UNIVERSITY OF KARACHI

INTERNATIONAL BUSINESS
From:

BUSHRA HASSAN
FATIMA RAO
SAIRA SALEEM
SABIHA ARSHAD
HUMAIRA YOUSAF

BS COMMERCE (7TH SEMESTER)

TO:

MAAM RAKHSHINDA
JULY, 2020

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 “TABLE OF CONTENTS”

S. No Description Page
No
1 Acknowledgement 4
2 Executive Summary 5
3 Product identification 6
4 Product description 6
5 Industry analysis 6
6 Competitive advantage 6
7 Target market 7
8 Why international market 7
9 International market entry plan 8
10 Barriers in entering international market 8
11 Marketing plan 8
12 Steps of producing seed infused bags 9
13 Process of collection of seeds 11
14 Manufacturing process of making seed infused bag 13
15 Inspection and quality from control 14
16 Design of the product 14
17 Cost of the project 15
18 Swot analysis 17
19 Availability 17
20 Distribution strategy 18
21 Price 18
22 Pricing approach 18
23 Pricing strategy 19
24 Environmental condition of international market 19

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25 The social/ cultural environment 19
26 The political and legal environment 22
27 The technological environment: 24
28 The economic environment 25
29 The competitive environment 25
30 Problems/ issues with solutions in entering south Korean market: 26
31 Financial plan 29
32 References 31

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 ACKNOWLEDGEMENT:
In performing our project, we had to take the help and guideline of some respected persons, who
deserve our greatest gratitude. The completion of this project gives us much Pleasure. We would
like to show our gratitude to ma’am Rakshinda, for giving us a good guideline for project
throughout numerous consultations. We would also like to expand our deepest gratitude to all
those who have directly and indirectly guided us in writing this project.

In addition, a thank you to our Teacher ma’am Rakshinda, who introduced us to the
Methodology of work, and whose passion for the “underlying structures” had lasting effect We
also thank the University of Karachi for consent to include copyrighted pictures as a part of our
research.

Many people, especially our classmates and team members itself, have made valuable comment
suggestions on this proposal which gave us an inspiration to improve our assignment. We thank
all the people for their help directly and indirectly to complete our assignment.

Thanking you.

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 EXECUTIVE SUMMARY:
In the start, we provided brief introduction of our product ‘seed bag’ which we are going to
export in South Korea with the help of our agent of Alliance experts. Seed bags are used instead
of plastic bags for daily use which will help to reduce pollution as plastic bags are hard to
dispose off so, polluting the world badly, as well as it will help in making the country greener by
burying the bag in soil. We also mentioned the reason of export which is less greenery in South
Korea. Moreover, we provided the marketing plan of our eco-friendly biodegradable seed
infused bag, which includes steps in manufacturing the bag and seed collection. It also describes
the packaging, price, and sizes of our product in South Korea. It also includes the cost of the
project required in making these bags. This plan also describes the availability of the product in
South Korea and even the distribution and marketing strategy, objectives and approaches are also
defined. Before entering into international market, we studied the Environmental Conditions of
that country in which we are going to export our product (South Korea) because in the
international market the economic, cultural, social, political or legal, technical environment or
competitive environment can create problems for the exporters. In social or cultural environment,
language, color, time, values customers, taboos, business norms, aesthetics and religious beliefs
are studied. In Economical environment, we studied the stability of economy of South Korea. In
political or legal environment, we studied the political stability, monetary circumstances, trading
blocs and agreements, tariffs and expropriations. We also checked out the competitive and
technical environment of the country. We can terminate the language, documentation,
registration, import duties, tariffs quotas and different legal problems with the help of our agent
of Alliance experts.

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 PRODUCT IDENTIFICATION:
We are exporting seed bags, which was introduced by Pakistan’s famous clothing brand
Sapphire, it is eco-friendly, biodegradable bag in which plant seeds are being infused.

PRODUCT DESCRIPTION:
In seed bags there are instructions written over the shopping bag. “This bag is embedded with
seeds” is written on the side of the bag and instructions are provided step wise how to plant the
seeds.

In First step, it is instructed to tear the bag into small pieces, then in Step 2, plant the pieces into
deep soil and then in Step 3, make sure to water them regularly and in step 4, feel proud for
making our country beautiful.

Our main motive to export these seed bags is to reduce the pollution worldwide and the world
greener.

