Exploring the Culture and Economy of South Korea

The article 'How Westernized is Korea?' by Seoulistic explores the level of westernization in South Korean culture, society, and economy. It highlights the country's efforts to modernize and globalize, citing statistics on trade, education, and technology. The article also touches on traditional aspects of Korean culture, such as arts and etiquette, and notes the significant influence of Western culture on contemporary Korean society.

International Marketing 1
Second Cup in South Korea
Table of Contents
1- Executive Summary:
2
2-Overview of the firm marketing the product
2
2.1 History:
2
2.3 Growth:
3
2.4 Description of Resources:
4
2.5 Market Position:
4
2.6 Missions, Vision, and Goals:
5
2.7 Second Cup Products & Services:
5
2.8 Second Cup Coffee Company in South Korea
6
3. Cultural Environment of South Korea
7

3.1 Introduction:
7
3.2 History:
7
3.3 Geographical setting:
8
3.4 Family:
8
3.5 Education:
9
3.6 Social Setup:
9
3.8 Business customs and practices:
10
3.9 Aesthetics:
10
3.10 Sports:
11
3.11 Living conditions:
11
3.12 Language and communication style:
12
3.13 Strategic implication of this factor on the company/product chosen
12
2

4. Second Cup Café in South Korea: Economic and Technological Environment
13
4.1 Introduction
13
4.2 The Demographics of the Republic of South Korea
13
4.3 The Economic Characteristics of South Korea
14
4.4 The Mineral and Natural Resource Endowment of South Korea
15
4.5 Science and Technology in South Korea
16
4.6 Transport and Communication in South Korea.
16
4.7 Working conditions in South Korea
17
4.8 Principal Industries in South Korea, Investment Opportunities, and International Trade 17
4.9 Channels of Distribution and Advertising Media in South Korea
17
4.10 Implications on the Business
18
5. Legal and political aspects
18
3

5.1 Political setup – structure
18
5.2 Legal systems
18
5.3 Commercial laws
19
5.4 Memberships in regional groupings
20
5.5 Strategic implication of this factor on the company/product chosen
20
Appendixes
21
References
23
1- Executive Summary:
This paper will analyze and examine the South Korean market with different aspects. We will study
the opportunity of Second Cup to enter the South Korean market. We will discuss in our paper the cultural
environment, economic environment, and the political environment. Also, We will be providing
implications strategies to Second Cup depend on the factors we examined.
Looking to the current market status of Second Cup, we found that the company has reached the
global stage and provide its service in 22 countries. And, the mission of the company is to become leading
in the coffee product all across the world. So, that will enhance the company's ability to enter the South
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Korean market. Also, the global experience that Second Cup has would facilitate their entrance into the
market.
Moreover, We have studied the South Korean cultural and we have found that there is an
opportunity to our products to be sold there. There are some cultural similarities between the consumer
behavior in South Korea and Canada. And, language as a second language would facilitate our mission to
adopt the South Korean culture.
In South Korea, The GDP per capita is $27,222. And, that reflect how South Korea's citizens enjoys
a good standard of living. And according to our research, we found that South Korea is considered the high-
income economy. Moreover, the advanced technology and transportations in South Korea will assist us to
promote our services.
The Republic of South Korea enjoys the stability in its political environment. The government is
friendly and welcoming FDI. Also, South Korea is a member of the WTO and the regimes on FDI are clear
the politics risks are small. However, We have found an opportunity for Second Cup to receive proper
treatment from the host country South Korea.
2-Overview of the firm marketing the product
2.1 History:
Second Cup is the most famous Coffee company in the Canada. It has been doing this business for
thirty-five years. The company was established by the Tom Culligan and Frank O'Dea in 1975. The
company has been created in the capital of Canada which is Toronto. Currently, the headquarter of the
company is in Mississauga, Ontario, Canada. The partnership of both these founders did not last long as
then, after few year Culligan was able to purchase all the O'Dea shares and become the sole owner of the
company. He gave the rise of the business of the company and established the chain of stores in the Canada.
The company under the ownership of the Culligan progress and reached 150-stores, He eventually
sold it to the Michael Bregman. Michael Bregman was not able to hold the business for long, and after just
five years he sold it to the Khalil Al-Gawad. He took the company to the public as a Chairman of the
company twice in history. Once in 1933 and then in 2002. It shows the twist and turns in the company
ownership of the Second Cup. However, this does not end here as then the company was sold to the Cara
5

