Introduction
LOreal was established in 1909, and by now the company is one of the leaders in the
beauty market while providing a wide variety of products for each segment of its market
tailored to meet expectations of its customers.
LOreal does and has always have believed in the strategy on innovation and
diversification. Due to the products uniqueness, LOreals product became well-known and
popular among all ethnic groups, not depending on gender.
Mission:
The companys mission is to promote an approach to beauty that is fun, affordable,
fulfilling, genuine and generous while meeting all stakeholders expectations by providing
a portfolio of deeply diversified range of products. (LOreal Group 2007)
Values:
Striving For Excellence: LOreal is trying to enchant the brand portfolio with continuously
innovating products while meeting all standards set for quality and safety.
Passion for adventure: their expertise drives their passion for new discoveries and
innovation in cosmetics.
Enrichment through diversity: understanding and valuing each individual is an essential
part of their corporate culture. Their staff members come from many different backgrounds
and work together to offer a full range of products through varied distribution channels.
Valuing individual talent: they are dedicated to enhancing the well-being of their
consumers; they also ensure that each employee has the opportunity to develop his or her
potential through personal and professional growth.
Leading innovation in beauty: research, sensitivity to consumer needs, know-how and
expertise are as essential as intuition. Building on their unrivalled experience and
expertise, fundamental research is a specific focus of investment that drives creativity and
contributes to developing the cosmetics of tomorrow.
Vision:
A company that is highly successful economically.
A company where people are enthusiastic about going to work.
A company that respects the environment and acts as a global citizen. (Sustainable
Development Report 2006) Achieving this will lead to LOreal being one of the most
exemplary companies in the 21st century.
Goals:
LOreal wishes to reach its vision by achieving its three most important goals; to achieve
economic success as overriding priority, making LOreal a company where employees
blossom both personally and professionally, and to make LOreal be seen as a global
citizen.
Objectives:
Objectives are mainly quantified, more precisely described goals. We cannot serve with
these figures, but among the objectives the first few places will be nominated to a growth
in market sale, in consolidated sales figures and in operating profit.
Financial Highlights
At September 30th 2007, the sales of the LOreal, was amounted to 12.639 billion euros,
based on reported figures, therefore we can conclude that the sales have increased by
+8.6%, compared to previous years. This increase in sales are manly the result of the
acquisitions of The Body Shop, Sanoflore, Beauty Alliance, PureOlogy and Malys West.
However, some economic factors, more precisely the exchange rates have affected the
companys profit negatively.
Apart from this, the following table summarizes the sales of LOreal by operational
division and geographic zone.
Sales by operational division and geographic zone
Third quarter 2007 At September 30th 2007
Growth Growth
*m Like-for-like Reported *m Like-for-like Reported
By operational division
Professional Products 615.9 + 7.1% + 16.7% 1,769.4 + 7.1% + 10.7%
Consumer Products 2,013.1 + 8.0% + 5.8% 6,290.1 + 8.1% + 5.2%
Luxury Products 938.8 + 7.2% + 3.5% 2,772.1 + 6.9% + 2.9%
Active Cosmetics 268.3 + 9.4% + 11.0% 984.6 + 9.9% + 10.0%
Cosmetics total 3,848.9 + 7.6% + 7.0% 11,863.4 + 7.6% + 5.6%
By geographic zone
Western Europe 1,679.1 + 4.0% + 3.7% 5,479.3 + 3.8% + 3.6%
North America 1,037.9 + 4.3% + 3.9% 2,967.7 + 4.0% + 0.1%
Rest of the World, of which: 1,131.9 + 17.0% + 15.6% 3,416.5 + 18.3% + 14.8%
– Asia 380.2 + 13.8% + 8.1% 1,168.4 + 13.8% + 7.0%
– Latin America 292.1 + 13.6% + 11.0% 820.0 + 15.2% + 10.3%
– Eastern Europe 260.4 + 29.9% + 36.3% 815.9 + 29.9% + 35.4%
– Other countries 199.2 + 13.5% + 14.9% 612.2 + 17.4% + 13.7%
Cosmetics total 3,848.9 + 7.6% + 7.0% 11,863.4 + 7.6% + 5.6%
The Body Shop 180.2 + 5.6% + 4.8% 520.7 + 6.5% n.s.
