CIA 1 B

INTERNATIONAL BUSINESS

Country Analysis
Degree of Bachelor of Commerce - Bachelor of Business Administration -
Business Analytics of CHRIST (Deemed to be University) 

 
By 

SAKSHI YADUMOHAN SINGH REGISTER No: 19111535 

HARSHADA PREMNATH JADHAV REGISTER No: 19111544
MANAN ANIL RAKA REGISTER No: 19111546

 
Under the guidance of 
PROF. SUBHASHREE ACHARYA

 
 

DEPARTMENT OF COMMERCE & MANAGEMENT

CHRIST (Deemed to be University) 
LAVASA, PUNE 
7TH MARCH 2021
 Acknowledgment:

Doing this I.B. assessment was very interesting.

We analysed various factors that could affect the
new business to enter and sustain in the new
country. First of all, we would like to express our
enormous gratitude to our I.B. professor
Subhashree Acharya
for her continuous encouragement and guidance
through her teachings. We are also glad that we
got such an impressive and exciting assignment to
work upon as a CIA. I am also very gratified to
have lived in a technology world where accessing
information is just a few clicks away. We are also
thankful to our parents, who were a
constant source of inspiration to us.
Thank you

Table of Content: -
1. Information of client’s company
2. Information about our consultancy firm
3. Brief information about South Korea
Demography
Purchasing Power
Consumer behaviour
Economy
4. Relations between Sri- Lanka and South Korea
5. Country Analysis
Political Analysis
Cultural Analysis
Economic environment Analysis
Legal environment Analysis
6. SWOC Analysis
7. Conclusion
8. Reference
Pentagon Ltd is a Sri-Lanka-based manufacturing leather, and now they want to expand their
business worldwide. We as a consultant are putting forward the country analysis of South Korea.
South Korea faces a very harsh winter, so that people will prefer leather jackets. Also, leathers of
good quality will be an excellent deal for the Korean population.

WHO ARE WE?

brilliant mind, brilliant people
We are a pioneering management consulting company that works with forward-thinking leaders
to develop adaptable solutions for today's diverse and unpredictable environment.
SHM consultancy's primary goal is to provide precise and accurate guidance to our clients to improve
their success chances. We strive to improve our expertise and sharpen our skills in response to
changes in this ever-changing marketplace.
We are your partner in significantly increasing your chances of success while drastically lowering
your chances of failure. SHM consultancy is a one-stop-shop for international trade assistance.
Website: https://harshadajadhav814.wixsite.com/website-1/book-online
We combine foreign and local experience at to:

 Established companies that want to drive growth and plan plans for the next phase of
development will get advice, guidance, and help from us.
 Allow new entrants to enter the market with ease and at a low cost. This prevents expensive
delays and the waste of financial and human capital by avoiding a needless 'learning curve.'
 Not only do we solve their most pressing business challenges, which are preventing them
from progressing from good to great, but we also teach them skills so that they can continue
to succeed long after we are gone. We are aware of the various requirements of organizations
at various stages of the business life cycle.
Here we do our jobs
We provide strategic advice where it's needed the most. We offer expert guidance to C-level
executives at industry leaders and emerging challengers on policy, marketing, transformation, and
digital. Whether it's driving growth, entering a new market, improving profitability, or coping with
digital disruption, our consultants help companies solve their most challenging strategic problems.
What we do to support
We provide you with a whole new viewpoint. Our three-pronged approach to problem-solving is
based on our specific and validated approach to problem-solving. As a result, our plans are future-
focused, market-tested, and designed to give the company a long-term competitive advantage.
ABOUT SOUTH KOREA:

South Korea- Map South Korea- Flag

South Korea's economy is the 4th largest economy in Asia and the 11th largest in the world.
It is a mixed economy. It is majorly dominated by family-owned conglomerates called chaebols;
however, Chaebol's dominance is unlikely and at risk to support the Korean economy's transformation
for future generations. South Korea is famous for its spectacular growth from one of the world's
poorest countries to a developed and high-income country in just one decade.
Demography:

Population 51,299,206 (as of Sunday, March 7, 2021)

