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1.1. About AmorePacificAbout AmorePacific1.1. AmorePacific KoreaAmorePacific Korea2.2. Europe S.AEurope S.A
2.2. Faced Problems in Early AgeFaced Problems in Early Age1.1. Why AP came to FranceWhy AP came to France2.2. ProblemsProblems3.3. Putting a Multicultural Manager Putting a Multicultural Manager 4.4. Solutions and SuccessSolutions and Success
3.3. France Attractivity France Attractivity 1.1. BenefitsBenefits2.2. ConstraintsConstraints3.3. Advise from AmorePacificAdvise from AmorePacific
4.4. Our ConclusionOur Conclusion
About AP Problems Attractivity
3/24<Best in France>, Fall 2006
Conclusion
AmorePacific Co.
About AP
VisionVisionVisionVision
EmployeesEmployeesEmployeesEmployees
BrandsBrandsBrandsBrands
DescriptionDescriptionDescriptionDescription
• Suh Kyungbae (Korean)
• World‘s top 10 cosmetics companies by 2015
• Seoul: Headquarter• 9 overseas subsidiaries
• Korean provider of cosmetics (78%), personal care (16%), and healthcare products (6%)
CEOCEOCEOCEO
PlacePlacePlacePlace
• 3000
• Revenue: 1 Billion €• Profit: 122 Million €
Korea90
Unit:%France 6
Key Figures
Others 4
About AP Problems Attractivity
4/24<Best in France>, Fall 2006
Conclusion
Europe S.A. - Overview
CEOCEOCEOCEO
EmployeesEmployeesEmployeesEmployees
PlacePlacePlacePlace
DirectDirectInvestmentInvestment
DirectDirectInvestmentInvestment
ProductProductProductProduct
DescriptionDescriptionDescriptionDescription
• JOHN Insoo (Korean)
• 200 (Manufacturing: 120)
• Paris: Headquarter• Chartres: Factory
• 62 Million €
• see next slide
• Total: 60 Million €
France50
US7.5
Unit:%
Middle East 6S. Korea 2.5
Spain 5
Others
Revenue
• Europe S.A is in charge of Perfume business• High degree of autonomy
About AP
About AP Problems Attractivity
5/24<Best in France>, Fall 2006
Conclusion
The Product _Perfume
• Perfumes:– Lolita Lempicka– L– Castelbajac
• For men and women
• Target group: – 20-25 years (LL)– 25-35 years (L)
About AP
Lolita Lempicka
Castelbajac
About AP Problems Attractivity
6/24<Best in France>, Fall 2006
Conclusion
Europe S.A - History
90 92 95 97 06 09
Established- Bought Cosmetics Fact
ory in Chartre- Started to develop Skin
care products
Launched Lirikos- Total cost was too high- Regarded as a strange, exotic pr
oduct to French People
1st Wave: Go Native
Operate with Native People for Global
Success
Decided to license Lolita Lempicka
Launched Lolita Lempic
ka
Launched L- Second Product - Targeting Women
in age 25-35
2nd Wave: Aim to Growth
With new investment, aim to grow Sales 5
times until 2015
About AP
1.1. About AmorePacificAbout AmorePacific1.1. AmorePacific KoreaAmorePacific Korea2.2. Europe S.AEurope S.A
2.2. Faced Problems in Early AgeFaced Problems in Early Age1.1. Why AP came to FranceWhy AP came to France2.2. ProblemsProblems3.3. Putting a Multicultural Manager Putting a Multicultural Manager 4.4. Solutions and SuccessSolutions and Success
3.3. France Attractivity France Attractivity 1.1. BenefitsBenefits2.2. ConstraintsConstraints3.3. Advise from AmorePacificAdvise from AmorePacific
4.4. Our ConclusionOur Conclusion
About AP Problems Attractivity
8/24<Best in France>, Fall 2006
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”
1956, Seoul
Suh Sunghwan
Problems
ReasonReasonReasonReason
ImplicationImplicationImplicationImplication
About AP Problems Attractivity
9/24<Best in France>, Fall 2006
Conclusion
3 Key Problems they Faced
Problems
Operation by Koreanmanagers
No understanding of Western Culture
Hardly accessing to French Know-how
Less innovation, and Creativity
• Because of less development in Korean Cosmetic Industry• Cultural issue
• It takes time for ‘Learning’ to know different country • Learning curve
• The first product line of Europe S.A ‘Lirikos’ got a reputation “Strange and Exotic”
• AP could not sell any product
About AP Problems Attractivity
10/24<Best in France>, Fall 2006
Conclusion
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
Insoo JOHN
Career Career RecordRecordCareer Career RecordRecord
About AP Problems Attractivity
11/24<Best in France>, Fall 2006
Conclusion
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
2
1Cost
Operating with Native People
Licensing the Native Brand– Licensed French designer brand “Lolita L
empicka” and “Castelbajac”– Positioned as a French product when AP
introduce its Perfume in the market
Relatively higher labor
cost thanKorean worker
A part of the product
price is paid for a license
fee
About AP Problems Attractivity
12/24<Best in France>, Fall 2006