INDUSTRY ANALYSIS:
a) Direct Competitors:
There will be no direct competitor of ours in South Korea because seed bags are not being there
yet and it will be considered as a unique product there which will contribute in reducing
pollution.

b) Indirect Competitor:
There will be our numerous indirect competitors, some of them are:

i.Plastic bags sellers.

ii.Seed sellers.

COMPETITIVE ADVANTAGE:
We will be having certain benefits being alone in the market with a unique product. Our seed
bags are supposed to have great sales there because South Korea lacks greenery which is a big
need of this time and plastic bags are main reason of the high pollution so, it is assumed that
people will try their best possible to contribute in reducing the pollution and increasing the
greenery.

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TARGET MARKET:
a) Gender:
Both, male and female.

b) Age:
Age doesn’t matter, anybody who shops is included in our target market.

c) Class:
All classes, no matter lower, middle or upper income level class.

d) Occupation:
No matter whatever the occupation will be, everybody can afford our product since it’s cheap in
price.

WHY INTERNATIONAL MARKET?

By entering into international market we can introduce our product and company to huge
markets, increase our sales and profits, gain in brand recognition, reduce the risk of only
operating in one market i.e. due to economic or seasonal downturns and extend our product’s life
cycle to a whole new level. This includes certain questions like:

a) Which Country and Why?

We are choosing South Korea for exporting our seed bags since we have noticed that this country
is lacking greenery so, there are higher chances that people out there will surely tend toward our
seed bags to make their country beautiful and their people healthier.

b) Scale of entry:
The obvious issue in entering a new international market is cost. Entering a market on a large
scale requires significant resources. Although this is more likely to make an impression on a new
market as it will attract the attention of customers and local similar businesses. So, we decided to
deal in bulks.

c) Market Entry Method:

There are several market entry methods that can be used i.e. Exporting, Licensing, Franchising,
Joint venture, Foreign Direct Investment, wholly owned subsidiary, Piggybacking etc. But we
are choosing Export methods to take our product in an international market i.e. South Korea.

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 INTERNATIONAL MARKET ENTRY PLAN:
We will make our entry in international market through “Alliance experts”. Alliance experts is
active in over 30 countries with local experts, who know the market, know the culture and speak
their language. They support export teams in entering the new market with less risks, less hassle
as well as much faster progress. One of their team members will serve as our local export
developer, who will set up our distribution channels, get our sales going and expand our
coverage. We can have him as a part-time employee as per our requirement for our required
period of time. Hiring them as our export commission agents will benefit us in following ways:

i.They are productive from day 1.

ii.There will be no need to set up an office abroad and hire a full time employee.

iii.There will be no search agency fees and training costs.

They will charge on monthly basis or a complete project fee. The fee may ranges from € 5,000 to
€ 20,000 based on chosen country and product.

BARRIERS IN ENTERING INTERNATIONAL MARKET:

There are some obstacles or conditions that make entry in international market more challenging,
more expensive or even impossible. Some most common market entry barriers are as follows:

1. Trade and economic sanctions.

2. Export and import controls.
3. Customs tariffs and taxes
4. Import and tariff quotas
5. Government subsidies
6. Trade blocs
7. Political instability
8. Customer preferences
9. Economic barriers

MARKETING PLAN:
PRODUCT:
This environment-friendly biodegradable bags having plant seeds in them. Even, if you will
dump these seed infused bags anywhere, they will not cause any damage to the environment but
will result in green trees.

It can decompose and even provide nutrients to the soil, meaning you can plant it as well.

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FEATURES:
• This product is environment friendly.
• It is very economical in nature
• Cheaply available in markets
• Destroyed or reuse for another purpose
• Use for plantation
• Does not harm to any creature and nature in any way.

STEPS OF PRODUCING SEED INFUSED BAGS:

Manufacturing biodegradable seed bags is not something that should be rushed into. Growing
greenery from these bags remains at place for years.

We produce these biodegradable seed infused bags to the same processes we always have:

Collection of cloth:
The cloth which is required for making these seed embedded bags are taken from textile
industry.

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Collection of seeds:
The seeds come from the farms.

Cutting:
Here the fabric is arranged in layers and cut accordingly to the product pattern and demanded by
customers. Cut fabric is marked according to product coding and handled over to next
department. 3 employees will be required here.

Stitching and finishing:

All the materials and body parts are stitched together in a stitching machine and finishing of the
bag is done by customer preferences and colour choices. There are 6 employees needed at this
stage.

Checking and packaging:

Finished bags are quality checked for any kind of errors. If find any, then it is mended and
rectified. Then they are paced up in a box to preserve it from moisture and then sent to stores.
Inspection is done from machines and 2 employees are required in this department.

