L’Oreal: Global Brand, Local Knowledge
L’Oreal: Global Brand, Local Knowledge
1. Outline the various conflicting demands on L’Oreal in the international context and their relative importance. What tradeoffs do you see among them? The conflicting demands are:
Leveraging knowledge (local to Global)
L’Oreal is one of the world’s most progressive companies and it is being honored for creating a corporate culture that embraces and drives diversity throughout the company. L’Oreal’s strength comes from the diversity of its teams, to be a global company, it’s needed first have to be global from within. So people from different cultures and origins are a real asset for the company. L’Oreal experience is that diverse teams are actually more creative and innovative. The company is aware of the necessity of recognizing the diversity of its customers. L’Oreal does not try to export or impose a single view of beauty. On the contrary, all the brands must reach out to people of very different types around the world. Local responsiveness:
One of the most conflicting demands that L’Oreal is experiencing the different needs of customers according to the local needs, sometimes a country asks for a product that fits perfectly for them but not for the other country. For a company that is dedicated to beauty care, it is essential to study the needs of the market and be able to adapt the business to them. L’Oreal has been able to adapt to the demands of different local markets and has become one of its competitive advantages by studying the needs and development of products specially designed for each market.
L’Oreal leverage the valuable knowledge is obtained from the research made in 18 Investigation centers. L’Oreal has a deep understanding of how the group makes local country studies and has an international focus and a global vision. From my point of view, this helps them to leverage the knowledge and adapt it worldwide.
2. Analyse L’Oreal’s global strategy using the AAA
framework outlines in the “Managing Differences” paper. Aggregation:
L’Oreal, in order to expand and minimize competition, considers each of the markets to know its maximum competitors either specific products or global brands. And they try to absorb other international brands, giving them a new makeover, improve product quality, introducing technology to alter its advertising and technifying its production. This is how they cover the market with all brand diversification controlled by the main company L’Oreal. In this way their own brands compete with each other and thus control the entire market covering all types of products: consumer products, luxury products, professional products and active cosmetics.
L’Oreal knows the people from different countries and cultures have their own particular needs, different habits, different dreams and desires. So, one product does not fit for everyone.
To boost the sales of a product it’s needed to power something that could be palatable by the society in a particular culture. This component has to associate the product with an element such as beauty, nutrition, purity, hygiene, elasticity…
The poor association of any new product to a component that is not well accepted by the society will create an absolute rejection and will force to remove that product from the market.
For that, L’Oreal has 18 research centres R&D called “Geocosmetics”, with 3.100 employees and 12 evaluation centres.
The mission of this people and institutions is to offer men and women around the world the best cosmetic innovation in terms of quality, efficacy and safety. They seek to achieve this goal in response to the needs and desires of the infinite diversity of beauty anywhere in the world being that beauty is universal.
From my point of view, L’Oreal has a lack of progress on the arbitration front. It is not a main principle of the company.
The marketing and advertising strategies of L’Oreal such as aggregation and adaptation appropriated to the market, the regional launches of their products, the way of distribution and the strong advertising strategies, have contributed to its success.
3. Evaluate the basis for L’Oreal’s competitive advantage considering the strategic capabilities key to their success? The four main key success factors of L’Oreal are:
1. Research and Development
2. Understanding customer needs worldwide
3. Investment in Advertising
4. Use Distribution Channels
Research and Development: L’Oreal competitive advantage in this field is because they invest heavily in innovation and creating products to suit the times and the needs of all current and future markets creating products that meet the needs and create new consumer needs. This allowed them to more clearly understand the needs of customers and satisfy them through their effective products.
Understanding customer needs around the world: it is a competitive advantage because understanding the needs of the population L’Oreal can make research and development that allows them to create products to get to meet all needs of all potential customers in all the countries around de world. L’Oreal capacity to spread throughout the world by understanding the needs of different regions and market has given a privileged status in the market for cosmetic, hair care and skin.
Investment in Advertising: is a competitive advantage because this investment covers all channels and positions in all sectors, comes to everyone, through all possible media. Thanks to the use in advertising campaigns celebrity brand creates an association of values of glamour, quality…
Use Distribution Channels: is a competitive advantage because they reach all corners of the world, from small businesses to large surface. Access to the various countries is carried out through a complex network of distribution and production, made up a whole network of factories, research centers, subsidiaries and distributors located in the countries in which it operates.
4. Explain the various means of knowledge transfer at work in L’Oreal and how this function is key to their success. L’Oreal has a “functional” organization instead of a “hierarchy”. This allows them to facilitate the transfer of knowledge among its employees and make sure they coordinate well with them. Each division is made up of different departments and each department is responsible for its own products.
