From Local to Global Beauty Harvard Case Solution & Analysis

From Local to Global Beauty Case Study Solution

Introduction

Amore Pacific is the leader of South        Korean cosmetic companies. It was established in 1945. It  launched its product with the name of Melody Market in 1948. The company initiated the selling channel of door to door sales, which had a drastic impact on company’s sales. Moreover, it also introduced Amore Ladies to promote its door to door sales. These ladies also facilitated with beauty counseling, home treatments and massages.

The president and CEO of the company were known as ardent globalizers. In the home market of the company which is South Korea, AmorePacific had been holding many international cosmetics players such as L’Oréal and Estee Lauder.

The company has been operating in Korea, France, United States and China. The main aim of the company is to recognize itself among the world top 10 cosmetic companies with sales of 4 billion by 2015.

Problem statement

As the company has been existing in different countries, it is necessary for the management to know that which country possesses the highest growth in future. Moreover, the diversity concerns to be shown by the company in order to operate successfully in different countries. In addition, the strategies to be used by the company in order to make successful international growth.

Analysis

In order to make company’s international analysis, following questions had to be answered:

Which of the three countries would offer the highest returns to additional investments of resources and managerial emphasis and attention? And where, if at all, should resource commitments be reduced?

To make analysis of all the countries in order to determine the highest return on additional investment of resources, we would use CAGE framework. CAGE stands for Cultural, Administrative, Economic and Geographic. These heads would help us to analyze the differences between countries:

Culture:

AmorePacific is operating internationally and has invested in different countries around the world. Company is planning to increase its resources in one of the three countries, which are France, China and United States. The cultures of these countries are defined as follows:

  • France: the people of France have high brand association with existing brand. It has been analyzed by the company that new cosmetic entrant would not be welcomed. Therefore, company planned to introduce perfumes which would be based on emotions and unique images in order to attract respective customers. Moreover, people highly responded the brand which is made in France, rather than any association with Korea.
  • China: the culture of China is highly associated and similar to as of South Korea, which is the home market of AmorePacific and its products. Moreover, the history of both the countries is also very similar. In addition, people of China like to watch Korean dramas and admire their stars. Also, the Chinese people tend to visit Korea in their vacations. Therefore, people won’t mind the items that wouldbe made in Korea. Moreover, the association with Korea would force the people to experience these products
  • United Sates:The Americans are likely to try and experience new beauty products and are not limited to only one brand. Therefore, the company has introduced a new product line along with spa and massage services to two Korean subsidiaries located in New York and Los Angeles.

Administrative:

  • France: The company introduced its first brand with the name of ‘Soon jeong’ in the French market in 1988.Thisis a special skin care product for sensitive skins. Later it was renamed as ‘Soon’ in order to make easy pronunciation for consumers. However, due to arrival of mid-priced pharmacy channels through distribution intermediaries, it was analyzed that consumers are not likely to purchase cosmetics from a new country industry. Therefore, the ‘Soon’ Brand was removed from the market.
  • China: A more Pacific was introduced in major Chinese markets of Beijing and Shanghai. Moreover, in order to attract customers company, set up a subsidiary in Shenyang. In addition, the company sold its major stake to the founder of a Chinese famous cosmetics company.
  • United States:the company entered in Los Angeles and New York in 1990s through Korean immigrants. Chinese and Latinos were hired for successful marketing.

Economics:

  • France: the company started itself in France in 1988 and introduced different perfumes. As a result of hard work, company managed to earn 2.7% of the total perfume sales in 2003. However, in 2004, the plant’s production capacity had finished. In order to make further expansion, investment of $20 million isrequired. On the other hand, the return that would be generated for investmentsislikely to be achievedby2016 which would reduce the value of money..........................

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