MPM735/935: International Business Management - Report Writing Assessment Answers

Business Management Report Writing

Report Writing Task

Assignment 2 requires you to develop a COUNTRY PROFILE (or scenario) of South Korea for Villiers, which is interested in exploring opportunities in that country. See the A - Assessment Overview document for information about Villiers.

This assignment requires you to imagine you are an individual, or a group of, international business consultants, who work for Villiers and have been asked to advise on taking the company into South Korea. You must try to look at the situation from Villiers’s point of view, and examine the business environment of South Korea through Villiers’s requirements, their company and their industry.

You need to write a Report presenting a current (2016) scenario of South Korea, plus a forecast based on this scenario for 4-5 years, to 2021. This assignment is PRACTICAL and requires you to identify the criteria you need to consider, such as economic, political, foreign direct investment, financial, legal and sociocultural factors in particular, as addressed in the first five topics of the Unit. The purpose of this assignment is to get you to apply what you are learning in the subject to this case study.

We want to know about the current South Korean environment and whether it would be a suitable environment to set up a new part of the business. We expect that from your data you will be able to form an opinion on whether or not South Korea is suitable for your company to enter as a new market. If it is not worth entering at the moment, is it worth considering over the next four or five years?

We require accurate, timely and relevant data and analysis of the significance of this data. In addition, we will assess you on your reasoning as to the suitability of South Korea as a country for entry: for example, factors such as economic growth, the cost of labour, the infrastructure, the political and security environment, the government’s rules around foreign investment and whether there are any government incentives for foreign direct investment, and so on. As consultants you would want to advise your company about the environment and whether there are any major problems, e.g. the economy overheating (inflation rates), economic growth rates, legislation preventing foreign ownership of land or operations, major corruption which is almost impossible to overcome, and so on. You have to take material from Topics 1-6 which relates to the situation of Villiers.

You are also required to briefly forecast what the South Korean environment will be like in 2021.

We don't only want to know for the next 3 months but we need you to think about the next four to five years. It is unlikely that you can really set up a business in under a year so you would need to have some knowledge of what is likely to happen over the next few years. We don't expect you to be able to predict the future. But we do expect you to look at the political situation of the country and say, for example, whether there is going to be an election and what the most likely scenarios are, or economically what is likely to happen over the next few years. You are evaluating the business risks and trying to position your business. We will reward you in this section for using the data (not just reporting it) and making educated predictions, which are supported with logical explanations.

Company and industry details

The assignments are based on a chocolate manufacturing company called Villiers Chocolates Pty Ltd. This is a fictitious company – that is, it is not a real company, but has been made up for these assignments. Villiers is a small company based in the inner eastern suburbs of Melbourne. It is family owned, and has been operating at its present location since its establishment in 1948. It manufactures and sells chocolates of the very highest quality, modelled on the Swiss style of chocolate design and production.

The company was established in 1948 when Pierre Auber, then 28, migrated to Australia from his home village of Villiers in Western Switzerland. Pierre had studied food production and food service in Switzerland and had served an intense apprenticeship at a leading chocolatier in Neuchatel, the nearest city to Villiers. Frustrated by the challenging economic conditions of immediate-post war Europe and the conservatism of his profession there, he emigrated to Melbourne in 1948 to seek more freedom and more opportunities.

He started his first chocolate shop in an inner Melbourne suburb and met with immediate success. His high quality, well-packaged chocolates soon found an enthusiastic market and the company’s growth began. His grandson, Robert, now owns and runs the company.

Villiers Chocolates now operates four shops in Melbourne, one in the city centre and three in upmarket suburban centres. It also has a substantial mail-order business, sending chocolates to customers all over Australia. This is difficult in Australia (because of the heat) as chocolates must not get too hot or too cold or they discolour and loose their attractive appearance, so chilled containers and reliable express delivery are required. To service this market, the company has developed patented technology that allows it to keep its products within a controlled temperature range for 48 hours, allowing shipping to most places in Australia without any heat-related damage.

The company has had a clear, two-pronged strategy since its inception: it focuses on the premium (high-priced) section of the market and it seeks to distinguish its products from its competitors through superior quality and superior presentation of all its products. It does not compete in the mass market and its products are not sold in supermarkets or similar venues.

