oréal training tools to
improve their sustainability policies.
• 20% of strategic suppliers will be associated with our Solidarity sourcing
programme

By 2020, we will enable more than 100,000 people from underprivileged

communities, equivalent to the size of our global workforce, to access work. We will
achieve our goal through programmes in the following areas.

• Solidarity sourcing.

• Inclusive distribution.

• Beauty professionalisation.

• Mentoring and community education.

• Employment of disabled people and underrepresented socioethnic groups.

CONCLUSION

After compiling this report, we can assume that L'Oreal has a strong corporate
identity. Within the pages it describes how L'Oreal uses globalization, diversity,
advertising, and women to build its identity. First, we noticed the metaphor used
when discussing L'Oreal as the umbrella brand. Almost every continent has a L'Oreal
company within its respective countries. L'Oreal produces a wide range of beauty
products and because of the many different brands, it stands apart from companies
who only have one product to sell. Furthermore, because L'Oreal is global it
recognizes that beauty is not one-sided and incorporates products for people of
different color and texture. This effective use of diversity makes the consumer feel as
though they can relate to this company more than others. This builds trust and unity
with the company and its audience. Not only is diversity shown within their brands,
but also in their advertisements which again shows that L'Oreal cares about its target
audience. On the other hand, the role of women within the company shows that
L'Oreal has good ethics, such as building a program for women in science and
offering career options for women who are under-privileged. Due to all these
reasons, L'Oreal is a strong company that represents global beauty.
PART B

INTRODUCTION

A leader in prestige omni-retail, our purpose at Sephora is to create an inviting

beauty shopping experience and inspire fearlessness in our community. Through our
continued expertise, innovation, and entrepreneurial spirit, Sephora encourages
clients to explore the universe of beauty and wellness with an unbiased approach to
experiential retail.

Since 1998, Sephora has been an industry-leading champion of diversity, inclusivity,

and empowerment in the U.S., guided by our longstanding company values. In 2019,
Sephora announced a new tagline and manifesto, “We Belong to Something
Beautiful,” to reinforce its dedication to fostering belonging amongst all clients and
employees and to publicly strive for a more inclusive vision for retail in the Americas.
Sephora continues to give back to our communities and advance inclusion in our
industry through our Sephora Stands social impact programs.

Owned by LVMH Moët Hennessy Louis Vuitton, the world's leading luxury goods
group, Sephora was founded in France by Dominique Mandonnaud in 1970 and is
defined by its unique, open-sell environment with an ever-increasing assortment of
products from carefully curated brands, featuring indie darlings, emerging favorites,
trusted classics, and Sephora’s own, SEPHORA COLLECTION. Today, Sephora is a
powerful beauty presence in countries around the world thanks to its unparalleled
assortment of prestige products in every category, unbiased service from beauty
experts, interactive shopping environment, and innovation.

Additionally, Sephora has been twice recognized by Forbes as one of America’s Best
Employers in 2018 and 2019. Most recently, Sephora scored 100% on the Human
Rights Campaign’s Corporate Quality Index 2019, the national benchmarking tool on
corporate policies and practices pertinent to lesbian, gay, bisexual, transgender and
queer employees.
SPACE MATRIX OF SEPHORA

Therefore Sephora should follow competitive strategy .

The directional route pinpoints in the competitive quadrant of the SPACE Matrix,
representing
competitive strategies. Therefore, Backward integration, Forward integration,
Horizontal integration etc should be followed.
GE MATRIX FOR SEPHORA.

Nine- cell matrix is a strategy tool that offers a systematic approach for the multi-
business corporation to prioritize its investments among its business unit. The nine
box matrix plots on its 9 cells that indicate whether the company should invest in a
product harvest/divest it or do a further research on the product and invest in it if
there is still some resources left.

There are two key dimensions for the Nine Cell Matrix which are the Industry
Attractiveness and Business Strength. The industry attractiveness is plotted on the
vertical axis (x-axis) and the business strength is plotted on the horizontal axis (y-
axis). A nine-cell grid dividing the vertical axis into three regions which are high,
medium and low attractiveness and the horizontal axis into three regions which are
strong, medium and weak competitive strength. The rating scale is from 1 to 5 for
both axis.

