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The L’Oreal Company Business Plan

Jun 11, 2019 at Other Essay Samples

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The L’Oreal Company was started in 1909 by a visionary chemist, Eugene Schueller. By 1920, the company had employed 3 chemists. By 1950, the number had increased to 100, while in 1984 the number had increased to 1000. Currently, the company employs more than 2,000 chemists in 2550 stores in 130 counties worldwide. It has 72,600 employees. The company is the biggest player in the beauty industry and offers a range of products to customers. Specifically, L’Oreal Store in New York focuses on beauty products such as skin care, hair color, make-up, sun protection, hair care and perfumes. The company’s mission revolves beauty in different aspects. Beauty from an internal perspective targets the relationship among staff through transparency, freedom of expression and self-confidence. To achieve this, I will ensure a conducive internal environment characterized with efficient system that ensures efficient horizontal, vertical and diagonal communication. Further, I will develop feedback system that will ensure that every staff member is motivated to give their feedback based on their experience or client’s feedbacks. Beauty in the mission also extends to men’s and women’s appearance. In this regard, I will ensure that the company operates a competitive research and development department, whose activities will be based on customers’ feedback to develop cosmetics reflecting quality, safety and efficacy that appeals to customers. Further, beauty in the mission denotes exploring the world to develop unique products based on natural and human endowment and commitment to ensure consumer confidence.

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The vision statement of the company revolves around growth based on ethical standards and a sense of responsibility to consumers, environment, communities and employees. In this regard, I will ensure that an internal supervisory body exits to make sure that policies and procedure put in place are followed to the letter. Further, external watchdog services will be hired to assess the ethical aspects of the operation. I will set standards to be met as far as the environmental pollution is concerned. With regard to communities within which the company operates, a specific proportion of staff will be recruited locally. Marketing will involve all aspects of the 4Ps of marketing while financial expenditure will be aimed at ensuring an efficient operation.

Management Plan

Regional Chairman and Executive Officer

He will be the top person in command. As such, he will spear head the stores mission and vision as well as the development projects. He will also lead, guide, direct and evaluate the performance by other executives to ensure that everything remains consistent with each other and as planned. Given the competition in the market, he will oversee implementation of strategic plans to ensure that the store remains competitive in the region. He will also maintain a link to shareholders through the board of directors. To ensure that the company achieves its goal, he will explore external environment and initiate appropriate internal re-adjustment to capitalize on opportunities.

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Human Resource Manager

His biggest role will be to get the store the relevant human capital to match the physical capital available. In this regard, he will ensure that the company gets the relevant expertise, to meet the standards set in the company’s vision. To ensure that employees remain competitive, he will be expected to set targets which will be followed by performance appraisal to assess how well they meet the target. Further, he will be in charge of training on any new advancement in the industry, among other training programs.

Research and Innovation Officer

To be able to remain relevant in the market, research and innovation officer will be in charge of the research and development department. His role will be to analyze the target market and develop products tailor-made according to consumer needs. Specifically, he will assess the changing in consumer taste and preference and ensure that the company remains the market leader and capitalizes in the ‘early to market’ pay-offs.

Salaries

Salaries
Staff Salary
CEO $10,000
Human Resource Manager $8,000
Research & Innovation Officer $8,000
Other Staff (30 @ 3000) $90,000
Total $1,392,000

Entrepreneurial Opportunity

The dynamism of consumer wants has made it even more difficult to serve the needs from one perspective. From another perspective, the changing preferences with regard to beauty products have opened new opportunities. Youths in New York offer a unique market to the store. A central feature of the market is the rising per capita income, which, in a way, indicates higher disposable income and, hence, higher purchasing power. The store will use the selling slogan “You Beauty Your Life”.

Seeking Investor

Being a store of a well-established company, the store will seek to use funds from the parent company’s accumulated savings. Further, the company may sell some shares to the public through initial public offer in case unexpected financial problems arise. The store is expected to get $4 million from the parent company, while the expenditure is expected to range between $4.5 and $5 million depending on inflation and price variations over different phases of implementation.

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Closing statement: The sales of the store are expected to rise by 15% in the first 5 years. The target sale in the first year is $6.5 million.

Marketing Plan

Market Analysis

New York is an extensive market that attracts players from all over the world. Though the data below indicate the world market share, similar market features are observed in New York.

Beauty and Personal Care: Top Global Players by Value 2010/2011
Company % share 2010 % share 2011
Procter & Gamble Co 11.5 11.5
The L’Oréal Groupe 9.8 9.7
Unilever Group 7.0 7.8
Colgate-Palmolive Co 3.6 3.8
Avon Products Inc 3.2 3.2
Beiersdorf AG 3.2 3.1
Estée Lauder Cos Inc 2.9 2.9
Johnson & Johnson Inc 2.8 2.8
Shiseido Co Ltd 2.6 2.5
Kao Corp 2.2 2.1

Demographic Profile

New York has a population of around 8.4 million of people, and hence it is the most populous city in the United States. Though the difference between male and female is generally equal, the number of women exceeds males by around 400,000. The per capita income of the city is relatively higher than of the other cities, averaging around $50,000.

Psychographic Profile

Women appear to be out looking and appreciate everything new. They cherish beauty and would wish to appear as young as possible. Majority of women have a greater affinity to bright colors and like to extend their beauty to their environs. They tend to spend more on cosmetics. Traditionally, men are conservative. However, their behavior is changing as the line between men and women becomes thinner and thinner. Though they may not directly spend much on cosmetics, they tend to surprise their loved ones with cosmetic gifts.

However, consumers are becoming more sensitive on the quality of product that they buy. Specifically, they are concerned about their health and hence our assurance stands to be beneficial. Given the increasing cost of living, consumers are becoming more sensitive on prices of the products. As such, the company will operate cost effective production methods without compromising quality.

Products

The store will operate a multiple sourcing approach of raw materials to avoid stock outs. Further, the company will get into a memorandum of understanding with strategic suppliers. Processing and blending of various products will be done within the regional plant. For the product line whose market may not warrant production will be outsourced within the company. The processed products will be then stored in the warehouse awaiting distribution to various distributors within the city. The products will be affordable, in different brands, consumer centered and of high quality.

Promotion Strategy

The pricing of the product will be based on cost, without disregarding the competitors’ pricing. Quality and variety of the products, among other features, will be communicated to consumers using the internet, social media, television and workshops. The store will also sponsor events such as ‘Miss New York’ among others. The products will be available in different outlets such as supermarkets among other retailers and the company’s stores to increase sales. Evaluation will mainly be based on consumers’ feedback and variations from expected sales.

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Financial Plan

Source of Funds

The cost of establishing the store is expected to range between $4.5 and $5 million. These funds will be obtained from the accumulated savings of the parent company. However, the parent company has only guaranteed $4 million. This leaves us with the option of offering initial public offer to meet the deficit.

Cash Flow

Cash flow
Revenue $6,500,000
Cost of Goods Sold $3,000,000
Labor $1,392,000
Utility (Rental/ Legal/ Insurance) $200,000
Sale Promotion $200,000
transportation and delivery $100,000
miscellaneous $100,000
Cash Flow $1,408,000

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