Intercultural Management

Summary

I. History and L’Oreal Values

II. Multicultural challenges

III. Impact of the headquarters

IV. What problem can be improved?

V. Conclusion

The area of beauty products worldwide is estimated to be worth 60 billion dollars. L'Oreal has used to be number one. The French company, which offered mainly to white goods, became a global giant over the past ten years. Analysts estimate that L'Oreal had to achieve a turnover of 18.2 billion dollars in 2003, an increase of double-digit earnings for 19 consecutive years. According to Morgan

Stanley, L'Oreal is the only cosmetic company that has maintained or increased its market share in the United States and the global market for cosmetics and those for hair.

History and L’Oreal Values

The origin of L’Oreal goes back to 1907, when Eugene Schueller, a young French chemist from Alsace, is developing a formula for synthetic hair dye. This formula is called the Aurealis, name inspired by a popular hairstyle of the time. On 30 July 1909, he founded the French Society of “teintures inoffensives” with André Spery, an accountant originally from Epernay and employee manufacturer Cusenier spirits. The company is located in a two-room apartment, in Paris, for both office and living room demonstration. In 1936, it became a limited liability company and in 1939 it became a limited company and takes the name of L'Oreal.

Main L’Oreal subsidiaries are:

L’Oréal Professionnel, Matrix, Redken, L’Oréal Paris, Maybelline, Garnier, SoftSheen-Carson, Lancôme, Ralph Lauren, Giorgio Armani, Biotherm, Helena Rubinstein, Cacharel, Kiehl's, Shu Uemura, The Body Shop, Le Club des Créateurs de Beauté, Vichy et La Roche- Posay.

L’Oreal Values:

 Business integrity

L’Oreal and its suppliers share and respect common values.

 Sustainable development

L’Oreal is convinced that lasting success is founded on ethical and responsible principles.

 Innovation

As a value-creation tool, innovation is a major issue for L’Oréal and its suppliers.

 Quality

Quality is one of the key factors for satisfying our consumers.

 Logistics

L’Oreal is constantly seeking out ways to optimize the management of its supply chain.

L’Oreal Mission:

L’Oreal mission is to help men and women around the world realize that aspiration, and express their individual personalities to the full. This is what gives meaning and value to their business, and to the working lives of their employees.

Some figures

 L’Oreal Turnover: 8,646 billons euros  Worldwide Employees: 63,360  World Presence: Europe, Asia, Australia, Africa, USA

Multicultural challenges

Geocosmetic

“- Does every individual living on our planet have the same way of washing his or her hair or taking a shower?

- Do all women around the world apply mascara or lipstick in the same way?

- How exactly do they do it?”

L’Oreal tries and wants to respond to all this kind of question.

In order to meet customer needs, L’Oreal chosen a sample of individuals to use their products, these persons are filmed in their daily life and then L’Oreal’s psychosociologists carry out research in order to adapt the product to the customer behavior, typology and habits.

For example, L’Oreal’s ethnologists were able to establish that the number of mascara brush strokes varies according to different geographical areas: in Japan, women use on average a hundred of brush strokes on their eyelashes, whereas in Europe, women are content with around fifty on average.

These differences in habits lead to constraints in terms of products: The mascara will need to have a light texture and limited covering power to allow a Japanese customer to obtain a good result.

FRENCH MARKET

L’Oréal acquires Sanoflore organic cosmetics brand

L’Oréal has announced its acquisition of the French Laboratoire Sanoflore, a pioneer in the design, manufacture and marketing of certified organic cosmetics products.

Founded 20 years ago in south-eastern France, Sanoflore manufactures and distributes through pharmacies and specialist shops its ranges of cosmetics and aromatherapy products. Sanoflore

handles all the stages in the aromatic and medicinal plant chain, from cultivation with partner farmers to the finished product.

Origin of the rising market for organic cosmetics

We can say that the craze for organic cosmetics has several origins:

● Article in the UFC How choose his conventional shower gels ● Guide Cosmetox Greenpeace ● The book Rita Stiens "the truth about cosmetics" From there, consumers have raised questions about the potential dangers of synthetic chemicals in traditional cosmetics.

