American Fast Food in Korea Essay

1. coarse on mart information for Asia Pacific, we can made conclusion that line of credit future in Asian region has to have bright future. With 33% of the creative activitys GDP and 50% of its population, Asia has emerged as a apace growing force in the global economy. Due to the cultural diversity, regulative controls, growing base of consumer power and its own set of business rules, the international corporations (MNCs) find it ch eitherenging to innovate the Asian mart successfully. Most MNCs argon reassessing their existing st trampgies or formulating new-fashioned strategies to sustain their growth (4).With regional exports surpass $1. 3 trillion, the East Asia and Pacific regions sh ar of work in GDP is the highest in the world. (Global Development. Finance Report. 2006). The economy of South Korea has bragging(a) in the last 35 classs. Per capita GNP only $100 in 1963, exceeded $20,000 USD in 2005. South Korea is now superstar of the worlds largest economies (a s of 2006, it is fourteenth in the world according to GDP). (2). If we lead compargon Korean trade to East Asian countries (Exhibit 1 p. 12). From report I have backbreaking understanding that mane immediate- fodder market in any Asian countries is in adult cities.Lets check urban population take aim in all Asian countries. Based on Exhibit 1 we can clearly see that Korea has star of the best Urban universe level-total population level 47. 6 one million million and urban population is 82%. Check GDP and GNI level. We can see that Korean level one of the highest in the Asia. Nominal GDP (2005 est. ) $811. 1 billion. GDP growth rate 2003, 3. 1% 2004, 4. 6% 2005, 4. 0%. Per capita GNI (2004) $14, 162. (5). In 1997 Korea had some serious economical crises and faced sever difficulties. After some structural reforms in Korean g everyplacenment, economy starts to recovery.Al define In 2001 Korea was 13th largest economy in the world with GNP of $398 billion. So based on all inform ation from above I can make conclusion that Korea has good future and it is one of the most promising market in Asian region. 2. Porters Five Forces have snuff it a yardstick for assessing labor profitability. They are ?Buyers/customers power ?Suppliers power ?Rivalry among competitors ?Threat of new entrants ?Threat of turn produces I bequeath try to analyze each one, for Korean unwavering diet market. Buyers power. The power of buyers is the impact that customers have on unshakable feed diligence.Buyers could be goodly in different circumstances. I believe that in our case we can say that buyers are concentrated. As I could inform earlier, main per cent of population in Korea are in the cock-a-hoop cities. Its give us good idea that for fast nutrition industry in this region go forth be easier to delivery product to the customers. Buyers grease ones palms the significant proportion of output. Suppliers power. A fast food industry entreat raw material for on that point business-labor, components. It leads to buyer-supplier relationship between the fast food industry and the sozzleds that provide it the raw materials apply to create products.Suppliers are powerful if they are concentrated- it will be really expensive to switch the supplier. From other side suppliers are week if it will be many suppliers with stock product on the market Korean agriculture sector includes forestry and fisheries. issue products are rice, veget ables, fruit, root crops, barley cattle, pigs, chickens, milk, eggs, fish. About 20% of the land used for agricultural busyness (5). From here we can understand that for fast food companies will be easy to find or switch the suppliers without problems for there businesses. Threat of new entrants.The possibility that new firms may enter the industry also affects competition. In theory any firm should be able to enter and exit market. And if free entrance and exit exists, than profit forever should be nominal. There are some barriers of entry. Easy to entry if bittie brand franchise access to distribution channels common engineering. On Korean market steal not allot firms with brand franchise. And it is big requirement in new choices for customers. It let us know that it will be easy to enter to the market. Threat of substitute products.Product charge elasticity is affected by substitute products-as more substitute become available, the demand becomes more elastic since customers have more alternatives. A fill up substitute product constrains the ability of firms in an industry to raise prices. In our case we can see example of some firms, Lotteria and McDonalds, who easy swop there recipes for Korean customers which needs more healthy national ingredients for there food.Rivalry among competitors. In pursuing an advantage over its rivals, a firm can choose from several competitive moves changing prices improving product creatively using channels of distribution exploiting relationship with supplier.For firm who will try to enter Korean market, I would say more hard-nosed and more helpful move will be to improve products. alter quality of materials, quality of services, and probably quality of food preparation technology (healthier environment), will be most important rouge to success on the Korean fest food market. 3. Urban Koreans eat out frequently. Fast paced lifestyles are driving Koreans to choose western-style fast-food, but healthy eating is a concern. These factors are driving a fast growing market for sandwich repositing franchising (3).Another important factor is that about 75%-80% fast food customers are young people whose age less than 20 year old. It is mean that along with westernization of Korean taste, western chain gained in popularity. In the past, people pursuance a fast meal would have been at rest by fast-food giants like McDonalds or Burger King, but it is changing. Consumers are seeking different choices. This new requirements has opened d oors for a steadily growing market for fresh and healthy sandwich businesses. Lotteria is a local hamburger franchiser and is the fast-food market leader in Korea.From 2002 to 2003 Lotteria experienced a sharp sales overlook of 40%. However, a strong contrast was seen in the South Korean sandwich market, as its $41. 20 million1 market value in the secondly quarter of 2003 doubled to $82. 40 million in the fourth quarter. This outstanding growth is forecast to continue, and the anticipated market value for 2004 is $117. 71 million (3) Besides Lotteria, the local franchisers include Sandday, Sandpresso and Sand & Food. In response to the obstreperous foreign companies, they are also coming up with strategies to secure their home within the market, and the competition is about to heat up.Based on all this information I would say that fast food business in Korea growing and this will continue until people need more choices. 4Globalization is the key to sustained growth for Yum Comp any Brands, the worlds biggest quick-service restaurant federation headquartered in the United States and managing five fast food brands KFC, pizza pie Hut, greaser Bell, A&W and Long John Silvers. Demand for fast food is rising because lifestyles are changing, said Allan, who leads overseas operations away of the U. S.and China, in a recent interview with The Korea Times.More Koreans are existence time pressured than they were historically. This trend is happening here. The number of people eating ready made food is continuing to increase. (Graham Allan, president of Yum Restaurants International. 11. 06. 2006) (6). As a socially responsible company, the 51-year-old executive said Yum will provide more ex gratia dishes to health-conscious consumers amid a well-being spree in the nation, but will not abandon its traditional concept of great taste. Under his leadership, Allan said he will target an annual growth of 10 percent or more in operating profits. There are about 250 Pi zza Hut delivery outlets in the nation, which are set to expand to over 400. Korea makes up about 5 percent of Yums international function sales, which amount to some $11 billion half of the groups overall system sales. If I were business consultant, I would recommend startle making money on Korean fast food market. The new trend is propelling growth in the franchising market.It is anticipated that the market will experience intense competition for the next couple years. New fast food companies should be able to take advantage of the situation and enter the market without much difficulty, while it is still at an early pose of development.Reference page 1. http//www. iff. com/Internet. nsf/0/B7A5C7E9B662B52685256D02006683DA 2. http//www. answers. com/topic/economy-of-south-korea 3. http//ats. agr. ca/asia/3879_e. htm 4. www. berkeleyabc. org/2006/ 5. http//www. state. gov/r/pa/ei/bgn/2800. htm 6. http//times. hankooki. com/lpage/biz/200611/kt2006110617463411890. htm.