International Business: Market Value of Australian Beef in Korean Markets

The essay examines the aspects that have made Korea the third most valued market for beef export for Australia and the largest per capita consumer of beef in the East. The paper follows the analysis of PEST and SWOT to determine the market value of Australian beef in Korean markets and the reasons that make Korea a valuable marketplace for Australian beef export.

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International Business
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Introduction
The past few decades have witnessed the meticulous growth of Korea as a massive
market for Australian beef, an outcome of trade liberalization, resulting to KAFTA. As of 2016,
Korea is one of the best performing markets for Australian beef although it has a tough
competition with the US. The essay examines the aspects that have made Korea the third most
valued market (Ryan and Cheetham 2017) for beef export for Australia and the largest per capita
consumer of beef in the East. The paper follows the analysis of PEST and SWOT to determine
the market value of Australian beef in Korean arkets and the reasons that make Korea a valuable
marketplace for Australian beef export. Pest analysis:
Based on the trade agreements between Korea and Australia, a PEST analysis was
conducted for determining the market value of Australian beef in Korea. The findings are as
follows:
Political factors: The business climate of South Korea is quite favorable, ranking the
country in the fifth position out of 180 economies of the ease of World Bank in business gauge.
The Australian exporters have acquired unprecedented liberties for accessing the international
markets due to the increasing demand for Australian beef and the free trade agreement signings
which is highly favorable for beef exporters. The FTA, which is functioning in full flow between
South Korea and Australia, has opened up further opportunities for agronomic exports to Asian
countries, the most profitable of which is beef (Hunt et al 2015). The reduction in tariff on the
beef market of South Korea for Australian exporters is a benefit that lowers investment and
maximizes profit (MacLeod 2015). Australia is therefore in a politically privileged position when

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it comes to exporting beef to Korea. The laws of the country (Korea) is lenient about trade with
Australia.
Economic factors: Korea has emerged as the fourth largest in Asia and the fifteenth
largest in the world following a significant economic growth over the past four decades.
Growing GDP of Korea has liberalized market which has contributed to a hike in meat
consumption since the late 90s. With the evolution of population and economy, meat
consumption has also increased (Murphy et al 2015). The growth in beef consumption is
accommodated both by imports and bigger domestic production (Lee et al 2013). It must also be
asserted that the Korean consumer base had a pre-existing preference for meat (beef in
particular) and the trade agreements between the nations further shifted the preference pattern of
beef towards Australian exports. The brand image of Australia is comparatively stronger than
that of any other country since their campaigns appeal to Korean consumers more (Allen et al
2014). Further, the quality of product offered at the prices by Australian exporters make them
more desirable for the crowd of developing Korea.
Social factors- The increasing GDP in Korea has leveraged meat consumption, especially
that of red meat. Moreover, Korea has perennially been an omnivorous culture, very few of their
dishes exclude meat. The superior quality and comparatively cheap Australian beef is high in
demand for the Korean consumers (Miranda et al 2014). Unlike many countries that are
developing in terms of environmental and ethical consciousness, Korea’s culture is a far cry from
vegetarianism and the meaty platters the people prefer is a boon to the Australian exporters as
this is one country that is least likely to ban beef or any meat for that matter. The culture and
society of Korea makes it a highly profitable market for beef (Wiedemann et al 2016).

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Technical factors: The meat industry of Australia is reported to take proper regard of
issues concerning sanitation and health. The system of production begins at naturally grown
pastures, which is the sole source of cattle sustenance for many farmers and are known to be
more resilient than artificially grown vegetation. The decision of targeting the cattle breed at
particular markets lies with the farmers. Angus is the most popular breed in the Korean market,
following Charaolais and Brahman. The formulated diet with which these cattle are fed make
them suitable for consumption and highly preferable for the Korean palate (Grant et al 2015).
Figure:1 (Agric.wa.gov.au. 2018)
The graph charts the beef exports of Australia to international markets, Korea has been a
steady marketplace for Australian beef since 2006.
SWOT analysis:
The production and prospects of the Australian beef industry in Korea can be determined
by a SWOT analysis:
Strengths: The production methods of the beef industry of Australia is highly efficient
since producers have made investments of significant amounts for improving productivity (Kahn
and Cottle 2014). The areas of investments include marketing, genetics and pastures. The ‘clean-

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green’ image of the industry is another major strength that qualifies the products and completely
disease-free, appealing even to health conscious consumers. As evident from the PEST analysis,
Australia is a major exporter of beef to Korean markets, which strengthens the preference pattern
of consumers. Moreover, Koreans are hardcore meat-eaters and value quality of food intensely,
since the meat exporters of Australia take special care of maintaining the quality of beef the
market value of Australian beef in Korea is remarkable and has very less potential rivals.
Weaknesses: The major weakness causing hindrance to Australia’s business is the
commodity market of Korea which centers on economic sector. This volatile, global market is
not favorable for Australian traders since the consumers may switch to better alternatives. The
processing capacity of Australian production is concentrated (Ding et al 2014), which might
cause deficit in bulk production. Deficit in production during festive seasons when the demand is
usually high, can mean great loss to the industry. Australia experiences climatic variability,
which can affect cattle rearing, and subsequent meat production. The dependency on climatic
factors for production weakens the industry development.
Opportunities: The opportunities of growth and development of the Australian beef
industry in the Korean market are plenty. The rising demand of beef in Asian market is an
excellent opportunity for meat industries like Australia to expand their business and evolve as
large-scale exporters (Lee, Han and Nayga 2014). The huge profit made by beef industries could
help them to attain greater and more advanced efficiencies (Hunt et al 2013). The production
process can be improved and the industry can adopt ethical ways of rearing the animals. The risk
of production can be managed better for higher profits and greater efficiency. As the growing
state of beef consumption and exports are two major strength for the beef industries in Australia,

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they can make provision for new possibilities wherein the industry can capitalize the
opportunities accessible to it (Hocquette et al 2014).
Threats: Despite the rapid pace with which the industry has been growing since the trade
agreement, some of the threats remain indispensable. No matter the vaccines and the clean-green
campaigns, the cattle is still not free of diseases. Growing awareness among the crowd about
health issues of beef consumption is a potential threat to the Australian beef industry
(Wiedemann et al 2015). The industry relies on limited number of exporters which can impose
serious challenges on the sector. Some trade laws of the Australian government can be another
source of threat for exporters, considering that back in 2011, the government of Australia had
suspended cattle exports or any trade relating to meat and livestock with Indonesia. The input
prices of producing meat can rise to sky-high prices and the producers may not be able to invest
huge amounts on production (Sun and Bosch 2014).
Figure:2 (Agric.wa.gov.au. 2018) Depicts how beef export have expanded most in 2016, with a
temporary fall in year 2012 and 2013.

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Conclusion
The environmental and SWOT analysis of the topic indicates the immense profitability of
Australian beef in Korean markets. The market might be confronted with hindrances and threats
like new government regulations and cattle diseases, but the brand value of Australian products
and the trade agreements weigh out the threats and make Korea a valuable marketplace for
Australian beef. The only recommendation would be to ensure that the cattle is raised in ethical
conditions and are disease-free. This can be done with the help of proper vaccination and
sanitary surrounding for the cattle.
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