operations limited. Currently, the company is split into two parts. One is the Canadian part which is known
as the Second Cup limited.
The another part is the Second Cup Coffee limited as this one works at international level.
Therefore, now there are two owners of this company. Stacy Mowbray leads the company which is in
Canada and controls the local market. While Jim Ragas leads the company to invest internationally and it
was working efficiently good the company. Currently, the CEO 7 President of the Second Cup Limited
since 2014 is Alix Box. The company is now progressing with the constant pace, but they have faced many
challenges in the past which are both economic and organizational challenges.
2.3 Growth:
Currently, the company has more than 345 stores all across the country and at international level.
The company is serving in 37 regions and 22 countries. There are many international stores of the Second
cup like in UK, USA, Egypt and many other nations. The first branch of the company was opened in
August of 1975. The company was working as small stores in the shopping mall of Canada, and the reason
to choose Kisok shopping mall was that it has more customer attraction than other malls in the city. The
Very first-day company was able to sell six blends of coffee beans. Although, it was the small start yet
impressive for the enterprise.
The company within a decade progress rapidly and until the late 1980's company was growing.
The chain stores were developed all across the country, and by 1989, approximately 130 cafes were under
the banner of Second Cup. Not only this the company open stores in the Shopping malls and Office Towers
to attract the market segment. The company broke into the new market in Quebec in 1990's. It was the new
and significant step of the business. They started growing rapidly and finally in 2003 company stepped into
the international market. After that group start progressing rapidly all across the world. There are many
challenges this company faced during its way to the International. (Second Cup, 2016)
The biggest problem that this group encounters is the leadership. The direction of the business
changed over time which causes the negative impact on the company performance. The progress becomes
slow when the management of the company changed. The second challenge is the terrorist attack. When the
company open stores in the Montreal the three stores of the company were attacked by the terrorist. The
6

reason behind the assault was the name "Second Cup" of the enterprise. After this incident company
reputation had decreased but they were able to gain the market segment again. (Roger, 2016)
Competitors like Starbucks also give the tough time to the enterprise. The company tried to
explore new market segment. They went in different countries where Starbucks is not yet present.
2.4 Description of Resources:
Second Cup company has started making progress at international level again after the economic
crisis of 2008. Last year the company lost was massive as compared to the loss in 2015. According to the
financial statement of the enterprise. In 2014 the net Loss of the company was $27,032,000 but in 2015 it is
$1,153,000. It shows that company is currently progressing and the company assets at the end of 2015 were
of $46,485,000. The company is now generating revenue through the stores and the franchises. The core
business of the company is the Coffee products, and they have competitors in this business. The major
competitor of the company is Starbucks. The market capital of the company is $30.28 million. The maker
share value of the company is $2.36. (Audit, 2016)
2.5 Market Position:
The current market served by the Second Cup involves the 37 regions of this world. They have
explored new market segments which are now covering almost all part of the world. Company futures plan
clearly shows that they are going to launch ten new international stores to reduce the loss of the company
and generate more revenue. The company has franchise partners in more than 11 countries. (Audit, 2016)
The major competitors of the company involve the Starbucks & Tim Hortons. These are two major
competitors of the company due to which company is struggling to take control of the international market.
While on the other hand company is currently exploring new market segments which are not yet explored
by its competitors.
2.6 Missions, Vision, and Goals:
7

The leadership of the company is motivated, and they have the clear vision in front of them. Now
company vision is to become the leading Premium Café brand. The company business is not just bound to
the coffee products beside they have stepped into many other firms. Due to which they want to become the
leading brand of Cafe all across the world. The mission of the company is loud and definite as they want to
grow continuously at the right pace. Second Cup believes in the innovation, and they have brought
innovation in the Coffee business. They are now planning to open new international stores. For that
purpose, they are looking forward to creating and develop new ideas. The company is known best for the
handpicked coffee beans this is the specialty of the enterprise.
The company went global and now serving worldwide. The franchise of the company is also
committed to the enterprise policy. They are bound to produce the high-quality product with excellent
service every day. The second cup does not compromise on the company reputation and customer
satisfaction. Due to this reason business reputation is quite good in the international market. However, it is
not that good like Starbucks due to some other reasons. They are one of the longest coffee retailers in the
history, so they have to protect their precious heritage. To do so, they are working hard to provide fresh and
delicious coffee to thousands of people each day.
Second Cup has to maintain their company on the top in the international market, and for that, they
always required highly skilled workforce. That is why the focus of the company management is not just
only on the qualification of the people but also they want to experience and high-level skills. The reason
behind is that company is serving in all regions of worlds, so they have to make sure that every employee
they hire can handle the challenging task that they give to them.
2.7 Second Cup Products & Services:
This company is famously known for its Coffee Products. The major items of the Coffee are listed
below which are available at Second Cup stores:
Caramelo, Espresso Forte, French Vanilla, Hazelnut Cream, Paradiso Dark, Americano, Café Latte
and Cappuccino
Above mentioned are the most popular beverages sold by Second Cup and they are producing
many more drinks. However, the Company stores do not only sell the drinks and beverages as they offer the
8

