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L'Oreal - Business Policy And Strategy

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Introduction

L’OrÐ"©al 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.

L’OrÐ"©al does and has always have believed in the strategy on innovation and diversification. Due to the products’ uniqueness, L’OrÐ"©al’s product became well-known and popular among all ethnic groups, not depending on gender.

Mission:

The company’s 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. (L’OrÐ"©al Group 2007)

Values:

Striving For Excellence: L’OrÐ"©al 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 L’OrÐ"©al being one of the most exemplary companies in the 21st century.

Goals:

L’OrÐ"©al wishes to reach its vision by achieving its three most important goals; to achieve economic success as overriding priority, making L’OrÐ"©al a company where employees blossom both personally and professionally, and to make L’OrÐ"©al be seen as a вЂ?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 L’OrÐ"©al, 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 Maly’s West. However, some economic factors, more precisely the exchange rates have affected the company’s profit negatively.

Apart from this, the following table summarizes the sales of L’OrÐ"©al 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.

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