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AmorePacific : “France Expedition". Group 4 Suah SIRH Sibylle SCHERRER Francis DUFAY Thomas HUDE. About AmorePacific AmorePacific Korea Europe S.A Faced Problems in Early Age Why AP came to France Problems Putting a Multicultural Manager Solutions and Success

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amorepacific france expedition

AmorePacific :“France Expedition"

Group 4

Suah SIRH

Sibylle SCHERRER

Francis DUFAY

Thomas HUDE

slide2

About AmorePacific

    • AmorePacific Korea
    • Europe S.A
  • Faced Problems in Early Age
    • Why AP came to France
    • Problems
    • Putting a Multicultural Manager
    • Solutions and Success
  • France Attractivity
    • Benefits
    • Constraints
    • Advise from AmorePacific
  • Our Conclusion
amorepacific co

About AP

AmorePacific Co.

Description

  • Korean provider of cosmetics (78%), personal care (16%), and healthcare products (6%)

Vision

  • World‘s top 10 cosmetics companies by 2015

Key Figures

  • Revenue: 1 Billion €
  • Profit: 122 Million €

CEO

  • Suh Kyungbae (Korean)

Others 4

Employees

  • 3000

France 6

Unit:%

Place

  • Seoul: Headquarter
  • 9 overseas subsidiaries

Korea

90

Brands

<Best in France>, Fall 2006

europe s a overview

Revenue

  • Total: 60 Million €

Unit:%

Others

France

50

S. Korea 2.5

Middle East 6

US

7.5

Spain 5

About AP

Europe S.A. - Overview

Description

  • Europe S.A is in charge of Perfume business
  • High degree of autonomy

CEO

  • JOHN Insoo (Korean)

Employees

  • 200 (Manufacturing: 120)
  • Paris: Headquarter
  • Chartres: Factory

Place

Direct

Investment

  • 62 Million €

Product

  • see next slide

<Best in France>, Fall 2006

the product perfume
Perfumes:

Lolita Lempicka

L

Castelbajac

For men and women

Target group:

20-25 years (LL)

25-35 years (L)

About AP

The Product _Perfume

Lolita Lempicka

Castelbajac

<Best in France>, Fall 2006

europe s a history
Established

- Bought Cosmetics Factory in Chartre

- Started to develop Skincare products

About AP

Europe S.A - History

1st Wave

: Go Native

Operate with Native People for Global Success

2nd Wave

: Aim to Growth

With new investment, aim to grow Sales 5 times until 2015

Decided to license Lolita Lempicka

90

92

95

97

06

09

Launched Lirikos

- Total cost was too high

- Regarded as a strange, exotic product to French People

Launched

Lolita Lempicka

Launched L

  • Second Product
  • Targeting Women in age 25-35

<Best in France>, Fall 2006

slide7

About AmorePacific

    • AmorePacific Korea
    • Europe S.A
  • Faced Problems in Early Age
    • Why AP came to France
    • Problems
    • Putting a Multicultural Manager
    • Solutions and Success
  • France Attractivity
    • Benefits
    • Constraints
    • Advise from AmorePacific
  • Our Conclusion
why ap came to france
The Founder of AP got a strong impression of France and its Cosmetic industry when he visited France in late 50’s

Because of that experience it was his dream of life to run a cosmetic business in France

As it is seen in this case, France got a lot of benefits from the “country Image” and “Prosperity of the past”

Problems

Why AP came to France

Reason

Implication

1956, Seoul

Suh Sunghwan

<Best in France>, Fall 2006

3 key problems they faced
Because of less development in Korean Cosmetic Industry

Cultural issue

Problems

3 Key Problems they Faced

No understanding of Western Culture

  • The first product line of Europe S.A ‘Lirikos’ got a reputation “Strange and Exotic”
  • AP could not sell any product

Operation by Korean

managers

Hardly accessing to French Know-how

  • It takes time for ‘Learning’ to know different country
  • Learning curve

Less innovation, and Creativity

<Best in France>, Fall 2006

introduced multicultural ceo
Undergraduate in SNU, South Korea

Graduate, Ph.D in Paris XI University (Economics)

Studied in France 10 years before joining the AmorePacific

Bilingual in Korean and French

Became CEO of Europe S.A in 1997

Very few skincare products were sold in the Western Countries until 1994

AmorePacific hired Insoo JOHN in 1994 to turnaround the “Europe S.A

Introduced Multicultural CEO

Career

Record

Insoo JOHN

<Best in France>, Fall 2006

executed go native strategy
Hired French cosmetics experts and made them to be a manager of each department

There is no Korean in AP Europe now

Problems

Executed “Go Native” Strategy

Cost

Operating with Native People

1

Relatively higher labor cost than

Korean worker

2

Licensing the Native Brand

A part of the product price is paid for a license fee

  • Licensed French designer brand “Lolita Lempicka” and “Castelbajac”
  • Positioned as a French product when AP introduce its Perfume in the market

<Best in France>, Fall 2006

1 st wave
Hired French cosmetics experts

Licensed a French fashion designer brand

Problems

1st Wave

Problems

Solution

Result

Operation by Koreans

Localization

Great Success

In Global Market

  • All managers are Korean
  • Lack of input from French expertise
  • Poor market response
  • 5th most popular perfume in France
  • Sold in about 90 countries today