Conclusion
1st Wave
Problems
Localization
SolutionProblems Result
Operation by Koreans
Great SuccessIn Global Market
• Hired French cosmetics experts
• Licensed a French fashion designer brand
• 5th most popular perfume in France
• Sold in about 90 countries today
• All managers are Korean
• Lack of input from French expertise
• Poor market response
About AP Problems Attractivity
13/24<Best in France>, Fall 2006
Conclusion
2nd Wave – New Challenge
• With its past success, Europe S.A. wants to grow• Until 2015, it visions now grow its sales 5 times more
CustomerRange
ProductRange
Focused Mass
Diversified
Focused
2006
2015Growth Strategy
1. Broaden Product line2. Widen Customer Base
Problems
1.1. About AmorePacificAbout AmorePacific1.1. AmorePacific KoreaAmorePacific Korea2.2. Europe S.AEurope S.A
2.2. Faced Problems in Early AgeFaced Problems in Early Age1.1. Why AP came to FranceWhy AP came to France2.2. ProblemsProblems3.3. Putting a Multicultural Manager Putting a Multicultural Manager 4.4. Solutions and SuccessSolutions and Success
3.3. France Attractivity France Attractivity 1.1. BenefitsBenefits2.2. ConstraintsConstraints3.3. Advise from AmorePacificAdvise from AmorePacific
4.4. Our ConclusionOur Conclusion
About AP Problems Attractivity
15/24<Best in France>, Fall 2006
Conclusion
“France” Benefits in cosmetics business
Attractivity
ExpertiseInfra
structure
FinancialStability
Image of the
Country
• Plenty of competitive human resource
– Highly innovative, and creative HR
• Technology
• “France” is a strong brand
• Stable political, economical environment
• Reduces risks of return
• Good suppliers• Well-developed
logistics• Competitors• Network• Cluster
About AP Problems Attractivity
16/24<Best in France>, Fall 2006
Conclusion
“France” Constraints in cosmetics business
Attractivity
Highconcerns
about Value
Distribution
• Rooted from cultural, historical background• Workers want to get their portion regardless of
company’s performance or future
CulturalIndividualism
• 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
Hard to make “Pie” bigger
About AP Problems Attractivity
17/24<Best in France>, Fall 2006
Conclusion
Social Security
Tax40% moreLabor cost
Labor cost
“France” Constraints in cosmetics business
Overprotection 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
Social SecurityBurden
Raise COGS
About AP Problems Attractivity
18/24<Best in France>, Fall 2006
Conclusion
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
Cosmetics Industry
Cosmetics Industry
Cost Competitive
Cost Competitive
LaborConcentrated
LaborConcentrated
ProsCons Pros Labor
Protection
HighCosts
• Is not a labor concentrated industry• Needs creative and innovative
resources
About AP Problems Attractivity
19/24<Best in France>, Fall 2006
Conclusion
Advise for the better from AP
Attractivity
Over Protection of WorkersCultural Individualism
Focusing on the Value Distribution rather than Value Creation
€€
PhenomenonPhenomenonPhenomenonPhenomenon
• 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
€€
Enterprise / Political Efforts
SolutionSolutionSolutionSolution
1.1. About AmorePacificAbout AmorePacific1.1. AmorePacific KoreaAmorePacific Korea2.2. Europe S.AEurope S.A
2.2. Faced Problems in Early AgeFaced Problems in Early Age1.1. Why AP came to FranceWhy AP came to France2.2. ProblemsProblems3.3. Putting a Multicultural Manager Putting a Multicultural Manager 4.4. Solutions and SuccessSolutions and Success
3.3. France Attractivity France Attractivity 1.1. BenefitsBenefits2.2. ConstraintsConstraints3.3. Advise from AmorePacificAdvise from AmorePacific
4.4. Our ConclusionOur Conclusion
About AP Problems Attractivity
21/24<Best in France>, Fall 2006
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
Conclusion
About AP Problems Attractivity
22/24<Best in France>, Fall 2006
Conclusion
Our Conclusion _ Recommendations for AFII
• To maintain its position of being the 4th largest FDI country, 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.
Conclusion
About AP Problems Attractivity
24/24<Best in France>, Fall 2006
Conclusion
We thank
• JOHN Insoo, – CEO– Mobile: +33.6.82.80.47.35– Email: [email protected]– Address: 6, rue Caroline 75017 Paris
About AP Problems Attractivity
25/24<Best in France>, Fall 2006
Conclusion
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.
About AP Problems Attractivity
26/24<Best in France>, Fall 2006
Conclusion
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– 177 rue du Faubourg Poissonnière 75009 Paris.– [email protected]