ASIAN MARKET

L’Oreal penetrated the Chinese market in 1997 with first Maybelline Brand, and then it launched other brandsof the group like L’Oreal Paris, Lancôme… L'Oreal has also acquired two brands Chinese Mini Nurse and Yue Sai. Thanks this policy L’Oreal benefited of distribution network and covered all market. L’Oreal consumers in China are urban women between 15 and 40 years old but the target widen. And the men market beginning to develop.

Understand the needs and adapt products to the market:

Two years ago, L'Oreal has established a center for research and development near of Shanghai. Each day, skin and hair consumers are studied carefully. Test of new products, interviews, photographs, a valuable database is formed. Objective: To meet the specific requirements of Chinese women.

And now, l’Oreal wants to use plant substance in their products, currently tests are realized on the products with bamboo or tea.

AFRICAN MARKET

Dark and Lovely Beautiful Beginnings is the range of U.S. brand SoftSheen Carson, specializing in hair products hair Afros. SoftSheen was founded in 1964. Leader in the United States in care products

for professional hair Afros, it was purchased by L'Oreal USA in 1998 to join other major brands of L'Oreal Group. In 2000 it merged with Carson, another brand hair Afros group L'Oreal, becoming the brand SoftSheen Carson.

In the United States, L'Oreal has turned its attention to the market of beauty products for ethnic minorities. According to one estimate, the value of this market in the process of rapid expansion could reach $ 14.7 billion annually by 2008.

The beauties cares of these were monopolized by blacks companies. With the help of researchers from the institute beauty descendants of ethnic minority L'Oreal, both companies have developed products that can be sold outside the United States. Concerning black population, the first target is Africa. "If we want to pretend to be the world number one, we cannot overlook the 1 billion consumers of African," said Alain Evrard, director general business section of L'Oreal Africa.

Before the merger, SoftSheen and Carson were rooted in South Africa and their shares on the market of products for the hair of South Africa, worth about $ 90 million, were nearly 41 % in 2002. L'Oreal hopes to have a presence in other African countries. According to a study, many Africans believe that if L’Oreal products correspond to the consumers demanding of the United States, thus they certainly should correspond to their expectations.

With interest in a small number of consumers in the U.S. market, L'Oreal has won a larger market in the world.

African governments wishing that cosmetics firms are implement in their countries and create jobs. Given the size of the market, some giants have already acceded to this wish. Example: L'Oreal, which aims trust half of the entire African market by 2015. The French group will invest this year to expand its factory in Johannesburg, it operates only in Africa. In the zones of Zimbabwe, investments related to cosmetics announced this year already 500 to $ 650 million.

Thus, the cosmetic companies in Africa, the Ghanaian Zochonis Paterson, the Senegalese Siparco and Detco, South African Clicks & Dickom, Amke cosmetics and Zimbabwean Fashion and cosmetics are essential for competition. Theoretically, the market should give them an advantage: to offer products for skin and black hair. But this is not the case.

Many consumers prefer imported brands, even if they sell price is more expensive and the effectiveness is less. The African cosmetics industries also suffer from unfair competition from fakes. Fake perfumes, tampered creams, soaps scented artificially manufactured in local shops or imported from Asia at reduced prices. Whatever the authenticity provided there is labels prestigious seem to say that consumers. African manufacturers also suffer from their small size.

Chicago, a center of Afro-American

In 2000, L'Oreal has invested $ 11 million for building and construction in Chicago of the L'Oreal Institute for research on skin and hair ethnic group of the first laboratory of this type. The city of Chicago was chosen as the location for many reasons. Softsheen has long had its headquarters in the city and Chicago is a cultural, historical and academic black American. Many famous universities are located in the area and present opportunities for synergy with the new research institute L'Oreal.

New products

Consumers of different ethnic origins have specific needs in terms of skin care and hair products that require specially products formulated for them. The acquisition by L'Oreal of the mark Sheen.Carson-Soft, a global leader in skin care and hair for black women, has greatly expanded the Group's activities in area.

When the group L'Oreal launched its offensive on the market for ethnic hair products, it was for him not to go near a market in the world estimated at 1.8 billion dollars to maintain its lead meet its competitors, especially Procter & Gamble, which, since the

acquisition of Clairol and Wella, had emerged as a leader of the ethnic overtones. With the acquisition in the U.S. companies specializing in ethnic hair SoftSheen Carson in 1998 and in 2000. L'Oreal is now leading the U.S. market for hair "women not -Caucasian "with, according to the group, 26.9% of the retail U.S. (40% of its business) at the end of August 2003 and 16.6% of the specialist retail (45% of its activity).

