Submitted by: Submitted by dlf00
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Words: 410
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Category: Business and Industry
Date Submitted: 04/24/2014 07:19 AM
SWOT Analysis of L’Oreal
Strengths
Strong brands: L'Oreal has a strong brand portfolio, through heavy advertising expenditure. A portfolio of strong brands provides a competitive advantage in the market place.
Diversified geographic presence: L'Oreal has a diversified geographic presence (operations in over 130 countries across five continents) It is not over dependent upon any one region, thus capable of withstanding a setback in any one region leading to stability.
Strong R&D capability: The strong R&D capability allowed the company to launch new products such as Armani Code Donna and La Roche Posay.
Weaknesses
Weak performance in North America: L'Oreal has been losing market share to Proctor & Gamble in the hair-care (shampoos and conditioners) segment and to Henkel in the hair-coloration market in America. A weak performance in such a geographically strategic market undermines investor confidence.
Slow revenue growth: L'Oreal's long term revenue growth has been low. Its revenues grew at a CAGR of 2.8% during the period 2002-2010, compared to an industry average of 10.4% over the same time. Slow revenue growth relative to the industry indicates a decline in competitiveness and lack of revenue driving products.
Opportunities
Demographic trends in the First World: Growing beauty consciousness especially among the aging population is an important trend for all cosmetics companies. Hence, L’oreal, with leading products marketed for this segment (L’oreal Age defying makeup and Vital Radiance), could look to benefit from this trend.
Cosmetics market in emerging nations: The importance of emerging markets such as China, India and Brazil is on the rise for cosmetics companies due to increasing popularity of beauty contests and increasing disposable incomes.
Acquisition and alliance: Demand for natural personal care products is rising as consumers shift to products which are safer and more eco-friendly.
Threats
Growing...