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Strategic Audit
Syndicate 2
Members of Syndicate :
Tamadara Hilman (29112042)
Adithya Nugraha(29112149)
Yulianita Rahayu (29112060)
Aditia Sovia Pramudita (29112061)
Ratu Sonia Gardenia (29112065)
3. Strategies
Providing beauty high-quality beauty and skincare product to all segmentation
Providing high quality service to customers
Aggressive market expansion to global market, from the latest information in the Amore
Website, the Amore Pacific brand will continue to advanced overseas through country-
specific strategy, especialli in Asia they will raise their image brand line such as
Sulwhasoo and AmorePacific. Here is the overseas expansion history until now.
From the case we can not get enough information, so we get the information from the website of
Amore Pacific with the latest update (in 2013), so it might be unrelated for the case which taken in
2006.
Board of Directors
The board of directors is consist of three committee, which all of them are Korean and 5 of them are
outsiders. The committees are :
A. Societal Environment
Political Legal
- Change in regulation (open price system, tariff rates) that Korean Goverment applied(T)
Economics
- The global personal care market was growing faster than global GDP (O)
- More woman joined the workforce (O)
- Possibilities of financial crisis (T)
Sociocultural
- Korean women applied more cosmetic product than Western (O)
- The growth of segmentation in cosmetic product user worldwide (O)
- Korean wave trends, emerging of Korean movies, TV dramas, musician, etc (O)
Technological
- The growth of technology in making beauty product (O)
- Posibility of product imitation (T)
Table of EFAS
A. Corporate Structure
The Amore Pacific have a functional and cross-functional structure in their corporate. The
company also lead by a CEO whos name Suh Kyung-Bae.
B. Corporate Culture
Learn from the best culture. The company not shy about learning from its multinational
competitors.
C. Corporate Resources
1. Marketing
- Have various segment and target market (W)
- Have strong brand image of asian botanicals ingridient product, embracing old
tradition (S)
- Good sales program, such as personal selling (digital door-to-door sales system) (S)
- Market leader and the largest brand in Koreas cosmetic industry (S)
- Low brand awareness in world wide (W)
- Have customer relationship managment (S)
2. Finance (NITA)
- Home Depot net sales is increase year by year (2004 until 2006) (S)
- Huge debt, due to recent acquisition of Hughes Supply (W)
3. R&D
- Have strong R&D team with employed more researchers (S)
- Have thousand domestic and international patents (S)
- Cutting edge technology (S)
4. Operations
- Amore Pacific held domestic selling right, they manufactured all its product itself. (S)
- Emphasis on total cost reduction and total creativity revolution, which they have:
Enterprise Resourcing Planning system, Six Sigma program for TQM and a 10-year IT
outsourcing deal with IBM. (S)
5. Human Resources
- Hiring an international expert talent (such as French Designer, consulting with
European specialist and China consultant) (S)
6. Information System
- Advanced information system to support its growth, reduce and control cost (S)
VII. Strategic Alternatives and Recommended Strategy (lihat contoh hal: 386)
A. Strategic Alternative (ADIT)
Corporate Strategy
Table IFAS
Table EFAS
We get IFAS`s score is 3.025 and EFAS score 3.125 than we can conclude that Amore should do
growth strategy.
EFAS
Stability Growth
(Corporate Strategy)
IFAS
Survival Diversification
In growth strategy there are 2 options we can chose: concentration and diversification. We prefer
choose concentration strategy through horizontal growth. It shows that amore should spread their
market all over the world but Amore still need do market research before they decide which product
is suitable with the target market.
There are some options when they growth to other region, there are: exporting, licensing,
franchising, joint ventures, acquisitions, green-filed development, production sharing, turnkey
operations, Bot concept, and management contracts.
If we see from external factor that there is tight competitor in this business, we suggest Amore to do
acquisition with others company in their target regions, so they can have direct access to their
market, especially in Europe and US that they want to persuit. This way is to protect their product
innovation and have a clear association that Amore never have cooperate with other brand.
AMOREPACIFIC aims to be a Global Top 10 cosmetics company. While tapping on matured and
developed markets such as North America and Western Europe, AMOREPACIFIC is more focusing on
developing countries such as China and other Southeast Asian countries.
To overcome the limitations of the market size and increasing level of competition in the
domestic market and accomplish economies of scale through market expansion with its own line of
competitive products, AMOREPACIFIC, utilizing its number one position in the domestic market, has
been looking to develop overseas market with in its efforts to gain presence and become a successful
international player in a very competitive global cosmetics industry environment.
While the domestic market has been steadily growing due to an increase in the number of
professional business women who have brought about buying power of female customers,
developing market conditions for high-function cosmetic products from the middle-class aging
population, as well as an increasing demand from men for cosmetics products, AMOREPACIFIC has
been facing increasing competition from the domestic competitors and market penetration from
global cosmetics companies. Nevertheless, AMOREPACIFIC has potential to be successful in overseas
market taking into account following advantageous factors:
1. The quality and diversity of products of AMOREPACIFIC has reached the level to be
competitive against global brands in most product lines.
2. Experiences of highly competitive market in Korea enriched the Company with various
competitive marketing strategies.
3. Korea's cultural wave has created friendly demands of Korean beauty products among
customers, especially in Asian market.
2. Financial
4. R&D
Table 5 TOWS Matrix
Strength Weakness
1. Pioneered mass-media advertising in Korea 1. Have various segment and target market
2. Good sales program 2. Low brand awareness in world wide
3. Market leader and the largest brand in Koreas cosmetic
industry
4. Have customer relationship managment
5. Have strong R&D team with employed more researchers
6. Have thousand domestic and international patents
7. Manufactured all its product itself
8. Hiring an international expert talent
9. Advanced technology & information system