<Best in France>, Fall 2006

2 nd wave new challenge
With its past success, Europe S.A. wants to grow

Until 2015, it visions now grow its sales 5 times more

Problems

2nd Wave – New Challenge

2015

Diversified

  • Growth Strategy
  • Broaden Product line
  • Widen Customer Base

Product

Range

2006

Focused

Customer

Range

Focused

Mass

<Best in France>, Fall 2006

slide14

About AmorePacific

    • AmorePacific Korea
    • Europe S.A
  • Faced Problems in Early Age
    • Why AP came to France
    • Problems
    • Putting a Multicultural Manager
    • Solutions and Success
  • France Attractivity
    • Benefits
    • Constraints
    • Advise from AmorePacific
  • Our Conclusion
france benefits in cosmetics business

Attractivity

“France” Benefits in cosmetics business
  • Plenty of competitive human resource
    • Highly innovative, and creative HR
  • Technology

Expertise

Infra

structure

  • Good suppliers
  • Well-developed logistics
  • Competitors
  • Network
  • Cluster
  • “France” is a strong brand

Image of the Country

Financial

Stability

  • Stable political, economical environment
  • Reduces risks of return

<Best in France>, Fall 2006

france constraints in cosmetics business

Attractivity

“France” Constraintsin cosmetics business

Cultural

Individualism

  • French people more concerned about themselves than the organization
  • They have strong personalities
  • Sacrifice and Devotion for the company is not the norm

 Hard to make collective, systematic organization

  • Rooted from cultural, historical background
  • Workers want to get their portion regardless of company’s performance or future

High

concerns

about

Value

Distribution

 Hard to make “Pie” bigger

<Best in France>, Fall 2006

france constraints in cosmetics business17
“France” Constraintsin cosmetics business

Over

protection of workers

  • 3 steps of protection:
  • Labor law, Collective Bargaining and Company Union
  • Strict regulations about lay-offs
  • Legal labor hours: 35 hours/week

 Low labor flexibility + High labor cost

Labor cost

Social Security

Tax

40% more

Labor cost

Social Security

Burden

 Raise COGS

<Best in France>, Fall 2006

france attractivity
Overall, France is a great place to operate cosmetics business

Amorepacific is satisfied with France’s operational environment

However, in other industry France could be a bad place to Invest because of its constraints

Attractivity

France Attractivity

Cosmetics

Industry

Cost Competitive

Labor

Concentrated

  • Is not a labor concentrated industry
  • Needs creative and innovative resources

High

Costs

Cons

Pros

Pros

Labor

Protection

<Best in France>, Fall 2006

advise for the better from ap
France has a lack of adaptability in system of Capitalization

The most urgent problem to be solved is the conflict between French labor and Capital

Attractivity

Advise for the better from AP

Over Protection of Workers

Cultural Individualism

Phenomenon

Solution

Focusing on the Value Distribution rather than Value Creation

Enterprise / Political Efforts

€€

€€

<Best in France>, Fall 2006

slide20

About AmorePacific

    • AmorePacific Korea
    • Europe S.A
  • Faced Problems in Early Age
    • Why AP came to France
    • Problems
    • Putting a Multicultural Manager
    • Solutions and Success
  • France Attractivity
    • Benefits
    • Constraints
    • Advise from AmorePacific
  • Our Conclusion
our conclusion case analysis

Conclusion

Our Conclusion _ Case Analysis
  • The story of AmorePacific in France is a success, thanks to a general adaptation of its organisation and structure to a specific market (Go-Native)
  • AmorePacific benefits from the local know-how, and from the image of French perfumes, in a sector where the cost of work and the flexibility of the labor market are not crucial

<Best in France>, Fall 2006

our conclusion recommendations for afii

Conclusion

Our Conclusion _ Recommendations for AFII
  • To maintain its position of being the 4th largest FDIcountry, France has to develop more “Centers of Excellence”. This will attract new companies.
    • e.g. making clusters, establishing educational institutions for each industry
  • The first difficulties of AmorePacific show that foreign investors should be helped to face cultural difficulties, especially through market and cultural information
    • e.g : coaching of new companies, database of problems faced by new investors, etc.

<Best in France>, Fall 2006

slide23

Thank you

Any Questions?

<Best in France>, Fall 2006

we thank
We thank
  • JOHN Insoo,

<Best in France>, Fall 2006

references
References
  • http://www.amorepacific.co.kr/
  • http://www.amorepacific.co.kr/eng/ir/ir/ir.jsp
  • Datamonitor (2005). Personal Products in South Korea. Found on November 1 2006 at http://web.ebscohost.com
  • Min, K.J. (2004, March 19). Asian company’s perfume passes French smell test. The Wall Street Journal.

<Best in France>, Fall 2006

our team
Our Team
  • SIRH Suah
    • HEC CH J26, 1, Rue de la Liberation 78351 Jouy en Josas
    • Apgujungdong Hyundai APT 106/1105, Gangnamgu Seoul, South Korea
    • [email protected]
  • SCHERRER Sibylle
    • HEC CH J29, 1, Rue de la Liberation 78351 Jouy en Josas
    • Uf de Breiti 1, 8460 Marthalen, Switzerland
    • [email protected]
  • DUFAY Francis
    • HEC CH C86, 1, Rue de la Liberation 78351 Jouy en Josas
    • chemin de la combe 69400 Liergues France
    • [email protected]
  • HUDE Thomas

<Best in France>, Fall 2006

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