Case Study Analysis: L'Oreal China - Paper Example

L Oreal China is the largest cosmetics company in the world. The sales volume has had gradual growth over the years in the company with the sales being 19.5 billion Euros in 2010. However, the company is facing stiff competition from P& G and other cosmetics companies around the world (Yang & Chandon, 2013). The visions of the LOreal China to secure the largest markets in the outside world has been curtailed by the competitive companies in the industry. The establishments of research and innovations centers in various parts of Shanghai, Yichang, and Suzhou have made it possible for the company to produce professional brands.

However, the issue facing the company is the strict rules and regulations in China. China has the largest consumers of cosmetics products and therefore the regulations in the country prevent LOreal China from selling her products in the country. The exclusions of L Oreal China from the Chinese market are because it does not meet the standards that the laws require. The Chinese government requires that the cosmetics products in the Chinese market be tested to prove that they are good for the health of the local population. The LOreal China has not qualified to run a body shop in China because it has not tested its products on the animals. The failure of the company to address the requirements of the law in the country denies them the opportunity to compete favorably with competitors in the industry. The P&G Company has worked hard to ensure that their products are acceptable in the Chinese market and thus will remain a threat to the growth of the sales in the LOreal China.

The LOreal China is the leading in the organization and coordination of the activities that promote the operations of the company. However, despite the organized and the well-coordinated activities in the company, the rules and regulations in the Chinese market have defeated the stallholders of the company (Yang & Chandon, 2013). The company has strong financial grounds, has the potentials of implementing the requirements of the law in China, and increases the markets for its products in the country. Winning 80% of the Chinese market will boost the sales of the LOreal China with a significant growth.

Recommendations

Following the barriers of the LOreal China to establish the body shops in China, the following recommendations are appropriate.

First, the company needs to commit to the community work and respect the laws in the different countries of operations. For example, there is a need to for LOreal Company to taste its products according to the laws of China.

Second, LOreal should follow suit with other companies in the country who have satisfied the needs of laws in China. LOreal supplies a variety of cosmetic products to the Chinese market. However, the remaining hurdle is to meet the needs of the law to establish the body shop in China (Zhou, & Belk, 2004).

Finally, the managers of the LOreal need to undertake market research in China to understand the needs of the people, the strengths, and the weaknesses of the cosmetics companies in China and to correct their weaknesses for better results. It is apparent that LOreal China is the largest cosmetic company and therefore it has the potential of overcoming the weaknesses facing its progress (Buckley & Horn, 2009)

Reference

Yang, H., & Chandon, P. (2013). LOreal in China: Marketing Strategies for Turning Around Chinese Luxury Cosmetic Brand Yue Sai.

Buckley, P. J., & Horn, S. A. (2009). Japanese multinational enterprises in China: Successful adaptation of marketing strategies. Long Range Planning, 42(4), 495-517.

Zhou, N., & Belk, R. W. (2004). Chinese consumer readings of global and local advertising appeals. Journal of Advertising, 33(3), 63-76.