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- Number of Words: 3500
Case Study: “What Makes Korres a Greek Pioneer in Natural Cosmetics?”
The phones at Korres SA’s headquarters in a northern Athens suburb often ring with requests from foreign hedge funds seeking an appointment. Some of those funds are looking into the possibility of a direct investment.
With a presence in 30 countries, growth in the double digits and a gross profit margin close to 65 percent, the Greek firm that produces and distributes natural cosmetics is regarded as holding great promise worldwide. This is especially so now, when sales in No. America is expected to accelerate thanks to a restructuring of the distribution network and the collaboration with Avon in Brazil. The opinion that the company has completed a successful restructuring and is poised to show sustainable robust growth is starting to prevail in the market. The company’s main shareholder’ attention is firmly on research and development for new innovative products based on natural ingredients, advanced packaging design and further expansion abroad.
This is, after all, the successful mix that has allowed Korres SA, despite the crisis, to reduce borrowing, improve inflows and profit margins, rationalize its financial figures and attract fresh talent, leading to a burst in exports fists 15-20 percent a few years ago to 45 percent today, along with an increase in turnover from 39 million euros in 2013 to 54.5 million euros in 2016. In the first half of this year. Turnover exceeded 30 million euros. Borrowing is at 34.8 million euros and after the cash availability is deducted, net borrowing amounts to 24.4 million euros.
These results arise from a slight uptick in sales in Greece in HI but mainly from a much more significant rise in strategic foreign markets. Sales in Greece rose 1 percent, but in Germany, Norway, the UIC and France, they shot up 32 percent. In the US, meanwhile, the main distribution channels —like Sephora, Sephora inside JCPenney and korresusa.com — also saw sales grow. Why then did group US sales come to 30.1 million euros in HI this year compared to 31 million euros in the same period of 2016?
This is explained by changes at the Home Shopping Network, one of the channels distributing Korres products, but the Greek company’s management tells Kathimerini that HSN has already completed its own restructuring plan and the Korres team has already speeded up sales, with positive results expected to start showing more clearly after the second half of this year. Sales are also doing well in Canada, where Korres has started working with a new independent distributor, and in South America, where it works with Avon.
The value of natural personal care products that are sold only in pharmacies, meanwhile, comes to 60 million euros, with an annual growth rate of 15-20 percent, DK Consultants estimates. The sector, however, has not been impervious to the crisis, prompting Greek companies to increase exports. This outward-looking mind-set has been spearheaded by market leaders, Korres and Apivita in particular, with new firms following their lead and aiming abroad from the get-go. The establishments of some particularly dynamic Greek export groups, in combination with the recognizability of Greek natural ingredients, have attracted the attention of giants in the sector and investment funds that see significant promise in their activities.
The existence of highly skilled scientists and researchers in the sector, as well as the significant expenditure made by leading Greek companies in research and development for new products and innovation across the board, including packaging, provide the Greek natural cosmetics industry with yet another competitive advantage, experts say.
Questions
Question 1:
Based on the information provided in the text above, briefly describe the main characteristics that make Korres a pioneer in natural cosmetics.
Question 2:
2A Based on the information provided in the text, how would you define the corporate strategy that is formulated by Korres and why?
2B Critically analyze, the purpose of the corporate strategy you identified and propose alternatives that may interest the organization.
Question 3:
The role of human resources in Korres’ success might be critical.
3A Based on what you taught during this module, critically analyze the role of human resources in formulating successful strategies.
3B How could Korres manage the performance of employees so they can contribute to organizational outcomes?
Question 4:
Considering the organization’s external environment, propose an appropriate tool that will enable Korres to analyze its external environment and justify your proposal based on the advantages and disadvantages of the tool.
