AmorePacific Hong Kong: Marketing Korean Beauty Products SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Global Business
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of AmorePacific Hong Kong: Marketing Korean Beauty Products
As the end of 2016 approached, the managing director of AmorePacific Hong Kong (APHK) was setting the media mix and budget for APHK's four makeup and skin care brands: ETUDE HOUSE, LANEIGE, Sulwhasoo, and AMOREPACIFIC. Tourists shopping in Hong Kong from mainland China comprised over half of the company's sales. However, in the face of a declining number of tourists and the shrinking of luxury goods spending, the managing director had to consider the marketing tools in the customer decision journey; competitive positioning; and the distribution of the marketing budget between traditional and digital channels in the upcoming bi-monthly campaigns. She needed to strike an appropriate balance between recruiting new customers and retaining existing customers within APHK's overall strategy for Greater China. Hugh Thomas, Andrew C.F. Chan, Howard Lam, and Andy Wong are affiliated with Chinese University of Hong Kong.
Authors :: Hugh Thomas, Andrew Chan, Howard Lam, Andy Wong
Swot Analysis of "AmorePacific Hong Kong: Marketing Korean Beauty Products" written by Hugh Thomas, Andrew Chan, Howard Lam, Andy Wong includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Amorepacific Aphk's facing as an external strategic factors. Some of the topics covered in AmorePacific Hong Kong: Marketing Korean Beauty Products case study are - Strategic Management Strategies, and Global Business.
Some of the macro environment factors that can be used to understand the AmorePacific Hong Kong: Marketing Korean Beauty Products casestudy better are - – there is increasing trade war between United States & China, competitive advantages are harder to sustain because of technology dispersion, increasing inequality as vast percentage of new income is going to the top 1%, cloud computing is disrupting traditional business models, increasing government debt because of Covid-19 spendings, technology disruption, increasing transportation and logistics costs,
central banks are concerned over increasing inflation, increasing commodity prices, etc
Introduction to SWOT Analysis of AmorePacific Hong Kong: Marketing Korean Beauty Products
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in AmorePacific Hong Kong: Marketing Korean Beauty Products case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Amorepacific Aphk's, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Amorepacific Aphk's operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of AmorePacific Hong Kong: Marketing Korean Beauty Products can be done for the following purposes –
1. Strategic planning using facts provided in AmorePacific Hong Kong: Marketing Korean Beauty Products case study
2. Improving business portfolio management of Amorepacific Aphk's
3. Assessing feasibility of the new initiative in Global Business field.
4. Making a Global Business topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Amorepacific Aphk's
Strengths AmorePacific Hong Kong: Marketing Korean Beauty Products | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Amorepacific Aphk's in AmorePacific Hong Kong: Marketing Korean Beauty Products Harvard Business Review case study are -
Cross disciplinary teams
– Horizontal connected teams at the Amorepacific Aphk's are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Analytics focus
– Amorepacific Aphk's is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Hugh Thomas, Andrew Chan, Howard Lam, Andy Wong can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Low bargaining power of suppliers
– Suppliers of Amorepacific Aphk's in the sector have low bargaining power. AmorePacific Hong Kong: Marketing Korean Beauty Products has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Amorepacific Aphk's to manage not only supply disruptions but also source products at highly competitive prices.
Learning organization
- Amorepacific Aphk's is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Amorepacific Aphk's is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in AmorePacific Hong Kong: Marketing Korean Beauty Products Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Ability to lead change in Global Business field
– Amorepacific Aphk's is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Amorepacific Aphk's in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Innovation driven organization
– Amorepacific Aphk's is one of the most innovative firm in sector. Manager in AmorePacific Hong Kong: Marketing Korean Beauty Products Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Successful track record of launching new products
– Amorepacific Aphk's has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Amorepacific Aphk's has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Strong track record of project management
– Amorepacific Aphk's is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Digital Transformation in Global Business segment
- digital transformation varies from industry to industry. For Amorepacific Aphk's digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Amorepacific Aphk's has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Organizational Resilience of Amorepacific Aphk's
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Amorepacific Aphk's does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Diverse revenue streams
– Amorepacific Aphk's is present in almost all the verticals within the industry. This has provided firm in AmorePacific Hong Kong: Marketing Korean Beauty Products case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Highly skilled collaborators
– Amorepacific Aphk's has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in AmorePacific Hong Kong: Marketing Korean Beauty Products HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Weaknesses AmorePacific Hong Kong: Marketing Korean Beauty Products | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of AmorePacific Hong Kong: Marketing Korean Beauty Products are -
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study AmorePacific Hong Kong: Marketing Korean Beauty Products, it seems that the employees of Amorepacific Aphk's don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
Lack of clear differentiation of Amorepacific Aphk's products
– To increase the profitability and margins on the products, Amorepacific Aphk's needs to provide more differentiated products than what it is currently offering in the marketplace.
