Loreal speechnotes 8.edited.edited (3)

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PERSON 1 Hi to all of you. In this presentation, we will look at the incredible journey of L’Oréal and also examine the various strategies employed by L'Oréal in globalization. SLIDE 1: COVER PAGE SLIDE 2: INTRODUCTION Eugine Schueller founded L'Oréal in 1909, marking the beginning of a publicly listed multinational firm. L'Oréal's headquarters remain in Clichy, France, as a testimony to its history and commitment to the French beauty industry. L'Oréal operates in four main business segments, each catering to different consumer needs and preferences. These segments include: Consumer Products: L'Oréal Consumer items cater to the mass market by delivering a wide range of cosmetics and personal care items. Popular skincare items in its portfolio include the L'Oréal Paris Revitalift range, which provides anti-ageing creams and serums. They also offer a comprehensive range of hair care products, such as shampoos, conditioners, and treatments customized to different hair types. Their makeup collection includes well-known brands such as Maybelline Great Lash Mascara. L'Oréal Luxe: L'Oréal Luxe is the epitome of high-end beauty for those seeking luxury and prestige. Under this segment, the company offers premium skincare products from prestigious brands such as Lancôme. You can also find top-of-the-line makeup under brands such as Urban Decay and elegant perfumes and colognes from icons such as Yves Saint Laurent, Armani, and Ralph Lauren. Professional Products: L'Oréal's Professional Products segment is designed to provide salon professionals with the best hair care and styling. Brands like L'Oréal Professionnel offer a range

of products that empower stylists to work their magic. In contrast, salon-exclusive products under Kérastase are designed for professional makeup artists, ensuring they have the tools to create beauty transformations. In terms of financial performance, L'Oréal has showcased remarkable growth. The company has consistently demonstrated substantial revenue growth and maintained good profit margins and a healthy balance sheet. This financial stability allows them to continue innovating and providing top-quality products. Active Cosmetics: Active Cosmetics is committed to formulating dermatological and skin care products tailored for various skin conditions. Brands such as La Roche-Posay, CeraVe, and Vichy offer specialized solutions to address the unique needs of different skin types. What's more, L'Oréal is a truly global player. Operating in over 150 countries worldwide, it stands out as one of the most internationally diverse cosmetics and beauty companies. With a global footprint, they have successfully reached and connected with beauty enthusiasts worldwide. SLIDE 3: L'Oréal Products Some of the L’Oréal products PERSON 2 SLIDE 4: GLOBALIZATION STRATEGIES L'Oréal employs the following strategies to penetrate and operate in international markets: Foreign Direct Investment (FDI): L'Oréal leverages FDI as a strategic approach for market expansion. For example, acquiring Magic China was a pivotal move to establish a more

substantial presence in the Chinese market. By developing local companies, L'Oréal gains insights into the specific needs and preferences of the target market. Direct Exporting: L'Oréal utilizes its extensive global distribution network to export products to international markets directly. An excellent example is the export of L'Oréal Paris Color Riche Lipstick to countries such as the United States and the United Kingdom. This approach allows them to maintain control over product quality and branding. Indirect Exporting: In markets such as India, L'Oréal collaborates with local distributors to ensure the distribution of its products to local beauty retailers and supermarkets. This indirect exporting approach helps adapt to regional markets and distribution channel variations. Franchised Salons and Beauty Centers: L'Oréal establishes a network of franchised salons and beauty centers worldwide, often under brands such as L'Oréal Professionnel. This strategy not only promotes its products but also creates brand loyalty and trust among both consumers and beauty professionals. Licensing Agreements: According to Tyuang (2020), L'Oréal partners with luxury brands such as Armani and Ralph Lauren to produce and distribute high-end fragrances. This approach capitalizes on the established reputation and desirability of these luxury brands. SLIDE 5: GLOBALIZATION STRATEGIES L'Oréal employs the following strategies to penetrate and operate in international markets: Technological Integration: L'Oréal embraces technology by acquiring tech companies such as Modi Face, which enhances the digital consumer experience through augmented reality and