Snack, Pastries, and Pre-Packed food items. Company hot and cold sandwiches are also very famous among
people. (David, 2016)
The second cup provides services like Home Delivery and Take Away. To find the Second Cup
Café in the city. There is an app developed by the company through which the person can quickly locate the
Second Cup Café in the town. This app also allows the customer to choose the product and set the order for
the company. The company gives the home delivery to almost every part of the city.
2.8 Second Cup Coffee Company in South Korea
Second Cup should open the store in the South Korean market as this can increase the productivity
of the company. It can help the company to generate some new flavor of Coffee according to the culture of
the South Korea. Market segment of the company is until now limited but with the opening of a store in
South Korea, the market segments can increase. Diversity factors play a major role in the market
development of the company. If the company store in one country is in crisis than the stores in South Korea
can help the company to stand again and recover the losses. Second Cup will have the greater access to the
talented people for their businesses in South Korea. They can hire the best people for the store and get the
best out of them. South Korea is full of resources this is also the benefit to the company. The company has
access to more resources and supplies in the country.
The competition in the South Korea is increasing in the coffee business but as the brand awareness
of Second Cup is already developed. Due to which it will be easy for the Second Cup to attract the audience
in the South Korea. The product quality and creative design can help the company to gain the strong market
position in the South Korea.
The future of the coffee is bright as this business is not going to slow down in South Korea
however the company has to work hard to make its ground. The major advantage to the enterprise is that
they will be able to occupy the Asian region of the world. Second Cup can explore from South Korea to
various other countries. The impact will be positive in the company with the store opening in the South
Korea. Brand awareness will increase and at the same market value of the company will increase. The
stores can help the business to build the best reputation for the future, and it can lead many other great
opportunities for the enterprise.
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3. Cultural Environment of South Korea
3.1 Introduction:
The Republic of South Korea has a sensitive culture that it has its norms, values and
characterizes. Like most others Asian country, South Korean culture’s has scored less in individualism
index, high in power distance index and high in uncertainty avoidance index (Cateora, Gilly, & Graham,
2013, p. 111). We realize that the use of “we” instead of “I” in South Korea culture is common. The
collectivist orientation has influenced the management style in South Korea that the decision process
considers being group decision making.
Moreover, the central social institutions in South Korea are family and school. The relationship
between parents and children consider being strong. Education in South Korea is an important factor to the
economy and culture. In recent years, the South Korean young generation has influenced by western
cultures in many aspects such as clothes, food, and music (Kim, 2015). On the other hand, older generation
adheres to traditions (Katz, 2007).
The primary language in South Korea is Korean, and the most common dialect used in South
Korea called Hangeul. Korean includes 24 letters and 27 digraphs. English classifies as the second largest
used language in South Korea.
There is a broad range of different religions in South Korea. The government and the Korean
constitution support freedom of beliefs and religions. Most of the people in South Korea do not follow any
religion or believe. The Christianity and Buddhism are two common religions in South Korea.
Some of the business customs in South Korea are cultural imperatives, such as avoid raising
your voice or cause a loss of face (Katz, 2007). On the other hand, like most other nationalism cultures,
there are some exclusive cultural customs such as negative comments on the Korean history.
3.2 History:
10

In the early time, Korea was running by three kingdoms through different periods. The name of
Korea has delivered from “Goguryeo,” one of the kingdoms. From 1910 until 1945, Japan was ruling Korea
and was consider it to be part of Japan, In November 1943, at the Cairo conference; all parties have agreed
that Korea has a right to independent. In 1948, the Republic of South Korea was proclaimed (BBC, 2016).
In 1950, The North Korea invaded South Korea and started the Korean War. The war ended in 1953, and
more than 2.5 people were killed (BBC, 2016). Despite the fact that South Korea has passed in many wars,
the country has learned how to create a shift toward self-reliance and became one of the largest economies
in the Asian region.
3.3 Geographical setting:
The Republic of South Korea located in the northeast Asia. It is sharing the north border with
North Korea, and the sea borders the rest three sides. This location provides an advantage to South Korea in
logistics and international trade where shipments can reach from three different sides. The total land of
South Korea is 100,033 square km (Visit Korea, 2016) that does not include islands. The largest Island is
Jeju-do that has a landmass of 1,825 sq km. Also, South Korea has many rivers with different lengths;
Nakdong is the longest river in South Korea that flows over 521 km.
There are different sizes of cities in South Korea. Seoul is the capital city of and located in the
northwest of the country. It considers being the city of business in South Korea. Then, Busan it comes after,
it is located in the southeast of the country map, and it is the second largest city after Seoul.
The climate in South Korea is regularly comparing to Asian countries. The country enjoys the four
seasons during the year. The winter season is typically long and cold; on the other hand, the summer is
short and hot. Temperatures vary from city to city. For example, on the north side such as Seoul, the
temperature in January is -5 and 22.5 in July while on the south shore of Jeju Island, the temperature in
winter is 2.5 and 25 in summer (Visit Korea, 2016). The country has a right amount of rainfall during the
year. The yearly rainfall is around 1,000 millimeters that give an opportunity to the state to maintain
improvement in the agriculture sector.
3.4 Family:
11

