L’Oreal is a French multinational company that provides personal care, cosmetics, and consumer goods. Eugene Schueller founded the consumer goods manufacturing brand in 1909. Today, we’ll discuss the PESTLE analysis of L’Oreal; it focuses on external environmental factors like; political, economic, social, technological, legal, and environmental factors.
Political Factors Impacting L’Oreal
Some of the main political factors in the L’Oreal PESTLE analysis are as follows;
I-Government Regulations
EU, FDA, and other regulatory departments have greatly impacted L’Oreal’s business operations. For instance, the EU has recently passed a law that made it necessary for the entire cosmetics brand to avoid testing on animals and ethical sourcing of raw materials. Such government regulations and policies are disrupting the company’s operations and increasing the overall production cost.
II-Regional Conflicts
L’Oreal is operating its skincare and cosmetics business in various countries across the globe. The cosmetic brand can’t run the same advertisement campaigns for skincare products in various countries due to cultural and values differences. Open and revealing ads aren’t acceptable in Muslim countries.
III-Political Views
The political views of the brand and its brand ambassadors have a great impact on the company’s sales and brand perception. For instance, one of L’Oreal’s brand ambassadors has posted anti-Israeli content on various social media platforms. It caused a significant public backlash and outrage and they started opposing the brand.
Economical Factors Affecting L’Oreal
Some of the main economic factors in the L’Oreal PESTLE analysis are as follows;
I-Economic Downturn
The global economy has been going through an economic recession for the past few years. It has unemployed many people in various countries across the globe due to social distancing, lockdowns, and shutdown of businesses. When people have limited disposable income and resources, and they won’t spend it on luxury and lavish products.
II-Trade Alliance
L’Oreal should develop a trade alliance and increase its trading relationships and partnerships with the world’s leading and growing economies like India, China, and other countries. The emerging economies have a great potential for the cosmetic and personal care brand and it helps the company to increase its sales.
III-Raw Material Cost
The cost of raw materials, cosmetic ingredients, organic material sourcing, and others has increased significantly. It amplified the production and manufacturing cost and it decreased the profit margin on the retail price of the product.
Social Factors Impacting L’Oreal
Some of the main social factors in the L’Oreal PESTEL analysis are as follows;
I-Beauty and Fashion Trend
The cosmetic beauty and fashion trend has been increasing significantly for the past few years. It is due to the show-off trend on social media, TV shows, and other media outlets. People have become highly cautious about their physical appearance.
II-Discrimination Incident
L’Oreal claims to be an organic brand and engages in ethical practices. Some former company employees exposed the brand’s hypocrisy and its discrimination towards black and other ethnic groups. Ever since the discrimination incident broke out, it attracted significant outrage and criticism from the public.
III-Whitening Cream
L’Oreal has had a history of advertising whitening cream in India, Pakistan, and other Asian countries; where racial and discriminating laws and boundaries aren’t clear. Such whitening creams and whitening skincare products earned significant criticism from various human rights organizations. They are highly discriminatory to the other non-white ethnic groups.
Technological Factors Affecting L’Oreal
Some of the main technological factors in the L’Oreal PESTEL analysis are as follows;
I-Green and Digital Technology
L’Oreal has invested a significant amount of capital resources in organic and green cosmetic products technology. It allows the company to find the organic raw material source for the cosmetics products, and efficient methods of testing, and production.
II-Smart Skincare Solution
L’Oreal has developed a very advanced smart skincare solution mobile application. It provides a fully customized skincare cosmetic product recommendation and suggestions to the users based on their skin color tone. However, users need to upload their skin color tone photo in the mobile app, which would perform various types of tests and offer a fully customized cosmetic makeup product solution to the customer.
III-E-commerce
L’Oreal has developed a very advanced user-friendly e-commerce platform in order to keep up with growing online shopping trends. It allowed the cosmetic brand to target the online and digital customers market. Ever since the launch of the e-commerce platform, L’Oreal earned a significant amount of sales from the e-commerce platform.
Legal Factors Impacting L’Oreal
Some of the main legal factors in the L’Oreal PESTEL analysis are as follows;
Regulatory Compliance
L’Oreal should comply with the legal and regulatory requirements of different countries and governments to avoid any type of potential lawsuit and heavy fines. They comprise ethical sourcing of raw materials, engaging in responsible practices, organic and green cosmetics, non-testing of animals, and discriminatory laws. Compliance with regulatory requirements would help the company to smoothly perform its operations without any restrictions and bans.
Environmental Factors Affecting L’Oreal
Some of the main environmental factors in the L’Oreal PESTEL analysis are as follows;
Environmental Sustainability
L’Oreal has made a strong commitment to the nature and the environment. They comprise of organic and green raw materials, ethical sourcing, biodegradable packaging, and care for wildlife. Environmental sustainability initiatives help the company to keep up with the growing sustainability trend and increase its sales and network.
Conclusion: L’Oreal PESTLE Analysis |PESTEL Analysis of L’Oreal |External Environmental Analysis of L’Oreal | Strategic Analysis of L’Oreal
After an in-depth study of the pestle analysis of L’Oreal; we have realized that L’Oreal is the world’s leading cosmetic, skincare, and consumer goods brand. If you are learning about the L’Oreal PESTLE analysis; then you should keep in mind the abovementioned external environmental factors like; political, economic, social, technological, legal, and environmental.
Ahsan Ali Shaw is an accomplished Business Writer, Analyst, and Public Speaker. Other than that, he’s a fun loving person.
