diversification of l'oreal
DESCRIPTION
TRANSCRIPT
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Key Facts and Figures 1st cosmetic group worldwide
1 century of expertise in cosmetics
23 international brands
19.5 billion euros of sales in 2010
130 countries
66,600 employees
612 patents registered in 2010
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DIVERSIFICATION STRATEGY
Entering three kinds of industry:
Cosmetics
The Body Shop
Dermatology “Closely-related”
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Offering different product lines through four market lines:
COSMETICS INDUSTRY Professional Products
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COSMETICS INDUSTRY Consumer Products
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Luxury Products
COSMETICS INDUSTRY
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COSMETICS INDUSTRY Active Cosmetics
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THE BODY SHOP
A chain of cosmetic stores specializing exclusively in hair and skin care products
based on natural ingredients.
Operated a total of 2,550 stores in 62 countries worldwide by the end of 2009.
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DERMATOLOGY
Galderma Laboratories: a joint venture with Nestle. It
boasts three of the top 25 best-selling drugs.
It specializes in skin diseases and skin infections.
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REASONS OF DIVERSIFICATION
Part of L’Oreal Long Term Strategy
Meet Consumer Needs
Exploiting Relevant Economies of Scope
Strengthening External Growth
1
3
2
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Internal Growth
Resources
Asset
External Growth
Diversification (M & A)
Alliances
STRATEGIC CHOICE
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GROWTH STRATEGY “Merger and Acquisition”
Reaching a critical size for exploiting
economies of scale.
Satisfying local needs.
Creating a portfolio of distinctive but complementary products and brands.
Quickly acquiring new resources and technologies.
Overcoming the entry barriers.
Objectives:
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Operating in different geographical markets from those in which L’oreal is already operating.
CHARACTERISTICS OF COMPANIES ACQUIRED
Offering products that complete the L’oreal portfolio brands or products.
The Body Shop: Enters India Easily
ROGER&GALLET: Produces Pharmacy Fragrance
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Operating in geographical markets in which L’oreal intends to
reach leadership position.
Having high technology and competences related with L’oreal products.
CHARACTERISTICS OF COMPANIES ACQUIRED
Inneov: Number 1 in Spain
Vichy: Advanced Skincare Technology
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ACQUISITION PREPARATION FLOWCHART
Preparation (Gather
information)
Similarities with L’oreal
Characteristics
What is the Objectives?
Final Preparation
Decision (Implementation)
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IMPLEMENTATION
L’Oreal has acquired more than 25 brands with different market segments (see acquisition timeline).
Each brands contributes a different advantage for L’Oreal long term strategies.
The Body Shop makes L’Oreal distribution broader.
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ACQUISITION TIMELINE
Professional Products
Consumer Products
Luxury Products
Active Cosmetics
The Body Shop
1990 1995 2000 2005 2010
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RISK MITIGATION STRATEGY Innovation and Patent
2001 2003 2005 2007 2009
Registered patents
493 515 529 576 674
R&D expenditures (mill. Euros)
432 480 496 560 609
R&D employees 2,743 2,921 2,903 3,095 3,313
Increasing patent rights on its inventions.
Rebuild the products to get customers’ attention.
Patents, R&D Expenditures and Employees at L’Oreal
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MARKETING MITIGATION Market different product with different target market.
Develop a clear positioning statement as a current market leader.
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Try to be the first mover – to gain more market share before other.
MARKETING MITIGATION
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PRODUCTS STRATEGY Collaboration with Channel Partners
Market Research Agencies
Licensee
Hair Salons Mass Market
Department Stores,
Perfumeries
Pharmacies, Dermatologists
Retail Partners
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-50% GREENHOUSE
GAS EMISSION
‘ALIGNING WITH NATURE’ STRATEGY
Reducing impact on natural capital.
Responsible sourcing.
Eco-designing new ingredients.
Addressing controversy on ingredients.
Protecting the global system.
Commitment to Sustainable Development:
-50% WASTE
GENERATED PER FINISHED PRODUCT
-50% WATER
CONSUMPTION PER FINISHED
PRODUCT
Target for 2015
Target for 2015
Biomethanisation Unit at Libramont Plant: 100% Green Energy
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NEWEST ACQUISITION: PACIFIC BIOSCIENCE LABORATORIES
Date of Acquisition: Dec 15th, 2011.
Intermediated by L’Oreal USA (the franchisee).
Products: Sonic Skin Care Devices (Patented).
Channels: Dermatologists and Prestige Retail. Main Market: US. Reasons behind Acquisition:
Pacific Bioscience Laboratories’ Expertise in Devices.
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QUESTIONS? Thank You for Your Attention