Comparison of Competitiveness of LOréal and Amore Pacific – An approach by the Generalized Double Diamond model

Abstract

Traditionally French companies have been strong in cosmetics industry. But in recent years Korean companies have emerged in the industry with Korean wave (hallyu) boom in Asia and beyond. According to the Womens Wear Daily (WWD) who published worlds 100 beauty companies for 2016, LOréal was the worlds number one company in the industry while Amore Pacific, a Korean national champion, entered for the first time as number seven in the Top 10 list. Does this mean that Amore Pacific is competitive enough as the global multinational company like LOréal to establish its own legacy and long term strong hold in the market? This study is designed to analyze the competitiveness of the worlds leading company LOréal thoroughly and compare with that of Amore Pacific, the Korean champion company. In order to analyze the competitiveness at firm level, we followed the Generalized Double Diamond model as a comprehensive and balanced framework, proven to be most effective to incorporate multinational activities to Porters Diamond Model. The study allows us to visualize the competitiveness of each firm. Based on this study, LOréal is indeed internationally competitive but Amore Pacific still remained as domestically competitive. It suggests for Amore Pacific to expand outside of Asia and to invest more in R&D so that Related and Supporting Industries can grow further. And it also emphasized the importance of increasing brand awareness as a part of Demand Conditions strengthening. This study intends to contribute to shaping the two cosmetics companies future strategy by attempting to draw a whole picture of each firms competitiveness.