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artificial intelligence applications. This technological integration sets them apart by offering innovative and personalized digital experiences to their customers. Contract Manufacturing: L'Oréal collaborates with third-party manufacturers to produce specific product lines. This flexibility allows them to respond quickly to market demands and efficiently manage their product portfolio. Product Customization: To cater for regional preferences, L'Oréal customizes products. For instance, they formulate high-sun protection factor (SPF) sunscreens for the Middle East, showing a commitment to tailoring their offerings to specific market needs. Local Marketing Subsidiaries: L'Oréal establishes marketing subsidiaries in various countries, ensuring their marketing strategies and campaigns align with local cultures and consumer behavior. This localization strategy helps them connect with customers on a personal level. Research and Development Partnerships: L'Oréal collaborates with industry leaders such as Estée Lauder to conduct research and develop cutting-edge products. An example is the joint effort to create advanced sun protection solutions. Such partnerships enable them to harness collective expertise for innovation. SLIDE 6: BENEFITS OF GLOBALIZATION L’Oréal benefits from globalization in the following ways: Expansion into Emerging Markets: L'Oréal's strategic expansion into emerging markets such as China and India has significantly broadened its consumer base. With over 1.4 billion potential customers in these countries, L'Oréal has tapped into immense growth opportunities, making it a global industry leader.

Cost Optimization through Global Presence: Leveraging low-production cost facilities in countries like Mexico and Turkey, L'Oréal can offer cost-effective products such as the famous "Garnier" haircare line. This cost optimization strategy allows them to provide quality products at competitive prices. Diversification Across Markets: By establishing a strong presence in various regions, including North and South America, L'Oréal diversifies its revenue streams. This strategy reduces the risk of over-reliance on a single market and enhances resilience in economic fluctuations. Recruitment of Talent: L'Oréal's recruitment of data scientists and sustainability experts worldwide has driven innovation. This approach has led to the developing of new product lines, such as "L'Oréal Paris" vegan skincare products, catering to the growing demand for sustainable and cruelty-free beauty solutions. Collaboration with Research Institutions: Collaboration with global research institutions has driven skincare technology innovation. For instance, breakthrough anti-ageing ingredients used in Lancôme products have resulted from such partnerships, maintaining L'Oréal's position at the forefront of beauty technology. SLIDE 7: BENEFITS OF GLOBALIZATION Diverse Workforce: L'Oréal's commitment to diversity within its workforce fosters cultural understanding. This diversity not only enriches the company's internal culture but also promotes product resonance with diverse consumer groups. Products are more likely to cater to various beauty needs and preferences. Global Supply Chains: L'Oréal's global supply chains, including those in Asia and Latin America, streamline logistics and procurement, effectively lowering production costs. This

efficient supply chain management enables L'Oréal to maintain its competitive edge in the industry. Sustainable Sourcing: By sourcing essential ingredients such as Moroccan argan oil for haircare products, L'Oréal actively contributes to economic growth in supplier regions. This ethical sourcing approach promotes sustainability and responsible business practices. Intensified Competition and Product Improvement: L'Oréal thrives in the global cosmetics market by embracing competition. The need to stay competitive continually drives L'Oréal to innovate, resulting in improved product quality and higher customer satisfaction. SLIDE 8: BENEFITS OF GLOBALIZATION Diverse Consumer Choices: L'Oréal's internalization initiatives result in a diverse range of customer options. With operations in over 150 countries, the company acquires an in-depth understanding of different client preferences, allowing it to offer a broader range of products and services. This product diversity not only serves a global audience but also stimulates innovation, ensuring that L'Oréal continuously introduces goods that match the ever-changing requirements and wishes of customers globally. The advantage of a wide range of customer options strengthens L'Oréal's position as a dynamic and consumer-focused leader in the beauty and cosmetics business. Beauty and cosmetics industry trendsetter: L'Oréal gains a distinct competitive advantage in the cosmetics market through its internalization methods. L'Oréal operates in numerous markets worldwide, allowing it to not only adapt to local trends and preferences but also set global trends, positioning itself as a trendsetter and pacesetter in the cosmetic sector. This capacity to anticipate

