Research and Innovation Centers

There are many beauty research centers in France, but they are in small or very small size, or not famous. Vichy is an example. Vichy used to be a pure laboratory center famous for medical cosmetics, then, it was acquired by L'Oréal. It means L'Oréal has been acquiring smaller research and innovation centers in France to diversify their research field. More important, L'Oréal also creates research centers in other countries to reach local concept because the aim of L'Oréal is beauty for all. Besides, L'Oréal takes partnership with some universities and institutes to cooperate in research.

4.3 Distributors

A wide range of distributors helps L'Oréal provide its products to customers as much as possible. For luxury products, there are department stores. For consumer products, there are supermarkets, cosmetics chain and convenient stores. For active products, there are drug stores. These kinds of distributors and retailers are at very corner of the world, bringing L'Oréal to every people.

CONCLUSION

After using different tools to analyze, L'Oréal is a very successful case in the cosmetics industry. With the purpose of beauty for all, L'Oréal use globalization corporate strategy as the main direction for other business and functional strategies. Playing in quite dynamic industry but low bargaining power of suppliers and consumers, the company stays at highly beneficial position with low threat of substitutes or new entrants. Its main rivals are Unilever, Shiseido, P&G and Estée Lauder. Those five giant competitors are dominating cosmetics market, resulting high intensity. But L'Oréal has its own strategy to be no.1 in the world. It creates itself much precious resources and capabilities that are sustainable competitive advantage, such as strong innovation, clever acquisition management and efficient supply chain. Thanks to vertical integration deeply, L'Oréal has taken huge advantage of economic of scale and not depended on outsourcing much. At business unit level, L'Oréal has five divisions which play different roles. L'Oréal Consumer Products is a cash cow business, bring stable profit to the company to invest in L'Oréal Active and Professionals units. L'Oréal Luxe is the star unit with high relative market share and high potential for future growth.

Regretfully, The Body Shop which was acquired 10 years before is in the dog category in the BCG matrix due to its fall in market share and growth. However, in general, the company uses differentiation strategy to diversify its portfolio to gain profit from worldwide market.

From first hair dyes, L'Oréal has grown to other lines of products as skincare, body care, fragrances, etc. It also expands from hometown – France- to other markets as the U.S., Latin America, Japan, China, to name a few. Thanks to high demand of beauty products of the French, L'Oréal has developed its business to catch expectation of every kind of beauty in other countries, also to find more suppliers and factor endowments as human resources, technology to enhance and sustain its competitive advantage to keep leadership position in the world cosmetics industry.

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