Raw materials:
Manufacturing process of seed infused bags involves using a variety of raw materials. The eco-
friendly seed bags are made from recycled cotton waste that is sourced from the textile industry.
They are a mixture of seeds: amaranth, marigold, and China Asther. The reason why they have
chosen these plants is that they can grow in variable climates and are resilient.

1- Cotton waste

2- Amarnath

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3- Marigold

4- China Asther

PROCESS OF COLLECTION OF SEEDS:

There are various steps of production process they are as follows:

Once the seeds are grown up, the collection process is started.

When to Collect Seed:

• Proper Season
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• Skilled Labour
Agencies for collecting of Seed:
• Pakistan Forest Institute
• Forest Department
• Pakistan Forestry research institute
• Responsible Contractor
Seed collection Techniques:
• Collecting of seed
• Climbing trees to collect seed:
• Shaking the tree:
• Throwing a rope with weighted end to break off a seed-bearing branch
• Pruning off seed bearing branches.
Seed Drying Techniques:
Once the seeds are collected so they are dried by different techniques
• Natural Drying
• Sun Drying
• Artificial Drying
• Layer Dryers
• Batch Dryers
• Continuous Flows Dryers Methods of Seed Drying
Protection of seeds:
Protection of seeds from:
• Water
• Contamination
• Rodents
• Insects
• Fungi
• Fire
Packaging and shipment of seeds to mills
The seeds are packed in:
• cardboard box and canes
• fabric bags
• Moisture proof Materials
• Metal containers
• Glass containers
• Moisture resistant materials

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Then it is shift to the mill for further proceeding.

Here the process of making the seed infused bags starts:

MANUFACTURING PROCESS OF MAKING SEED INFUSED

BAG:

STEP ONE: RECEIVING OF BALLS AND SEEDS:

the first step in the process to making product are receiving of balls generally each ball includes
hundred kilogrammes of cotton waste and collected seeds of amaranth, marigold, and China
Asther

STEP TWO: CUTTING

in this second step of production with cotton is cut as per the diagram of product and standard
sizes with the help of cutting machine

STEP 3: SEWING
in the next step of production, the cotton waste and seeds are sewed as per the design and pattern
with the machine

STEP 4: STICKING
in these this step of product is going to be a stick with the help of this solution and machine this
process is mostly related with the attachment of handles and belts.

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STEP 5: POLISHING
after the completion of sticking for get up of product polishing is necessary because of polishing
the item likes good. the work of polishing is made with the help of machine and then name of the
company is printed.

STEP 6: PACKING
the last step of process is packing of each item all items are packed in different boxes these
products are sent to different places as per the order.

Production capacity :100000 bags (per Month)

INSPECTION AND QUALITY FROM CONTROL:

To survive in a competitive business environment organisation makes all possible efforts to
produce the product which satisfy their customer to the maximum extent.

quality cannot be reliability quality is that why consumers is the golden code the existing of the
product.

in a product like deed infused bag, from raw material to finished good inspection and quality
control is required. Simple devices and machines are used to check the raw material proportion
and quality at every stage.

DESIGN OF THE PRODUCT:

Package contains one seed infused bag.

The shopping bag reads that this bag is embedded with seeds. The bag also provides instructions
for how to plant trees.

In step one, the bag will be torn into small pieces.

The step two includes planting the pieces two inches deep in the soil.

In step three, the seeds will be provided ample water regularly.

the bag asks people to feel proud for making your country beautiful in the fourth step.

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Size:
this product is come in only size which is the standard size of the product. The size we use for
manufacturing our seed infused bag is 45cm * 35cm *20cm

Packaging:
This seed infused bag is packed in tear off paper and moisture free bag with seal.
COST OF THE PROJECT:
Land:

Particulars Area (sq. mts) Rate Total Cost

Land 400 1100 4,40,000

Building:

Particulars Area (sq. mts) Rate Total Cost

Building 275 1800 4,95,000

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Utilities:

Sr.no. Particulars Amount

1 Power 20,000
2 Water 15,000
3 Transportation Cost 50,000
Total 85,000

Plant &machinery:

Name quantity rate Total cost

Fabric roller 1 2,50,000 2,50,000
Seed grinder 1 1,50,000 1,50,000
Cutting machine 2 50,000 1,00,000
Sewing machine 2 40,000 80,000
Presser machine 1 1,00,000 1,00,000
Punching machine 1 50,000 50,000
Polishing machine 2 50,000 1,00,000