Functional organization is created to decentralize decision-making, in order to speed up proceedings and especially to break the linear hierarchy structure in companies, where information does not flow, but distributed or enforced, and instead, in the functional system are created specific departments that manage themselves, and who are responsible for everything that affects its department in all areas of the company.
This enables enterprises increasingly rely on teams, specialized, that among these knowledge flows, and where there is always a command structure to manage and control departments, but where the roles and responsibilities of departments shared on a team. So the company removes large hierarchies, where the good or bad performance of the company depends solely on the opinion and vision of a command or senior position, which has the power of information and decision, and operation of the company, depends on their knowledge, skills and decisions.
L’Oreal gives its employees the opportunity to move around the world through all the companies that have, I think it is a positive development for workers and for the company to give them a functional and geographical mobility. Thus there is a transfer of knowledge within the company and knowledge can be acquired and transferred among its employees.
This mobility helps the employees to gain experience, entrepreneurial approaches and market situations, offering employees the international challenges at some point in their careers. In this way the company ensures that its employees are continuously trained and internal feedback helps them get the best of each of the elements of the company and that knowledge is transferred between their own companies and different countries.
Leaders give workers an important vision of the company and facilitate the transfer of knowledge.
If L’Oreal did not have this type of knowledge transfer, the company would be totally different and the knowledge and experience would be lost and does not even come to discover ever. So I think this function is a key to the success of L’Oreal.
5. How important is the human resource/global talent function in a company like L’Oreal, give reasons for your answer.
L’Oreal is a company with more than 60.000 employees from 100 nationalities. Human Resources are the core business. L’Oreal Human Resources is considered a strategic partner more than a business support area. Human Resources gives very important and protagonist role in the company.
The department is responsible for identifying, recruiting, hiring, monitoring and maintaining employees who were part of the organization. Also one of their functions involves controlling the relationship between the organization and employees.
As we can see the presence of Human Resource Management in an organization is extremely important because it is what ensures that the aforementioned
situations are carried out properly. The goal of Human Resource Management is the planning, organizing, developing, coordinating and controlling. However, his goal goes beyond because, should handle the organization and employees maintain a good relationship. This means, they have the obligation to check that employees work in an environment where they feel engaged and able to perform their activities efficiently and effectively. Thus to achieve the objectives of the company to obtain optimal results in the production or services it provides, resulting in higher profits.
In order that the Human Resources Department could achieve its objectives through human capital, must establish certain policies which are rules that employees must follow to ensure that the functions are performed properly and avoid in a way to make mistakes that could endanger the success of specific functions.
The Human Resources Department attracts the best talent and value their personal qualities. Develop international strategy of long-term employee. L’Oreal knows that the best way to retain its employees is by giving them opportunities to grow within the company.
The top priority for L’Oreal is the training of personnel is an ongoing process by which the company’s Human Resources acquired and perfected a set of knowledge, attitudes and skills, in order to allow workers better chance of develop and enhance their career while nourished by the culture of the company, having better quality of life and work. By doing this, L’Oreal is investing in the same organization and this way will bring benefit. Because now, there are many companies and all the companies represent a great competition between them, training is essential to provide better service or product and thus gain competitive advantage. Staff will need to be formed to develop and manage programs more sophisticated as the organization matures and faces more complex issues such as the financial, more difficult to attract new customers, improve the quality of services and products etc.
Finally one of the tasks of Human Resource Management is the application of the remuneration or incentives, which arise from the need to motivate
employees to undertake additional efforts that the work they do within the company. The pay is also important to keep longer employees, reducing turnover by satisfying them, because sometimes the high level of resignations or dismissals created or comes to cost the company more money than simply giving incentives. It is true that this are a good way to motivate, however, it’s a delicate issue because they can cause conflicts to arise injustice ideas.
In conclusion, the administration department of l’Oreal Human Resources plays an important role within the company because it is in charge of the process referred to workers, from the time they are hired until some cases are dismissed.
Human Resources Department is also who oversees the relationship between the organization and the workers is adequate so that there is harmony in the workplace. Consequently everyone can do or be able to do their work properly to obtain optimum results. As this is the responsible for the welfare of intellectual capital, is who proposes the distribution of incentives in order to motivate. Training is an important part of the development of workers, so it must be constant, giving better quality of living and working. The company to provide service training and has trained staff that provides competitive advantage.
Case: L’Oreal: Global Brand, Local Knowledge
Managing Differences: The Central Challenge of Global Strategy, (Harvard Business Review – March 2007)