3.1.1 Political and Legal Forces
The political challenge is that L'Oreal should conform to all the different government leadership styles in various countries it operates within. L'Oreal faced a decline in the dermatology branch led by its Galderma brand due to new legislations governing drugs (Euromonitor, 2005). The EU law affects L'Oreal. L'Oreal is restricted in their use of certain kinds of chemicals, such as Phthalates which is carcinogenic (The Rules Governing Cosmetic Products in the European Union). L'Oreal is obligated to produce safe products that do not contain any harmful substances. Also, legislation for advertising is also affecting L'Oreal. L'Oreal has to follow the rules set by Advertising Standards Authority. For example, advertisements cannot be misleading that over-exaggerating the functions of a product (The Control of Misleading Advertisements Regulations 1988). Recent policy developments in the European Union (EU), that is the safety of cosmetics is directed standards. Seventh Amendment cosmetics directive finally approved by the European Parliament and the Council of the European Union, It is expected an immediate ban on animal testing products and a total ban on animal testing of cosmetics raw materials, no later than six years to implement the directive. (Anonymous,http://www.jrc.ec.europa.eu/more_information/download/ecvam2.pdf? In addition, It needs an immediate ban on new cosmetics sales (of finished products and raw materials) and the experimental animal alternative methods have been tested in ecvam and accept the existence of the ban on the sale of cosmetics, on human health affected to a certain extent. It is thought that L'Oreal should fully understand these policies, and to avoid a violation of these policies and regulations, strictly control chemical products and related banned substances content
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3.1.2 Economic Environment Analysis
L'Oreal should adapt to all the different economic environments and problems in all countries it operates in. For example in 2004, L'Oreal was affected by the continued weakness of the dollar and other currencies. Economic crisis is a bad news for L'Oreal, The world GDP is fall sharply from 2007 to 2009, The economic downturn will be a great chanllege for the development of L'Oreal "Although the growth last year is below that in 2008 due to the financial crisis, it is fortunate that it still met the target," said Paolo Gasparrini, president of L'Oreal China, at the 6th China Young Women in Science Fellowship Award Ceremony sponsored by L'Oreal in Beijing Tuesday. In the first three quarters of 2009, L'Oreal's total gross sales increased 0.7 percent compared to last year, of which growth in Asia, where the Chinese market is a large contributor, totaled 21.2 percent, he said.
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3.1.3 Social Environment Analysis
The culture of countries in which a business operates can be of particular importance. The culture of a country consists of the values, attitudes and beliefs of its people. (David Campbell, George Stonehouse and Bill Houston: 119). For example, with modern standard of living continues to improve and the level education get higher and higher, the social increasingly recognize the external image, and people are increasingly focusing on the image appearance, the demand of quality and effectiveness of cosmetic and related skin care products become higher and higher.
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3.14 Technological Environment Analysis
Changes in technology affect the products available to consumers and business, the quality of the products and their functionality. (David Campbell, George Stonehouse and Bill Houston. 124). Today's society is constantly changing, technology updates means that the product updates, cosmetic update speed, short product life cycles, a cosmetics market, we should immediately prepare for the next period. As the technology develops, people can be more channels to purchase products, business and customer contacts more and more ordinary. So technology is the enterprise competitive advantage. Along with the development of science and technology? the latest scientific and technological achievements and advanced technologies rapidly apply in cosmetics industries, particularly biotechnology, nanometer technology, information technology, electronics technology, which provide a lot of opportunities for the development of cosmetics industry. L'Oreal has strong research and development (R&D) capability, According to new technological development, the company registered 529 patents related to cosmetics and dermatology in 2005.
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