Industry attractiveness indicates how hard or easy for a business to compete in the
market. Business strength indicates how strong a particular business unit is against
its rivals. There are three major regions in the Nine Cell Matrix which are grow and
build, hold and maintain and harvest or divest.

In the region of grow and build which is at cells I, II or IV, the intensive and
aggressive tactical strategies are needed. Companies should invest into the business
because the highest return is promise in future. These business units will require a
lot of cash and resources so there would no constraints for them to grow and will
have to maintain grow their market share.

In the region of hold and maintain which is at cells III, V or VII, any business that falls
within these cells are often considered last as there are lots of uncertainty. Business
can invested only if there is enough money for investment and believed that this
business able to generate cash. Make sure the business is operating in large market
whereby there are fewer competitors.

In the region of harvest or divest which is at cells VI, VIII or IX, business with surplus
cash can invest the business just to keep business operating and make sure the cash
generated able to cover total investment while business with deficit cash should be
divested if there is no way to make profits, liquidation of business is an option
 EXTERNAL ANALYSIS

Industry Attractiveness Factors Importan Professional Consumer L’Oréal Luxe Active

ce Weight Products Products Cosmetics

Ratin Scor Ratin Scor Ratin Scor Ratin Scor

g e g e g e g e

Market growth rate 0.15 2 0.30 2 0.30 3 0.45 2 0.30

Industry uncertainty and business 0.05 5 0.25 3 0.15 1 0,05 1 0,05

risks

Industry profitability 0.10 4 0.40 3 0.30 2 0.20 3 0.30

Social issues 0.05 4 0.20 3 0.15 2 0.10 1 0.05

Government policy 0.10 5 0.50 4 0.40 3 0.30 3 0.30

Development of R&D 0.10 4 0.40 5 0.50 4 0.40 2 0.20

Resource requirements 0.10 1 0.10 3 0.30 4 0.40 4 0.40

Economic Condition 0.15 2 0.30 3 0.45 2 0.30 3 0.45

Intensity of competition 0.20 1 0.20 3 0.60 1 0.20 4 0.80

Total weighted score 1.00 2.65 3.15 2.4 2.85

20
 INTERNAL ANALYSIS

Business Strength Importance Professional Consumer L’Oréal Luxe Active

Factors weight Products Products Cosmetics

Ratin Scor Ratin Scor Ratin Scor Ratin Scor

g e g e g e g e

Market share 0.20 2 0.40 4 0.80 5 1.00 1 0.20

Cash flow 0.10 1 0.10 3 0.30 5 0.50 2 0.20

Brand image and 0.05 4 0.20 3 0.15 2 0.10 4 0.20

reputation

Productivity 0.05 5 0.25 3 0.15 2 0.10 3 0.15

Price competitiveness 0.10 2 0.20 2 0.20 3 0.30 3 0.30

Breadth of product line 0.15 4 0.60 2 0.30 3 0.45 3 0.45

Financial position 0.10 1 0.10 3 0.30 4 0.40 2 0.20

Customer service 0.10 3 0.30 2 0.20 2 0.20 3 0.30

R&D strength 0.15 4 0.60 3 0.45 3 0.45 3 0.45

Total weighted score 1.00 2.75 2.85 3.5 2.45

21
Industry Attractiveness Factors
Consumer products division get an overall weighted industry attractiveness score of 3.15 out of
5.00. It is because of this division get a highest score of 5 out of 5 in the criteria of development
R&D. Annual revenues for consumer products division, Sephora, professional products division
and active cosmetics division are approximately 12 billion euros, 8 billion euros, 3 billion euros
and 2 billion euros respectively. Therefore, consumer products division has the largest spending
on development R&D. Thus they had launched a lot of brands and products under consumer
products division and leads to large revenues earn under consumer products.
The Sephora, Division recorded dynamic growth in Asia, Pacific, with double-digit growth in
China, Japan and Southern Asia. Yves Saint Laurent more than doubled its sales, and Giorgio
Armani recorded more than 35% growth. The Consumer Products Division is strengthening its
growth at +4.4% like-for-like and +1.3% based on reported figures. The Division has delivered
an excellent performance in North America, where it is significantly strengthening its
leadership. It is growing exceptionally strongly in the United Kingdom, and is also accelerating in
Spain and Germany. The Division's expansion in the New Markets is continuing. The
Professional Products Division recorded growth of +1.8% like-for-like. It is stable based on
reported figures. The Division posted a contrasted year, with good growth in Europe, Africa,
Middle East and Latin America, but a mixed performance in North America. The top growth
contributor countries are India, Russia and the United Kingdom. Then, the global cosmetics
market is expected to grow at a CAGR of nearly 6% between the periods of 2017 to 2021. The
biggest markets are expected to be the US, China, Brazil, Japan and India. L'Oreal's market
position in North America, the fastest growing market for active cosmetics, is expected to grow
further due to acquisitions of the skincare brands, CeraVe, AcneFree, and Ambi from Valeant
Pharmaceuticals.
Cosmetic and skin care are competitive industries and thus attract new entrants striving to
capture market share. Therefore, the degree of competition amongst rivals in the industry is
high. However, the degree of competition amongst rivals in the active cosmetics division is
relatively low compared to others. It is because of strict law and regulatory requirements for
cosmeceutical products.

