L’Oréal SA (Essay Sample)

L’Oréal SA Student’s Name Affiliation Course Name and Number Instructor Due Date TABLE OF CONTENTS1.0 Situation Description……………………………………………………………………….........3 1.1 Company overview……...………………………….…………………………………….3 1.2 Brief History and ownership…..........................................................................................4 1.3 Stages of development........................................................................................................5 1.3.1. Family dimension……………………………………………………………..5 1.3.2. Ownership dimension…………………………………………………………6 1.3.2. Business dimension………………………......……………………………….6 1.4 Internationalization…........................................................................................................6 1.5 Corporate social responsiblity............................................................................................7 1.5.1. CSR issues……………………………………………………………………8 1.6 Institutional context……………………………………………………………………...9 2.0 Problem/Issue Diagnosis……………………………………………………………………….10 3.0 Recommendations ……………………………………………………………………………..12 4.0 Supporting Rationale…………………………………………………………………………..15 7.0 References……………………………………………………………………………………....18 L’Oréal SA 1 Situation Description 1 Company Overview L’Oréal SA is a 110-year-old family business founded by chemist Eugène Schueller on July 30th, 1909, in Paris, France. Headquartered in Clichy, Hauts-de-Seine, France, L’Oréal is the world’s largest cosmetics company, valued at $47.5 billion (Global Data, 2023). The company manufactures and sells beauty and hair products, including skin care, hair color, make-up, perfume, sun protection, and hair products. It produces over 500 brands and thousands of individual products in all sectors of the beauty business, including Lancome Giorgio Armani, Biotherm, Yves Saint Laurent, Cacharel, Diesel, Kiehl’s, Biotherm, Shu Uemura, Ralph Lauren, Matrix, Maybelline New York, Yue Sai, Viktor&Rolf, Redken, Essier, Clarisonic, Essie, and Helena Rubinstein (Forbes, n.d.). L’Oréal merchandises its products through a wide variety of distribution channels, including hair salons, beauty outlets, supermarkets, pharmacies, and e-commerce platforms. It operates through five segments: Professional Products segment, which manufactures products that are used and sold in hair salons; Consumer Products segment, which offers mass market beauty and care products for women and men; L’Oréal Luxe, which sells high-end beauty and skin care products in selective retail outlets and; Active Cosmetics, which manufacturers dermocosmetic skin products sold through pharmacies and drugstores (L’Oréal, 2022). The company is present in 150 countries. Research and development are at the heart of the company’s operations and growth strategy. It has 21 research facilities distributed across the world (Forbes, n.d.). In 2021, L’Oréal had 85,253 employees worldwide and reported a revenue of $32.28 billion (Global Data, 2023). 2 Brief History and Ownership L’Oréal was founded by Eugène Schueller in 1909. Eugène, a young French chemist, developed a hair dye called Oréale using his own products and began distributing it to Parisian hairdressers. (Lamare, 2020). In 1919, he registered his company as Société Française de Teintures Inoffensives pour Cheveux (Safe Hair Dye Company of France). Eugene identified research and innovation in the field of beauty as the guiding principles of the company from the very beginning (Lamare, 2020). A year after its founding, the company, which eventually became L’Oréal, had three full-time chemists. By 1950, the team had grown to 100 employees and had branched out to other beauty and cleansing products in addition to the hair-color business from which it had started. In 1984, L’Oréal had 1,000 employees; as recently as 2021, the company had grown to close to 86,000 employees worldwide. Schueller married Louise Betsy Berthe in October 1909 at the age of 28 (Collin & Taillard, 2021). They had only one child, Liliane Henriette Bettencourt, who was born in 1922. Her mother died when she was only five years old. At the age of 15, Liliane joined her father’s company as an apprentice, mixing cosmetics and labeling bottles of shampoo. She married Andre Bettencourt, a French Politician, in 1950. Liliane and Andre had one daughter, Francoise, born in 1953. When her father died in 1957, Liliane Bettencourt inherited the L’Oréal fortune and became the company’s principal shareholder (Lamare, 2020). The company later went public in 1963, although Liliane retained a majority stake. By 2012, she owned 30.5 percent of