Professional Product:

Founded in 1991 in the USA, the range Mizani is distributed selectively in the most beautiful hair salon, and offers various services (hair relaxed, coloring, care measure, followed beauty at home) and high-end African women, mixed, Maghreb.

Europe

L'Oreal estimated 6 million people the number of people of African origin, including 2.5 million in France, 1.5 in Britain, 500 to 000 Netherlands 500 000 in Germany and 1 million the rest of the continent.

In 2001, the group created SoftSheen-Carson Europe with an ambition of an active policy in the relevant markets. In 2003, Optimum Care line was introduced in Europe with the ambassador Laila Ali, the youngest of 9 children of Mohamed Ali. In June, London will take place in the second edition of the European Golden Scissors Awards, intended to reward the best hairstylists specializing in women's black hair, organized and sponsored by SoftSheen-Carson. The first edition was held in Paris in 2003. Meanwhile, L'Oreal has launched in France and Great Britain, the street marketing campaigns to promote the company's products with a vehicle along the two countries, handing out samples and guides on the hair, and offering customize advices.

The group also sponsored the exhibition "Head Ornaments" which ends 11 July 2004 at the Musée Dapper in Paris, a way for the group to "participate at the beginning of the multicultural representation of beauty." In the meantime, the products of SoftSheen-Carson began

to appear on the linear French: twenty hypermarkets including Carrefour and Leclerc, which are entitled to their own displays; department stores such as Galeries Lafayette, the Samaritan woman, the Printemps.

With the expertise gained in the United States on very curly hair, the group has developed its range Dop. In 2002, was launched in France Dop shea butter for very curly hair and very dry.

The packaging included a picture with several women including one Afro-Caribbean, one type of Hispanic, an Arab woman who appears on the bus poster campaign that accompanied the launch.

INDIA MARKET

L'Oreal has the intention to buy an Ayurveda brand in India. The French cosmetics giant wants to enter quickly in a very applicant cosmetic. Ayurveda is a traditional medicine in India. Its beauty products based on herbs and minerals are known to be therapeutic. Ayurvedic treatments have become trendy in New York or Los Angeles.

L'Oreal is already present in India with its different brands. Last year, the brand was launched Lancôme and Giorgio Armani. Beauty products of the brand Garnier generate wholesale sales rose 40% in India through this label. Labels L'Oreal Paris and Maybelline New York are also available. L'Oréal has become one of the largest cosmetics companies by acquiring small local businesses. The company has also invested in areas of beauty including more specialist in buying the British company The Body Shop, and small organic label Sanoflore French.

RUSSIA MARKET

L'Oreal has become the No. 1 cosmetics in Russia. In one year, sales increased at 86%. Russia has not been an easy market to conquer for the No. 1 worldwide cosmetics. A pioneer in this country, L'Oreal had to establish, in 1989, a public company with the Russian state. But if the agreement allowed him to implement itself, but this did not help to flourish. On the contrary paid in Russian currency, the firm has lost a lot of money when the value of the ruble has fallen from

10 F to 10 cents. At that time, the multinational preferred stop. To found, in early 1994, a new company 100% L'Oréal: Rusbel, and finally achieve its true entry into the Russian market.

The reasons of success

Recruitment of quality and a marketing plan adapted to local realities. The staff Rusbel: Expatriate Spanish, French, Finnish and young Russians in perfect French without any accent, perfected the strategy of conquest. These include handle this vast Russian territory, which covers 9 time zones. Today, L'Oreal has 4 000 outlets. But that is not enough. We still need to develop distribution.

L'Oreal has launched an innovative campaign: readers of the “L’Ouvrière” and la “Paysanne” discovered in their magazines a sample of day cream. This strategy finally launched L'Oréal. It remained to best adapt to this market, first, by assessing wages of the population.

Even if they are evolving rapidly, wages are still very low: 4% of the population earns between 2200 and 3000 euro per month, 26% received between 75 and 2200 euro, the vast majority of the population earns less. L'Oreal, as its main competitor the U.S. Procter & Gamble, target the 50 million consumers can buy its products, and the product which is more affordable is shampoo.