Population growth rate 0.2 % (acc. to the latest data provided by
the World bank)
Urban Population 81.8% of the population is urban
(41,934,110 people in 2020)
Median age 43.7 years
Gender ratio 1:1
Most populated city Seoul
Least populated city Gyeonggi province
Some of the main cities Seoul, Busan, Incheon, Daegu, Daejeon,
and Gwangju.
Literacy rate: 97.9 %

Purchasing Power: The GDP per capita PPP was $ 43,028.896 in 2019. In Korea, the average
household net adjusted disposable income per capita is USD 21,882 a year, lower than the OECD
average of USD 33,604 a year. A significant gap exists between the richest and the poorest: 20%
of the population earns more than five times more than the lower 20%. Also, the average salary
in Seoul is among the highest in Asia, currently at KRW 2.7 million, or slightly more than USD 2300.
Consumer Behaviour: South Korea is a consumer society. They purchase not only to serve their
primary needs but also for as for their status. The economic slowdown and high debt level have
pushed some Koreans to pay attention to their spending, even if luxury goods are still trendy.
Products attracting the most consumers are successful brands where detailing is visible. Consumption
is used to make a statement. In general, purchases are made in department stores, shopping centres,
and new stores (for example, food retailers).
Korean consumers are not loyal to brands, and they tend to be tech-savvy and concerned
with brand names. Koreans are very connected. More than 98% of South Korean households access
the World Wide Web daily, and over 85% of the Korean population owns a smartphone. Online
shopping is very democratized. In 2019, 88.5% of the nation's population used e-commerce platforms,
which is expected to rise to 94.4% in 2023. The use of the internet also makes it possible to search for
information on a product before picking it up in a store. Social networks are used to explore, review
products, and buy. Influencers and testers of known products are influential in consumer decision-
making. Consumers are less attracted to domestic products and want to experiment, and hence,
they tend to buy more foreign goods.
South Koreans tend to change their consumption behaviour. Koreans are increasingly
looking for leisure free time. Adding to that, a new group of consumers has emerged, insisting on
"green labels" and hunting for eco-friendly or organic and natural alternatives. Concerns for the
environment are a little more substantial among young people. There is a second-hand market in
South Korea developing, especially with flea markets and internet exchanges. The collaborative
economy is present and growing in South Korea.
Economy
After the 1950-53 war with the Democratic People's Republic of Korea (North Korea), South Korea
emerged as one of the 20th century's most remarkable economic success stories, becoming a
developed, globally-connected, high-technology society within decades. The Asian financial crisis of
1997-98 hit South Korea's companies hard due to their excessive reliance on short-term borrowing,
and GDP ultimately plunged by 7% in 1998. The Republic of Korea tackled difficult economic
reforms following the crisis, including reorganizing some chaebols, amplifying marketplace
flexibility, and opening up to more foreign investment and imports. These steps caused a
comparatively rapid economic recovery. South Korea also began growing its network of free trade
agreements to help bolster exports and has since implemented 16 free trade agreements covering 58
countries—including the United States and China—that collectively cover more than three-quarters of
global GDP. Socioeconomic problems also persist and include rising inequality, poverty among the
elderly, high youth unemployment, long working hours, low worker productivity, and corruption.
Relations between Sri- Lanka and South Korea:
Sri Lanka and the Republic of Korea, as two Asian countries, enjoy longstanding friendly relations.
Historical Buddhist links between Sri Lanka and the Republic of Korea go back to the 5th century
A.D. Economic relations between Sri Lanka and the Republic of Korea are of utmost importance. Sri
Lanka is a lower-middle-income country with a GDP per capita of USD 4,065 and a population of 21
million.

There is a steady increase in bilateral trade between Sri Lanka and the Republic of Korea, currently
standing at approximately USD 400 million. Sri Lanka is a producer of high-quality, ethical apparel
for top global brands. The Republic of Korea is a vital investment source, including Foreign Direct
Investment (FDI) to Sri Lanka. Korean investment has over 75 companies based in Sri Lanka and has
generated more than 18,000 job opportunities.