the company, of which 12.56 percent was effectively held in trust for her daughter. After the 1974 French elections, Liliane, fearing that the company would be nationalized, exchanged almost half of her stake for a 3 percent stake in Nestle (Lamare, 2020). Liliane was active at L’Oréal and held a seat on the Board of Directors until 1995. Between 1995 and 2012, she served as the Director of the board. During her time at the helm, L’Oréal expanded by acquiring other companies and expanding operations to almost every part of the world. In 2012, Liliane stepped down as the Director of the board due to failing health (Willsher, 2012). Her position was taken by her grandson, Jean-Victor (who was only 25 at the time). Today, the Bettencourt family owns 33.17 percent of the company. Other owners of L’Oréal include Nestle S.A (23.2%), international institutional investors (29.6%), French institutional investors (7.87%), individual shareholders (4.59%), and the company’s employees (1.57%) (L’Oréal, 2022). The majority of managers and leaders of L’Oréal are non-family managers. For example, Jean-Paul Agon serves as the chairman of the board, while Nicolas Hieronimus is the chief executive officer. Paul Bulcke, together with Francoise Bettencourt Meyers, serve as vice chairmen of the board of directors. However, the family still occupies a central position in the company’s affairs and decision-making. Francoise’s husband, Jean-Pierre Meyers, and her two sons, Jean-Victor Meyers and Nicolas Meyers, also serve on the board. 3 L’Oréal’s Stage of Development in Ownership, Family, and Business Dimensions 1 Family Dimension L’Oréal is now controlled by a combination of the third and fourth generation of the family, who together owns 30% of the voting rights of the business. Françoise Bettencourt Meyers, who is 69 years old, is the oldest of the family members now. The other family members are Jean-Victor Meyers, who is 36 years old, and Nicolas Meyers, who is 34 years old. Francoise is the third generation, while Jean-Victor and Nicolas are the fourth generation of the family, and they are brothers. Since Liliane Bettencourt Meyers, the mother of Francoise and the grandmother of Jean-Victor and Nicolas, died in 2017, there have been no reported issues in the family. 2 Ownership Dimension For the ownership, the three family members own 33.17% of the company shares and 30% of voting rights in the business. The family consists of a mother and her two sons, who have good relations. Francoise, the mother, is the vice-chairperson of the board of directors, and her two sons are members of the board of directors. Currently, there are no family disputes about ownership and succession. 3 Business Dimension For the business stage, L’Oréal passed its maturity stage a long time ago and is now in the renewal stage. The company operates in 150 countries today, and its internationalization has been successful most of the time. L’Oréal successfully created beauty for every culture and continent and understood the world of cosmetics (Collin & Taillard, 2021). L’Oréal is creating new brands all the time and acquiring new companies. L’Oréal business performance is growing, and its revenue is increasing year after year. In 2022, it was another strong year for sales growth in all departments and all zones. The company’s revenue was €38.26 billion (Global Data, 2023). L’Oréal renewal and reinvestment stage is going well; the company has a bright future for many years. There are many issues facing L’Oréal as a company. Some of the problems facing the firm are environmental issues, product health and safety challenges, animal welfare, and business competition (Pointing, 2021). 4 Internationalization L’Oréal is present in 150 countries, with a strong presence in five geographic zones: Western and Eastern Europe, North America, Asia Pacific, Latin America, Africa, and the Middle East (Forbes, n.d.). The company entered the international market through joint ventures and acquisitions. Currently, L’Oréal owns 36 brands and continues to grow. It started acquiring other companies in the industry in 1973, with the acquisition of Synthelabo to expand its operations in the pharmaceutical field (TFR, 2020). Synthelabo merged with Sanofi in 1999 and later with Aventis in 2004 to become Sanofi-Aventis. Sanofi- Aventis is one of the largest pharmaceutical companies in the world. L’Oréal owns 10.41 percent of Sanofi-Aventis shares. In March 2006, L’Oréal acquired The Body Shop, a British cosmetics, skincare, and perfume company, for $562 million (TFR, 2020). This was followed by the acquisition of Y...