Printing machine 2 20,000 40,000

Printing ink 2 5,000 10,000
Testing equipment 1 50,000 50,000
Packaging machine 2 20,000 40,000
Total 785,000
Grand total 8,20,000

Raw Materials:

Sr. No. particular Amount

1 Cotton waste 3,00,000
2 Seeds 30,000
3 Solution 5,000
4 Other stitching items 15,000
Total 5,30,000

Salaries, wages and miscellaneous

Sr.no. Particulars Amount

1 Skilled labors 25,000
2 Non skilled labors 15,000
3 Technical support 30,000
4 miscellaneous 3, 00,000

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SWOT ANALYSIS:
Strength
• eco-friendly and environment- friendly in nature.
• Competitive price
• less competitors
• quality of product
• use of modern technology

Weaknesses
• plant capacity
• can be damage by any means of moisture. For example, in monsoon and rainy season.
• less advertising efforts
Opportunities
• increasing awareness of how hazards of plastic everywhere
• bags are provided there is something that never end packaging
Threats
• government policies
• introducing of new product similar to plastic bags an seed embedded bags
• increasing raw material price

AVAILABILITY:
Our product will be available at public crowded places.
• Supermarkets
• Departmental stores
• Retail shops.
• Pharmacies
• Shopping malls and shopping centres.
Shopping centres
Shopping centres of south-Korea are:
• Emart,
• Homeplus,
• Lotte Mart
• IKEA
• Costco

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Traditional markets of South Korea are:
• Gwangjang Market
• Tongin Market
• Gukje Market
• Namdaemun Market

Distribution strategy:
Our exporter commission agents would offer our products to all users and obtain the strategy of
Business to Business (B2b) as we will offer our services directly to businesses and uses forward
integration for offering the better quality with valuable and best price.

Price:
Our product is available only in one size which is a standard size. The price of that environment
friendly seed infused bag is 700 South Korean Won.

Pricing approach:
We used non-price-based approach for earning profit that will also help the nature and makes the
environment greener.

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Pricing strategy:
The seed infused bag is based on profit-based objective for earning of maximum profit and to
carry out our market share to optimum level.

For this purpose, we used cost plus profit pricing strategy to cover our manufacturing cost and
marked and targeted profit.

ENVIRONMENTAL CONDITION OF INTERNATIONAL

MARKET:
There are some differences, many of which are centered on environmental factors which affect
international marketing:

• the economic environment.

• the competitive environment.

• the cultural environment.

• the political/legal environment.

• technological environment and therefore the ethical environment.

THE SOCIAL/ CULTURAL ENVIRONMENT:

The cultural environment consists of the influence of spiritual, family, educational, and social
systems within the marketing system. Marketers who shall market their products overseas could
also be very sensitive to foreign cultures. While the differences between our cultural background
within the us and other people of foreign nations could seem small, marketers who ignore these
differences risk failure in implementing marketing programs. Failure to think about cultural
differences is one among the first reasons for marketing failures overseas. Table 6 provides some
illustrations of cultural difference round the world.

This task isn't as easy because it sounds as various features of a culture can create an illusion of
similarity. Even a standard language doesn't guarantee similarity of interpretation. for instance,
within the US we purchase “cans” of varied grocery products, but British purchase “tins”. variety
of cultural differences can cause marketers problems in attempting to plug their products
overseas. These include:

a) language,
b) color,
c) customs and taboos
d) values
e) aesthetics,
f) time,
g) business norms,

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h) religion
i) social structures. Each is discussed within the following sections.

• Language:
The importance of language differences can't be overemphasized, as there are almost 3,000
languages within the world. Language differences cause many problems for marketers in
designing advertising campaigns and merchandise labels. Language problems become even more
serious once the people of a rustic speak several languages. for instance, in Canada, labels must
be in both English and French. In India, there are over 200 different dialects, and an identical
situation exists in China.

• Color:
Colors even have different meanings in several cultures. for instance, in Egypt, the country’s
national color of green is taken into account unacceptable for packaging, because religious
leaders once wore it. In Japan, black and white are colors of mourning and will not be used on a
product’s package. Similarly, purple is unacceptable in Hispanic nations because it's related to
death.

• Customs and Taboos:

All cultures have their own unique set of customs and taboos. it's important for marketers to find
out about these customs and taboos in order that they're going to know what's acceptable and
what's not for his or her marketing programs.

