Loreal's business strategy is based on six areas of growth - Vibilia

BRIGITTE STRELLER, GENERAL MANAGER OF L'OREAL BALKAN
<strong>Loreal's</strong> <strong>business</strong> <strong>strategy</strong> <strong>is</strong>
<strong>based</strong> on six areas of growth
L'Oreal celebrates its 100 th anniversery, the соmрапу <strong>is</strong> present in about
130 countries all over the world, and its top quality products have the milions of sat<strong>is</strong>-
fied consumers... What kind of organization structure and which <strong>business</strong> prindpals
were needed to achieve these results?
For the past 100 years, L'Oreal has strategicallv developed and built a portfolio of brands that
have set bench-marks in the cosmetics industry and in-fluenced the everyday beauty habits
of people aroimd the world. Today, L'Oreal <strong>is</strong> present on six continents, with 16 labs and
evaluation centers, and 40 plants around the world. Its portfolio of 26 in-ternational brands
inñudes a diverse range of hair color, skin care products, cosmetics, and fragrances.
L'Oreal's <strong>business</strong> strategv Is <strong>based</strong> on six areas of growth. Technological innovation <strong>is</strong> a кеу
to sustain our success, and we continue to invest substantiallv in research and development,
al-loiving us to develop new, exciting products for our clients. The second area <strong>is</strong> in the
creation of major prod-ucts, which we base on the fact that the beauty market <strong>is</strong> driven by the
supplv of quality products. VVe respect our consumers' vv<strong>is</strong>hes by constantlv crating top
level new products that are rolied out on an international level. The third area <strong>is</strong> in the
enhancement of the value of the products. In addition to creating new products, we
constantly im-prove and enhance our ex<strong>is</strong>ting lines. Thefourth<strong>is</strong> thepower of brandsjhemselves
- the strength of a сотрапу <strong>is</strong> related to the power of its brands and the L'Oreal brand
portfolio <strong>is</strong> unique. And we cannot forget globalization and growth - the globalization of the
beau-ty <strong>business</strong> <strong>is</strong> just beginning and there <strong>is</strong> an amazing potential still ahead of us
in terms of new markets. The final area of growth <strong>is</strong> in acqu<strong>is</strong>itions - we want to grow both
organicailv and externally. Our criteria for acqu<strong>is</strong>ition are simple: global brands that complete
our portfolio and have identified growth potential.

Is the cosmetics industry a profitable <strong>business</strong> today? Through which development
stages, in terms of <strong>business</strong>, has L'Oreal passed during 10 decades ofi ts work?
We are lucky enough to work within a universal domain: beauty. The world will always need
beauty. The aspiration to achieve beauty and take care of oneself <strong>is</strong> eternally and uraversally
present. The cosmetic markets will thus continue to grow, driven by these unstoppable
forces. The cosmetic market <strong>is</strong> a market for the future. It <strong>is</strong> full of potential and prosper-
ity. VVhat <strong>is</strong> important <strong>is</strong> to be committed, to invest 'm research and constant innova-
tion, and to be surc that you are always at the service of quality for the consumer.
Over the past centurv, L'Oreal has been the best example of combining beauty and science.
We are a соmрапу full of innovation, with 4000 new formulas developed each уеаг
worldwide. L'Oreal invested €581 million in 2008 in cosmetic and dermatological research. It
<strong>is</strong> the largest budget in the cosmetics industrv. Once again, hmovation <strong>is</strong> the соге
of our <strong>business</strong> model, and today тогеthan ever, the group <strong>is</strong> focusing on sci-
entific innovation. Throughout the innovation chain, L'Oreal strives to respectfive basic
principles of sustainable development: Consumer Care, Environmen tal Protection, Social
and Societal Impact, Equity in International Trade and Ethics.
You are general manager of World Balkan and уоu live in Belgrade. What are your
impressions about <strong>business</strong> in Serbia? What are advantages and what im d<strong>is</strong>ad-
vantages? How do уоu evaluate a terms of <strong>business</strong> operating in Serbian market in
compar<strong>is</strong>on with other region markets?
I have been living in Belgrade for five years, ever stnce L'Oreal Balkan was establ<strong>is</strong>hed in
2004. In terms of major advantages, I would say that it <strong>is</strong> the Serbian consumers.
Serbian consumers are "beautv minded."There are beautiful, they show natural inter-
est for beauty and they аге well-informed. For ехаmpleе, a Serbian vvoman gives her
beauty high priority and she <strong>is</strong> an expert on cosmetic products, she <strong>is</strong> even willing
to spend a little bit тоге if that would guarantee ћег better quality. In the cosmetic in-
dustry that <strong>is</strong> a great advantage. Also, the Serbian market <strong>is</strong> still open for growth, and our
w<strong>is</strong>h <strong>is</strong> to grow and improve. In Serbia, we see тапу possibilities for that. It <strong>is</strong> a very
important mar-ket for us, and we do our best to work constantlv on developing our products
and to bring best offer to our consumers. As in апу other oountry, there are some
d<strong>is</strong>advantages in Serbia as well, but апу d<strong>is</strong>advantage comes from not changing
the will to look forward in a positive way and find new potential for development.
At th<strong>is</strong> moment, L'Oreal Balkan <strong>is</strong> managing the Consumer Products Div<strong>is</strong>ion and
Professional Products Div<strong>is</strong>ion directlv in Serbia. Most of products from other div<strong>is</strong>ions are
present on the Serbian market through d<strong>is</strong>tributors. 1 would Hke to point out that the
products that are present in Serbia are completely the same products intended for costumers
in other European markets.
How <strong>is</strong> in major соmpany such as L'Oreal balanced its growth between
developed countries and new markets? Which markets have shown the most
rapid growth? What are development plans for 2010 and upcoming years?
L'Oreal <strong>is</strong> a соmрапу wellbalanced between developed countries and emerging markets. The
сотрапу has always been aware of immense potential of international market, so its
presence has been expanded over the decades. In order to grow in terms of internationalization,
every possible effort was made to succeed, in.du.di.ng improving our methods,
expanding mobility, training employees, and adapting our structures. For Loreal, the quest for
"new таг-kets" <strong>is</strong> not only geographical. It relies on intense curiosity, a keen sense of observation,
and strong intuition. It <strong>is</strong> im-portant not onlv to adapt to <strong>business</strong>, but also to a
country's culture, psychology, consumption habits, and its sensi-bilities. Everywhere you go
you need to understand and decode the culture.