Interest costs
– Compare to the competition, Amorepacific Aphk's has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study AmorePacific Hong Kong: Marketing Korean Beauty Products, in the dynamic environment Amorepacific Aphk's has struggled to respond to the nimble upstart competition. Amorepacific Aphk's has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
No frontier risks strategy
– After analyzing the HBR case study AmorePacific Hong Kong: Marketing Korean Beauty Products, it seems that company is thinking about the frontier risks that can impact Global Business strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Capital Spending Reduction
– Even during the low interest decade, Amorepacific Aphk's has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Aligning sales with marketing
– It come across in the case study AmorePacific Hong Kong: Marketing Korean Beauty Products that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case AmorePacific Hong Kong: Marketing Korean Beauty Products can leverage the sales team experience to cultivate customer relationships as Amorepacific Aphk's is planning to shift buying processes online.
Slow decision making process
– As mentioned earlier in the report, Amorepacific Aphk's has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Amorepacific Aphk's even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
Low market penetration in new markets
– Outside its home market of Amorepacific Aphk's, firm in the HBR case study AmorePacific Hong Kong: Marketing Korean Beauty Products needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Amorepacific Aphk's is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study AmorePacific Hong Kong: Marketing Korean Beauty Products can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Increasing silos among functional specialists
– The organizational structure of Amorepacific Aphk's is dominated by functional specialists. It is not different from other players in the Global Business segment. Amorepacific Aphk's needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Amorepacific Aphk's to focus more on services rather than just following the product oriented approach.
Opportunities AmorePacific Hong Kong: Marketing Korean Beauty Products | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study AmorePacific Hong Kong: Marketing Korean Beauty Products are -
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Global Business industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Amorepacific Aphk's can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Amorepacific Aphk's can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Amorepacific Aphk's can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, AmorePacific Hong Kong: Marketing Korean Beauty Products, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Amorepacific Aphk's is facing challenges because of the dominance of functional experts in the organization. AmorePacific Hong Kong: Marketing Korean Beauty Products case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Amorepacific Aphk's in the consumer business. Now Amorepacific Aphk's can target international markets with far fewer capital restrictions requirements than the existing system.
Better consumer reach
– The expansion of the 5G network will help Amorepacific Aphk's to increase its market reach. Amorepacific Aphk's will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Amorepacific Aphk's can use these opportunities to build new business models that can help the communities that Amorepacific Aphk's operates in. Secondly it can use opportunities from government spending in Global Business sector.
Manufacturing automation
– Amorepacific Aphk's can use the latest technology developments to improve its manufacturing and designing process in Global Business segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Leveraging digital technologies
– Amorepacific Aphk's can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Amorepacific Aphk's can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Learning at scale
– Online learning technologies has now opened space for Amorepacific Aphk's to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Amorepacific Aphk's to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Amorepacific Aphk's to hire the very best people irrespective of their geographical location.
Developing new processes and practices
– Amorepacific Aphk's can develop new processes and procedures in Global Business industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Loyalty marketing
– Amorepacific Aphk's has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Threats AmorePacific Hong Kong: Marketing Korean Beauty Products External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study AmorePacific Hong Kong: Marketing Korean Beauty Products are -
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Amorepacific Aphk's.
Easy access to finance
– Easy access to finance in Global Business field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Amorepacific Aphk's can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Environmental challenges
– Amorepacific Aphk's needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Amorepacific Aphk's can take advantage of this fund but it will also bring new competitors in the Global Business industry.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Amorepacific Aphk's with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Amorepacific Aphk's needs to understand the core reasons impacting the Global Business industry. This will help it in building a better workplace.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Amorepacific Aphk's can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study AmorePacific Hong Kong: Marketing Korean Beauty Products .
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Amorepacific Aphk's will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
High dependence on third party suppliers
– Amorepacific Aphk's high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Amorepacific Aphk's business can come under increasing regulations regarding data privacy, data security, etc.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Amorepacific Aphk's in the Global Business sector and impact the bottomline of the organization.
Stagnating economy with rate increase
– Amorepacific Aphk's can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Consumer confidence and its impact on Amorepacific Aphk's demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Amorepacific Aphk's in the Global Business industry. The Global Business industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Weighted SWOT Analysis of AmorePacific Hong Kong: Marketing Korean Beauty Products Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study AmorePacific Hong Kong: Marketing Korean Beauty Products needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study AmorePacific Hong Kong: Marketing Korean Beauty Products is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study AmorePacific Hong Kong: Marketing Korean Beauty Products is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of AmorePacific Hong Kong: Marketing Korean Beauty Products is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Amorepacific Aphk's needs to make to build a sustainable competitive advantage.