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and lead emerging trends strengthens L'Oréal's brand image and product innovation, propelling it to the forefront of the beauty and cosmetics industry. Bargaining Power: L'Oréal's status as an industry leader gives it considerable bargaining power with suppliers and retailers. This position allows L'Oréal to negotiate better terms and conditions, benefiting the company and, ultimately, the end consumer. PERSON 3 SLIDE 9: PAST CHALLENGES FACED BY L’ORÉAL L'Oréal has faced various challenges in the past. These challenges include Adapting to Changing Consumer Preferences and Trends : L'Oréal consistently faced the challenge of adapting to the growing consumer demand for natural and sustainable products, which influenced their decision to develop the "L'Oréal Paris Elvive" line focusing on natural ingredients and sustainability. Navigating Global Economic Uncertainties: Economic uncertainties significantly impact luxury goods spending, affecting L'Oréal's premium product lines. During the 2008 global recession, L'Oréal had to adapt to consumers cutting back on luxury cosmetics, which impacted their revenue. Regulatory Compliance in European Markets: The evolving and complex regulations in European markets, particularly in Europe, required L'Oréal to adjust their product formulations and labelling to comply with strict EU Cosmetic Products regulations governing cosmetics.

Thriving in a Competitive Market: L'Oréal faced intense competition in the cosmetics market, with numerous brands competing for market share and consumer attention, challenging their market position. Brand Image Management: Safeguarding and enhancing the company’s brand image in a critical consumer landscape was a challenge. L'Oréal successfully managed this by partnering with celebrities like Eva Longoria and influencers like Camila Coelho to maintain a strong and contemporary brand image. Talent Attraction and Retention: Attracting, retaining, and leveraging top talent in the competitive industry was challenging. L'Oréal addressed this by launching the "BeautyTech Atelier" program, which recruited tech-savvy skills to strengthen their digital capabilities and innovation. Market Expansion and Cultural Adaptation: Expanding into diverse markets with unique cultural norms and regulations presented challenges. For instance, entering the Indian market required understanding and addressing local beauty preferences, which L'Oréal did by launching products like "Garnier Light Complete." SLIDE 10: PAST CHALLENGES FACED BY L’ORÉAL Counterfeit Protection: L'Oréal faced the challenge of counterfeit products in China, which prompted them to implement advanced anti-counterfeiting measures, including blockchain technology, to ensure the authenticity of their products and protect their intellectual property.

Environmental Sustainability: L'Oréal addressed ecological and sustainability concerns by committing to reducing carbon emissions through the "Sharing Beauty With All" program, demonstrating their dedication to responsible business practices and environmental sustainability. Navigating unexpected crises: L'Oréal had to address issues like product recalls. For instance, in 2014, the company faced a product recall in the U.S. due to microbial contamination, highlighting the challenges of maintaining its brand image amid such crises. Managing Currency Rate Changes: L'Oréal has previously faced difficulties handling currency rate fluctuations that impacted worldwide operations and financial stability. For example, during significant currency depreciation, the company's manufacturing costs increased due to increasing import charges for vital materials. This variation strained the company's finances, requiring changes in pricing methods to preserve profit margins. To counteract these consequences and assure stable financial operations, L'Oréal had to use financial risk management measures such as currency hedging. Maintaining Product Availability in the Face of Supply Chain Disruptions: During a supply chain breakdown, L'Oréal had a significant issue ensuring product availability. Natural calamities, such as the 2011 earthquake and tsunami in Japan, for example, damaged the supply chain for specific raw materials used in L'Oréal's products. This resulted in temporary shortages, which impacted product availability and customer satisfaction. To limit the risk of future delays and maintain continuous product availability, the company had to diversify its supply base, implement contingency plans, and enhance inventory management. Adapting to Digital Transformation: L'Oréal faced difficulties adjusting to digital change and changing consumer behaviour. L'Oréal needed to improve its digital presence and customer