It is in this sector that L'Oreal and Procter have the most invested. Because even if 1 russian on 3 still washes his hair with soap, others prefer more sophisticated products.

That is why the launch in September, Fructis, vitamin C, has been a great success. Moreover L’Oreal invented formulas that respond to local problems capillaries. Example: the Russians have a lot of film because of the wearing of hats. L'Oreal has created just for them an "Ultra-soft" in cedar.

However, despite their coquetry, Russian women see no benefit to change the color of their hair other than the hydrogen peroxide. Unable to convince them to buy less scathing products, so it was a failure for the color specialist.

Concerning the face care l'Oreal never could compete with the local moisturizers, sold less of 1€ a large model tube. A pot of Plenitude is ten time more expensive. Despite of this serious disability, coquettes choose the French brand. Because, instead of launching a product simply moisturizer, Rusbel introduced a new concept: anti-wrinkle. From the moment where the product was launched, waiting lists have been formed, with payment in advance.

Concerning the makeup, Russian consumers, who make up a lot, as the Americans women and more than French women. They say using 5 different lipsticks; they change depending on the color of their clothing or time of day.

L'Oreal now has at its disposal a cheap new brand of products bought to Americans Meybelline. Most adapted to the bourse's consumer, this range, will replace Gemey around the world, made a grand entrance into Russia market. Moreover l’Oreal has also adapted its products size so the price is less expense in order to correspond to consumer budget.

LATINA MARKET

The French group L'Oreal, the world leader in cosmetics, will install in Rio de Janeiro a research center for all of Latin America, representing an investment of 30 to 50 million. Rio will be the headquarters of the fourth pole of L'Oreal research in the world after the USA (New York), China and South Africa. In the new research center, L'Oreal will develop Brazilian products for cosmetics, because they are now imported.

L'Oreal and Starmedia Network, leader of the Internet in Latin America, created cadamujer.com it is an Internet portal for women. This project was launched in Mexico, and soon Brazil and Argentina.

This website is composed by 7 topics which are: Belleza (beauty), Moda (mode), Amor y pareja (Love and couple), Actualidad (News), Salud (health), Familia (Familly), and Carrera (Careers).

This website permits to meet the cultural diversity of each region. Customers will be informed of product launches in their country, or benefit from expert advice on hair care, makeup and skin care.

Foreign Regulations

Regulations on cosmetics differ according to the countries (contents, packaging, and advertising) for instance in America Latina women using more quantity of makeup than the French women so L’Oreal had to adapted its sizes of product.

Concerning the norms and regulations China is a country where the norms and regulations are very strict. And in the Maghreb countries, the advertising has to be adapted to the morals of those countries.

Impact of the headquarters

L’Oreal has a French Headquarters (directed by Jean-Paul AGON), which is localized in Clichy near of Paris. This is the place, where all marketing decisions are taken for all subsidiaries. There are local direction « head teams » in each country to communicate between the French Headquarters and others; however, each country has autonomy.

Organization and methods direction (DOM) in the French headquarters set up norms and strategies for each subsidiary.

L’Oreal diversity

L’Oreal’s ambition is:

• To reflect, in its teams and at every level, the diversity of its clients (in terms of nationality, ethnic or social origin, age...), coherently with its employment pools, • Promote the access of women to high-responsibility position and a better gender equity in jobs, • To promote work for disabled people, • To accumulate skills and capitalize on the experience of its employees, taking advantage of the cultural diversity of its teams, extending careers and making use of experience.

The principles behind the Group’s action:

• Respect for its requirement for excellence in terms of its core competencies and individual performance, • Attract candidates from outside its usual talent banks and identifying diversified profiles which will bring new perspectives, • Focus on a managerial culture which fosters the inclusion of all employees and capitalise team diversity.

Different issues of the Group

Penelope Cruz Commercial

For the spot, praising mascara "Telescopic" of the L'Oreal cosmetics group is accused of misleading advertising.