The family is one of the primary social institutions in South Korea. Like many Asian cultures,
People in South Korea have obligations toward their family. The parents’ role is to raise children and be
responsible for their expenses and education. The men are accountable for the financial side, and women
are responsible for the house and kids. Also, involving in most decisions of the children such as marriage.
In return to that, kids are treating their parents with respect all the time and taking care of them when they
get older (Asia Society, 2016).
Despite the fact that Korean well- structured family is important to the society, today many
changes have happened to the family’s structure in the major cities in South Korea. Adults have started to
live independently from their parents, and children have the freedom to decide and choose their future
partner without parent’s permission (Asia Society, 2016).
However, most families from generation X are still maintaining the traditional structure of the
household. Disintegrations of the family’s structure are common in the couple or families from generation
y. Furthermore, the role of the women in South Korea has improved, and women enjoy the same advantages
of men in society (Asia Society, 2016).
3.5 Education:
Education is a primary tool to the economy development in South Korea. The government
encourages and subsidizes the school system by providing funds to both public and private school (NCEE,
2015). Elementary schools are free; high schools are free, but they charge a small amount of fees to
supplement the government support. According to the final results of the Program for International Student
Assessment (PISA) in 2009, South Korean students have ranked fourth in math and sixth in science (Clark,
2013). In 2008, the literacy rate in adults was over 97% (UNESCO, 2008).
There are 222 universities in South Korea (38 of them in Seoul) and 3.3-million university
students. The government is planning to build 100 new universities by 2040. In addition to that, there are
126,000 South Korean students studying abroad between U.S, Canada and Europe (Clark, 2013). Seoul
National University is one of the top schools in South Korea. However, the government support lead to
make South Korea’s education system is one of the best in the world (Clark, 2013).
3.6 Social Setup:
12

The group behavior in South Korea tends to be collectivism. People in South Korea have tied to
each other, and they share decisions. Also, Confucianism has played a significant role in the South Korean
society. Confucianism describes the obligations of individuals toward others based on their relationship. For
example, the relationship between parents and children contains a high level of respect. And the
relationship between friend and friend is based on loyalty (Commisceo, 2016).
The society in South Korea treats senior citizens, riches and who hold sensitive work position with
more respect. Age and social class in South Korea are important factors to determine the level of respect
you will get (Rough guides, 2016).
3.7 Religion:
The people in South Korea enjoy the freedom of religion; the government respects the right of
religion practices. The Majority of the Korean citizens 41% does not practice any religion. The Christianity
is the most common religion in South Korea, 31% of the people follows it, and then Buddhist with 26%
(CIA, 2010). However, religion and believe are not adequate, stable factors that could affect trade in South
Korea (Ramírez, & Rubio, 2010).
3.8 Business customs and practices:
In South Korea, business customs are critical and sensitive. There are almost protocol and
etiquettes for all business and trade aspects. Some of the cultural imperatives are required in business deals
such as; greeting and avoid causing a loss of face. Some are electives where foreign can participate but not
required such as, have your business card translated into Korean. Finally, there are cultural exclusive
customs, for example, disrespect of South Korean traditions.
Moreover, People in South Korea are strict with time, be on time is a major factor to meet Korean
business customs. Also, it is advised that always be ready to exchange business cards in the first meeting
and show interest in reading it (Commisceo, 2016).
3.9 Aesthetics:
Most of the arts in South Korea derived from its history and traditions. There are several of
impressive visual arts in South Korea. Since the era of Goryeo (700 years ago), the art of the Korean pottery
13

