Project Report

Firm: Christa Clothing International

Prepared by:

Aquib Mohammad Irfan Ansari – A00158706 – aquibansari40@yahoo.com

Parmod Kumar – A00165676 – parmodkumar2604@gmail.com

Mansi – A00161352 – mansiawal17@gmail.com

Consulting Firm - The Parthenon Group

Assigned by - Professor Brian. P. Vendramin

Date - 29 March 2018

1|Page
Executive Summary

This report was commissioned to analyze the Korean market and prepare an entry strategy for

Christa clothing international.

Christa clothing International is expecting to expand their business into the Korean peninsula

and it is our responsibility as a consultancy to provide the required details which can provide

some clarity to the firm before it can venture into that geographical region.

A vital recommendation would be to invest extensively in the region by tying up with specific

governmental organizations which are formed especially for the foreign firms looking to expand

their business prospects in their country. Doing this can also benefit the firms to avoid some

legal hassles as they would be approaching a government formed agency for expansion.

Analysis and Implementations have been prepared and have been added in the report ahead

with due credits to the sources.

2|Page
Table of Contents
Title Page …………………………………………………………………………………………………………………………………..Page 1
Executive Summary………………………………………………………………………………………………………………………..Page 2
Table of Contents …………………………………………………………………………………………………………………………..Page 3

Summary Of Important Facts…………………………………………………………………………………………………………Page 4

Statement of Problems ………………………………………………………………………………………………………………….Page 5

Analysis ……………………………………………………………………………………………………………………………………..Page 5

Pestle Analysis of Korea ……………………………………………………………………………………………………………..Page 5

Political Analysis ………………………………………………………………………………………………………………………….Page 6

Economic Analysis ……………………………………………………………………………………………………………………….Page 6

Social Analysis ……………………………………………………………………………………………………………………………..Page 7

Technology Analysis ……………………………………………………………………………………………………………………Page 8

Legal Analysis ………………………………………………………………………………………………………………………………Page 8

Environment Analysis ………………………………………………………………………………………………………………….Page 9

SWOT Analysis …………………………………………………………………………………………………………………………..Page 9

Strength ……………………………………………………………………………………………………………………………………Page 10

Weakness ………………………………………………………………………………………………………………………………...Page 10

Analysis …………………………………………………………………………………………………………………………………….Page 11

Threat ……………………………………………………………………………………………………………………………………….Page 11

Recommendations …………………………………………………………………………………………………………………..Page 11

Price ………………………………………………………………………………………………………………………………………….Page 12

Product ……………………………………………………………………………………………………………………………………..Page 12

Promotion …………………………………………………………………………………………………………………………………Page 13

Place ………………………………………………………………………………………………………………………………………….Page 13

Techniques (Elements) ………………………………………………………………………………………………………………Page 14

Bibliography …………………………………………………………………………………………………………………………….Page 15

3|Page
Summary of Important Facts

 Christa clothing International is a company with a strong base across the globe

 The client wishes to enter the Korean market as a part of its business expansion

 The firm is facing difficulty on ascertaining and identifying sectors such as cultural, legal,

political social and environmental factors in the Korean peninsula

 The client wishes us to consult and identify the Korean lifestyle and the other required

data and strategies

 The company products has focused itself majorly on the outgoing young adults

 The Brand faces various complexities like the others in the fashion business due to

intense competitive climate and practices such as counterfeit products- for example a

first copy

 The company has its major manufacturing unit in Philippines and a coordinative unit in

Indonesia

 The fashion business depends on seasons as the demand increases during holidays and

seasonal ends

 The client faces a risk of its product being considered as cheap due to lack of brand

awareness of the fact that it has not done extensive advertising

 Christa clothing is moderately priced making it affordable to an extent for the general

public

 The firm expects to create a global outlook of its brand by standardizing and diversifying

its products and the other overall elements and becoming a full fledge Global company.

4|Page
Statement of Problems

The case showcases issues based on entering Korean market and there are some questions

identified which require attention:

 How to enter the market? Ascertaining when to enter the market?

 Using an entry strategy and which to choose from is an important aspect to clear in the

client’s expansion idea

 Understanding Language, values, cultural and perception barriers

 Another issue would be the firm using their ethnocentric approach in

hiring/collaborating with the Korean nationals

 Taxes, tariffs, duties is a part of the complexities of the same

 The endogenous barriers created by the established firms

 Adjusting to the scenarios as stated and enforced by the government policies for

International companies.

