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REPORT ON LORAL GROUP1. Introduction This report focuses on a successful international company in China - the LOral Group. The topics covered include “The basic information”, “Should the company use e-commerce as the main distribution channel?” and “Suggestions under the current macroeconomic situation in China”.2. The basic information Primarily, the form of LOral Group is corporation. It operates in many countries in the world and has many successful subsidiaries. Two of the best known are Lancme and The Body Shop. As a corporation the company has some distinct features. Firstly LOral Group is a separate legal entity and secondly, the owners of LOral Group are shareholders. Currently the major shareholders are the Bettencourt family, Nestl, international institutional investors, French institutional investors, individual shareholders, treasury stock and employees. Together with other shareholders, they own the LOral Group but have only limited liabilities. 1) Undesirable disadvantages As a corporation is that it pays income taxes twice. Firstly, the company is required to pay income tax for the company earnings. When it distributes dividends to its shareholders, the shareholders need to pay individual income taxes for the dividends. As a transnational corporation, the board of directors and officers comprise the management of LOral Group. The top manager of LOral is Jean-Paul Agon, who is the chairman and chief executive officer of the corporation. In terms of what products or services provided, LOral is the world largest cosmetics company concentrating on hair color, skin care, sun protection, make-up, perfume and hair care as well as toxicology,tissue engineering, andbiopharmaceuticalresearch fields. Besides, the products it provides can be categorized as mass, professional, luxury and active cosmetics markets. Respectively, the mass cosmetics brands are LOral Paris, Maybelline NY and Garnier. The professional are LOral Professional, Kerastase and Matrix. The luxury brands are Lancme, YSL, Giorgio Armani, Kiels, The Body Shop, and Shu Uemura. The active cosmetics brands are cosmeceuticals, such as Vichy, La Roche-posay, Skin Ceuticals, and INNEOV. 2) Four major distribution channels Retailing, franchising and e-commerce. These distribution channels have their merits and shortcomings. First, retailing has small transaction size but high transaction frequency. Additionally, retail sale is largely influenced by consumer buying behaviors. Second, franchising has its own merits. The franchise owners can use franchising to make large-scale sale and achieve low-cost expansion, but franchise can only focus on one area, and cant be a strategic victory in every market. The third is e-commerce. The upside is that using e-commerce as a distribution channel is convenient, time saving and costs reducing. But on the other hand, for customers to buy products online, especially cosmetics, takes risk because they cannot check the quality of the products as they do in a physical store. 3) LOral should use e-commerceAs every distribution channel has its merits and demerits, it needs to be finding out if LOral should use e-commerce as the main distribution channel. Electronic commerce makes it possible to sell commodities in a cheap, efficient, easy and global way. In accordance with the operation and saling situation of LOral, e-commerce is an optimal distribution channel. For one thing, LOral sells mass cosmetics brands products, the target customers of mass cosmetics products are ordinary or middle class people, who are increasingly interested in buying online with the development and convenience of e-commerce. Consequently, using e-commerce as a main distribution channel meets the needs of these customers and is profitable. Nevertheless, as for the luxury and professional products, using e-commerce as its main distribution channel is not a good choice, because sales of luxury and professional products should provide extra service and customers will need other assurance for buying the products. Since the service system of e-commerce is not completely perfect to satisfy the need, not all the products and services of LOral should use e-commerce as the main distribution channel.3. ConclusionAlthough LOral Group has been a great success story since 1909, improvements are still possible for LOral Group to remain its profitability in China given the current macroeconomic situation. In China, the main economic indicators show that the Chinese economy is growing slower in recent years. However, the overall consumption growth is basically stable. Specifically, for the first 8 months of this year, the accumulative total retail sales grew by 10.3% and the national commodity online retail sales increased by 25.5%. It can be seen that the economy in China is still expanding. With peoples income increasing, consumers will continue to buy luxury products to improve their quality of life. So a great market exists for LOral to sell its products in China. Although LOral pays much attention to innovation and research to keep their products up to date, to sell their products successfully in China requires more attention to any other respects. Firstly, Chinese government is strict to standardize the cosmetics industry, and has intensified the quality supervision of the domestic cosmetic products. From this perspective, the quality of raw materials for the production of cosmetics must be up to the standard. To upgrade the package of the products to guarantee sealing and non-pollution is another way to achieve this objective. Secondly, from the perspective of economy, the cosmetics industry in China is in theperiodoftransitionfrom growingtomaturity with competition intensifying and market pressure increasing. To face this challenge, LOral should make full use of online retailing in China as a sales strategy since the national commodity online retail sales in China increased by 25.5% this year. Thirdly, from the perspective of brand culture, once consumers have the identity of a brand, is not easy to change. That means brand culture will bring high profits. It can also play a role in hindering or reducing
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