It has an extensive product range, with all products being made in its own premises by its own staff. Its milk and most other ingredients are sourced from quality Victorian producers, and its cocoa beans (which it imports raw and roasts itself) are sourced from environmentally-certified (UTZ Certification) growers in several countries. The products include loose chocolates, chocolate bars, boxed chocolates, special occasion chocolates (eg, significant birthdays, weddings, Easter, Christmas, etc), gluten and egg free chocolates, corporate packages, novelty chocolates, drinking chocolate and so on. The company is very happy to work with customers to meet special orders. The products are not cheap but their consistently high quality and careful and stylish packaging generate good business, much of it repeat business.

Robert Aubert has personally selected and trained all his staff and he places great emphasis on the quality of the products and their presentation. He also emphasises to his staff the importance of being open to new ideas, of ethical behaviour within the company, and of enjoying working with the company – all values that his grandfather introduced to the company in 1948. The company has modern, well-equipped kitchens that have considerable capacity for increased production.

The company last year reported a net profit of $2.3 million on sales of $11.6 million. Sales have grown at an average rate of 10.9% over the past 12 years, with a large fall in both sales and profit in 2009 (due to the Global Financial Crisis) being fully recovered by 2011. Profit has consistently been around 25% of sales for many years, and the company has no debt.

Although the company continues to do well, the competition in Melbourne – indeed, in all Australia – is very tough as there are several other specialty, quality-based, chocolate manufacturers. Robert and his experienced senior management team have been contemplating expanding to other countries, perhaps using their patented controlled-temperature shipping technology to help. In the longer term – say 10-12 years – they are particularly interested in China and Japan – China because of the size of the potential market and Japan because of the sophistication and wealth of the market. However, they know very little about either, but they do know that both are challenging and difficult markets in which other companies have failed. So, as a first step they have decided to investigate the possibility of entering the market in the Republic of Korea – South Korea. They know that South Korea is different from both China and Japan, but they think that what they can learn from 5-10 years in Korea will greatly assist them in later entering the Chinese or Japanese market.

Senior management is therefore considering South Korea as a potential new market. They need a great deal of further information to make a decision on whether or not to enter this market. The senior management team has therefore asked the Marketing Director to prepare materials to inform senior management about this market and about how Villiers could enter it. In turn, the Marketing Director has asked a group of international consultants – you – to prepare these materials.

1 Introduction

1.1 The South Korea country profile

Due to the financial crisis, foreigners regard South Korea as made the most difficult place to transact business. South Korea government formed rules and regulations to protect domestic industries from international competition band inward foreign direct investment. The policy regulations limit the domestic industries to the changing business environment which led to inefficiency, significant loss of competitiveness in the 1990s. Korean industrialization policy limits diversification of businesses, expansion of excessive debt per capita and also limits incentives.

1.2 Korean republic profile

The government regulations also limit the financial sectors and labour market from venturing into businesses. The interventions caused financial inflexibility, labour market inflexibility and inconveniences in the businesses. Through the crisis experience, Korean society changed and became friendlier to foreign business operations. Firms came to the realization that international competitiveness could enhance more productive and improve quality (Bae, Bailey & Mao, 2013). Management of the firms was evolved from adjusting to the changing of business circumstances of the business.

1.3 Objective of the study

For the entry into the Korean market, there is a need for a clear understanding of the important factors that shape the market. The paper is aimed at providing an outline these factors that include the political and the legal system. The stability of a country is a great recipe for stable economic state in the region. Compared to the North Korea, South Korea is very stable and thus, more investors are attracted to invest. The economic stability provides an insight on how the new entry can strive and survive in developments that are all fundamental to making profits.

1.4 Methodology

The study was mainly based on the comprehensive review and analysis of the available literature published on the Korean markets. It involved identification and selection of the relevant journal articles. It also involved the review of the Government website and the Statistics provided by the World Bank.

1.5 Limitations of The report

The data presented were exclusively obtained from the secondary sources. There is need to conduct a primary analysis of the market before making resolutions and developing an investment plan. Therefore, there might be gap that is existing between the data collection, analysis and reporting.

2 Current South Korean market environment

The economy of South Korea is ranked fourth in Asia. Therefore, it attracts very good numbers of investments from international clients. The open trade policies in the country provide the opportunity with an opportunity to access international markets that are being advanced by the existing trade agreements and treaties that the government of South Korea has signed (Bekaert, Harvey & Lundblad, 2013). The success of the economy of the South Korea's over the 35-years from the 1960s is notable because of the few natural resources in the Korean peninsula until the 1997 economic crisis.

