Reference no: EM133345213

With more than 88,000 employees and a massive pres- ence spread across 150 countries on five continents of the globe, L'Oréal is the world's largest beauty company. The company has had a successful global expansion strategy since its inception, growing from a local producer of a hair dye for French hairdressers in 1909 to a global giant today. Around the globe, the company has a mix of different operations, ranging from corporate offices, to manufacturing sites, to distribution centers, to retail stores. In line with its expansion strategy, the company has acquired numerous popular beauty companies and brands over the years, including European, American, and Asian brands. According to L'Oréal, this aspect of its expansion strategy is especially important for bolstering its brand portfolio and ensuring future organic growth.

However, global expansion has its own challenges, among which is successfully managing employees across cultures and regions, all separated by different norms, languages, and traditions. There are many examples of companies that have failed in foreign markets due to their inability to manage the cultural differences among their global units and establish effective communication between its international subsidiaries. According to Geert Hofstede, a Dutch social psychologist known for his pioneering research on cross-cultural groups, there are cultural differences between different countries and regions, especially between Western and Eastern cultures. Similarly, Jeanne M. Brett, a professor at the Kellogg School of Management, notes that communication styles vary from one culture to another, which can increase the possibilities of conflict and misunderstanding between employees from different cultures. In fact, a recent study by L'Oréal in the United Kingdom found that cultural differences across international markets are the biggest reason why employers are unable to provide ample foreign assign- ments to their employees.

Global companies need to create effective strategies that can increase harmony and unity among their workers across the globe. They can build cultural sensitivity-being aware and sensitive to the cultural differences between different groups of people-by ensuring that employees learn about each other's norms and cultures. L'Oréal has invested heavily in workforce initiatives that aim to build stronger connections between its people around the globe. L'Oréal tries to base itself on "global careers" by promoting and encouraging its staff to rotate among the company's locations around the world. The result is stronger collaboration and partnerships between different international workgroups that contributes to organizational effectiveness in global settings. At its foundation is a strong dedication to employee diversity, underpinned by L'Oréal's long history of building diverse, multicultural teams, raising cultural awareness, and improving unity between its people, something that its competitors have found much more challenging.

Questions

1. What are the challenges for L'Oréal as it expands to international locations? Name some challenges not listed in the case.

2. What do you think of the L'Oréal' study men- tioned in the case? What did you find most inter- esting in the study? Should L'Oréal continue to conduct such studies?

3. What is your opinion on using international careers to overcome cultural challenges. What alternative means can you think of?