has introduced. There are many great designs, and most of them are unique. Today, Korean potteries
especially jars attracts from foreign buyers (Korea.net, 2016).
Printing is another major art in South Korea. It has introduced in the 12th century. The artists were
capturing the daily life of early South Korean people. In fact, printing art is one of the sources that describe
the history of South Korea.
However, Music and dance are also common arts in South Korea. The main traditional music in
South Korea is known as Jeongak, and the traditional dance called Buchaechum that they dance while
holding fans (Korea.net, 2016).
3.10 Sports:
Some of the sports of South Korea have driven from its traditions and some from other cultures
and countries. For example, Taekwondo, which is one of the traditional martial arts sports in South Korea,
has originated during the era of Goguryeo.
However, People in South Korea have westernized in sports. The two popular games in South
Korea are football and baseball. Football has the big part of fans in South Korea that 41% of Korean people
practice it or enjoy watch it. The national team of South Korea has played in many world cups and reached
semi- finals (Topendsports.com, 2016). Baseball has become the second largest sport in South Korea that
over 25% of the Korean people enjoy it. Also, the national team of South Korea in baseball is competing in
international tournaments (Topendsports.com, 2016).
3.11 Living conditions:
The cost of living in South Korea is higher comparing to others Asian countries. Seoul is ranked to
be the 8th expensive city in the world (Santandertrade, 2016). Also, the health system in South Korea
classifies to be one of the best in the world. The government provides public health insurance program,
which is National Health Insurance Corporation (NHIC) (Santandertrade, 2016).
The traditional clothes in South Korea are Hanbok. It was introduced to the South Korean culture
during the 3rd century. Today, It used in festivals and special events (Visit Korea, 2016).
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The South Korean kitchen has a huge number of traditional dishes. Some of the popular dishes are
Kimchi, Hanjeongsik, and Galbi. The rice and noodles are primary components in most South Korean
meals (Visit Korea, 2016). Also, there are many international fast foods and restaurants in South Korea.
Young adults in South Korea are the big segment consumers to those international franchise restaurants
such as MacDonald’s and KFC (Kim, 2015).
Recently, hot drinks in South Korea have experienced positive growth in the market. The demand
for coffee products has recorded positive growth while there is a decline on tea due to competition in the
market from other non- alcohol products (Euromonitor International, 2016).
3.12 Language and communication style:
Communication and languages are important factors to the South Korean culture. The primary
language in South Korea is Korean. Also, there are different dialects depend on the region; the most
common used dialects is Hangeul (Spain Exchange, 2016). English is the second language in South Korea.
It is taught in schools and government encourages people to learn it and use it. All citizens in South Korea
who are younger than 40 years old have had English classes as a part of their education (Spain Exchange,
2016).
3.13 Strategic implication of this factor on the company/product chosen
The culture environment in South Korea is an essential element, and it affects the business and
economy. Our strategy to enter the South Korean market will cover the cultural factors. Since we found in
our research that Seoul is the capital and biggest city in South Korea and has the most businesses in the
country, we would recommend that we open our first Second Cup store in Seoul. Also, the climate in Seoul
is colder than other cities because it located in the north of the country, which gives an opportunity to our
hot beverages to be consumed there.
Moreover, We have found that the family’s structure in South Korea has a strong impact on the
society. So, we will ensure to diversify our products to fit all family’ members needs. And, we will make
sure that our location size and tables are comfortable for families to enjoy some time with our beverages
and pastries. Also, because we are going to open in a busy city such as Seoul, we will focus to meet
business people demand by providing quick line services.
15

Also, according to our research we conduct that the number of the university students in South
Korea is large. That would give us in Second Cup advantage by hiring university students as part-time jobs
after providing them well training program. Moreover, We could attract university students by opening
stores nearby campuses and attract them to spend some time studying with hot beverages in our stores.
Concerning our promotions and advertisings in South Korea, we would recommend that Second
Cup should sponsor events in sports such as baseball and soccer, because we have found in our research
that, there are many South Korean people like sports and watch it. And we have to provide different choices
of cold beverages during these events.
Also, the society in South Korea show interest in arts and painting; we will make sure that we
design our advertisements in posters and cups with a combination of harmonics forms and colors.
Furthermore, since South Korean people like music and dance we will ensure to provide a wide range of
music in our stores to add value to our physical locations.
Finally, since English is the second language in South Korea, we will attract our customer by using
English. We will remain our logo and symbols without any changes. And, we will promote our
communication tools by providing Korean/English menus.
4. Second Cup Café in South Korea: Economic and Technological Environment
4.1 Introduction
This work presents a summary of the research on prospects of doing business in South Korea for
Second Cup Café. It indicates a healthy business environment supported by a stable economy, strong labor
force, proper transport and communications, cheap methods of product promotion and channels of
distribution. Therefore, the work concludes that the business could benefit from such advantages if it
invested in the South Korean Economy.
4.2 The Demographics of the Republic of South Korea
According to the most current data concerning the population characteristics of South Korea, the
nation has a total population of some 50,584,064 people (Worldometers, 2016). This population estimate is
according to data provided by the United Nations. Such a population makes South Korea be the 27th largest
16