For the regulatory authority of the British advertising (SAA), the campaign aired in the press and on television breaking the rules by exaggerating the power of extending of the product, "60%" according to L'Oreal, without specify that the actress wearing false eyelashes and that the extension only covered "the appearance of lashes and not on the lashes themselves. The ASA has asked that in future the brand made mention of such additions in its campaigns.

L'Oreal denies

In his defense, L'Oréal was surprised by this warning. After producing a certificate signed by the actress herself and her makeup, ensuring that Penelope Cruz was wearing a few individual false eyelashes in this campaign, the group argued that it was "a common practice in this area than 'use some artificial lashes to ensure proper maintenance of lashes during filming and shooting. " L'Oreal has also stressed that "the ASA had previously accepted more than once these practices as not misleading." However, the group has assured that "in future campaigns, of course it would follow the new conditions set by the ASA."

Beyonce Commercial

L'Oreal has been accused of 'whitewashing' her by digitally lightening her skin. August 2008 in the “Elle” American magazine: Beyoncé appears in L'Oreal commercials. A few days later, in The New York Post: "The beauty giant L'Oreal seems to have bleached Beyonce Knowles in an advertisement, where her complexion, was bleached making her unrecognizable this international star." The debate is raging. Within minutes, information spread around the web and American associations African American rise immediately niche. The next day, it was the turn of the world's media to take possession of the case.

On the cosmetics company side, we strongly denied any retouching. "Beyonce is a spokesperson for L'Oreal Paris brand since 2001. We have very good relations with her and we have not changed in its features or the color of his skin.”

Palestinian Boycott

In this holiday season, the Palestinian Boycott, Divestment and Sanctions National Committee, BNC, calls upon people of conscience all over the world to boycott all the products of the French cosmetics giant, L'Oreal, due to its deep and extensive involvement in business relations with Israel. In 1994, L'Oreal bought a 30 percent stake in Propper's company Interbeauty, from which L'Oreal Israel was created. Since then Israel has become L'Oreal's commercial center for the entire Middle East.

L'Oreal Israel manufacturers a line of products using Dead Sea minerals under the name "Natural Sea Beauty" that is exported to 22 countries. It should be noted that one third of the western shore of the Dead Sea lies in the Israeli-occupied West Bank.

While the entire shore and its resources are systematically closed to Palestinians by Israeli military occupation and apartheid practices, Israel exploits the Dead Sea for international tourism, mining, and improving its image.

Discrimination

Garnier-L'Oreal company was ordered by the Court of Appeal of Paris, in a ruling delivered on 6 July 2007, 30 000 €, about the case of discrimination race-based hiring. In 2000, L'Oreal had asked the company Districom-SODEPA become Ajilon (group Adecco), recruit and train 300 presenters to know all Garnier products, specifically the range of Fructis Style. A fax sent by the Ajilon Director to Adecco Director, was marked "BBR", for "Blue, White, Red". The L'Oreal rest on its positions and does not feel any responsibility for such an order.

Conclusion

To sum up, we can say that L’Oreal could be a model for another company which wants to extend its activities in international area. L’Oreal succeed on each sector, (professional, large public, luxury) and maybe in each countries of course with some failures at the beginning. But its secret is that the company has succeed to adapt itself to the habits, moral of the different countries, in Russia for example as we can saw above, the group has had one failure and after that the company has analyzed the market and is come back with novelty and it was a success.

We can maybe wondering if the company has too much brands in its portfolio and if this could harms to the image of the group, in the customer mind that is to say confusion between all of its brands and maybe a cannibalization between whole of the brands.

Bibliography

http://www.loreal.com/_en/_ww/html/our-company/world- presence.aspx http://www.usinenouvelle.com/article/l-or-al-envisagerait-de-racheter- une-marque-indienne.95073 http://www.quotidiendurable.com/news/france-l-oreal-acquiert-la- marque-de-cosmetiques-bio-sanoflore http://www.pearson.fr/livre/?GCOI=27440100287600 http://www.ninapeople.com/penelope-cruz-porte-des-faux-cils-dans- un-spot-l-oreal--a3239.html http://www.news-de-stars.com/beyonc%E9/l-039-oreal-accuse-d-039- avoir-blanchi-la-peau-de-beyonce-dans-une-de-ses- pubs_art6357.html http://www.lexpansion.com/economie/l-oreal-doit-se-refaire-une- beaute_25751.html