Despite the economic successes, the potential trading opportunities in the nation remain largely unknown to the investors from the outside countries. The market potential is attractive and attracts few foreign investors, and English speakers, but only the multinational companies like Samsung and Hyundai. Strategically, the country of Southern Korea is founded among big nations like China, Japan, and Russia. The position confers greater challenges and at the same time, provides more significant trading benefits to Korea as compared to the US (Barnes et al., 2013). The economic conditions of the country are poised at a critical juncture. For example, its manufacturing, industrial sectors have massively developed over the last few decades and create a potential cheap labour and market.

2.1 Economic

The intensive growth of Korea's economy has transformed South Korea to become one of the members of Economic Co-operation and Development (OECD). The market economy of South Korea has improved over the decade (Fenwick & Kalula, 2015). The Gross Domestic Product of South Korea has advanced which it has made its purchasing power to improve over time as shown in figure 1. South Korea is a developed country with developed markets and high-income economy.

2.2.1 Gross Domestic Product

25,976.95 USD (2013)

2.2.2 GDP Growth Rate

The South Korea economy is fastest growing economy from the year 1997. The reason is based on the strong international trading and foreign investment by the US.

2.2.3 Economic freedom

South Korea's economy had the fastest growing rate in the 1970s to late 1990s. It remained the fastest developed country. The rigorous education system has enhanced motivation and the use of technology. It has led to rapid development. The overpopulation of Korea has formed the largest internal consumer market, which improves the economy of this country. Even then, they import and export a lot of products in the world which is an economic indicator. Despite the Korea is having the best economy, it still suffers a liquidity crisis.

The ICT industry has been improvised, and they concentrate their activities in the hardware sector. This aim of expanding wireless and wired telecommunication networks is to help in building the economy. Also, the sector focuses on developing the software to create innovations and delivery of better services to the citizens of South Korea (Haggard & Maxfield, 2011). Due to improvising of ICT industry, South Korea is now the leading electronic consumer globally and was ranked number one in the year 2001. Therefore, owing to its improved economy to diversification of investments it has created a stable economy. The improved economy created a better economic freedom as shown in figure 2.

The economy of South Korea has high growth potential and apparent structural stability, but it suffers perpetual damage due to credit rating. The damages have been caused by adverse financial markets due to the military crisis. Even then the organizations such as the International Monetary Fund, compliment economic the economy of South Korea to challenges against the fiscal reserves that can easily be transformed to address any economy emergency.

2.1.4 Taxation

The government taxes are at the rate of 35% of the highest personal income tax. In addition, the taxes are at 22% of the top corporate tax. An approximate 10% is surtaxed on both the corporate and individual rates and a value-added tax that total overall tax burden to approximately 24.3% of the country’s GDP. The total amount that the government spends amounts to approximately 31.8% of the total domestic output. There are generations of a small surplus by the budgetary allocation, and therefore, the debt of 35% of the GDB becomes the public debt.

The government of South Korea's has the average tariff rate at 7.7%. The level of foreign in the country has been capped in several sectors of the economy. The numerous state-owned companies and enterprises are actively involved in the economic developments. The government has challenged during the process of expropriating properties without providing sufficient and appropriate compensations. There have been high competition levels in the financial even though the upcoming business investment struggle in raising capital and funding. Despite the challenges in raising capitals for investments, the banking sector has relatively remained largely stable (Kim, 2013).

2.1.5 Imports and exports

A lot of exporting commodities such as semiconductors, electronic equipment, automobiles and petroleum products faces significant pricing pressure globally as shown in figure 3. The products have reduced the revenues to a number of companies and thus, decrease the total volume of production. They reduce the profits of productive firms which later caused unemployment and lower wages. The South Korean government has to improve the use of technology to educate and in the innovation of the practices that would allow the economy to solve the issues (Head & Mayer, 2013). Also, it has to encourage production in the service sector to limit wage growth and to benefit from the global value chain.

2.1.6 International trading

The continued increase in the Koreas economic interactions with the global economy has resulted in disagreeing with the trade policies. These disagreements and frictions in the bilateral trade are affected by several notable factors that include the following;

• The size and nature of the deficit in the trade between the US and the South Korea.
• The progress and the development of the Korean economic reforms in the progress of economic

  development.

• The state at which the US economy is as compared to that of South Korea
• The effects of both the security issues and political matters that override the bilateral agreements

  and considerations of trading.