Dermatology(1) 95.9 + 15.3% + 10.5% 255.1 + 12.0% + 6.8%
Group total 4,124.9 + 7.7% + 7.0% 12,639.2 + 7.7% + 8.6%
As you can see it from the table, The PROFESSIONAL PRODUCTS division experienced
a
+ 7.1%, growth rate, and with this figure it successfully outstripped the rest of the
divisions in all geographic zones. On the other hand, the CONSUMER PRODUCTS
division also achieved an increase in its sales, mainly in facial skincare and make-up. The
LUXURY PRODUCTS division realized a + 6.9% increase in sales, and it was even more
successful in developing countries such as China, Russia, Mexico and Dubai. Finally, the
ACTIVE COSMETICS obtained a + 9.9% growth rate, which resulted mainly from the
facial skincare products.
Organization Structure and Organizational Chart:
The Boards Committees
The Boards Committees carry out missions entrusted to them by the Board. They are
actively involved in preparing for the Boards work, but do not themselves have any
decision-making powers. They report to the Board on a regular basis.
The Committee for “Strategy and Implementation” (6 members)
This Committee clarifies the strategic orientations, which are submitted to the Board, and
monitors the implementation and progress of significant ongoing operations. It ensures that
general financial stability is maintained.
The Audit Committee (3members)
The role of this Committee is to ensure that the General Management is provided with
information enabling it to identify and manage the economic, financial and legal risks
faced by the group both inside and outside France in its routine and exceptional operations.
The “Management and Remuneration” Committee (3 members)This Committee assists, in
complete independence, the Chairman and the Board in their review of succession plans
for the groups senior management positions. It reviews the composition of the Board of
Directors and any possible changes. It makes proposals to the Board concerning the
remuneration of corporate officers and attributions of stock options, and addresses general
issues of remuneration policy in the company.
You will find a description of the Board of Directors bellow and the detailed list of the
names attached (Appendix 1).
Stakeholders Expectations
Stakeholder Mapping
Stakeholder mapping helps in identifying stakeholders expectations and power and the
way they should be treated. If the level of their interest is low as well as their power, we
only need to make minimal efforts to make them satisfied, we dont need to focus on them
as much as if they had low interest but high influence, and so on. To make it easier for, we
will use the letters you can see below in the Power/Interest Matrixs different segments.
Since a certain companys strategy depends on what people expect it to achieve it is
essential to look at who these people actually are and what they want from LOreal.
The stakeholders are those who depend on a particular organization in one way or another
thus have an influential power over the overall strategy of the organization. These
stakeholders can be either internal or external. Internal stakeholders can be identified by
looking at the organizations corporate governance chain which describes its hierarchical
composition.
In case of LOreal the Board of Directors (D) is on the top level of the organizational chart
and is ultimately serving the shareholders` interests. In 2006 The Board of Directors
decided to separate the functions of Chairman and Chief Executive Officer the new
Composition of the Board of Directors looks the following way where the statutory length
of the tenure of a LOreal director is 4 years which is renewable and each director holds a
minimum of 1,000 LOreal shares (please see attached, Appendix 1).
The next level in the corporate governance chain is the Chief Executive Officer under
whom are the Senior Managers and the Top Management. On the following level the
Management can be found who are directly responsible for the employees.
The 50,000 employees (B-C) of LOreal play an immense role from strategically point of
view in the strategic decision making process. For this reason it is inevitable for LOreal to
develop a sustainable human resources policy which means adopting several objectives.
Motivating people through a dynamic approach to remuneration and mobility is one
effective way that the management of LOreal has chosen. Recruitment of talented people
and the development of diversity within the company also serves the employees` interests.
Offering international career opportunities and promoting personal and professional
development through training programs means a lot to present and future employees.
Development of social dialogue and promotion of Corporate Social Responsibility plays a
significant role when it comes to employee satisfaction. The implementation of the best
possible working conditions is necessary for employees to feel comfortable during the time
they spend in the buildings of LOreal. Personal career management can be very attractive
for employees together with the opportunity to receive early responsibility that shows trust
towards them. All these elements of a successful Human Resource Management contribute
to a well-working organization that is overall attractive to employees. Since the success of
LOreal is very much based on its employees maintaining and further improving the above
mentioned conditions is vital.
Customers` (D) influential power is necessary to take into account especially in case of
such a well known company as LOreal. By scientifically conducted studies on customers`
needs we can say that without any doubt the top three expectations of LOreals customers