Consider how the subsequent examples might be utilized in development of international

marketing programs:

• In Russia, it's acceptable for men to greet one another with a kiss, but this tradition isn't
acceptable within the US.

• Germans prefer their dressing during a tube, while Americans prefer it during a bottle.

• In France, wine is served with most meals, but in America, milk, tea, water, and soft drinks are
popular.

• Values:
An individual’s values arise from his/her moral or religious beliefs and are learned through
experiences. for instance, in America we place a really high value on material well-being, and
are far more likely to get status symbols than people in India. Similarly, in India, the Hindu
religion forbids the consumption of beef, and fast-food restaurants like McDonald’s and Burger
King would encounter tremendous difficulties without product modification. Americans spend
large amounts of cash on soap, deodorant, and mouthwash due to the worth placed on personal
cleanliness. In Italy, salespeople turn women as long as their husbands are reception.

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• Aesthetics:
The term aesthetics is employed to ask the concepts of beauty and quality. The phrase, “Beauty
is within the eye of the beholder” may be a very appropriate description of the differences in
aesthetics that exist between cultures. for instance, Americans believe that suntans are attractive,
youthful, and healthy. However, the Japanese don’t.

• Time:
Americans seem to be fanatical about time in comparison to other cultures. Punctuality and
deadlines are routine business practices within the US. However, salespeople who set definite
appointments for sales calls within the Middle East and Latin America will have tons of your
time on their hands, as business people from both of those cultures are far less bound by time
constraints. to several of those cultures, setting a deadline like “I need to know next week” is
taken into account pushy and rude.

• Business norms:
The norms of conducting business also vary from one country to subsequent. Here are several
samples of foreign business behavior that differ from US business behavior:

• In France, wholesalers don't wish to promote products. they're mainly curious about supplying
retailers with the products they have.

• In Russia, plans of any kind must be approved by a seemingly endless string of committees. As
a result, business negotiations may take years.

• South Americans wish to talk business “nose to nose”. This desire for close physical proximity
causes American businesspeople to retreat from the constantly forward-moving South
Americans.

• In Japan, business people have mastered the tactic of silence in negotiations. Americans aren't
prepared for this, and that they panic because they think something has gone wrong. The result's
that Americans become impatient, push for closure, and sometimes make business concessions
they later regret. These norms are reflected within the difficulty of introducing the online into
Europe (see subsequent “Integrated marketing”).

• Religious beliefs:
A person’s religious beliefs can affect shopping patterns and products purchased in addition to
his/her values, as discussed earlier. In the United States and other Christian nations, Christmas
time is a major sales period. But for other religions, religious holidays do not serve as popular
times for purchasing products. Women do not participate in household buying decisions in
countries in which religion serves as opposition to women’s rights movements.

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Every culture has a social structure, but some seem less widely defined than others. That is, it is
more difficult to move upward in a social structure that is rigid. For example, in the US, the two-
wage earner family has led to the development of a more affluent set of consumers. But in other
cultures, it is considered unacceptable for women to work outside the home.

THE POLITICAL AND LEGAL ENVIRONMENT:

The political/legal environment abroad is quite different from that of the US. Most nations desire
to become self-reliant and to raise their status in the eyes of the rest of the world. This is the
essence of nationalism. The nationalistic spirit that exists in many nations has led them to engage
in practices that have been very damaging to other countries’ marketing organizations.

For example, foreign governments can intervene in marketing programs in the following ways:
• contracts for the supply and delivery of goods and services
• the registration and enforcement of trademarks, brand names, and labeling
• patents
• marketing communications
• pricing
• product safety, acceptability, and environmental issues.

⚫ Political stability
Business activity tends to grow and thrive when a nation is politically stable. When a nation is
politically unstable, multinational firms can still conduct business profitably. Their strategies will
be affected however. Most firms probably prefer to engage in the export business rather than
invest considerable sums of money in investments in foreign subsidiaries. Inventories will be low
and currency will be converted rapidly. The result is that consumers in the foreign nation pay
high prices, get less satisfactory products, and have fewer jobs.

⚫ Monetary circumstances
The exchange rate of a particular nation’s currency represents the value of that currency in
relation to that of another country. Governments set some exchange rates independently of the
forces of supply and demand. The forces of supply and demand set others. If a country’s
exchange rate is low compared to other countries, that country’s consumers must pay higher
prices on imported goods. While the concept of exchange rates appears relatively simple, these
rates fluctuate widely and often, thus creating high risks for exporters and importers.

