SWOT Analysis of L’Oréal

SWOT stands for strengths, weaknesses, opportunities, and threats. It is the internal environment analysis of a business firm in which we examine and reviews the internal environment of an organization that influences business operations and profitability.

It is said that SWOT analysis is a very powerful strategic management tool that helps in the process of strategic development of the organization. It is the need of every organization to take care of every element of SWOT that has a strong influence on the operation of an organization.

SWOT Analysis of L’Oréal

Now we are going to do a SWOT analysis of L’Oréal. L’Oréal is the world’s largest beauty products company headquartered in Paris. L’Oréal is structured into three main branches:

• Cosmetics
• The Body Shop
• Dermatology

L’Oréal has a portfolio of 27 international, diverse, and complementary brands. L’Oréal has almost 100000 employees, 43 production plants, and 146 distribution centers worldwide. L’Oréal is one of the largest cosmetics companies by sales. 

Strengths of L’Oréal

Innovation: Company L’Oréal has a good reputation for offering and launching innovative products to customers across the world. The company has well established Research & Development (R&D) team which takes care of continuous focus on the new product development and innovation to meet customer demands and beat the competition in the market. Research and innovation are the guiding principles of L’Oréal in the field of beauty. L’Oréal has near about 2000 researchers today. 

L’Oréal has a strong image in all major markets of the world. This strong image helps L’Oréal to attract new customers which leads to getting new market share that is very important for any organization to achieve its goals and objectives.   

Different Range of Products: L’Oréal is well known for its different range of products. L’Oréal facilitates more customers rather than any other brand. For example, L’Oréal has 20 different products only in the category of shampoo, conditioners and treatments. It easily helps in making customers loyal to L’Oréal. This factor has a significant impact on the profitability of L’Oréal.

Weaknesses of L’Oréal

Too Many Subdivisions: When the company handles such a large operation then it also causes problems and issues. The same is the case in L’Oréal. The firm is known to be slow and bulky in nature because of the various subdivisions it has. Employee management is also a problem in L’Oréal as the firm has close to 60,000 employees. Thus, human capital expenditure is huge. 

Big Competition in Cosmetics Industry: There are many local and international competitors in the market of L’Oréal. Due to a large number of companies in the cosmetic and beauty products industry, L’Oréal has to depend on the third-party sales agent. Despite a strong name in the markets worldwide, L’Oréal has to encounter big competition.

Opportunities of L’Oréal

Strong Demand in Organic Products: L’Oréal is a forerunner in organic-based beauty and cosmetics products. These products have big demand all over the world because people are more conscious of health care. People just trust organic products of big companies so that they can stay away from the danger of low-quality products for health care.  

Product Mix Expansion: Expansion of product lines and introducing innovative products in the product mix will help L’Oréal in the complete product expansion. It is the factor that maybe would be under consideration of L’Oréal management.

Threats of L’Oréal

Global Economic Crisis: Cosmetics are considered as luxurious products as these are sold at more price than other necessary items that have been purchased by consumers. During this global financial crisis, people usually do not purchase high priced products and go for low priced products to overcome the financial crisis. So it would be difficult to make revenues from the global market due to this global economic crisis. 

Dynamic Nature of Cosmetics Industry: There is a constant demand in the update of cosmetic products by consumers which is ultimately a very difficult task. The company cannot keep happy everyone at once. On the other hand, the competition in the market is not going to stop and every competitor will come with more smart tactics. We can consider it as a major threat for L’Oréal.

Note: All information is solely shared for research, educational and informational purposes. There is no intent to harm any company.