nation in the world according to their populations where it is home to about 0.68 percent of the entire world
population of about 7.4 trillion (FindTheData, n.d). South Korea has a population density of 519 persons for
every square kilometer because of the entire land area of the nation is 97,245 square kilometers (). Of this
population, the majority (81.6 percent) live in the urban areas with Seoul being the most populated and the
rate of urbanization is 0.66 percent (FindTheData, n.d). The median age of the country is approximately
41.1 years, which is a product of the moves by the nation's leadership in the recent years to improve the life
expectancy of its population (FindTheData, n.d).
The current rate of population growth in South Korea is 0.42 percent, which accounts for an
increase of about 210,494 persons annually (Worldometers, 2016). The change in the population of the
country is effected by the nation's fertility rate of about 1.27 and immigration, which contributed to an
addition of 40,000 persons to the population in 2016 (Worldometers, 2016). The birth rate of the country is
about 8.4 births for every 1000 people, and the death rate is about 5.8 deaths per 1000 persons
(Worldometers, 2016). In South Koreans, English and Korean is spoken. English is taught in junior and
high schools. In addition, there is a homogenous ethnic group in the nation with most of them being
Christians (31.6 percent) and Buddhists (24.2 percent) (CIA, n.d).
4.3 The Economic Characteristics of South Korea
South Korea’s economy has been on a steady and uninterrupted progression in its economic
freedom in the recent five years (Heritage.org, 2016). Reforms in the recent past have emphasized the
enhancement of regulatory efficiencies and given a huge role to the medium and small-scale entrepreneurs
in the economy. The private sector of the nation is dynamic and is bolstered by the existence of a
hardworking and well-educated labor force. Currently, the Gross Domestic Product (GDP) of the nation is
$1.38 trillion and the GDP per capita is $27,222 (Heritage.org, 2016). The GDP per capita figure indicated
is about four and a half times that of the median of the entire globe, which is $6,056.15 (FindTheData, n.d).
This implies that South Korea has a high rate of economic productivity as well as standards of living of its
citizens. Additionally, the GDP figure for the nation is 51 times larger than that of the median of the world,
which is $27 billion (FindTheData, n.d). The GDP of South Korea grew by 2.61 in 2015, which made it be
about 0.25 per cent bigger than all other nations of Eastern Asia that grew at 2.36 per cent. Therefore, South
17

Korea is ranked the 44th globally regarding its GDP per capita and 12th regarding its GDP figures
(FindTheData, n.d).
Another economic feature of South Korea is its Gross National Income (GNI). The per capita
figure for this element of the economy of South Korea is $27,440, which makes it about 4.6 times bigger
than that of the entire world, which stands at $6,010 (FindTheData, n.d). It should also be noted that the
GNI figure of South Korea at the national level is about $1.38 trillion, which makes it about 54 times larger
than the global figure of $25.9 billion (FindTheData, n.d). For this reason, it should be understood that
South Korea is ranked the 36th globally according to its GNI per capita and the same position regarding its
GNI figures. A comparison of the GDP and GNI of the nation indicates that the figure for GNI is larger
than that of the GDP. Therefore, it implies that there are more foreign investments of South Koreans abroad
than there are investments by foreigners into the South Korean economy (FindTheData, n.d).
The rates of inflation of the nation are healthy for the development of the economy. The latest
figures on the rates of inflation of South Korea indicate a 1.27 per cent rate, which ranks it at 117th
worldwide and the third among five nations of Eastern Asia,(FindTheData, n.d). The rates of inflation of the
South Korean economy is projected to be about 2.00 per cent by 2021, but before that, the highest rate will
be 2.18 in 2017 (FindTheData, n.d). For these reasons and others, South Korea is considered to be a high-
income economy (FindTheData, n.d). However, as much as such statistics are true, it should be noted that
there is an unequal distribution of income among Koreans. In fact, the top ten per cent of the population
controls 45 per cent of the total income (Jae-Won, 2016). This data is according to the IMF, which ranks
South Korea the last among the 22 countries of the Asian-Pacific region (Jae-Won, 2016).
4.4 The Mineral and Natural Resource Endowment of South Korea
According to data released in 2010 concerning the mineral endowment in the world nations, South
Korea leads steel, cadmium, and slap zinc production. (Thomas, 2012). The country is also a regional leader
in the production of talc, zeolites, cement, pyrophyllite and refined copper (Thomas, 2012). South Korea is
also endowed with lithium and rare earth metals, which are its chief industrial minerals. The information
below summarizes the mineral production (in percentage) for South Korea in 2010.
- The production of iron ore rose by 13 per cent in 2010 compared to 2009
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- The production of pig iron increased by 14 per cent
- The production of steel rose by 21 per cent
- The production of bismuth rose by 66 per cent
- The production of cadmium was increased by 67 per cent (Thomas, 2012).
The exports of copper from South Korea amounted to 3,864 tons. However, there is a need to note
that the nation had to import unrefined copper before it smelted it Chanhang and Onsan (Thomas, 2012). A
similar process was done to gold, but not in the mentioned places, which enabled the nation to export some
77,804 kilograms of gold worth $2.93 B in 2010 (). It should also be noted that South Korea is the leading
Liquefied Natural Gas (LNG) importer in the world (Thomas, 2012).
4.5 Science and Technology in South Korea
The nation is among the leading in the world regarding research in science and development
(Science and Technology Seoul, n.d). The progress that the country has made to rise from poverty in the
60s to where it now ranks regarding its GDP is related to relentless involvement in research projects.
Presently, the government has invested heavily in the field or research. For instance, there was an
investment of 0.73 per cent of the nation's GDP into research, which made it only the second behind
Switzerland regarding such investment (Science and Technology Seoul, n.d). Presently, the nation is ranked
as the 9th according to the expenditure of GDP on research. The investment projects currently undertaken
by the nation through its numerous institutions of research involve the areas of engineering, transport, and
communication, information technology among others (Science and Technology Seoul, n.d). Such projects
are geared at imparting the labor force with the skills needed in tackling their specific jobs and improving
the efficiencies related to the same.
4.6 Transport and Communication in South Korea.
Notably, the nation is one of the leading users of information technologies, which has greatly
revolutionized the modes of communication available. For example, the most common mode of
communication in the nation is telephone (Advameg Inc. 2016). There are two major telephone service
operators; LG Telecoms and SK Telecoms (Advameg Inc. 2016). However, it should be noted that there are
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limited chances for roaming while using mobile network because of the absence of GSM network
(Advameg Inc. 2016). Another means of communication is the internet. Leading research in the nation is
focused on making the internet the most frequently used mode of communication (Advameg Inc. 2016).
South Koreans also use the post office, which is reliable and well developed to ensure fast delivery of mails
(Advameg Inc. 2016).
Road transport is the main mode of transport in South Korea with the country having one of the
most developed and properly maintained roads in the world (Advameg Inc. 2016). However, the pressure
from an increase in the numbers or road users means that the road network is not sufficient. Therefore, a
reliable bullet train network supplements this mode, which is one of the fastest means of transport for
commuters between towns (Advameg Inc. 2016). There are also airports in each province, which make air
transport another reliable means of transport around the country. The country also has a series of ports built
on its 2,495 kilometers stretch of coastline (Advameg Inc. 2016). Therefore, water transport is also an
option, especially for bulky cargo, which makes it the least used among the three.
4.7 Working conditions in South Korea
The rate of unemployment in South Korea is currently 3.5 percent, which is less than the global
average of 6.90 per cent (FindTheData, n.d). Such a figure means that the economy can perform well
through high productivity with little government strain. Data also indicates a steady fall in the levels of job
security in the nation from 2013 to 2015 with the current figures being 3.15 per cent down from 24 per cent
(FindTheData, n.d). Such a drop is related to the existence of a large labor force with skills in specified
fields of practice. There is a culture of health employer-employee relationships in which the workers are
represented by unions. The unions champion for good treatment of workers by their employers through the
provision of reasonable salaries and good working environments (FindTheData, n.d).
4.8 Principal Industries in South Korea, Investment Opportunities, and International
Trade
A range of export industries drives the economy of South Korea. For instance, the biggest industry
is that of electronics followed by shipbuilding, automotive and petrochemicals in that order (ANZ Business,
n.d). However, there are a series of emerging industries, which provide business opportunities for investors
20

