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Korean Cosmetic Company
1945 Suh Sung-
Whan
1993 Amore Pacific
1959 Exports
Door-to-door sales
70s - 80s Internationalization
Korea China France U.S.
↓
Corporate Rebranding: objective of creating “a holistic identity system that merges Eastern and Western inspirations but with Korean accent”
Vision: become “World Class”
Distribution of exports
55%
17%
9%
12%
6%
France
China
U.S.
Hong Kong
Taiwan
TARGET 2015: deriving 30% of sales from
overseas
↓
CAGE FRAMEWORK
CULTURAL DISTANCE GEOGRAPHIC DISTANCE
ADMIN. DISTANCE ECONOMIC DISTANCE
FRANCE
Different sense of beauty
Reluctance to buy cosmetics from
foreign countries
Physical distance
Different time zones
Lack of land border
Different currency and legal system
Lack of colonial ties
Lack of shared regional trading block
Mature market
Home of cosmetics
L’Oreal
CHINA (Affinities!) (Closeness!)
Closed market until 1980s
200% - 300% Tariffs on cosmetics
Prohibition of FDI
Law against door-to-door sales
U.S.
Different language and ethnicities
Different norms and values
Differeces in national work system
Physical distance
Different time zones
Lack of land border
Different currency and legal system
Lack of colonial ties
Lack of shared regional trading block
Differences in consumer incomes
Different economic size
Different availability of resources
FRANCE: Premium segment but with local brand
Two skin-care products
Attempt of Aggregation - Failed
Perfume market “Made in France”
“We didn’t want people to associate Korea with our Brand”Catherine Dolphin
ADAPTATION
CHINA: Bottom-up penetration
Cultural Affinities BUT Entry Barriers
Profit of new legislation, lighter entry barriers and the “Korean Wave”
ADAPTATION AGGREGATION
US: Top down penetrationFocus on Korean\Chinese immigrants
THENStarted to focus on Luxury products
ARBITRAGE – ADAPTATION
EVALUATION: Better off and Best alternative test
FR US CHI
Industry
Attractiveness
x
Differentiation x
Dual Effects x x
Risk x x
Cost effect x
Better – off Test
Subsidiaries were main strategy
Acquisition
Joint Ventures
Franchising ?
Strategic alliances
Licences
Best alternative Test