New markets drive L'Oreal's growth. Thanks to forward thinking, invest-ment in new markets
achieved a strong overall performance. L'Oreal has therefore identified the countries with
large market potential and highest growth rates on which to focus investment. The rapid and
profound transforma-tion of the worldwide cosmetic market <strong>is</strong> an h<strong>is</strong>toric opportunity for
L'Oreal.
How did global economic cr<strong>is</strong><strong>is</strong> afected L'Oreal during last уеаг anñ a half? Did уоu
have апу negative <strong>business</strong> consecjuences? What consumers mostly buy during the
cr<strong>is</strong><strong>is</strong>? Has cr<strong>is</strong><strong>is</strong> divided consumers into two categories - the rich and the deprived?
The cr<strong>is</strong><strong>is</strong> affected the global econo-ту, so it affected L'Oreal as well, but it secms that the
worst of the recession тау be over. We have learned a lot and proven our reactivity and
capacity to adapt. The drop in sales picked up again from July to September. In emerging
markets sales improved significantb/, especially in China, India and Brazil. The balance <strong>is</strong>
sbifting, and tbat <strong>is</strong> a major change in the world today and for L'Oreal m the next 10 years -
emerging markets will be the future in terms of success. We seek to understand our
consumers' needs and expectations in order to respond to them. And that requires a good
deal of adap-tation. From that point of vievv, the cri-s<strong>is</strong> has been an еуеopener; it has forced
us to reappra<strong>is</strong>e ourselves more quickly so that we can widen our consumer base.
Takc innovation for example. Innovation <strong>is</strong> essential in th<strong>is</strong> <strong>business</strong>, and we need to make it
sufficientlv accessible to as many people as possible. Every time our brands innovate, they
should aim to reach more customers. We are moving away from the idea "the more
expensive product <strong>is</strong>, the more effective it <strong>is</strong>". UOreal will keep developing high quality
products that people could buy at an affordable price.
What are уоuг personal impressions about Belgrade and Serbia? Do уоu
have your favourite places? What do уоu like the most in Belgrade and Serbia?
Му impressions of Belgrade and Serbia are very positive. The people are very helpful, openminded,
and very friendly. The unique spirit that Belgrade and its citizens have makes you
feel welcome very soon, not like a foeigner. Also, there are a lot of green areas in Belgrade
to епјоу, such as Ada and riversides. I can say for Belgrade that it <strong>is</strong> easyliving town, and I
believe you can compare Belgrade with its social and cultural diversity to апу other European
city.
Resource: Bizn<strong>is</strong> magazin
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