Read the case study given below carefully and complete the tasks given at the end
L’Oréal is one of the largest cosmetic companies in the world and a well-recognized brand name in the cosmetics sector. Even though the brand is popular in over 130 countries with over 25 brands and number of sub-brands, the company recently been accused of number of unethical practices including airbrushing advertisements, misleading claims, animal testing and price fixing. In addition to L’Oréal, Nestle, which own over 29% stake in L’Oréal also been through negative publicity over animal testing, condoning child labour, unethical promotion and misleading advertising. In the recent years there has been growing concerns over environment friendly products particularly products that are purely based on natural ingredients. Public sentiments about ethical issues such as opinions against price fixing, child labour has resulted in drop in reputation on Nestle and L’Oréal.
In the UK, Body Shop had emerged as a popular brand famous for its core values including its support to human rights and environmental care as well as its stand against animal testing. The Body Shop on its own has presence in 33 countries with 2600 brands (Bronstein, 2004).
In 2006, L’Oreal made a bid to acquire Body Shop for £652 million. By acquiring the Body Shop, L’Oréal gets access to these outlets as well the supply chain which could help strengthen its own stores and supply chain. But according to the CEO of 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).
Many critics argue that the main reasons for acquisition of Body Shop by L’Oréal is to correct their suffering as the result of poor reputation, and that L’Oreal wanted to use goodwill of Body Shop to limit damage to the reputation. The announcements that L’Oréal is willing to learn from the Body Shop’s practices is evidence that shows the intention of damage control as reason for this acquisition (Bronstein, 2004).
In 2017, L’Oreal sold Body Shop to a Brazilian company Natura Cosmeticos SA (Trefis, 2017).
Tasks to complete
1. Discuss the impact macro environment had on the current situation faced by L’Oréal particularly the Social, and Ethical factors (500 – 750 words – 20%)
2. What is the organisational culture at Body Shop and L’Oreal. In your view are they compatible and what are the likely benefits or challenges arising out of the compatibility of culture. (500 – 750 words – 20%)
3. Discuss any factors that L’Oreal would have considered before deciding to acquire Body Shop (500 – 750 words – 20%)
4. In your view what are the factors that had effect the L’Oreal acquisition of Body Shop resulting it the failure (500 – 750 words – 20%)
5. The second part of the assignment will involve writing a reflection report on your experience in writing this report. (250 – 500 words – 20%)
This assessment addresses
LO1: Understand the dynamic and changing nature of business and the consideration of the future of organisations within the global business environment.
LO2: Identify the need for individuals and organisations to manage responsibly and sustainably and behave ethically in relation to social, cultural, economic and environmental issues.
LO3: Discuss leadership, management and development of people.
LO4: Discuss the development of appropriate policies and strategies within a changing environment to meet stakeholder interests.
LO5: Discuss the design and development of organisations.
