Which of AmorePacific`s three principal international targets (France/Europe, China and the United States) seems the most promising?

When the company plans the international expansion, several things should be considered whether the expansion is promising or not. First, the company`s competitive advantage should be considered. For example, if they have the competitive advantage in the local area distributing channel, it`ll be useless to exploit in the global market. Second, the nation`s competitive advantage should be considered. So, if the company wants to expand their market, nation`s research must be done before. This can be explained according to the Porter`s Diamond Model.

                  In the case of the AmorePacific, they have few market shares in the global cosmetic market. But in Korea, they have more than 30% of market shares. The reason they hold 1^st cosmetic company in Korea consisted of two reasons. First, AmorePacific has a well-organized distribution system. For example, “Amore Ladies” to sell its products door-to-door managed greater part of their sale. Also, legitimated-pyramid network channel helped their distribution. Second, AmorePacific makes good skincare, cosmetics along with herb or ginseng based cosmetics. Invest their 2% sales in R&D also facilitates them to innovate more.

                  France, in Porter`s Diamond Model, showed relatively good national competitive advantage, particularly in ‘intensity of rivalry’ and ‘competitiveness of related and supporting industries’. A strong association between vigorous domestic rivalries will let the AmorePacific grow more. Also, the center of cosmetics and knife-edge art environment can help the AmorePacific to innovate more. But France has low local demand conditions compared to China.

China showed really good local demand conditions and factor conditions. Tremendous populations in China will make AmorePacific gain more profit. Also, abundant raw materials and the labors will lower the cost. Also, China becomes more and more severe competitive market because of their tremendous demand conditions. So, it`ll also give the ‘intensity of rivalry’.

The U.S. showed robust demand conditions and good factor conditions. But there are too many rivalries. Because the U.S. is too big, it`ll be too costly for the AmorePacific to build a distribution network channel nor it`ll be impossible to employ the “Amore Ladies”. Compared to china, the U.S. market has few incentives to choose. Also in terms of the ‘competitiveness of related and supporting industries’, France has more advantages than the U.S. because U.S. have more competitive advantage in the manufacturing industry.

So, China seems the most promising market among three nations. Along with their competitive advantage in cosmetics and distribution-network experience, they should exploit the China`s competitive advantage.