such as biotechnology, Internet services and software, high-tech communications and tourism (ANZ
Business, n.d). The mentioned leading industries have produced a significant growth in the volume of
exports like indicated in the figures that follow. International trade in South Korea is almost liberalized.
However, some restrictions are involved such as tariffs on imported and exported products. In addition, the
South Korean government may occasionally impose quotas on the importation of some products, which
could happen without prior notice (Austrade.gov.au, n.d).
4.9 Channels of Distribution and Advertising Media in South Korea
There are several media advertising channels in South Korea such as newspapers. The radio is the
most common means of advertising used in the country and can reach close to 47,500,000 people per day
(Press Reference, n.d). The radio is followed by the internet, which serves some 19,040, 000 persons, daily.
Television follows in the third place with an approximated 15,900,000 sets existing. Newspapers come in
the third position with people spending some 3,639,291 Won Millions daily on the newspapers (Press
Reference, n.d). There are additional modes of promotion such as billboards erected in cities and
magazines. Of the mentioned media of advertising, the internet is considered the cheapest. The most
common channel of distribution in South Korea is the use of marketing boards. However, businesspersons
may also use agents in the distribution of their products (Export.gov, n.d).
4.10 Implications on the Business
The factors shown above indicate that South Korea presents an opportunity for the company to
invest in its economy. The first reason is that the company will operate in one of the most promising
industries of South Korea; tourism. There is an advantage presented in such an opportunity such as the
existence of a large prospective market, little trade restrictions, cheap modes of product promotion and
reliable channels of distribution. The company will also benefit from the existence of a reliable means of
transport and communication occasioned by modern technologies in the same. The Economic stability of
the nation does not threaten the firm of continuous loses. The South Korean population also provides a large
pool of skilled personnel that will ensure the success of the business.
5. Legal and political aspects
5.1 Political setup – structure
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South Korea is a fully sovereign nation whose president is elected every five years and is always
allotted only a one-term tenure. The sovereignty of the nation is something which has been widely
embraced throughout the country particularly in the face of ongoing tensions with neighboring North Korea
which is ruled by a single dictator. After carrying out the necessary research, it can be concluded that the
political establishment of South Korea is sturdy and reliable enough to implement Second Cup as we intend
to successfully. As with every country, however, they too have their way of doing things, and as a result of
that, we have acted to ensure that we cooperate with the rules and regulations, which governs this
phenomenon nation.
5.2 Legal systems
Judicial power in South Korea is placed in the hands of the courts of the land. Similarly to many
other nations of full sovereignty the highest court in the land is the Supreme Court which can overrule the
other courts where it sees fit. The Supreme Court is then followed by the appellate court which is similar to
the appeals court in many nations, there are (5) five courts of appeal located throughout the country and are
regularly able to resolve issues themselves without any further regulation from the Supreme Court that is.
The Appellate court is then followed by the District Court which is located in Seoul and 12 other prominent
cities. There are two types of District Courts, the Seoul Civil District Court which deals with civil unrests
and the Seoul Criminal District Court which deal with criminally related offenses. The Civil District Court
tends to get matters in a more quickly manner than most of the other courts as the issues to which they tend
are usually of a less severe nature than the others. The Criminal District Court on the other hand though
arguably just as efficient as the Civil District Court usually has cases of often a more severe nature and
hence a more prolonged time of completion.
5.3 Commercial laws
It is this important strength in the judicial system which makes us confident that we would be
able to implement ourselves adequately in this new market. South Korea has moved to restrict trade in some
areas as a result of security concerns and a move to directly protect local industries. However, our intended
area of cooperation with the Koreans is not one of the sectors that have been restricted. Under the Foreign
Investment Promotion Act which was implemented in 1998, only a formal notification will be required after
which preparations can commence laying the ground work as we as a company see fit. The government
22