The year 2018 is of particular significance to bilateral relations between Sri Lanka and the Republic
of Korea as the two countries hold the 2nd round of bilateral political consultations between the two
Ministries of Foreign Affairs in Sri Lanka in June 2018 after five years Besides, given the potential
for the expansion of trade and investment, a Joint Commission on Economic Cooperation (J.C.)
between the 2 countries had been established in 2018, and therefore the first meeting of the J.C. was
held in Colombo in June 2018. Collaborations between the 2 countries also exist at a greater level,
including academics, science and technology, defence, and cultural relations. The Republic of Korea
and Sri Lanka's bilateral relations still deepen gradually to a good state.

Political analysis:
President Moon Jae-in party won a parliamentary election in January 2020, with citizens backing
government authority's reaction to the COVID pandemic. The ruling left-wing party is probably going
to form agenda in front of the 2022 official political election, eminently on the unemployment rate
and chaebol change
Form of state
Presidential system; the president and the National Assembly (parliament) are directly elected;
members of parliament are elected using a mixed system of first past the post and proportional
representation

The executive

The president (elected for a single term of five years) appoints the State Council (the cabinet), which
comprises the president, the prime minister, and 15-30 ministers. Cabinet ministers are generally not
members of the National Assembly

Head of state - Elected president

Legislature

Unicameral Kuk Hoe (National Assembly) was elected for a four-year term. The current assembly,
which was elected in April 2020, has 300 seats. Most of the assembly's seats are filled by election
from geographical constituencies, with the remainder distributed among the various parties in
proportion to their shares of the national vote

Main political organizations

Minjoo Party, People Power Party, Party for People's Livelihoods, Justice Party

Prominent members of the State Council

President: Moon Jae-in

Prime minister: Chung Sye-kyun
Deputy prime minister: Hong Nam-ki; Yoo Eun-hae

Cultural analysis:

Influence of Confucianism on the Corporate Culture of South Korea As an East Asian country, South
Korea has been highly influenced by Confucianism. Confucianism is an ethical way of living life. It
has been said that Confucianism has had a more significant influence in South Korea than in any
other nation. Confucianism, which emphasizes reverence for education, authority, and age, is deeply
rooted in Korean culture. While modern Koreans do not adhere to Confucian principles strictly as
previous generations, many customs and business practices are still based on them.
Age and social standing
In Korean culture, age and rank are highly valued, with hierarchy influencing all facets of social
interactions. As a result of hierarchy, everybody has a place in society, so it is important to value it.
Koreans are most at ease when engaging with someone they regard as a peer. Someone's status is
primarily defined by their role in an organization, the organization for which they operate, the
University they attended, and their marital status.
Business cards are used to promote a company.
Initial meetings are incomplete without the exchange of business cards. It enables Koreans to quickly
decide the crucial position, title, and rank of their counterparts. You should respectfully hand over a
business card with two hands while still standing and receive one in return. Instead of tossing the card
into a pocket, take a few moments to study the names and titles. Place it on the table in front of you
for the remainder of the meeting if you are seated.
Handshakes and bows
Koreans bow as a greeting and a show of respect to those in positions of authority. The junior
individual starts the bow by bending from the waist at a 30 to 45-degree angle from vertical. As an
acknowledgment, the more senior person returns a less pronounced bow. Bowing is not as common in
Korea as it is in other countries, such as Japan. When meeting a group of Koreans, greet the highest-
status individual first, followed by the oldest. The person with the highest status usually is the first to
enter a room. When greeting and leaving, Australian businesspeople extend a simple handshake;
however, don't be shocked if you get a two-handed handshake and a b.
The dress code is:
The importance of appearance is paramount, and Koreans dress more formally than Australians. The
emphasis on conformity rather than individual speech is emphasized in business attire. Dark-colored
business suits with ties and white shirts are recommended for men
Maintaining one's appearance
Maintaining face is essential in Japan's business and social relationships, as it is in other Asian
societies. Koreans seek to maintain a harmonious atmosphere in which a person's kibun (mood or
inner feelings) can remain balanced through social etiquette and behaviour. Openly contradicting
others, publicly criticizing them, or patronizing them are all sure-fire ways to lose the company.
Giving genuine compliments, demonstrating appreciation, or doing something that boosts self-esteem
are all better options.
Dining
In bars and restaurants, much relationship-building happens. Often accept dinner invitations because
this is the Korean's chance to test your trustworthiness and decide whether or not to do business with
you.

