L’Oreal Brazil Harvard Case Solution & Analysis

L’Oreal Brazil Case Solution

In order to examine the company’s general environment, PESTEL analysis will be applied in order to evaluate each important factor, which would likely affect the company’s operations.

PESTEL Analysis:

Political and Legal Factor:

Since the company is operating in different countries around the world; therefore, challenges to align with the government regulations are intense. It is expected that regulations and legislation can change at any stage due to which the company would be required to meet those changes, which may result from the change in government.  However, in Brazil, government is considered proactive and stable since there is no instability in the country, which is a good aspect for the company. However, this instability is uncertain; the company should make certain strategies that could meet the uncertainties in near future. (Darkwah, May 2012†)

Economic Factor:

It is assumed that the economic factors may have significant impact on the company due to its global presence, which may be affected by any economic downturn in which the company is operating. Furthermore, the size and the reinvestment of the company may impact the company’s overall revenues and sales volume. However, the company is operating in a highly capital intensive industry that requires huge investment and innovations in order to stabilize its position in the market and L’Oreal has made its strong position in the cosmetic industry by doing so, which in turn has made it financially strong and stable. The population in Brazil is high and the gap between the poor and the rich is declining, this facet has created opportunities for the company to carry out its business operation successfully. Moreover, the labor cost in Brazil is considerably low due to which the company may have successful business since the overall economic situation is under control. (Darkwah, May 2012†)

Social Factor:

The culture of countries in which the company is operating is important to consider, as it may influence the company’s operations along with its style of doing business. The culture of the country comprises of values, attitudes, and beliefs of the people, which is important to consider while doing business. However, the company is selling its products without the particular demographics and is offering a wide range of products, which attract different age groups, nationalities, cultures and at price points that reach most of the people. In Brazil, majority of the people are living above the poverty line, which is considered as a positive aspect for the company in order to explore opportunities. Furthermore, Brazilians are more aware about fashion trends and are generally considered modern since they mostly rely upon  expensive and luxurious products. (Darkwah, May 2012†)

Technological Factor:

Technological factors may also influence company’s operations, as the technology affects the products’ quality and functionality. In today’s modern world, society is constantly changing and consumers are becoming more aware about the cosmetic markets. L’Oreal has a strong Research and Development department due to which it is highly innovative and is offering high quality cosmetic products. However, the infrastructure in Brazil is weak and there is little investment over it, but efforts are being made to technologically develop the counter, which in turn would be beneficial for the company as well. (Darkwah, May 2012†).....................

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