American Fast Food in Korea Essay

1. Base on commercialize information for Asia Pacific, we can made conclusion that ancestry future in Asiatic region has to have bright future. With 33% of the worlds GDP and 50% of its population, Asia has emerged as a rapidly growing force in the spherical economy. Due to the cultural diversity, regulatory controls, growing base of consumer office staff and its own set of business rules, the multinational corporations (MNCs) find it challenging to enter the Asian merchandise successfully. Most MNCs be reassessing their existing strategies or formulating in the altogether strategies to sustain their growth (4).With regional exports exceeding $1. 3 trillion, the eastside Asia and Pacific regions helping of trade in GDP is the highest in the world. (Global Development. Finance Report. 2006). The economy of South Korea has grown in the last 35 years. Per capita GNP only $100 in 1963, exceeded $20,000 USD in 2005. South Korea is now unmatched of the worlds largest economies ( as of 2006, it is 14th in the world according to GDP). (2). If we will comp atomic number 18 Korean market to East Asian countries (Exhibit 1 p. 12). From report I have strong understanding that mane truehearted- regimen market in any Asian countries is in big cities. permits check urban population level in all Asian countries. Based on Exhibit 1 we can clearly perk up that Korea has one of the best Urban Population level-total population level 47. 6 million and urban population is 82%. Check GDP and GNI level. We can actualise 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(a) serious economic crises and faced sever difficulties. After some structural reforms in Korean government, economy starts to recovery.Already In 2001 Korea was 13th largest economy in the world with GNP of $398 billion. So based on all information 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 become a yardstick for assessing industry profitability. They are ?Buyers/customers condition ?Suppliers power ? disputation among competitors ?Threat of new entrants ?Threat of convert products I will try to analyze each one, for Korean fast solid food market. Buyers power. The power of buyers is the impact that customers have on fast food industry.Buyers could be powerful in opposite circumstances. I believe that in our case we can vocalise that buyers are concentrated. As I could explain earlier, main per cent of population in Korea are in the big cities. Its give us good mentation that for fast food industry in this region will be easier to delivery product to the customers. Buyers purchase the significant proportion of output. Suppliers power. A fast food industry require raw material for there business-labor, components. It leads t o buyer-supplier relationship between the fast food industry and the firms that provide it the raw materials used to create products.Suppliers are powerful if they are concentrated- it will be really expensive to switch the supplier. From another side suppliers are week if it will be many suppliers with received product on the market Korean agriculture sector includes forestry and fisheries. National products are rice, vegetables, fruit, root crops, barley cattle, pigs, chickens, milk, eggs, fish. About 20% of the land used for outlandish 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 liberal entrance and exit exists, than profit always should be nominal. There are some barriers of entry. Easy to entry if l ittle brand franchise access to scattering channels common technology. 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 price elasticity is affected by substitute products-as more substitute become available, the demand becomes more elastic since customers have more alternatives. A close 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 change 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 represents changing prices improving product creatively use channels of distribution exploiting relationship with supplier.For firm who will try to enter Korean m arket, I would say more realistic and more helpful move will be to improve products. Improving quality of materials, quality of services, and probably quality of food preparation technology (healthier environment), will be most chief(prenominal) key 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 feeding is a concern. These factors are driving a fast growing market for sandwich store 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 seeking a fast meal would have been satisfied by fast-food giants like McDonalds or Burger King, but it is changing. Consumers are seeking different choices. This new requirements has opened doors for a steadily growing market for fresh an d healthy sandwich businesses. Lotteria is a local hamburger franchiser and is the fast-food market leader in Korea.From 2002 to 2003 Lotteria acknowledged a sharp sales drop of 40%. However, a strong contrast was seen in the South Korean sandwich market, as its $41. 20 million1 market value in the second quarter of 2003 doubled to $82. 40 million in the fourth quarter. This dramatic 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 aggressive foreign companies, they are also coming up with strategies to secure their position 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 Company Brands, the worlds biggest quick-service restaurant friendship headquartered in the United States and managing five fast food brands KFC, Pizza Hut, Taco Bell, A&W and Long John Silvers. Demand for fast food is rising because lifestyles are changing, verbalise Allan, who leads overseas operations outside of the U. S.and China, in a recent interview with The Korea Times.More Koreans are being time pressured than they were historically. This dilute 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 optional dishes to health-conscious consumers amid a well-being spree in the nation, but will not abandon its traditional concept of spacious taste. Under his leadership, Allan said he will target an annual growth of 10 percent or more in operating profits. There are about 250 Pizza Hut delivery outlets in the nation, which are set to e xpand to over 400. Korea makes up about 5 percent of Yums global division 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 a great deal difficulty, while it is still at an early stage 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.