 Koreans tend to focus on their food while eating and speak over coffee or tea after the meal is
finished.
 Avoid talking business during a meal unless the hosts bring it up first.
 Make sure you don't serve or eat anything until the host does.
 Until consuming, always move food from a serving dish to your plate or cup.
 While chopsticks (along with spoons for soups and noodles) are the most commonly used
utensils, you may also use spoons.
 Economic environment analysis:

Economic freedom (24th on the list in 2021 74.0%

Index)
Rank among the Asia- Pacific region 7th rank (among the 40 countries)
Currency Korean Won (KRW)
GDP growth (annual %) of 2019 2.0
Inflation (2020) 0.5 %
Unemployment 3.7%
Government debt (in % of GDP) 52.24%
The industrial production growth rate 3.5% (2017 est.)
Population below the poverty line 12.5% (2015 est.)
Taxes and other revenue 23% of GDP (2017 est.)
Public debt 43.3% of GDP (2017 est.)

Currency: -
South Korean Won
The USDKRW spot exchange rate specifies how much one currency, the USD, is currently worth the
other, the KRW. While the USDKRW spot exchange rate is quoted and exchanged on the same day,
the USDKRW forward rate is quoted today but for delivery and payment on a specific future date.

Comparison of Korean Won with USD: -

GDP Composition by sector of origin: - GDP by a composition by the end-user: -

 Import and export: -
Exported commodities
Export Partner's
Export Volume (in 2020)
Import Volume (in 2021)
Imported commodities
Import Partners
Semiconductors, petrochemicals,
automobile/auto parts, ships, wireless
communication equipment, flat displays,
steel, electronics, plastics, computers,
China 25.1%, US 13.5%, Vietnam 6.6%,
Hong Kong 6.6%, Japan 4.9% (2016)
The U.S. $512.8 billion
The U.S. $ 44.6 billion
Crude oil/petroleum products,
semiconductors, natural gas, coal, steel,
computers, wireless communication
equipment, automobiles, fine chemicals,
textiles
China 21.4%, Japan 11.7%, US 10.7%,
Germany 4.7% (2016)
Import volume of goods (percentage
change)

Export volume of goods and services

(percentage change)
Balance of Payment: -
52.5 billion U.S. dollars in 2020 is the balance of payment of South Korea. Though the current
account balance fluctuates substantially in recent years, it is increasing thoroughly.
Current account balance (U.S. dollar)
Current account balance (percent of GDP)

Trade Relations of South Korea and Sri Lanka: -

 - Comparison between Import
volume of South Korea and Sri
- Comparison of Export Volume of
Lanka
South Korea and Sir Lanka

South Korea Foreign Exchange Reserves

In South Korea, Foreign Exchange Reserves are the foreign assets held or controlled by the country's
central bank. The reserves are made of gold or a specific currency. They can also be special drawing
rights and marketable securities denominated in foreign currencies like treasury bills, government
bonds, corporate bonds, equities, and foreign currency loans.
 Actual Previous Highest Lowest Dates Unit Frequency
447557.50 442727.70 447557.50 564.50 1971- USD Monthly
2021 million

South Korea Stock Market

The Korea Stock Exchange Composite KOSPI is a primary stock market index that tracks the
performance of all common shares listed on the Korean Stock Exchange. It is a capitalization-
weighted index. The KOSPI Index has a base value of 100 as of January 4, 1980. The KOSPI is a
primary stock market index that tracks large companies' performance based in South Korea. The
prices displayed in Trading Economics are based on over-the-counter (OTC) and contract for
difference (CFD) financial instruments.

