Second Cup Coffee Company: South Korean Market Entry Strategy

This report provides a comprehensive analysis of the South Korean market for Second Cup, examining the cultural, economic, and political environments. It explores Second Cup's history, resources, and market position, considering the company's potential for international expansion. The report delves into the cultural nuances of South Korea, including history, family dynamics, education, and business practices, to assess their implications for Second Cup's products and services. Furthermore, it analyzes the economic characteristics, technological advancements, and legal and political aspects of South Korea, including demographics, industries, and trade, to identify opportunities and challenges for the company. The report concludes with strategic recommendations for Second Cup's market entry strategy, considering the various factors analyzed, including the company's global experience and the favorable political climate of South Korea. The report also covers Second Cup's products and services, its competitors, and its mission, vision, and goals to provide a holistic understanding of the company and its potential in the South Korean market.

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
4

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.
9

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