L’Oreal/Body Shop Case Study Q1. Macro environment is an external environment which does not have direct impact on the organisation, but it has impact on organisation overall with in the sector. Macro environment consist of many elements, and these are: Socio-culture and demographic environment, Economic environment, Political & Legal environment, Ecology & Physical environment, Technological Environment. It is apparent from the case study that L’Oreal is accused number of practices including airbrushing advertisements, misleading claims, animal testing, price fixing and child labour these are major issues currently facing by L’Oreal. In this case study we will discuss the impact macro environment had on L’Oreal particularly on social and ethical and factor. The impact of macro environment on L’Oreal - Social Environment: Airbrushing Advertisements and Misleading Claims. - Unethical/Political & Legal Environment: Child labour and animal testing - Economic Environment: price fixing Social environment; L’Oreal advertisements featuring actress Julia Roberts and supermodel Turlington was banned by UK advertisement Standard Agency because they were digitally manipulated and retouched. Unethical advertising does misrepresent its product and seek secretive means of manoeuvring its target group of people. This kind of advertisement create concern for the environment and motivates environmentally destructive behaviour in the society. L’Oreal intention is by exaggerating their advertisement would help increase their profit (Sabawoon, 2013). Social environment: misleading consumer with false images through advertisement also not mentioning exact information about the product itself consider as misleading and unethical behaviour by company. In 2007 L’Oreal was criticised by American Standard Association (ASA) for misleading customer with their advert on mascara where advert was showing 60% longer eyelashes by applying the product but in reality, the model was wearing false eyelashes. There are many way a company can mislead customers which are ; False claims in advert by exaggeration of truth and this tactic considered as “crossing an ethical line”. Stealth marketing involves more subtle form of unethical behaviour which involves deliberate intention to deceive customer and remain within the law. Small print is the another way which company can mislead customer by writing the terms and condition in small print(Anon, 201 Political environment and unethical: Child labour is a majorly unethical practice which supported by L’Oréal for the benefit of their organisation which effect social and political environment. L’Oréal and other large cosmetic company uses a naturally occurring mineral which gives reflective finish to nail polish, eyeshadow, blush, lipstick and more and majority mica (mineral) comes from eastern state of Jharkhand and Bihar in India where more than 22,000 children work in mica mines. (ETTA, 2019). Roughly 70% of mica generate in India comes from illegal mines that are completely unregulated by the government which indicate sourcing materials unlawfully is illegal and effect the social as well as political environment which is one of the elements of macro environment (LEBSACK, 2019). Political environment and unethical: Animal has right to live as much as human, there for killing animal for the purpose of experiment is unlawful. killing animal for testing on cosmetic and drug leads to extinction of particular animal, which impact the environment and it is against the norm of the society to kill animal in that manner. It is apparent from the case study that L’Oreal support animal testing for their cosmetic product which may be profitable for their organisation. According to European Union law killing animal for purpose of testing for cosmetic is illegal in the united kingdom. In March 2013 European Union Implemented that selling any animal tested cosmetic product in Europe is illegal. Because of that investment in no-animal testing method has been increase significantly. Despite the ban on animal tested product by European Union, but the global markets environment allows animal test on cosmetic outside the Europe and sell the product globally. China is one of the emerging market support animal tests for experiment on cosmetic (Anon, 2019). Performing animal testing is debatable and the viewpoint have shifted significantly over the 20th century. Argument remain which procedures are useful for which purpose, and which ethical principal apply to which species. Out of many opinion most favourable opinion is testing animal purpose of scientific and medical goal providing animal suffering and use is minimal (NURUNNABI, AFROZ and ALAM, 2013). Economic environment : Price fixing is an illegal practice where organisation collude and fix price and this disallow other business from being able to compete against the business in the price fixing agreement, and this prevents the public in the society from being able to expect the benefit of free competition. UK is a free market economy therefor fixing price is illegal. It