Economics of Globalization: Capilano's Expansion to France or South Korea

For Capilano Honey Limited, the decision to expand to either France or South Korea depends on the economic, political and business environments in these countries. This article analyzes these factors and concludes that France offers a more stable and extensive market for the company to invest in.

Running head: ECONOMICS OF GLOBALIZATION 1
Economics of globalization
Name
Institution

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Economics of globalization
The sensation of globalization is having a high impact on the food systems in global
trade. Forces exhibited by globalization, for instance, capital flow, urbanization, and trade
liberalization have not only transformed the nature of food systems by increasing affordability,
diversity and accessibility of food but also has changed its quality and nutritional value. Honey is
the most preferred natural sweetener is contributing billions of dollars each year to the global
trade. Owing to the diverse use of its productions, the universal consumption of honey is so
enormous that supply can hardly cope with demand. This occurrence has lured many
entrepreneurs into the business promising and lucrative margins. The phenomenon of open
economies across the world has mostly curtailed honey business operations which warrants an
analysis of the marketing setting in any particular country before launch. As for Capilano, the
market leader of honey business in Australia, the strategic decision on whether to expand to
either France or South Korea can only be made by studying the economic, political and business
environments in this area.
The economic environment is mainly constituted by external (macroeconomic) factors
that affect the buying habits of households and businesses, such as employment, income, interest
rates, inflation, wealth and productivity. Regarding economic freedom score, France has been
scored at 63.8, making its economy the 71st open in the 2018 Index (Europium Commission,
2018). Its overall score has improved by 0.6 points, with enhancements in the ratings for fiscal
health, investment liberty, and business freedom overshadowing reduction in property rights and
government integrity. France’s key economic policy challenges are to lower the stubbornly high

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unemployment rates, increase economic growth, improve public finances and bolster
competitiveness. On the other side, the economic freedom score of South Korea’s is 73.8,
making its economy the 27th open in the 2018 Index. Its overall rating has reduced by 0.5 points,
with a steep deterioration for the government integrity indicator overshadowing an improvement
in investment liberty (the Heritage Foundation., 2018). South Korea is placed 7th out of43 states
in the Asia–Pacific region. Additionally, the new South Korean government has embraced an
ambitious demand-driven economic policy agenda that stresses income-led growth and populist
spending through measures targeted at improving debt burdens for consumers, increasing the
minimum wage and raising taxes on the wealthiest and corporations.
Political environment entails government actions which influence the operations of a
business or a company. These activities may be on the domestic, regional, or international level.
Regarding political setting, France offers a moderately stable business setting to businesses
compared to South Korea. In connection with this, the GDP output of France is the 5th biggest in
the world, implying that France is a large consumption zone in itself (Startin, 2013). According
to the Heritage Foundation (2018), France is a top political force in the European Union and a
major international actor, a lasting affiliate of the UN Security Council. After the deliberate
economic stabilization (2017-2018), a stronger economic development might be predictable in
the country, further inspiring foreign direct investment inflows. South Korea on the other side is
not that stable. Since 2012, the economic growth of South Korea has been somewhat stagnant
because of both cyclical impacts and a steady weakening in the growth potential of the country
(EIU Digital Solutions, 2018). In 2017, economic constraints were emphasized by a worsening

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relation with China, the country's principal trading partner. Following the North Korean nuclear
launch, South Korea approved the deployment of the USA anti-missile system on its territory, to
the great dismay of Beijing (EIU Digital Solutions, 2018). Additionally, the concession by the
National Assembly to impeach the President, Park Geun-Hye, due to corruption dealings, power
abuse and breach of constitutional obligations caused a political obstruction with strong
economic effects.
The business environment includes all of the external and internal features that influence
how a business operates including the location of the business management, employees,
customers, business regulations and demand and supply. In terms of business environment,
France is one of the most current and highly-advanced states in the world, with one of the
leading economies, and is a groundbreaker among European countries. The geographical
location of France offers the country great communications network crossroads for the European
Union (Startin, 2013). The French coastline provides access by sea to America, Africa, and
Northern Europe through the Atlantic Ocean, the Mediterranean and the North Sea, which are
amongst busiest waterways in the world. Besides. France has one of the largest populations; in
the EU in 2013 it was in excess of 65 million people which a good client base for business.
On the other hand, South Korea is a peninsula extending southward from Manchuria.
China and Japan have annexed the Korean Peninsula on different occasions owing to its
geographical size and position relative to these countries (the Heritage Foundation., 2018). Also,
the country experiences structural problems, for example, an aging population weak financial

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market, overdependence on exports and declining competitiveness as Chinese production move
up-market.
Judging from the issues above relative two these two countries that is France and Korea
and from a personal perspective, Capilano Honey Limited should, by all means, consider
expanding to France instead to South Korea. This is supported by the availability of ready market
with France have a larger population than South Korea’s. Besides, France offers an extensive
market for products as it borders six more developed countries that are Luxembourg and
Belgium, the north; Switzerland and Germany to the east; Spain to the south-west and Italy to the
south-east. Besides, the political tension in France is relatively stable which implies that the risks
that are mostly associated with political unrests and mass actions are massively reduced. In
contrast, South Korea is not stable with increased tension mostly emanating from its northern
counterpart due to nuclear weapon warheads test. Further, South Korea has been experiencing
deteriorating relations with its neighbors including Japan and China. All these issues favor
France as the best place for Capilano Honey Limited to invest than South Korea as they would
curtail the success of the business owing to the poor business setting.
In conclusion, the global honey trade is as an important as the honey industry in Australia
as it earns the economy millions of dollars every year. Like many other industries, the honey
industry experience many challenges such as accessing native flora and competition in both
domestic and export markets. Thus, Capilano Honey Company Limited ought to sustain its
comparative advantage and competitiveness as a seller of high-quality honey by ensuring while
at the same time keeping operations costs at the lowest possible levels. In addition, due to the

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volatility of markets owing to increasingly global activities, it is essential for Capilano Honey
Company Limited to invest expand to regions that offer conducive business settings to thrive in
the market owing to reduced risks of political, economic and business environments fluctuations.

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References
EIU Digital Solutions. (2018, September 11). South Korea Economy, Politics and GDP Growth
Summary - The Economist Intelligence Unit. Retrieved from
http://country.eiu.com/South%20Korea
Europium Commission. (2018). France. Retrieved from http://businessculture.org/western-
europe/business-culture-in-france/
The Heritage Foundation. (2018). South Korea Economy: Population, GDP, Inflation, Business,
Trade, FDI, Corruption. Retrieved from
https://www.heritage.org/index/country/southkorea
The Heritage Foundation. (2018). France Economy: Facts, Population, GDP, Unemployment,
Business, Trade. Retrieved from https://www.heritage.org/index/country/france
Startin, N. (2013). France. European Journal of Political Research Political Data
Yearbook, 52(1), 70-82. doi:10.1111/2047-8852.12010