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engagement as e-commerce and online beauty shopping grew popular. For example, during the COVID-19 pandemic, the change to online buying necessitated fast modifications. To keep up with shifting consumer preferences for online product discovery, L'Oréal needed to invest in e- commerce systems, boost digital marketing, and develop virtual try-on capabilities. Staying competitive in the growing beauty sector required adapting to this digital shift. SLIDE 11: PRESENT CHALLENGES FACING L’ORÉAL Present challenges faced by the L’Oréal company include Market Saturation ¿ Competition: With so many national and international brands, L'Oréal faces fierce competition from niche beauty brands such as Glossier and Fenty Beauty, challenging its market share in specific product segments. For instance, Fenty Beauty's release of the Pro Filt'r Soft Matte Longwear Foundation with a groundbreaking 40-shade range raised the bar for inclusive makeup, intensifying competition in the foundation segment. Digital Transformation and Online Presence: Specific Challenge: The challenge of rapid digital transformation and maintaining an online presence includes creating virtual try-on tools and artificial intelligence (AI) -driven product recommendations. L'Oréal's Virtual Try On tool allows customers to virtually apply makeup and experiment with different looks before purchasing, enhancing the online shopping experience. Sustainability Commitment: L'Oréal's commitment to sustainability necessitates substantial investment in research and development for eco-friendly packaging. An example is their

investment in developing biodegradable materials for product containers, such as bioplastic packaging for skincare products, reducing plastic waste. Supply Chain Disruptions During the Pandemic: The challenge of supply chain disruptions required L'Oréal to enhance its online shopping experiences and digital customer support. For instance, L'Oréal expanded its online customer support services to offer live chat support and virtual beauty consultations, ensuring customer satisfaction during the pandemic-induced shift to online shopping. The impact of COVID still impacts the company. Competition in Emerging Markets: In emerging markets like India, L'Oréal faces competition from local brands offering affordable and culturally relevant beauty products. An example is the challenge of competing with local Indian brands and providing products tailored to traditional beauty practices and preferences. SLIDE 12: PRESENT CHALLENGES FACING L’ORÉAL Data Privacy and Security : As customer data is increasingly collected for marketing and personalized recommendations, L'Oréal faces the challenge of ensuring robust data privacy and security practices in compliance with global data protection laws. For instance, L'Oréal implements advanced encryption and authentication measures to safeguard customer data in line with the General Data Protection Regulation (GDPR) requirements in Europe. Geopolitical Tensions and Supply Chain Diversification : Ongoing geopolitical tensions have disrupted global supply chains, challenging L'Oréal to diversify suppliers and develop contingency plans. For example, L'Oréal established relationships with alternative suppliers for essential ingredients and components to mitigate the impact of geopolitical trade disruptions.

Innovation and Staying Relevant : To stay relevant, L'Oréal continuously innovates by introducing new product lines and collaborating with influencers. An example is their collaboration with a prominent beauty influencer to create a limited-edition makeup line, which generated buzz and maintained the brand's relevance in the ever-evolving beauty landscape. Talent Attraction and Retention: In a competitive job market, attracting and retaining top talent, such as data scientists and sustainability experts, remains challenging. For instance, L'Oréal offers competitive compensation and benefits packages to attract and retain sought-after talent in data science and sustainability, ensuring top professionals power the company's innovation and sustainability efforts. Environmental Responsibility: Specific Challenge: L'Oréal faces pressure to reduce its carbon footprint and address ecological concerns. An example is the challenge of transitioning to renewable energy sources for production facilities, such as solar panel installations and wind turbines, to meet sustainability goals and minimize environmental impact. PERSON 4 SLIDE 13: RISK MITIGATION STRATEGIES Product Safety and Regulatory Compliance: Before launching a new anti-ageing skincare line, L'Oréal conducts consumer surveys and product testing to assess potential risks, such as allergic reactions, ensuring product safety and adherence to regulatory standards. For instance, extensive patch testing on human subjects is performed to ensure the safety and efficacy of skincare formulations, minimizing potential risks. Economic and Political Monitoring: L'Oréal closely monitors the political situation in regions like Venezuela, where economic instability and political turmoil directly impact a significant