⚫ Trading blocs and agreements

US companies make one-third of their revenues from products marketed abroad, in places such
as Asia and Latin America. The North American Free Trade Agreement (NAFTA) further boosts
export sales by enabling companies to sell goods at lower prices because of reduced tariffs.

Regional trading blocs represent a group of nations that join together and formally agree to
reduce trade barriers among themselves. The Association of Southeast Asian Nations (ASEAN)
is an example of a regional trading block. The organization is comprised of 10 independent

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member nations, including Indonesia, Malaysia, Thailand, and the Philippines. A free trade
agreement within ASEAN member nation allows for the free exchange of trade, service, labor
and capital. However, universal implementation of these standards is scheduled for 2020. In
addition, ASEAN promotes regional integration of transportation and energy infrastructure.

One of the potentially interesting results of trade agreements like ASEAN or NAFTA is that
many products previously restricted by dumping laws, laws designed to keep out foreign
products, would be allowed to be marketed. The practice of dumping involves a company selling
products in overseas markets at very low prices, one intention being to steal business from local
competitors. These laws were designed to prevent pricing practices that could seriously harm
local competition. The laws were designed to prevent large producers from flooding markets. In
2007, about 60 nations had anti-dumping legislation. Those in favor of agreements argue that
anti-dumping laws penalize those companies who are capable of competing in favor of those
companies that are not competitive.

Almost all the countries in the Western hemisphere have entered into one or more regional trade
agreements. Such agreements are designed to facilitate trade through the establishment of a free
trade area, customs union or customs market. Free trade areas and customs unions eliminate
trade barriers between member countries while maintaining trade barriers with nonmember
countries. Customs unions maintain common tariffs and rates for nonmember countries. A
common market provides for harmonious fiscal and monetary policies while free trade areas and
customs unions do not. Trade agreements are becoming a growing force for trade liberalization;
the development of such agreements provides for tremendous opportunities for companies with
global operations.

The creation of the single European market in 1992 was expected to change the way marketing is
done worldwide. It meant the birth of a market that was larger than the United States, and the
introduction of European Currency Units (Euros) in place of the individual currencies of member
nations. Experience in multilingual marketing would help non-European companies succeed in
this gigantic market. With new technologies such as multilingual processing programs, it would
be possible to target potential customers anywhere in Europe, in any language, and in the same
marketing campaign.

Progress toward European unification has been slow-many doubt that complete unification will
ever be achieved. However, on 1 January 1999, 11 of the 15 member nations took a significant
step toward unification by adopting the Euro as the common currency. These 11 nations
represent 290 million people and a USD 6.5 trillion markets. Still, with 14 different languages
and distinctive national customs, it is unlikely that the European Union (EU) will ever become
the “United States of Europe”.

⚫ Tariffs
Most nations encourage free trade by inviting firms to invest and to conduct business there while
encouraging domestic firms to engage in overseas business. These nations do not usually try to
strictly regulate imports or discriminate against foreign-based firms. There are, however, some
governments that openly oppose free trade. For example, many Communist nations desire self-

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sufficiency. Therefore, they restrict trade with non-Communist nations. But these restrictions
vary with East-West relations.

The most common form of restriction of trade is the tariff, a tax placed on imported goods.
Protective tariffs are established in order to protect domestic manufacturers against competitors
by raising the prices of imported goods. Not surprisingly, US companies with a strong business
tradition in a foreign country may support tariffs to discourage entry by other US competitors.

⚫ Expropriation
All multinational firms face the risk of expropriation. That is, the foreign government takes
ownership of plants, sometimes without compensating the owners. However, in many
expropriations there has been payment, and it is often equitable. Many of these facilities end up
as private rather than government organizations. Because of the risk of expropriation,
multinational firms are at the mercy of foreign governments, which are sometimes unstable, and
which can change the laws they enforce at any point in time to meet their needs.

South Korea had a turbulent political past, characterized by frequent changes in government,
little political freedom and military coups. However, in 1986 the democratic process was
streamlined and the president was vested with maximum power. Due to the centralization of
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. There is a
high-degree of political violence in the country and relations with North Korea continue to be
tense. This is costing South Korea both economically and politically. There have been frequent
summits between the two countries; however, they have so far failed to reach a consensus.

THE TECHNOLOGICAL ENVIRONMENT:

The level of technological development of a nation affects the attractiveness of doing business
there, as well as the type of operations that are possible. Marketers in developed nations cannot
take many technological advances for granted. They may not be available in lesser developed
nations. Consider some of the following technologically related problems that firms may
encounter in doing business overseas:

• Foreign workers must be trained to operate unfamiliar equipment.

