L’oreal Tahiland Essay

LOreal is a beauty and cosmetic global company and is vastly spread company all over the world. The company is large coat as it is a Multi-National Company (MNC).LOreal offered a come of cosmetic products and beauty services through its fourteen brands they had in 2000, seg mented on the basis of worth and tar liquidate groceryplaces. Some of the brands were Biotherm which exclusively offered skin care productsKerastase offered only hair care productsPCI offered only fragrances and ancillary productsHelena Rubinstein & Lancme offered skin care as rise up as confine-up products LOreal Paris cover hair colours, skin care, make-up and hair care products. LOreal Professional offered services such as hair colouring and hair care treatment Maybelline was exclusively used for make-up productsGarnier only dealt with hair colours.LOreal offered their expertise in the service of women and men worldwide,meeting the diversity of their beauty desires with a number of brands which targete d different markets accordingly. Biotherm, PCI, Lancme covered the very high end market, LOreal Paris and LOreal Professional covered the high end and Maybelline and Garnier covered roughlyly mass market.LOreal Thailand had been performing poor after Asian crisis and was liner a decline in market share, low gross revenue and profitability. Chris Martins, was appointed as a Managing Director in order to help improver the profitably, sales and market share of LOreal in Thailand. LOreal Thailand had two different local agents which were Slampar and Thailor. Slampar was the oldest one which had a joint venture with a local conglomerate. Due to the high import duties on high life products Slampar manufactured some Lancme products locally and imported the rest of the line.ANALYSISCURRENT SITUATIONChris Martins, the new managing director was appointed to create a truly LOrealized company which upholds the long term values and deliver healthy profit satisfactory growth. The Asian crisis had negatively affected the market share, sales and profitability of LOreal Thailand. Thailand with a population of 63 million had the beauty market of Bt 26.6 billion. Thailand had set almost a retail revolution as immaterial retailers had entered the market and dominated all sectors. This had increase the level of competition and professionalism for LOreal Thailand as well as local companies.LOreal had two entities in Thailand, Siampar and Thailor which were later merged to form a wiz multi-division entity LOreal Thailand Ltd. But even after the merger the two companies did non talk to each other and had odds with each other. They in any case lacked media support ascribable to which some of their brands not even known in the market. The current goal of the company is to solve their issues and further professionalize and stimulate their teams so as to pass away in the Thai market. indwelling EnvironmentStrengthsLOreals two major brands LOreal Professional and Kerasotes ar e market leaders and had an excellent plan among top professional salons. ChrisMartin, who is a well experienced person in the LOreal industry, has been well utilized by the company in Thailand during the Asian crisis. From this we get to know that those who work sincerely with complete dedication & talent are given a prospect to make use of it.The new managing directorr knows the seriousness of the issues faced by the company and is ready to implement changes in the organisation. The new MD is willing to work on the issue as a team preferably than a self-centered approach. For a companys success, working as a team will overcome any barriers. The company is able to divulge the type of consumers whereby they croupe improve the quality of their business by concentrating on the type of consumers. LOreal in Thailand operated three divisions-luxury divisions, consumer division, professional division .This decentralized approach to handle respective responsibilities is a cracking c haracteristic whereby these three divisions can analyze their own areas and find the key areas to work on. WeaknessesLOreal Thailand is facing high turnover and is losing staff as the staff doesnt see any future of the company. The staffs are just considered to be mechanical employees. The company is not considered about their well-being. Thus experienced employees are lost, young people are to be hired that lack in maturity and motivation. They are not able to catch up with the budget and are facing financial problems due to limited sales.The working environment in the organistaton is not inspiring and motivating for the employees as well as the reward system is out of touch with the market. They lack media support as they do not arrive at enough funds to give notice (of) their brands.Thus in that location was no clear positioning of the brand in the minds of Thai consumers. The organisation is much leaner and less bureaucratic than the international adversarys.This company di d not have a good tie up with the Thai government that were more(prenominal) protective about the local companies. A company can fly high only in a well-coordinated and cooperative environment. Martin noticed that there was bitter rivalry among most of the retail sectors. The business was restricted to beauty products only.The company had to hypothecate out of the box in order to compete with the counter brands LOreal, Paris management turns out to be self-oriented and not concerned about the well-being of the validation. They are not willing to spend beyond the assigned budget. Turnover is highest in the support functions asthere is no HR Director at present. This is solely due to the narrow hiring criteria.External EnvironmentOpportunitiesLOreal Thailand has the opportunity to come up in the market as it has a number of good quality brands which lack awareness among consumers due to less advertising They could use direct sales for make-up and skin care products instead of reta il sales as this would help them to have direct interaction with their customers and know about their hires.LOreal can make specialised products specifically for Asian women so as to target the womens in the Thai market and increase sales. LOreal can expand their business to non-beauty products alike to increase their bar of business in comparison to the other leading brands. Beauty products can also be focused on men apart from women, thereby change magnitude a chance of rise in market. Online marketing should be put to best use to ease the customer needs and provide a niche solution in this technology driven generation. ThreatsLOreal Thailand has a lot of intensive competition in the beauty market due to the entrance of many strong foreign companies. One of the major threats would be the government regulations which could turn out to be deadly to shut down the business as the government tends to be more protective about their local companies. When similar products are introduce d in market by different companies, consumers tend to choose the product with minimal price to foregather their needs. The involvement of local companies in marketing of cosmetics can be a threat to the mass-cosmetic marketing.STRATERGIC CHOICEMethods of Pursuing StrategyExternal Environment AnalysisAnalysing & perusing the current market situation Current competitors in the market (Existing companies and new foreign companies) Finding out the Current Trends in the market The Current Pays ground on the market condition Identifying the customer needs, what is being sold in the market and the products having high demand in the