22
After that Sephora, is trying to put technological innovation at their service for research team
by providing them with powerful to express their creativity and take the knowledge of skin and
hair. Sephora, has been ahead of competition in its digital innovations, with products such as
an augmented reality based app called “Makeup Genius”. It is a new beauty innovations of
Sephora, which under consumer products division.
Nowadays many people are more conscious about their healthy lifestyle and avoid to take any
kind of danger from usage of beauty care product. So that Sephora, company needs to
maintain and produce the more natural blended product to attract more and more customers
to buy their beauty products. Thus, Sephora, has stopped animal testing completely in all
product divisions. It is 100% natural and organic in nature and hence the choice of animal
lovers.

Business Strength Factors

Sephora, is the outperforming the global market and winning market share. These brands grow
faster than other brands. Their rating/score is highest, while Active product is affected by
declining salon visit in the new market so that get the low rating/score. Active product is
strengthening its position as the world leader in the derma-cosmetics market, so that this brand
is lower rating/score in market share Sephora, has the highest cash flow compared to other
division and this has contributes a lot in their rating/score. Active products which only get 7.5 %
of profit is smallest market share in Sephora, Company.
Professional product and active product get the higher rating/score in brand image because
many people know this brand and usually buy and use it, and for Sephora, get the lowest
rating/score which only certain customers with strong income has the purchase power to buy
the products. But recently, L'Oreal announced its intention to acquire the skincare brands,
CeraVe, and Ambi from Valeant Pharmaceuticals for a sum of $1.3 billion. The popularity of
these brands among health professionals indicates that they are expected to strengthen the
company’s relationship with professionals who are key to the development of active cosmetic
market products.

23
 Professional product has higher rating/score in production capacity compared to another
brand product and L’Oreal performs good technology capability in their all products. L’Oreal
adopted different strategies to launch its brand e-commerce according to target market. In
digitally developed countries, they cooperate with local e-commerce leaders, such as Alibaba in
China.As concluded, L’Oreal company uses sales force to keep its operations coordinated and
interact with customers to promote and protect the important brands. They also set up a portal
site to provide beauticians with product information, training materials and add employee
social network that work together to plan the new brands in Sephora,

NINE CELL MATRIX FOR SEPHORA

Cosmetic

Industry Attractiveness is plotted on the vertical axis and competitive strength on the horizontal
axis. The nine-cell grid can be into three regions in the vertical, which are high, medium and low
attractiveness. For the horizontal axis also able to be into three regions, which are strong,
average and weak competitive strength. The nine-cell attractiveness-competitive strength
matrix is providing clear and strong logic of why company need to consider both industry
attractiveness and competitive strength in allocating resources and investment capital.