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portion of the company's global business and revenue. This involves continuous analysis of the political climate to mitigate potential economic and operational risks. Currency Risk Management: L'Oréal uses currency futures contracts to hedge against fluctuations in the value of the Brazilian Real when importing essential ingredients for their haircare products, ensuring predictable production costs. This financial risk management strategy minimizes currency-related financial risks. Regulatory Compliance for New Formulations: To comply with European Union Cosmetic Products Regulation (EC) regulations, L'Oréal collaborates with local laboratories to conduct comprehensive safety assessments for new cosmetic formulations, minimizing legal risks. This involves rigorous testing and documentation to meet regulatory requirements. Data Privacy and Security: L'Oréal employs advanced encryption and tokenization technologies to secure customer payment data during online transactions. This ensures compliance with strict data protection laws, such as the General Data Protection Regulation (GDPR). This safeguards customer data and ensures adherence to data protection regulations. Supply Chain Risk Mitigation: L'Oréal diversifies suppliers for mica, a key ingredient in eyeshadow products, to reduce supply chain risks related to child labor concerns in certain mica- producing regions. This risk mitigation strategy ensures the ethical sourcing of raw materials. Data Management and Privacy Compliance: L'Oréal implements a centralized Customer Relationship Management (CRM) system to manage customer data consistently and securely across all international markets, adhering to data privacy regulations. This ensures that customer data is handled in compliance with data privacy laws.

Cybersecurity and Data Protection: L'Oréal conducts regular third-party penetration testing and employs advanced intrusion detection systems to safeguard proprietary formulas and customer data on its research and development servers. This ensures data and intellectual property protection in an increasingly digital world. SLIDE 14: RISK MITIGATION STRATEGIES Supply Chain Contingency Planning: L'Oréal's risk management team creates contingency plans for supply chain disruptions due to political unrest, such as stockpiling key ingredients in secure global warehouses. This proactive approach minimizes the risks associated with supply chain disruptions. Innovation and Sustainability: L'Oréal innovates by developing a biodegradable packaging material for its product lines, reducing environmental risks and demonstrating a commitment to eco-conscious practices. This innovation minimizes ecological impact and aligns with sustainability goals. Innovating Products and Processes: L'Oréal innovates by introducing a breakthrough 3D- printed mascara brush technology for its mascara products, adapting to evolving consumer preferences for unique and precise makeup applications. This innovation enhances product performance and customer experience. Water Resource Management: L'Oréal collaborates with local non-governmental organizations (NGOs) in regions with water scarcity issues to source and use water responsibly in its manufacturing processes. This mitigates water-related risks and strengthens its reputation for environmental protection and resource sustainability. SLIDE 15: CONCLUSION

Global Industry Leadership: L'Oréal is a global cosmetics leader, well-known for its diverse product range and iconic brands. With a rich history and a robust global presence, L'Oréal has become synonymous with quality beauty products. Internationalization Strategies: Internationalization strategies drive L'Oréal's global success, catering to diverse markets and consumers. These strategies enable L'Oréal to adapt to local preferences while maintaining a global identity. Globalization Benefits: Globalization yields diversified revenue, access to emerging markets, brand recognition, and innovation. L'Oréal's global footprint provides a broad market reach and diverse opportunities for growth and expansion. Resilience and Risk Mitigation: L'Oréal's resilience is seen in its risk mitigation strategies, ensuring stability in a dynamic industry. These strategies protect against various challenges, ensuring continuity and stability in a highly competitive sector. Commitment to Sustainability, Compliance, and Quality Control: The company's commitment to sustainability, compliance, and quality control solidifies its industry leadership. L'Oréal's dedication to environmental responsibility, regulatory adherence, and product quality ensures trust and longevity in the market. Future Outlook : Looking ahead, L'Oréal will continue to evolve to meet consumer and market needs while prioritizing sustainability for continued global success. As the beauty and cosmetics industry transforms, L'Oréal remains committed to adapting and leading the way, aligning with evolving customer preferences and global sustainability goals. Slide 17: References

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Slide 18: References

Loreal speechnotes 8.edited.edited (3)

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