• Poor transportation systems increase production and physical distribution costs.
• Maintenance standards vary from one nation to the next.
• Poor communication facilities hinder advertising through the mass media.
• Lack of data processing facilities makes the tasks of planning, implementing, and controlling
marketing strategy more difficult.

South Korea has been historically known for technological innovation. Moreover, with a highly
educated workforce and well-equipped infrastructural facilities, the country is a favored
destination for R&D. South Korea is the most wired country, in terms of communications and
internet facilities, in the world. The gap between innovation and commercialization is also very

24
small in South Korea. There are about 900 R&D centers that include foreign participation in
South Korea, although over regulated governance and low-cost competitive neighbors cause a
major threat to the country.

THE ECONOMIC ENVIRONMENT:

A nation’s economic situation represents its current and potential capacity to produce goods and
services. The key to understanding market opportunities lies in the evaluation of the stage of a
nation’s economic growth.

A way of classifying the economic growth of countries is to divide them into three groups:
1) Industrialized.
2) Developing.
3) less-developed nations.
The industrialized nations are generally considered to be the United States, Japan, Canada,
Russia, Australia and most of Western Europe the economies of these nations are characterized
by private enterprise and a consumer orientation. They have high literacy, modem technology,
and higher per capita incomes.

Developing nations are those that are making the transition from economies based on agricultural
and raw materials production to industrial economies. Many Latin American nations fit into this
category, and they exhibit rising levels of education, technology, and per capita incomes,

Finally, there are many less developed nations in today’s world. These nations have low
standards of living, literacy rates are low, and technology is very limited.

Usually, the most significant marketing opportunities exist among the industrialized nations, as
they have high levels of income, one of the necessary ingredients for the formation of markets.
However, most industrialized nations also have stable population bases, and market saturation
for many products already exists. The developing nations, on the other hand, have growing
population bases, and although they currently import limited goods and services, the long-run
potential for growth in these nations exists. Dependent societies seek products that satisfy basic
needs–food, clothing, housing, medical care, and education. Marketers in such nations must be
educators, emphasizing information in their market programs. As the degree of economic
development increases, so does the sophistication of the marketing effort focus on the countries.

The Competitive Environment:

Entering an international market is similar to doing so in a domestic market, in that a firm seeks
to gain a differential advantage by investing resources in that market. Often local firms will
adopt imitation strategies, sometimes successfully. When they are successful, their own nation’s
economy receives a good boost. When they are not successful, the multinational firm often buys
them out.

25
Japanese marketers have developed an approach to managing product costs that has given them a
competitive advantage over US competitors. A typical American company will design a new
product, then calculate the cost. If the estimated cost is too high, the product will be taken back
to the drawing board. In Japan, a company typically starts with a target cost based on the price
that it estimates the market is most willing to accept. Product designers and engineers are then
directed to meet the cost target. This approach also encourages managers to worry less about
product costs and more about the role it should play in gaining market share. Briefly, at Japanese
companies like Nippon Electric Company (NEC), Nissan, Sharp, and Toyota, a team charged
with bringing a product idea to market estimates the price at which the product is most likely to
appeal to the market. From this first important judgement, all else follows. After deducting the
required profit margin from the selling price, planners develop estimates of each element that
make up the product’s cost: engineering, manufacturing sales, and marketing. US firms tend to
build products, figure how much it costs to build the product, and then ask whether the product
can be sold at a profitable price. US companies tend not to assess what the market will be willing
to pay.

⚫ Marketing objectives
Having identified stakeholder expectations, carried out a detailed situation analysis, and made an
evaluation of the capabilities of the company, the overall marketing goals can be set. It is
important to stress that there is a need for realism in this, as only too frequently corporate plans
are determined more by the desire for short-term credibility with shareholders than with the
likelihood that they will be achieved.

The process adopted for determining long-term and short-term objectives is important and varies
significantly, depending on the size of the business, the nature of the market and the abilities and
motivation of managers in different markets. At an operational level, the national managers need
to have an achievable and detailed plan for each country, which will take account of the local
situation, explain what is expected of them and how their performance will be measured.
Examples of objectives might be:

• financial performance, including return on investment and profitability;

• market penetration, including sales (by volume and value), market share by product category;
• customer growth, by volume and profitability;
• distribution, including strength in supply chain, number of outlets;
• brand awareness and value;
• new product introductions and diffusion;
• company image, including quality and added value (or service).