24
The location of consumer product in Sephora is at upper row and middle column of the grid.
The score for competitive strength is 2.85/4.00 while the score for industry attractiveness is
3.15/4.00 In general, consumer product brand considers as a good overall performance and
attract high investment which has strong competitive position and high industry attractiveness.
Sephora Company may be able to maintain their high priority area. By maintaining this area
Sephora will be more capability and provide maximum investment to investors.
The score for competitive strength of Sephora is 3.5/4.00 while the score for industry
attractiveness is 2.4/4.00 so that Sephora is in red zone area which located at harvest region.
Sephora can consider as weak competitive strength and medium industry attractiveness so that
management of L’Oreal should be considered this product brand need to carry again or do
promotion into this product.
 Active product and Professional product are in yellow zone area which located at medium of
the grid. The score for competitive strength for Professional product is 2.75/4.00 while the
score for industry attractiveness is 2.65/4.00. The score for competitiveness strength for Active
product is 2.85/4.00 while the score for industry attractiveness is 2.45/4.00. In general,
Professional product can consider as a medium overall performance which has medium
industry attractiveness and average in competitive position. Therefore, the management in
Sephora must exercise caution when making additional investments in this product and make
contingency plan to promote this brand while maintain their share to prevent loss share.
The conclusion we able to make from the nine cell matrix is we can make improvement to
product brand which is in the red zone area and yellow area. Throughout this improvement,
professional product, Sephora and active product may be able to move into a better matrix
position. Thus, Sephora will be more capability and increase their shareholder value through
many investor to invest in many product brand in Sephora.

25
 SUGGESTION FOR BUSINESS STABILITY

 Make digital an executive priority. 

 Enhance the physical store. Today, retail is all about the “offline experience.”
 Integrate in-store technologies to engage clients. .
 Personalize product or service recommendations based on customer data. Localizing
data is key for reaching global markets.
 Build partnerships. 
 Cultivate robust loyalty & rewards programs. 

26
CONCLUSION

Sephora has proven the value of its model not just for beauty retail, but for retail at large.
At the heart of Sephora’s strategy, every technology, experience, and product goes beyond
simply delighting customers to solve specific consumer pain points, from finding the perfect
foundation color match to seamlessly booking beauty services.
While Sephora has pioneered a future of tech-enabled retail, it does face sizable competition
with personal care conglomerates, niche clean beauty retailers, big box retailers, apparel
retailers, and others capitalizing on beauty’s high margins. And of course, retailers always face
the looming threat of Amazon.  
If Sephora can keep its laser customer focus, pace of innovation, and guiding principles
of testing, iterating, and learning, the beauty trailblazer could stay ahead of the curve and
continue to push boundaries across cosmetics retail.

27
REFERENCES

 Abramovich, G. (2012, October). L’Oreal: Ads matter less.Retrieved from

http//:digiday.com/brands/adweek-tracking-the-evolution-of-                  loreal-
marketing/
Jones, G. (2010). Beauty imagined: A history of the global beauty industry. New York,
NY:Oxford University Press Inc.
 Grand Le, JC. (n.d.) The eye of the beholder: Where L’Oreal finds beauty [Interview by K.
Hochrein]. Retrieved from                                            
http://www.ey.com/GL/en/Issues/Business-environment/Leading-across-borders--
inclusive-thinking-in-an-interconnected-                    world---The-eye-of-the-beholder--
where-LOreal-finds-beauty
 Edmondson, G., Neubrone, E., Kazmin, A., Thornton, E., & Nickel, K. (1999). L'Oreal: The
beauty of global branding (int'l edition).                       BusinessWeek. Retrieved from
http://www.businessweek.com/1999/99_26/b3635016.htm
 Semuels, A. (2006). Applying cosmetics to budding markets; Western beauty firms push
into developing countries, creating                               customers and critics. Los Angeles
Times, C.1. Retrieved                                                                                                                        
from http://search.proquest.com/nationalnewscore/docview/422116124/D45C4279CC
65418CPQ/1?accountid=14709
 Gleason, S.(2014). L'Oreal USA acquires Carol's Daughter. The Wall Street Journal.
Retrieved                                                                            
from http://www.wsj.com/articles/loreal-usa-acquires-carols-daughter-1414083020
 Suddath, C. (2014, May 27). How L’Oreal knows what you look
like. Businessweek. Retrieved from http://www.businessweek.com
 L'Oreal Paris. (n.d.). loreal-paris.co.uk. Retrieved from http://www.loreal-
paris.co.uk/spokespersons.aspx
 Passariello, C.,& Colchester, M. (2011). Corporate news: L’Oreal slogan must prove
worth anew. The Wall Street Journal, B.14.                Retrieved
from http://pitt.idm.oclc.org/login?
url=http://search.proquest.com/docview/903826905?accountid=14709
 L’Oreal. (n.d). Foundation L’Oreal. Retrieved from http://www.loreal.com/foundation/
Default.aspx

28
29