market. Internal Environment AnalysisAnalysing the Internal Environment Improving the working Environment of the employees i.e. creating a positive office ambience in which the employees feel enlightened to work Providing deserving remuneration for the employees found on their expertise Coordination within departments Meeting the Working Capital Requireme nts bonny IN TIME strategy can be applied for the production litigate The HR Manager should be broad minded and should recruit new staffs and assign their position in the organisation based on their area of expertise and only skilled workers should be selected. Motivation of the employees by the Top Management.FOUNDATIONS FOR COMPETITIVE STRATEGY (Marketing Strategy)Promoting their products with the help of mediaSpecifically advertisements in televisions through which a large number of people can be reached over a vast geographical area. Various Sales Promotion methods can be used Price Reduction(Discount) quantity gift, Providing free samples, Product combinations, Sampling, Personal selling. Promoting products based on the customer needs (selected products having demand in the current market and excluding other products that are least preferent by the customers)STRATERGIC GAPExternal EnvironmentAs there were multiple foreign retailers and industries making their way in Thaila nd, the market share by LOreal was slowly and steadily declining by the entry of similar products in market. In order to increase the market share and revenue for the company, the managers should Study about thecompetitors strategy for sales and try to study the consumption of their products by different age groups. This can help them gain an additional advantage over other competitors. Internal Environment1. LOreal has different departments but there was very little or no communication betwixt the departments. So there is a need to improve the inter-department communication so the information can be reached throughout all the organization and they can work efficiently. This can be done bya) Team Building activities for the employeesb) Holding events like dinner or party so the employees can know each other.2. The organization also faced the problem of the employees leaving their job. The main point here is that the employees didnt have a satisfying work environment and adding to t hat the un-satisfying wages. This problem can be solved by the followinga) They should offer employees some incentives or bonus for extra time, extra paid leaves in case of break dance performance.3. The company also faced the problem of slow generating revenue. This was happening due to various factors. a) They were selling their products only through 2 types of retail outlets. This was not helping them to make the products in everyones reach. b)The company was issuing invoices to the retailers but receiving the payments only when the products were sold. These issues can be solved by Selling the products through more retail stores which help increase the sales. Collect the payments immediately while distributing the products to the retailers. Marketing StrategyThe problem in marketing department was that it didnt have the sufficient funds for promoting more about their products. The solution for this problem is that Reduce their operating expenditure by introducing JUST IN TIME s trategy. This will reduce the cost for storing the raw materials and as a result, thecompany can have a better margin over each product they sell.IMPLEMENTATION PLANDevelopment of alternative strategies enables to select the most apt strategy through proper evaluation of the success rate of each strategy. To make the selection of strategic process more effective, team members should have a clear understanding about the strategic goals thereby reducing uncertainties in decision making. Implementation of the pricing strategy, customer service and product ontogeny will definitely improve the firms performance.For the successful implementation of strategy there should be integration among the strategy implementation team and functionality between the various departments within the organization. If the corporate refining within the internal environment copes up with the rapid changes of external environment, the performance of the organization increases. Quality of communications plays a major role in the selection of strategy process. High quality communications within the organization can improve the firms market performance. Concerning the distribution of products, organisational and tactical planning needs to be done by selling of products through multiple retail stores in attractive ways by improving the ambienceintroducing new products through a trialincluding beneficial offers or discount rates to stay competitive introducing raffle draws to allure customersJUST IN TIME strategy will reduce the storage cost of raw materials and as a result, the company can have a better margin over each product they sell. It is important for an organization to be well aware of the software potentials to improve the organizations efficiency. Employee empowerment in an organization can be done byproviding necessary skills to the employeesproviding them authority to take up right decisions required for their job providing adequate information and resources to do their job re cognise the employees for their hard workbuilding confidence in themHuman resource management can improve the organizational performance by Introduction of lead training programs and enhancing the skills and capabilities of the employees mentoring by the senior employees to give deep insight to the kind of work they are doing promoting positive attitudes and increasing motivation and job satisfaction increasing budget scales to allow experimentation within the company in order to take risks to meet the rapid changes of the external environment Allotting responsibilities to the employees so that they can make full use of their capabilities.These are the ways to improve the relationship of the employees within the company, thus producing highly committed employees in the development of the company.CONCLUSIONS AND RECOMMENDATIONSIn conclusion, LOreal is placid the market leader in the cosmetic industry of Thailand because it is providing quality products to its customers. They need t o pay more attention to the relationships within the organization and between Tailor and Siampar as this will help them achieve their goals in the future. . Last but not least, well skills of managing conflicts, politics, controlling of power and the structured decision-making approaches within the organization structure and culture will assist LOreal Thailand to tackle with the challenges and come with a positive financial performance in order to remain the leader of cosmetics industry in Thailand.We would like to recommend the following to LOreal Thailand, firstly that each department should have a different decision making processes. Secondly the Managers should and need to gain from their mistakes as this will help them gain new information from their past failures. Thirdly they need to avoid the conflicts within the organization, the company should implement matrix organization to run the organization by listening more different ideas and respect the voice of colleagues, so th e problem solving can be more conciliatory and objective. Next the company should find out the current trends in the market and try to differentiate their product in order to face competitions. Finally the managers need to motivate the employees if they want the best from all of them.