2.2 Social and cultural issues in South Korea market

2.2.1 The social stratification

South Korea is experiencing a lot of challenges relating to social and cultural issues. The issues include; gaps between the rich and the poor, low fertility, social issues, poor management of the environment and social polarization. The issue has contributed to the slow growth in the economy. Due to the increasing population of South Korea, the nation has established policies on the market that promote social cohesion and growth (Kim, 2013). The reforms are determined to reduce inequality and to improve growth prospects. Growing population demands more output that requires the more effort from the ageing population. The labour inputs have to be increased which would result in reducing the unemployment rate.

2.2.2 Community populations and demographic changes

South Korean businesses, particularly retails ones, face the challenging needs of customers. This has forced the companies to adapt their product line and modify the market strategies to meet the person's interest with their purchasing power. As the population increase, the dependency ratio increases also. Trust in employment companies diminishes as the rate of unemployment rises (Kumar, 2014). Thus, the advanced group could consider themselves inferior to others which may lead to biases and violating of rights.

Due to the sacristy of the resources, the abundant resource in Korea is labour. It is contributed by the vast availability of knowledge as shown by the literacy rate of 98% as shown in figure 3. The hardworking and the skilled labour have been one of the strongest pillars that have continuously improved the Korean industrial profiling among the global industries. It has also improved the labour force technicalities making Korea be among leaders in industrial productions. These industries include the shipbuilding, auto vehicle manufacturing, and steel making industries.

2.3 Political

2.3.1 Country’s democracy history

The South Korea is a republic that was established to be the Fifth Republic after the Constitutional Referendum that took place in the year 1980. The basic model of the government in the Republic is the U.S. tripartite system with a distinct executive branch that is being led by the president. There is also a national assembly that handles the legislative duties of the government. There is also the judicial branch that works with the Supreme Court.

The Republic of Korea is a democratic nation. However, the Democratic Justice Party has been in power since its establishment in the year 1963. The greater trends toward freedom in the general election results were seen in the year 1992. In the election, the South Koreans elected a president who did not have any connection to the military despite the series of scandals and conspiracies that connected the government, business leaders, and the military (Phelps & Tewdwr-Jones, 2011). Other factors include the list shown in figure 4.

During the year 1998, during the toughest worst of the Asian Economic Crisis, the Republic of South Korea improved the commitment of increasing liberalization. During that time, the elected president Kim Dae-Jung has never challenged to the re-imposing the authoritarian rule of the nation of South Korea. Therefore, the president maintained the high ratings about 80% and approvals despite the economic crisis that was faced by his first term in office.

2.3.2 The political influences

Government policies significantly influence the political, business environment in South Korea. The policies encourage the external investment which would bring competitiveness in quality production. It also provides incentives to the developing companies in order to create more employment opportunities. The tax system is favorable and thus does encourage the establishment of small organization which they form a vital role in building the economy. More so, the government policies also ensure proper allocation of resources in terms of social services, infrastructure, secure business and stable politics to favor the business ventures.

2.3.3 Political risks

The South Korean government is conflicting with the republic of the North Korea government. However the regional politics present some sense of relief to the battles that are domestic. They also benefit from the effect of national government rallying in the territorial conflicts that exists with the neighbors that include: China, Japan, and North Korea. The country relations are likely to be shaped by the ongoing political disputes, particularly with the North Korea and China. There is also pending judicial pending ion the role that was played by intelligence agencies in the year 2012 during the national elections.

2.3.4 The Corruption Risk

Bribery is considered to be illegal. In the year 2014, South Korea according to the Transparency international corruption index (CPI) was ranked 43th. The ranking included the consideration of the public sector. The ranking was a drop from the year 2009 ranking that was positioning the nation at 39th. The total number of reported cases of corruption that are reported from the public has shown a drastic drop and reduction. However, the corruption methods are believed to be more secret and sophisticated to be detected. The issues are relating to the nature of subsidiaries and ownership that is very complex across the South Korea.

The new legislation that was passed in the year 2015 has helped a lot in tackling the bribery and corruption of the public sector officials. The law is stated as the Improper Solicitation and Graft Act. The commissioning of the ARC (Anti-corruption & Civil Rights Commission) is the central in fighting corruption in the public sector. It also helps in protecting the civil rights from unfair exercise and practices by the administrative offices.

2.4 Financial

2.4.1 Financial policies

The government has established a vigorous and continued support in influencing the business organizations and developments in the nation. At the start of the 1960s, the government of South Korea formulated an industrial policy that if established the target companies and industries will be created. These established policies formed a foundation to the subsequent success seen in the Korean giant trading organizations, industries, and companies. Due to both the financial and economic crisis, the South Korean government took steps in forcing the process of restructuring of the national financial industry.