Analysis

To provide a detailed view over various aspects certain principles need to be used to get a

recommendation out of the same

PESTLE ANALYSIS OF SOUTH KOREA

(Author: Ojha- PGDM, www.sachdevajk.in)

5|Page
POLITICAL ANALYSIS

South Korea had an unstable political past, due to frequent changes in government, little

political freedom and military coups. In 1986 the democratic process was streamlined and the

president was vested with maximum power, and as there were centralized authority, policy

making became straight forward. The president is the chairman of all the committees, which

makes it very easy to co-ordinate and run the whole system. The country also has strong

political and economic support from the US. Although South Korea has been a democracy for

over two decades, the military continues to wield considerable power.

Analysis on political landscape:

Current strengths

• Centralization of power

• Political will for economic reforms

• Strong foreign relationships

Current challenges

• Military influence in Korean politics

• Political violence

ECONOMICAL ANALYSIS

The economic structure is well support by government policies in South Korea. South Korea also

has very strong economic reforms and due to this, the country has continued to experience

steady growth. The reason for economic growth is powerful export sector in the country.

Although the company is developed in terms of all- round economic health, and provides a

6|Page
good investment climate, and it is still distressed from structural weakness due to very extreme

rules on imports and FDI. Even though the country is on a path of economic growth, it has been

affected by declining FDIs. These restrictions are affecting the domestic market and make it

internationally uncompetitive.

Analysis on economic landscape:

Current strengths

• Powerful export sector

• Successful economic reforms

Current challenges

• Low level imports

• Decline level of FDIs

SOCIAL ANALYSIS

Wages are generally higher than other neighboring countries and the force is well educated and

technically qualified in Korea. The country’s literacy rate is one of the highest in the world, and

country’s low fertility rate still presents a significant challenge as Korea is faced with an

increasingly ageing population. And as the rapid urbanization, government spending on social

welfare is low.

Analysis on social landscape:

Current strengths

• High wages

• Educated workforce

7|Page
• Rapid urbanization

Current challenges

• Low fertility rates

• Ageing society

• Low social welfare spending

TECHNOLOGICAL ANALYSIS

South Korea has been known for technological innovation, with highly educated workforce and well

equipped infrastructural facilities, and the country is a favored destination for Research and

Development. In terms of communications and internet facilities South Korea is the most wired country

in the world. And the gap between innovation and commercialization is very small.

Analysis on Technology landscape

Current strengths

• Robust telecom sector

• Presence of large global and domestic players

Current challenges

• Scarce natural resources

• Rising R&D costs

LEGAL ANALYSIS

The South Korean judiciary is based on the US and German court systems and juries are not

present during trials. The country is facing a shortage of judges cause the has exclusive

constitutional court, which keeps a check on government decisions and law making and very

few students pass the tough law examinations. The country gained the status of a developed

8|Page
country and provides one of the attractive regulatory incentives for industrial development

among the OECD (organization for Economic co-operation and Development) nations.

Current strengths

• A exclusive constitutional court

Current challenges

• Absence of juries

ENVIRONMENTAL ANALYSIS

Urban areas are increasing day by day so, the government has adopted several control

measures in urban areas and is promoting environmental education in schools and business

community. The government now focuses on environmental development have leads to

formation of national eco parks.

The goal is to create value for the firm’s targeted customers and to build profitable customer

relationship. The firm must decide which customers it will serve (Segmentation and targeting)

and how it will be made (differentiation and positioning). Guided by the marketing strategy, the

firm will design an integrated marketing mix that is made up factors under its control: Product,

Price, Place and Promotion.

SWOT Analysis of South Korea Market

Retrieved from: https://www.bartleby.com/essay/Swot-Analysis-of-South-Korea-Market-

PKTE8S5HKGEY

9|Page
Strength

1. South Korea has a very high economic freedom. South Korea economic freedom score is 71.2

which makes its economy goes to the top 31st free economy in 2014. South Korea has

improved on 0.9 point higher than last year due to their financial freedom and monetary

freedom outweighing modest declines in business freedom, labor freedom, and fiscal freedom.

South Korea is ranked 8th out of 42 countries in the Asia–Pacific region.

2. South Korea is moderately free of corruption. This makes South Korea a very clean place to

conduct business where everything is fair towards the people which make it a very good place

to conduct business if compare to country which has higher corruption rate. The …show more

content…

Financial institutions have gained more autonomy from the state, ensuring greater market

competition.

Weaknesses

1. Bankruptcy can be proceed very easily

2. The labor market remains dynamic, but there are lingering regulatory rigidities, and powerful

trade unions add to the cost of conducting business.

3. The poor in the South Korea will be hard to buy any luxurious goods. Hence, a deep

consideration needs to be done in order to start a new business in Korea or to compete in the

market of South Korea.

10 | P a g e
Opportunity

1. There is a positive outlook on South Korea travel and tourism industry. This is a big

opportunity because there will be more tourist who come to South Korea and eventually boost

the income of South Korea. Besides that, more customers or consumers will come to South

Korea to buy their product which makes it easier to earn profit and has more customers from

all over the world.

