STRATEGIC BUSINESS - L'OREAL

Managing Information in a Strategic Business - L'Oreal



Table of Contents

Introduction3

Discussion3

Company Information3

Financial Statements6

Balance Sheet6

Profit and Loss Statement9

Cash flow Statement10

Evaluating Financial Performance12

Liquidity ratios12

Profitability Ratios13

Leverage Ratio14

Company Analysis15

Comparison with Competitor20

Coping with Financial Issues22

Liquidity Problem Resolutions23

Excessive Expenses Problem Resolutions24

Financial Leverage Resolutions25

Conclusion26

MANAGING INFORMATION IN A STRATEGIC BUSINESS - L'OREAL

Introduction

An Organisation needs many resources to operate successfully in a competitive environment, which is open to frequent challenges. An efficient labour, a large piece of land and sufficient capital are certainly not enough to ensure success, proper implementation of carefully formulated strategies are very important. Managing a business properly is essential to secure good profit and growth figures. A well-maintained financial information greatly assists in enabling the managing authorities to make appropriate decisions. (Michael, 2009, pp. 43-49)

Representation of financial information in an effective, efficient and timely manner is the most important input in the decision making process. Financial statements not only assist in planning strategies and controlling operations, but also in budgeting, forecasting and other various areas of organizational operations. (Gitman, 2003 pp. 112-120)

Discussion

Company Information

Eugene Schueller, a young French chemist, developed an innovative formula for colouring hair in the year 1907, which he called Aureole. With this, the history of L'Oreal began. Eugéne Scheller formulated and manufactured his own products, which he then sold to Parisian hairdressers. The company was registered in 1909. The guiding principle from the beginning was research and innovation in the interest of beauty.

L'Oreal got its start in the hair-colour business, but the company soon branched out into other beauty products. The Group today markets over 500 brands and more than 2,000 products in all the sectors of the beauty business: e.g. hair colour, permanents, styling aids, cleaners and fragrances and body cosmetics. The company, having over 51,000 employees of 98 different nationalities, is operating in 130 countries and has 290 subsidiaries. Forty-two factories round the globe that are producing L'Oreal products. (Gentucky, 2003, pp. 133-145)

The highest organ in the company is the AGM. The Annual General Meeting is held once in a year to discuss results and agree on future development. The Board of Directors also report to the AGM. The Board of Directors are responsible for the overall planning and financial operations including investments. The CEO is responsible for day-to-day operations of the company. The Vice-President is responsible for production and technology, human resources, and other departments. Vice presidents report to the CEO. (Gitman, 2003 pp. 112-120)

The Structure Of The Company



Financial Statements

Financial statements are based on accounting concepts and standards, which require extensive study because of their technicalities. Accounting provides an in depth information of not only the position but also the overall progress of an organisation. It provides the financial framework for analysis and plays a critical role in the decision-making process. Apart from providing the necessary information, it assists the management in making decisions on the basis of trends and forecasts.

Although it is an accountant's job to prepare, analyse and interpret financial statements, it is equally essential for the management to have the basic understanding ...