PROBLEMS/ ISSUES WITH SOLUTIONS IN ENTERING

SOUTH KOREAN MARKET:
About the past three decades, South Korea has faced a great boom in industrial sector which
have made it a successful industrialized country. South Korea positioned itself a prominent
economy and a source of investment for other countries. We have to face certain issues while
26
entering in the South Korean market which we can resolve by various means and some of them
are as follows.

LOCAL LANGUAGE AND CULTURE PROBLEM:

More than half of the population understands local language, business cultures and practices and
it is considered as the dominant barrier for doing trade in South Korea.

We will use language translator with the help of our agent to remove this barrier while entering
in South Korean market.

FOREIGN COMPETITORS:
Domestic and foreign firms that are already doing businesses in South Korea can be a barrier for
us in our way of success because they are already covering great part of the business trade there.

We have a unique product that we are introducing there for export and to enter into the market.
Our product is our strength and it will help us to entering the market.

IMPORT DUTIES, QUOTAS AND TARIFFS:

10 to 11% tariffs, import duties can be seen as a potential barrier in exporting our product that is
new for the Korean market. Tariffs and taxes must be paid in Korea within 15 days after goods
have cleared Customs.

Korea maintains quota tax and tariffs system to stabilize itself.

Well different trade agreements are in force to trade and they will help us to significantly reduce
barriers and taxes to make it easy for us to export our product.

LOCAL FIRMS REGULATION AND AUTHORITIES:

A major problem is existence of CHAEBOL (large industrial conglomerate that is run and
controlled by an owner or family in South Korea). A chaebol have covered the economy of south
Korea and they have a monopoly in various businesses.

IMPORT REQUIREMENTS AND DOCUMENTATION:

Companies who have to export products in the Republic of Korea, the following shipping
documents are required to clear Korean Customs:

• COMMERCIAL INVOICE

• CERTIFICTAE OF ORIGIN

These documents have complete description of the product about quality, quantity, unit value,
total value. There are many other documents beside these.

27
We will prepare these documents with the help or our banking and business agents who will
guide us about legal procedures.

The Korean government has stipulated requirements and procedures for importing certain
products including registration, and efficacy testing to ensure the protection of public health and
sanitation, national security, and the environment standards and safety. Typically, health or
safety-related products, such as pharmaceuticals and medicines, require additional testing or
certification by the relevant organizations before clearing Customs.

LABELING/MARKING REQUIREMENTS:
Korea have certain labeling and marking requirements for specific products, such as
pharmaceutical and food products as well as for organic and functional food and food produced
through biotechnology which are covered by specific regulations from Korean Government and
agencies are responsible for these items. Language label of Korea, except for country of origin
markings that must be shown at the time of Customs clearance, can be attached locally on
products in the bonded area, either before or after clearance. Our service agents will help us in all
these legal matters.

ACCESS TO FINANCE:
Financial issues are the main consideration of doing international business. Credit and clearing
issues are the main problem.

The help of a banking agent can be taken to resolve our all cheque payments and cash handling
issues.

These were some of the issues of entering South Korean market which can be resolved by the
help of legal agents and banking systems also.

28
FINANCIAL PLAN:
SEED INFUSED BIODEGRADABLE BAGS

INCOME STATEMENT

FOR THE YEAR ENDED DEC 31

YEAR
REVENUE 2021
Sales 1,845,000
Net sales 1,845,000

less: Cost of Goods Sold

Raw Material 530,000
Transportation-in 50,000
580,000
Gross profit 1,265,000

less: Operating Expenses

Salaries expense 70,000
utilities expense 35,000
administrative expenses 50,000
marketing expense 50,000
maintainance 50,000
depriciation expense 380,000
miscellaneous expense 300,000
legal and auditing Expense 10,000
Advertising expense 20,000
Operating Profit 965,000
300,000
Net profit before interest and taxes
less: provision for tax (19 %) 57,000

Net Profit after taxes 243,000

29
 SEED INFUSED BIODEGRADABLE BAGS

BALANCE SHEET

FOR THE YEAR ENDED DEC 31

ASSETS EQUITIES
LIABILITIES
current Assets 200,000 total current liabilities 100,000
Fixed Assets Total liabilities 100,000
Building 495,000
Machinery 820,000 Equities
Land 440,000 Share Capital 1,232,000
less: Depriciation 380,000 Profit 243,000
1,375,000 1,475,000
Total Assets 1,575,000 Total Equities 1,575,000

30
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