Legal environment
Ease of Doing Business in South Korea

The ease of doing business index ranks countries against each other based on how the regulatory
environment is conducive to business operation stronger protections of property rights. Economies
with a high rank (1 to 20) have more specific and more friendly business regulations.
No. Procedure Time to complete Associate cost
1. Make company seal 1 day KRW 30,000
(Company should make their seal of their
business)
2. Register the company with Start- Biz and 3 days KRW 2,000 fee of e-
pay incorporation fees registration+ 1.2%
(Start-Biz Online (www.startbiz.go.kr) is capital registration
the combined the Internet Register tax + education tax
Office, the Local tax and many more (20% of the
facilities related to the Procedure) registration tax) +
KRW 20,000 (e-
registration form)
3. Register with the tax office 4 days No charges
(Following the completion of its court
registration, a company must register
with the appropriate tax office according
to the Corporation Tax Law (Article 111)
and the Value Added Tax Law.
The following documents need to be
provided:
 - Registration application;
- Article of Incorporation;
- Certificate of the commercial registry;
- Lease agreement for the office;
- Certificate of the corporate seal;
- Corporate seal;
- Permit (in the case of a business that
requires any);
- PoA and I.D. card of the representative
director;
- proof of funds and their origin (e.g.,
copy of tax return or a loan agreement).

Legal Procedure for starting a business: -

1. Pre-registration (for example: - name verification or reservation)
2. Registration in the economy's largest business city (Seoul)
3. Post-registration (for example, social security registration, company seal)
4. Obtaining approval from spouse to start a business or to leave home to register the
company.
5. Obtaining any gender-specific document for company registration and operation or
national identification card.
SWOC Analysis:
Discarding traditional SWOT analysis, we are adopting SWOC analysis- (replacing T with C). The
question is, why? Why do SWOC analysis instead of SWOT? Finding challenges instead of threats
gives an entity a positive outlook. It is a great cost-effective way to reduce challenges and deter
failure of a business venture or product.
 Strengths Weaknesses Opportunities Challenges

STRENGTHS

 High Private and public R & D spending: "South Korea invested almost 90 trillion won
(US$83 billion) in research and development (R&D) last year, making it the fifth-largest
spender among members of the Organization for Economic Cooperation and Development
(OECD)", the ICT ministry said Wednesday.
 Source: The World Bank
 Good educational background: South Korea is one of the top-performing OECD
countries in reading literacy, mathematics, and sciences, with an average student scoring
about 519, compared with the OECD average of 493, placing it ninth in the world. The
country has one of the world's highest-educated labour forces among OECD countries.
 Diversified FDIs in Asia: Korea has become one of the leading providers of FDI in Asia.
Korea's outward FDI exceeded inward FDI in 1990 for the first time. Since then, Korea has
rapidly expanded FDI abroad. As motives for FDI can be counted as providing a firm with
new markets and marketing channels, cheaper production facilities, access to new technology,
products, skills, and financing. For a host country or a foreign firm, which receives the
investment, FDI can provide a source of new technologies, capital, processes, products,
organizational technologies, and management skills, and as such can provide a strong impetus
to economic development.  
 High Economic freedom: South Korea's economic freedom score is 74.0, making its
economy the 24th freest in the 2021 Index. South Korea's economy continues to maintain its
ranking among the freest countries. A well-educated labour force and a high innovation
capacity have helped companies capitalize on their global trading system's participation. 
WEAKNESSES

 Competition from China: "China has enhanced its competitiveness in various industries since
2010, and South Korea and China are currently competing very closely with each other in most
major export industries other than information and communications technology," the institute
explained.
 High level of household debt: South Korean households are piling up debt for various
reasons, from overspending on credit cards to unemployment to gambling losses. 