appears from the case study that L’Oréal were accused of price fixing allegation, finding from the recharge shows Greece’s anti-trust commission fined six cosmetic company for being agreeing on the discounts to be applied to their products when resold in shop and indirectly fixing price as result (Anon, 2017). Q2 Culture of Body Shop and L’Oréal: Based on the case study it is quite clear that L’Oréal and Body shops organisational culture are significantly different from one and other. According to business dictionary ethical behaviour is acting with the respect of socially accepted moral principals and values, which include fairness, dignity, honesty and individual right and also means to act in the best of all parties involved and within generally accepted norms in society (Zarina, 2016).It is evident from the case study that L’Oréal organisation is disregarding many of the ethical values. Findings from the case study L’Oréal’s goal is to focus on promoting brands name and maximising profitability. Due to L’Oréal’s unethical behaviour in regard to some of their major controversial issues particularly with regards to child labour, and animal testing, companies’ reputation in the market as well as the society is very poor and put the company in the categories of unethical organisation. Whereas Body shops reputation is more ethically stronger compare to L’Oreals. Body shops approach towards business is based on their good morals which serves the society as well their company. The core five ethical values Body Shop practices are Activating self-esteem, protecting planet, against animal testing, supporting community trade and Defending human right, this are the main foundation of body shop ethics. As a result of their strong ethics they have a very good reputation in their local as well as the global market. Founder of Body Shop Dame Anita Roddick started her business in 1976, using only natural ingredient sourced sustainably for making personal care products and abstaining from animal testing. Since than Body Shop grew to become one of the most renowned “High Street” brand reputable company (John, 2017) Body shop and L’Oréal, they both are cosmetic manufacturer and because that they compatible to each other, and this is where their similarity ends. Gathered from the information provided for the case study it is obvious that their values, their goals are not in parallel by any mean. After evaluating all the information about both the companies, it will be unrealistic to say that both the company are compatible. On the base of ethical behaviour, Body Shop falls under ethical and L’0real falls under unethical company. L’Oréal acquired Body Shop in 2006 for £652 million and their intention was to restore their reputation in the market under the influence of good reputation of Body Shop also the brand expansion in mind. Emarging both companies together had a negative impact on body shop due to L’Oréal’s bad images. Body shop is known to consumer as British brand with best corporate reputation, and customer values their products because Body Shop use natural materials as the ingredient for the beauty products and free from animal teste. Q2 Benefit and challenges Benefits are; Expansion because of amalgamates, Increase profit, Brand image, Access to all the outlet of Body Shop as well as their chain supply also enable them to reach out to more customer. According to L’Oreal Jean-Paul Agon “Body Shop brand could more than double the size of its store network “in a few years” thanks to international expansion” (Hope,2017) Challenges are: L’Oréal reputation will affect body shop customer in regard to ethical approach to buying product. Body shop may have to follow loreal ideas and principal because of ownership status. Q3: The factors that L’Oréal would have considered before acquiring the Body Shop would be ethical, social, and economical factor. These three major issues are affective and concerning factor for L’Oréal’s reputation and it would be their best interest to tackle this issue with strategies acquisition with Body Shop. Information provided from the case study suggested that it was a strategic decision by L’Oréal to acquire Body Shop, so that they can use Body Shops reputation and restore their own reputation in the market. Number of occasions they have been accused of miss conducts in regard to ethical, social, economic factor. L’Oréal organisation is one of the largest cosmetic company in the world and having to continue with such negative reputation is much damaging for their organisation. On the other hand, Body Shops reputation is highly praiseworthy in the world of business. Their business ethics are based on solid foundation of values. The report out line that, there are many factors L’Oréal would have considered before acquiring Body Shop and among them; Product range, Locations, Good brand images, expansion and profit, this are some of the reason but above all the main issues they would have consider that how they will erase bad images of their organisation by collaborating with Body Shop. Other factors