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Acquisition of Body Shop by L’Oreal

Factors L’Oreal would have considered before deciding to acquire Body Shop

Acquisition is the process of buying the share of any company fully or partly to get the control over that company to make business expansion. In that case, L’oreal acquire Body Shop it was facing controversies regarding the company reputation by L’Oreal and they realized that acquiring Body Shop will be an added advantage to overcome the reputation that was happened due to unethical business practice. Therefore, acquiring Body Shop will create a positive market image that they are going to follow the policies of Body Shop those are not unethical.

Acquisition of Body Shop by L’Oreal

The following points are the core factors that L’Oreal would have considered before acquiring Body Shop:

Buying Out a Competitor:

Body Shop is renowned for producing socially conscious product and practicing ethical business by the means of taking position against the terms of animal testing, not using artificial chemical and doing marketing fair and transparent activities. As a results, those issues have made Body Shop a tough competitor for L’Oreal. So, it the consideration of L’Oreal to acquire Body Shop is from the aspect of buying out a competitor for potential growth of business. The thing that L’Oreal’ did is that they would continue the business principles and business ethics of Body while they will produce product or doing marketing activities.

Take the advantage of Brand Image:

The brand reputation of Body Shop would be advantageous for L’Oreal by acquiring Body shop to overcome the damage of brand reputation. Acquisition of Body shop would be helpful for increasing branding presence in mass market for their brand safety and brand protection. Therefore, by taking the advantage of brand image L’Oreal would be able to focus on the issues of producing environment friendly product which will not harm any animals and they are inspired by the business practice of Body Shop.

Implementing Vertical Integration

The acquisition of Body Shop by L’Oreal would be beneficial because they will get the access of Body Shop suppliers and it will be very helpful for pricing of the product, even it will be helpful to take the cost leadership advantage in the market.  Moreover, L’Oréal would be able to get access of Body shop outlets and developing a mass supply chain.

Gain access to new products and new markets

L’Oreal would have considered the factor of gaining access to new products and new markets in which the market share for similar products will be increased and ultimately the sales revenue of the firm will be almost doubled.  From that prospect, it will be possible to retain the customers of body Shop or it could be offered something interesting for those customers were also switching the brand. Therefore, if it is lucrative and able to get the attention of the customer, it will be possible to gain the access of those customers with new products and keeping the existing customers loyal.

So, the above factors would have worked as prime motive of acquiring Body Shop by L’Oreal before taking decision for acquisition.

 

Written by

Md. Shadequr Rahaman

Email: [email protected]

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