 An aging population: South Korea entered an aging society in 2000 when the ratio of older
people was 7.2% of the total population. Generally, the aging population is directly caused by
a declining birth rate and a slowing death rate. On the other hand, South Korea's demographic
aging stems mainly from collapsing fertility rather than a slowing death rate in the wake of
extended average life expectancy.
 High youth unemployment: The rate of youth unemployment in South Korea fluctuated in
the 9–11% range between 2001 and 2014. It was above 10% in 2018 and down to 7.1% by
the end of 2019 - the lowest since 2011.
 Proximity to North Korea: There's always an underlying threat from North Korea.
 Increasing tensions with Japan: Tensions between Tokyo and Seoul intensified after Japan
imposed new exports that could hit South Korea's tech industry.
OPPORTUNITIES
  Free trade agreement: Korea has Free Trade Agreements with ASEAN, Australia,
Canada, Central America (Partial), Chile, China, Colombia, India, New Zealand, Peru,
Singapore, the European Union, and the European Free Trade Association (Norway,
Switzerland, Iceland, and Liechtenstein), U.S., Turkey, and Vietnam.
 Growth set of rebound despite downside risks: Growth is set to recover gradually through
2021, on the back of a revival in private consumption supported by fiscal stimulus measures,
although exports (40% of GDP) should remain modest. A steady recovery in key trade
partner China (25% of exports), and semiconductors (17% of exports), have been driving
external demand. That said, the recent U.S. curbs on China's technology might add downside
pressures, alongside decreasing semiconductor prices in recent years. 
 The interest of young people in foreign products: Youngsters prefer buying more of the
foreign good to stay in trend and neglect home country products.
CHALLENGES

 The budget deficit will widen for the second consecutive year: The budget deficit will
widen due to expansionary moves extended through 2021 to support an economy damaged by
the pandemic. The government drafted a record USD 469.9 billion fiscal budget for 2021,
marking the second consecutive year where expenditures exceed revenues. Considering the
increasing unemployment rate, the budget would mainly focus on health, welfare,
employment (30.5% of budget expenditures), and job creation (5.5%), as President Moon
Jae-in pledged to expand public sector jobs at the end of his term in 2022. 
 There are no significant improvements with its neighbours:  Relations with neighbours do
not seem to get any better so far. Increasing tensions recently led Pyongyang to blow up the
joint liaison office with Seoul near Kaesong (North Korea). It is unlikely that Japan and
South Korea's ongoing trade conflict - with South Korea requesting reparations from Japan
for crimes committed during the Second World War - could ease under the new Japanese
Prime Minister Suga, who inherited Abe's policy line.
 Changing Government policies: During the two decades since it became a democracy,
South Korea has faced lingering problems, such as poor governance, high-level corruption,
lack of leadership, political conflict, social polarization, volatile public opinion, and lack of
consensus on major issues, to cope up with this government keep changing up their policies.

Conclusion:
Reasons why Pentagon Ltd. should start their business in South Korea: -
1. South Korea promotes starting a business, and this will encourage Pentagon Ltd. to
start a business.
2. South Korean people prefer wearing fashionable clothing, and they consider leather a
high-status fashion clothing item. So, it will be a great idea to launch the leather
company.
 3. South Korea is a country that has a cold climate, and leather is considered to give
warmth to the body. Therefore, there is a great demand for leather over there.
4. The Chaebol (high-class business people) mostly like to wear leather, and as the
leather items are expensive, so they can afford the items.
5. The youngster in Korea prefers using international or foreign brands rather than using
the local brands. So, this would be an opportunity for us to launch the leather
company.
6. Bilateral relations have improved between South Korea and Sri Lanka. So, it is an
advantage for the Pentagon Ltd. because their home country is Sri Lanka.

Thank you!!!
Reference:

1) https://www.worldometers.info/world-population/south-korea-population/#:~:text=South
%20Korea%202020%20population%20is,of%20the%20total%20world%20population.
2) http://www.slembassykorea.com/eng/s2/s2_2.php#:~:text=Bilateral%20Relations
%20between%20Sri%20Lanka%20and%20the%20Republic%20of%20Korea&text=Sri
%20Lanka%20is%20a%20lower,at%20approximately%20USD%20400%20million
3) Reaching the South Korean consumer - Santandertrade.com.
https://santandertrade.com/en/portal/analyse-markets/south-korea/reaching-the-consumers
4) Korea, South - The World Factbook. https://www.cia.gov/the-world-
factbook/countries/korea-south/
5) EMBASSY OF SRI LANKA / 주한스리랑카대사관.
http://www.slembassykorea.com/eng/s2/s2_2.php