offers various types of incentives to potential foreign investors as it sought to strengthen its ties in this
sector. One such incentive which we aim to capitalize on is the reduced rent on land which as available as
well as the help provided with the site preparation process which would assist us as company venturing into
a new place.
South Korea has been unprecedented in the way they attempt to lure new business to shore very
notably so even in the tax breaks they offer in giving a (30%) thirty percent tax credit to new small and
medium businesses. A very crucial part of the impressive growth noted by the South Korean economy is the
involvement of foreign investors who have chosen to make South Korea their home. Korea has world
renowned and highly respected companies which call them home such as Samsung, Hyundai, and many
others. Though there has been rumors and speculations surrounding the rise of these companies, the
Government has been keen to show the world that it can operate in a clear and transparent manner
following the prolonged hold authoritarians had in the country.
South Korea has (10) ten highly regarded Free Economic Zones which have really helped to
propel and sustain their status as one of the top 20 countries in the world to do business. These areas
especially the ones that are in full swing have a great deal of workers who often look outside of their
kitchens for several of their daily meals and can potentially turn to ours. One of the more noted benefits of
operating in one of the Free Economic Zone is the fact that in an area such as Saemageum-Gunsan Free
Economic Zone the land available is largely government owned and is available for lease at significantly
reduced costs.
5.4 Memberships in regional groupings
South Korea is the founding member of APEC as, a member of the World Trade Organization, a
member of the United Nations, ASEAN Plus three, as well as its foreign minister Ban Ki-Moon, is the
current Secretary-General of the United Nations. Several nations but in particular the United States have
long voiced their opinion of South Korea being one of their most trusted partners to do business within the
region. This in itself is proof that the country had come a long way since when it was under authoritarian
rule.
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5.5 Strategic implication of this factor on the company/product chosen
With the continuous strengthening of an already established and stable set of laws, it is
understandable why we believe that this atmosphere will be one, which can prove rather suitable to our
operations. The legislation of South Korea has clearly been a beneficial factor in doing business throughout
the land especially when it is taken into consideration how much of the current local projects receives
substantial foreign support. The way in which we intend to tackle the issue of launching Second Cup in
South Korea is through the application of ourselves as a brand, which stands for the people. Ultimately
doing so through the laws of the land. It will be in our best interest to attain the utmost trust and cooperation
from the people and as far as we see what better way to do this than to abide and reside by the same laws
which govern the people.
By carrying out the necessary research we make ourselves better prepared to tackle the issues with
which we will be presented. By discovering and discussing various aspects of the laws that will have an
impact on us as a company, it will help to alleviate potential encounters of difficulties which we are still yet
to face. With the hospitality and warmth that the people of South Korea and in a lot of cases its laws as well
presents foreign investors, we feel as if it will be our obligation as a company to live up to the standards and
expectations of the people. As a result of this, we believe it will be crucial for us to understand the laws and
practices of the people best if we intend to truly make our mark as the most preferred coffee shop of the
people that is. The fact that we are also dealing with something that will be consumed by the public even
more so means that we have to do everything possibly can to ensure that always attempt to exceed the
standards which we are presented with.
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Appendixes
25

Figure 1: A summary of the volumes of exports and imports and Trade partners of South
Korea. Source: Michigan State University (2015)
26

Figure 2: The trend in export (blue line) and import (red line) trade of South Korea. Source:
OEC (n.d).
Note: In 2014 South Korea was with a positive trade balance of $75B. In comparison, her
balance in 1995 was a negative of $1.75B.
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