Transcript Diapositive 1
Information
Systems Emmanuel MONOD Executive MBA 8419– Module 3
Promo 9 – Groupe 1
ll l
Lionel AUSTRUY
ll l
Ivan BAILLY
ll l
Arnaud BOMPAS
ll l
Anne CABOTIN
ll l
Luiza STANIEC
l ll l ll l ll l ll l ll
S
uccess
S
tory
13 Septembre 2008
ECONOMIC PERFORMANCE
L’Oréal awarded the Grand Prix for economic performance, by the magazine L’Expansion: September 2007
The company that has demonstrated the most remarkable economic performance over the past 40 years
13 Septembre 2008 3
INNOVATIVE AT HEART
Every year • Over 4,000 new product formulas are created • • • Over 30,000 new patents Increase of the number of researchers Increase R&D budget
3,3%
13 Septembre 2008 4
Focused and Integrated
13 Septembre 2008 • 94% of its production is internal • Acquisitioning raw material production plants to be able to have direct control over quality, immediate accessibility and reap outmost benefits from the process 5
Perfect ‘FIT’
• • • • • • • HR R&D Marketing Management Diversity Communication Drive & Passion 13 Septembre 2008 6
L'ORÉAL‘S PERFORMANCES
Group performance over 4 years 2007 Dividend per share : X2 since 2002 +62% since 1997
13 Septembre 2008 7
C
osmetic
M
arket
E
nvironment
13 Septembre 2008 8
THE COSMETIC MARKET
• • • • 110 billion € in 2006 Growth: 4,5% over the past 15 years High profitability Rest of the world zone: 33% • • Fragmentation L’Oréal number 2 (fragrances) 13 Septembre 2008 9
Market attractiveness PORTER’s network model
13 Septembre 2008 10
Product Life Cycle
Europe - North America
Active Cosmetics Consumer products Professionnals Body shop Luxury products
Growth Maturity
BRIMC
Decline 13 Septembre 2008 • • Most of the business has reached maturity (91%) in Europe BRIMC countries represented 10% of the turnover but 33% of L’Oréal’s growth in 2006 11
BCG Matrix
• • Active Cosmetics is a STAR Luxury Products could become a DOG 13 Septembre 2008 12
Differentiation
• • Lack of creativity & flexibility Standardization of advertising and creative process - centralization 13 Septembre 2008 13
M
anagement and
S
tructure
13 Septembre 2008 14
Management Overview
1909/1957: EugèneSchueller 1957/1985: François Dalle 1988/2006: Lindsay Owen Jones From 2006 till today: Jean-Paul Agon
Structures / Management Systems ENTREPRENEURIAL INNOVATIVE FUNCTIONAL
Centralized
13 Septembre 2008
DIVISIONAL
Decentralized
15
Evolution Management & Structure
Dalle • • • • Man with a vision Internationalization Autocratic Agile Owen Jones (OJ) • • • • Guided by intuition R&D, focus on experts Internal competition Fiefdoms 13 Septembre 2008 16
Segmentation
13 Septembre 2008 17
Balancing act: Jean Paul Agon
Jean Paul Agon operates within a Matrix, where all elements must be balanced out throughout the structure: • • • • Three level decision process: divisions, zones and corporate Mutual adaptation Internal structure not formalised in order to promote organisational agility Organic growth 13 Septembre 2008 18
P
rocesses
13 Septembre 2008 19
The value Chain
L’ORÉAL : a global company leant on 3 pillars
MARKETING R&D PROCESSES Purchases/Supply Production of finished products Distribution Sales L’ORÉAL
Processes Value Chain
Purchases/Supply • Suppliers • Raw materials • Containes/packa ging • Equipment • Indirect purchases • POS/Promo Production of finished products • L’ORÉAL factories • Outsourcing partnership Distribution • L’ORÉAL warehouse Sales • Shopes • Supermarket • Perfume shop • Department stores • Bodyshop stores
L’ORÉAL at the crossroads?
Centralized
•Integrated core business vision •Strategic control •Unique consumer •`Common prodicts •Common processes
BUSINESS MODEL
L’ORÉAL • Mixted models • Segmented by business • Operational directives • Few shared processes
Decentralized
•Holding •Different consumers’ databases •Different markets •Different products •Specific processes
Centralized TO BE
•Single design •Single implementation •Necessity to join a standard
SAP DEPLOYMENT MODEL
AS IS • Unique model based design • Numerous implementation • Common rules and guides • Local flexibility
Decentralized
•Multiple design •Numerous implementations •Local entities are totalous autonomous
P
olicy
13 Septembre 2008 24
Vision
• A strong, simple, challenging and forward-looking vision by a charismatic leader : François Dalle «
I wanted to change a small business into a big business, I wanted to beat our foreign competitors back out of the french market and succeed eventually one day, to beat them in their own countries
» • A vision that became the unifying thread of l’Oréal 13 Septembre 2008
Mission statement
•
« serving all kinds of beauties »
•
« promoting a genuine, blooming, happy, reachable and generous beauty »
13 Septembre 2008 26
Core values
• • • • • • Diversity Innovation Individual talent Devotion to individual well-being Striving for excellence Passion for adventure 13 Septembre 2008 27
Organizational learning
• • • • • Low degree of formalization/ agile structure Verbal transmission Close cooperation between Marketing and R&D Projects & missions Risk taking culture 13 Septembre 2008 28
A strong company culture
• • • • Stability in top management Historical background on organic growth Low formalization Consistency between values and learning organization 13 Septembre 2008 29
N
eed for
C
hange
13 Septembre 2008 30
NEED FOR CHANGE
J.P.Agon: “the model has been successful in the past, it still works and will work very well in the years to come” THERE IS NEVER JUST ONE MODEL IN HYPER COMPETITION – Emmanuel Monod 13 Septembre 2008 31
CONFLICTING INTERESTS
Shareholders
Initial capital X32 in 20 years
Customers
More differentiation Expertise 13 Septembre 2008 Innovation Leadership
Employees
20% turnover (28/32) Strike 32
BEAUTY IS FRAGILE
• End of the organic growth since 2001
Brand
Shu Uemura The Body Shop YSL Beauté 2001 2006 2008
Year Activity
Skin & Make-up Bio-cosmetics Luxury
Turnover (million €)
145 435 626 • Old fragrances portfolio • • Trésor & Romance (1990) Polo (1978) & Aqua di Gio (1996) • Stock’s drop by 20% since Jan08 13 Septembre 2008 33
CHALLENGES TO ADRESS IN HYPER COMPETITION
• Management quality (new CEO) “My objective is to make L’Oréal a company of its time, modern in its internal behavior. Our homogeneity is a strength but it should not get transformed into consanguinity, we have to keep attracting talented people” “LEADS WITH HUMAN SENSITIVITY” “ACHIEVES RESULTS WITH INTEGRITY” 13 Septembre 2008 34
CHALLENGES TO ADDRESS IN HYPER COMPETITION
• More differentiation Luxury: exclusivity, experience, high quality No cascading effect • Mastering distribution channels 13 Septembre 2008 35
CHALLENGES TO ADDRESS IN HYPER COMPETITION
•
R&D focus
Budget 3% turnover versus 30% for marketing Partnership with suppliers High quality raw materials 13 Septembre 2008 36