Amore Pacific Case

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PAmore Pacific

1. Why has Amore Pacific been doing so well in the home market?

AmorePacific (AP) performed admirably in its home market due to a multitude of reasons. Most notably is its ability to adapt to external pressures whether it is changes in consumer preferences, fluctuations in economic activity or the threat of new competition. Over time, Korean consumer preferences shifted significantly with Korean women seeking “styles and trends they could call their own.” AP met this by leveraging off the “Buy Korean” post Asian financial crisis wave whilst tapping into the Korean philosophy that “the body and mind are one.” This was achieved through “cosmeceuticals” that promised health and beauty benefits beyond traditional masking. Also, AP was familiar with consumer demand for skin care as skin care dominates the Korean market more than anywhere in the world AP particularly excelled in this area not only due to its deep manufacturing experience and significantly vertically integrated backward business model, but also because they succeeded to meet the needs of Korean women. Korean market was characterized by the popular in Asia skin whitening cosmetics, also the using of greenish base makeup products, which were used nowhere else in the world. Another difference would be that, while Western women liked using all in one products, Korean women prefer using diversity of cosmetic products. It was found by Loreal that Koreans like using around 20 producs a day. AP particularly excelled in this area due to its deep manufacturing experience and significantly vertically integrated backward business model. When posed with the threat of new entrants to the Korean market, AP rigorously refocused in many areas including labor, R&D, distribution channels, capital efficiency and product proliferation. AP cut costs by reducing head count by 8,000 and sought new processes to boost capital efficiency leading to annual savings of 2%. Three new and highly successful...
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