2.4.2 Financial aids

The government gave these target companies and industries special financial aid considerations (Bae, Bailey & Mao, 2013). The financial aid was targeted at nurturing their growth. The growth of both the companies and industries will form a solid basis for economic development across the country of South Korea. During the terms of both Presidents Park Chung and Chun Doo-Hwan, they established plans that were to be rolled out in five years and targeted at establishing and ensuring the economic well-being of both the industries and companies tax reliefs, subsidies and protective tariffs.

2.5 Foreign Direct Investment

The global economy continues to struggle from the global financial crisis of the year 2008. The recovery of the economy has been facing the challenges that include the Eurozone debt crisis. As a result, the trading and the financial markets are more and more volatile, and the future recovery is becoming more uncertain. Despite the challenges facing the global business markets, the Korea financial markets and economy has demonstrated high stability and resilience. The Korea economy has been very attractive in the recent past despite the global economic challenges (Bekaert, Harvey & Lundblad, 2013). There has been a positive economic growth due to the continuous deregulations that has provided the investors with opportunities to invest as shown in figure 8.

Foreign investments in Korea in considered as the main sources of job creations and advanced technology that can be interfaced with industrial production and management. The policies that target the foreign investment have been designed to spur and favour such investment to boost the economic developments. The Korean nation and business environments are improving to technology era and is becoming more intense in technological production and marketing in industries.

2.5.1 Industrial investment

Its operations are slowly being shifted to services that are the knowledge-based economy, therefore, creating many business opportunities for the investors and leaders in the service sectors including the advanced technology. The recent free trade agreements that were signed between the UK and the US will play a significant role in accelerating the competitiveness and openness of the South Korean markets.

The South Korean businesses are dominated by collections of industrial groups whose corporate organization is exclusive to the country of South Korea. The industry groups are referred to as cables. They can also be defined as the financial cliques that consist of varied corporate enterprises that are engaging in diverse trading and businesses. They are also typically run and controlled by different interrelated families. According to, the South Korean chaebol are distinctively described by the following characteristics:

• The family managed and controlled cables
• The running of chaebols uses the paternalistic leadership.
• There are, central planning and the coordination of all their operations.
• They are oriented in an entrepreneurial nature.
• The chaebols maintain close ties and closer business-government.
• They also maintain a strong and close school when they are formulating the hiring policies.

The nation of South Korea has an approximate number of established chaebols at about 50. The established chaebols are varying in size, strength, and varied business operations as shown by figure 10. It is estimated that over 60% of the South Korea's gross national product (GNP) is collected from the largest five chaebols across the country. Among the largest chaebols are Hyundai, Sunkyong, Samsung, the LG Group, and Daewoo (Head & Mayer, 2013). The cables are made of numerous industries and companies that are connected by sharing board members, internal affiliations, and family connections.

The largest chaebols like Samsung consists of over 30 individual enterprises. Each of the 30 enterprises is considered to be the independent company that is found in the United States. Some of the Samsung firms are privately owned while others are publicly held. Individual companies consist of enormous arrays of industrial areas that range from Samsung Electronics, the insurance companies, petrochemical and shipbuilding sectors.

Most of the chaebols share organizational similarities among the affiliated companies. The similarities also extend to varied and diverse sectors that the affiliated firms are involved. Similarly, the LG Group is constituted by approximately 40 firms that range from financial services to the consumer electronics and oil refineries. The Hyundai Company consists of over 25 companies that range from elevator manufacturing to elevator manufacturing.

2.5.2 Foreign investment policy

s part of Korea commitment to the IMF, it pledges to eliminate the restrictions that are affecting the foreign direct investment as shown in figure 9. The government, after signing the treaty in the year 1997, it moved swiftly in an attempt to save the Korea financial crisis. It also tries to liberalize the nation foreign investment regimes (Haggard & Maxfield, 2011).

2.7 The government legal policy

2.7.1 The legal system

The Korea's modern legal system and framework have its foundations on the occupations of the Japanese during the early 20th century. Similar to the Republic of Japan, South Korea adheres to both the commercial and the civil codes of the Continental Europe (Bekaert, Harvey & Lundblad, 2013). The Korea's civil code is constituted of the general legal principles as shown in figure 11. The framework is regulatory and is designed to be relatively competitive. Starting a business in the nation of South Korea is not burdensome because there is no specification of the minimum capital that is required.