L’Oréal would have consider is that customer will have access to both the company’s products under one roof, meaning whenever they are visiting L’Oréal as they are visiting Body Shop, which allows more choice for the customer and consequently this should impact on sales and profit will increase as a result. Other consideration would of through by L’Oreal is through acquisition company will expand its brand geographically and boost its presence in organic beauty market. L’Oréal chief executive Sir Lindsy Owen -jones said “partnership between our companies makes perfect sense. Combining L’Oréal’s expertise and knowledge of international market with the Body Shop’s distinct culture and values will benefit both companies” (INDEPENDENT, 2006). This statement indicates L’Oréal’s consideration and expectation from Body Shop. It’s evident from the findings that L’Oréal is one of the largest organisations in the world and their focus on digitalization, positive outlook for global market, and acquisitions is one of practices they implement to offer growth opportunities to the company. It is apparent from the information that Body Shop was not just another company L’Oréal taking under their belt to generate profit and thinking of expansion. Study indicate that their main focus to discard companies’ bad image which has been damaging for their reputation. Moreover, the critics argue that the main reason for acquisition of Body Shop by L’Oréal’s is to amend theirsuffering as result of poor reputation, and that L’Oréal wanted to take advantage good will of Body Shops to control damage to the reputation. Q4: Looking at the case study it apparent that two major factors that had affect the L’Oréal acquisition of Body Shop by resulting its failure are; Ethical factor and Economical factor Ethical Factor: Anita Roddick founder of Body Shop started her business based on natural ingredients sourced sustainably for making personal care products and abstained from animal testing. Body Shop popular among ethically conscious consumers who shared Roddick’s principal of ethics and sustainability. Body Shop had lost its glory and patronage among its customer since L’Oréal bought the company (JOHN, 2017). Because of L’Oréal acquired Body Shop that puts customer of Body Shop are in the predicament whether to go to Body Shop or not. Study suggested that Body Shops sale went down due to L’Oréal’s bad reputation. L’Oréal was unable to realise that customer of Body Shop is more strongly rooted to moral values like against animal testing or child labour, and other unethical activities they are engaged in which made a significant dent on their image. As a result of that Body Shops customer are falling short which effecting business. Because of their behaviour L’Oréal driving the Body Shops customer away strategies was to use Body Shops brand reputation to increase sale and eventually expand the brunches globally Your Bibliography: INDEPENDENT (2006). L'Oreal buys Body Shop for £652m. [online] Available at: https://www.independent.co.uk/news/business/news/loreal-buys-body-shop-forpound652m-6106519.html [Accessed 12 Dec. 2019]. John, D. (2017). L'Oreal Body Shop Acqusition : what went wrong. [online] Amity Research Centre. Available at: https://www.thecasecentre.org/corporate/products/view?id=148905 [Accessed 11 Dec. 2019]. Essays, UK. (November 2018). Cultural Values Of The Body Shop. Retrieved from https://www.ukessays.com/essays/commerce/cultural-values-of-the-body-shop-commerceessay.php?vref=1 Your Bibliography: Anon, (2014). Airbrushed make-up ads banned for 'misleading', [online] (39). Available at: https://www.ibe.org.uk/userassets/briefings/b39_customers.pdf [Accessed 4 Dec. 2019]. Bibliography: Sabawoon, A. (2013). Ethical Issues in Advertising. [online] Available at: https://www.academia.edu/16880825/L_Oreal_Unethical_practices_in_Advertising [Accessed 3 Dec. 2019]. Bibliography: Anon, (2017). [online] Available at: https://www.businessoffashion.com/articles/news-analysis/loreal-to-appeal-greek-fine-overprice-fixing [Accessed 5 Oct. 2017]. Bibliography: ETTA, v. (2019). Here's What's *Really* Behind the Shimmer in Your Fave Makeup. [online] Available at: https://www.flare.com/beauty/mica-makeup-child-labour/ [Accessed 5 Dec. 2019] LEBSACK, L. (2019). [online] Available at: https://www.refinery29.com/engb/2019/05/231987/mica-in-makeup-mining-child-labor-india-controversy [Accessed 6 May 2019].. Zarina, K. (2016). Understanding Ethical Issues in Marketing and Suggesting a Model that Will Help to Shift Towards Better Perception of the Industry in Czech Republic. [online] Available at: http://file:///C:/Users/amdad/Downloads/Kenesbayeva,%20Zarina_509722_Final%20Project%20Thesi s%20(1).pdf [Accessed 9 Dec. 2019]. Your Bibliography: NURUNNABI, A., AFROZ, R. and ALAM, S. (2013). ETHICAL DEBATE ON ANIMAL RESEARCH. [online] Available at: https://pdfs.semanticscholar.org/5d95/efc978eb3f82fe91db9b561c2db0cb41c849.pdf [Accessed 11 Dec. 2019]. Your Bibliography: JOHN, D. (2017). L'OREAL BODY SHOP ACQUISITION : what went wrong. Amity Research Centers.
