The Enduring Logic of Industrial Success

Paper Summary:

Alfred D. Chandler's article entitled "The Enduring Logic of Industrial Success" states that the pioneers in a market will dominate their industries and continue to do so for decades. The writer examines in detail why these companies are identified as first movers and how they take advantage of being first movers to capture markets and become successful.

Table of Contents:
Introduction
Findings & Discussion
L'Oreal
Toyota
P&G
Conclusion

From the Paper:

"L'Oreal is one of the first companies who sought to compete internationally beyond local or regional markets. When it enters a new market, the most significant strategy is to buy and repackage the local brands and make them world-famous. The most famous examples are Maybelline, Soft Sheen and Carson in the United States and Shu Uemura in Japan. L'Oreal was not satisfied with the profit-guaranteed market of Maybelline in Middle America. Aggressively, it promotes its products worldwide. When Carson found a market in South Africa, the Savannah firm, in debt, was unable to do the investment, L'Oreal made it because Owen Jones, the chairman of the company realized that "people of African origin, where they were in the world, were a huge future potential business" (Tomlinson, 2002). In addition to economics of scale to exert its cost advantage, L'Oreal also expands via economics of scope tremendously in years. The company started out in hair dyes. Now they have products in hair color, permanents, hairstyling aids, body and skin care, skin cleansers, and fragrances. Since they market over 500 brands and more than 2000 products, this provides them with a very strong presence in the beauty market. L'Oreal products are found in all distribution channels: hair salons, hypermarkets, supermarkets, health and beauty outlets, and direct mail. This gives them an advantage over competitors with limited distribution outlets."

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