L'Oreal Expansion in China Case Study Report

1458 Words Dec 15th, 2012 6 Pages
Introduction
This report is based on the ‘L’Oreal: Expansion in China’ case study. L’Oreal is a successful French cosmetic company that involved into many different international markets. This report will discuss how L’Oreal gets into the Chinese cosmetic Market and the strategic to develop their brand in the Chinese market. L’Oreal acquires two famous Chinese cosmetic brands which are Yue-Sai and Mininurse. It is in order to entrance the market quickly and sales the most suitable products. The aim of this report is to define the challenge L’Oreal has been faced. Then it describes how L’Oreal managing their strategic in Chinese market. In addition, it gives an accommodation which could help L’Oreal overcoming these challenges.
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So, the world's leading cosmetics company L’Oreal buying two local cosmetics firms for a share of China's vanity cash. One is Mininurse and another is Yue Sai. These are two competitive company is Chinese market as both of them are in the list of China’s top 10 cosmetics brands in 2002. Mininurse is one of the brands belong to Shenzhen Raystar Cosmetics Company. It set up by Li Zhida in 1989. Another company is called Yue-Sai Kan Cosmetics Ltd which founded in 1992. After the two acquisitions, L’Oreal group had 14 different brands in China in 2004. In order to manage these brands, L’Oreal set up a differential products and brands strategy to each brands. They called it “Pyramid Brand Structure”. There are four level of the pyramid included Luxury Products, Professional Products, Active Cosmetics and Consumer Products. This pyramid could ensure the marketing positioning for the 14 brands owned by L’Oreal.

Challenge
According to the situation mentioned above, L’Oreal’s strategy will lead them suffer from few of the challenges. There are three main challenges discussed in this report. Firstly, the acquired companies now work without their founders. Secondly, manage L’Oreal’s portfolio of products. Thirdly, it is hardly to manage lots of brands. Finally, it might have a problem about customer loyalty for local companies.

Founder quit the business
According to the agreement between L’Oreal and those two local companies, Li Zhida and Yue-Sai Kan who is

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