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L´oréal - External and Internal Risks

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STRATEGIC MANAGEMENT

Family businesses

Business management

18.11.2014

Mikhail Nemilentsev

L’OREAL: EXTERNAL AND INTERNAL RISKS

L’Oréal is a french cosmetics and beauty company. It is the largest cosmetics company in the world and offers various products in this field and more especially hair care products (shampoo, care, colour, etc), sun protection products, make-up and perfumes. The group also carries out dermatological and biopharmaceutical research.

Main external risks of L´Oréal

Main internal risks of L´Oréal

Economic slowdown

Quite high prices for the products

High number of competitors on the market

Risk of internal control failure

Increasing demand of organic products

Following, the main external risks of L´Oréal which are mentioned above will be described.

Economic slowdown has a huge effect on the company because of decreasing revenues. Furthermore, the high number of competitors on the market makes it harder for L´Oréal to find a competitive advantage and therefore customers. Last but not least, the increasing demand of organic products makes it harder for L´Oréal to remain as an attractive brand for customers. All these are external risks for the company. To avoid that the risks are taking over, L´Oréal could develop an organic product line in their portfolio to serve the niche market of customers. Moreover, it is possible stand out from the market by creating a special competitive advantage.

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