International Marketing: Second Cup's South Korea Expansion Plan

This report provides a comprehensive analysis of the South Korean market and its potential for Second Cup's expansion. It begins with an executive summary outlining the key aspects of the analysis, including cultural, economic, and political environments. The report then delves into an overview of Second Cup, including its history, growth, resources, market position, and mission. A detailed examination of Second Cup's products and services is also included. The report also explores the opportunities and benefits of Second Cup entering the South Korean market. The report emphasizes the cultural similarities between South Korea and Canada, the high-income economy of South Korea, and the advanced infrastructure that can support Second Cup's operations. The report also discusses the competitive landscape, including Starbucks and Tim Hortons, and the importance of brand awareness and product quality. The paper concludes with a discussion of the potential for Second Cup to generate new coffee flavors adapted to South Korean culture and the benefits of market diversification.

International Marketing 1
Second Cup in South Korea
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 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 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 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:

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