Due to the dynamics of the labour market, the rigidity of the lingering regulators, and the trade unions that have gained power over the years have added to the tremendous costs to the process of conducting business. The stability of the monetary value has been relatively stable. Monetary stability has been well maintained (Fenwick & Kalula, 2015). However, the government subsidies for several childcare and medical-care, the renewable energy projects affect the cost of running businesses and prices. The legal principles are a subject to the considerably several interpretations by the courts than the case law systems that practices the common law the US. Contrary to the older civil code nations, the South Korea's civil code was officially established in the year 1960.

2.7.2 Policy formulations

The legal system formulates the government policies that are used in guiding trading and international investment. The socioeconomic aspect helps in understanding the dynamics and varied expectations of the wide market. Understanding the customers varied needs and expectations help in producing products and services that will the customers’ needs. It also helps in evaluating the availability and cost of labour for the industrial development. Moreover, it is important to evaluate the techniques and skills of the labour force. The paper outline the market dynamics at the moment and in five years’ time to provide enough information to the investors who are planning to invest in Korea.

The government policies favor a new entry by the international investors. They give tax reliefs because they create employment to the highly skilled and unemployed citizens. The international treaties for trading favor global trading, therefore, the Korean markets form the platform for launching product marketing and reaching the global markets. The policies safeguard the interests of all the investors globally. Therefore, investing in Korea is not only lucrative, but also favorable to growing businesses.

2.7.3 Nature of the policies

More importantly, the government formulated policies that forced the companies and industries to concentrate and focus core businesses. The policies also pressured them to participate in trading in less profitable divisions that exist amongst themselves in an attempt to provide consolidation (Barnes et al., 2013). The policies help in banning the practices that exist among them such as maintaining the mutual debt payments that guarantee among the companies and industries.

2.7.4 Property tenure/ownership

The property ownership in South Korea is constitutionally stated as follows

1. Free hold title of the fee simple system
2. The Strata title system where there is sub-division approach to the available air space with the view

   of providing an equivalent of freehold ownerships (the flor-by-flor approach)

3. The leasehold approach where the investor is only allowed the short-term nature. However, the land is

   rarely leased.

4. The lasing of land is allowed to a maximum of 30 years with the possible extension of the lease for

   only two terms of ten years each.

2.7.5 Employment law

Additionally, the Korean laws are less strict and adhere less to the low-context cultures. It is further reinforced by the Confucian traditions that create the scenarios where lawsuits are, generally considered as the final alternative. Thus, most of the conflicts and misunderstandings in business are resolved informally outside the courts. The employment laws applies to foreign nationals working in South Korea. Article 32 of the Constitution that establishes fundamental principles of employment law include:

1. All the citizens have the right to be employed.
2. The working conditions and wages should ensure human dignity.
3. The law forbid gender discrimination in work and employment.
4. It allows and provide special protection for the minors who are working.

3 Forecast

There is a foreseeable stability and resolution of the conflicts with the neighbors.

3.1 Gross Domestic Product

The country has registered a stable growth rate in the GDP of the country it is relatively forecasted to be improved and stable mainly because of the friendly trading and investment policies. The policies are expected to attract more investment and more trading between the country and other nations globally.

3.2 Primary Surplus

Due to the accelerating economic growth rate, the primary surplus is forecasted to increase by approximate 1.5% by the year 2017, from 4.5 % in the year 2014. There is more revenues collected as the economy remain relatively table while the world’s economy is reducing.

3.3 Current Balance

The South Korean bank is presenting a current account that shows a positive projection of the balance at the end of the current financial year. The values are attributed to the business relations that are improving between the EU, UK and US trading with the South Korea.

4 Conclusion

The Republic of South Korea has maintained high consulates and trade advisories all over the world especially the Western nations. Most of the Western nations are commercially oriented and maintain the trade consulates in South Korea. The paper provides and evidence that is empirical understanding the Korean governed efforts in maintaining a stable rate of growth in their economy. Despite the efforts that the government is trying to improve and the changing the business environments and markets after the wake of the 1997 economic meltdown, the foreign business people trading in Korea have a general view of improvement in negative perspective. They assume that most of the fundamental business spheres have not improved. These spheres of business environment include the labour relations, the Korean parochial attitudes, government-business relations, and the business relations with the Korean nationals.

The existing challenges in entering and establishing a business in Korea are apparent. The present study outlines the issues that foreign investors and firms need to consider as they plan to enter and conduct business in the South Korea. It also provides an understanding of the key areas that are exclusive for the Korean government to improve so as to improve the reputations of the nations among the international investors.