2. South Korea trend has emerged to all over the world where the Music Industry of Korea has

burst to country like the US, Indonesia, China, Malaysia and etc. This makes it easier to start a

business which need to deals with people internationally. People nowadays might prefer things

made in Korea due to their idols and tend to follow their culture. Hence making it a business

opportunity for businessman in South Korea.

Threats

1. Increasing labor cost and changing of government policies. Due to the high level of education

of labor in the South Korea,

Recommendations:

Using an alliance as an aspect to do business in the Korean peninsula

The Korean company are expected to have access to a proven distribution network (retail

outlets) or supply chain and the non-Korean firm which is (Christa International clothing) has a

11 | P a g e
product that easily fits into this supply chain. The venture can be addressed through a

distribution/license agreement and, not, a joint venture agreement.

We’ll be using the 4 P approach as a recommendation for the firm to do business in the Korean

region

Price

Right price for the product or service is a key thing for the firm’s success or failure. Price must

reflect the quality and value the Korean consumer perceives in the product. Setting the right

price for the goods is a difficult task for the marketer. It needs to be done after analyzing the

economic situation and the average spending of an individual.

Costs of Exporting

The cost of exporting from Philippines/Indonesia to the country, prices can be raised by

shipping costs, insurance, packing longer channel of distribution, larger middlemen margins,

special taxes, administrative costs and exchange rate fluctuations

Product

Focus should be upon products features, design, quality level, brand name and packaging. In

the last level the planners must build an augmented product around the core benefit and actual

product by offering additional consumer services and benefits.

Product adaptation into new markets

12 | P a g e
The meaning and value imputed to the psychological attributes of a product can vary in

different cultures and the same product can be seen in very different ways in different cultures.

Adaption of product according to the Korean culture needs to be ascertained as a vital point

Product Quality

Products and services needs to be delivered as what has been agreed in contracts or

promotional campaigns

Promotion

A blend of advertising, public relations, personal selling, sales promotion and direct marketing

tools can affect the firm’s business prospects in Korea. Product’s design, price, shape, color,

package and store that sell the product affect how the customer sees it. Even though the

promotion mix is the company’s primary communication tool, the product, price and place

must be coordinated to achieve the greatest communication impact (Kotler and Armstrong,

Principles of management)

Place

Christa international, by expanding itself in Korean market it must choose a strategy by

reflecting on an analysis of the markets characteristics. Focus should also be on potential sales,

competition, strategic importance, strengths of resources, cultural differences and country’s

restrictions and regulations. They must also find out what are the company’s capabilities and

characteristics, knowledge of target market, marketing involvement and commitment that

management is willing to make. (cateora, gilly- International marketing)

13 | P a g e
Implementation

On the promotional point of view, approaches can be made to,

Invest KOREA (http://www.investkorea.org/en/ik/investkorea.do)

Invest KOREA (IK), Korea's national investment promotion agency, was established as part of

the Korea Trade-Investment Promotion Agency (KOTRA) to support the entry and establishment

of foreign businesses in Korea.

We provide comprehensive services for foreign businesses, including consultations, assistance

with investment notification and corporate establishment, support for business activities in

Korea and grievance resolution.

Invest KOREA also holds various investment promotion activities abroad.

Other Elements to focus on:

Points retrieved from: https://www.export.gov/article?id=Korea-Selling-Factors-and-

Techniques

 Adapting company products and procedures to Korean tastes and conditions

 Communicating regularly with Korean business partners and customers

 Exhibiting a consistent, firm, and long-term commitment to the Korean market

 Working at building long-term relationships

 Augmenting the efforts of the firm’s local representative by visiting Korea frequently

14 | P a g e
  Inviting Korean representatives back to the home office periodically to ensure they are

fully informed, motivated, and up-to-date on our company and its offerings

 To the extent possible, allowing the distributor/agent to select from all of the company’s

product lines

 Holding demonstrations, seminars, and exhibitions of products in Korea

 Increasing the distribution of technical data and descriptive brochures

 Assisting local representatives with follow-up on sales leads.

Bibliography

1. Pestle analysis of South Korea (Author: Ojha- PGDM, www.sachdevajk.in) – Page 5

2. SWOT Analysis of South Korea Market Retrieved from:

https://www.bartleby.com/essay/Swot-Analysis-of-South-Korea-Market-PKTE8S5HKGEY -

Page 7

3. 4 P’S Promotion - (Kotler and Armstrong, Principles of management) – Page 9

4. 4 P’s Place – (Cateora, Gilly- International marketing) – Page 9

5. Invest KOREA- Implementation Part (http://www.investkorea.org/en/ik/investkorea.do) –

Page 10

6. Korean elements- Implementation Points retrieved from:

https://www.export.gov/article?id=Korea-Selling-Factors-and-Techniques – Page 10

15 | P a g e