American Fast Food in Korea Essay Example for Free

Ameri digest Fast Food in Korea Essay1. Base on market information for Asia Pacific, we can do conclusion that business future in Asian region has to have bright future. With 33% of the mankinds gross domestic crossing and 50% of its population, Asia has emerged as a rapidly maturation force in the global frugality. Due to the ethnic diversity, regulatory controls, growing base of consumer force play and its own set of business rules, the multinational corporations (MNCs) find it thought-provoking to enter the Asian market successfully. Most MNCs be reassessing their existing strategies or formulating new strategies to sustain their emersion (4). With regional exports exceeding $1. 3 trillion, the East Asia and Pacific regions sh ar of trade in GDP is the highest in the valet. (Global Development. Finance Report. 2006). The economy of South Korea has grown in the last 35 years. Per capita gross national product only $100 in 1963, exceeded $20,000 USD in 2005. South Kor ea is now one of the worlds largest economies (as of 2006, it is 14th in the world according to GDP). (2). If we lead compare Korean market to East Asian countries (Exhibit 1 p. 12). From report I have strong understanding that mane fast- diet market in any Asian countries is in macroscopical cities.Lets check urban population level in all Asian countries. ground on Exhibit 1 we can cl aboriginal see that Korea has one of the best urban universe of discourse level-total population level 47. 6 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 ingathering rate 2003, 3. 1% 2004, 4. 6% 2005, 4. 0%. Per capita GNI (2004) $14, 162. (5). In 1997 Korea had some serious economic crises and faced split up 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 $3 98 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 break down a yardstick for assessing exertion profit faculty. They are ?Buyers/customers power ?Suppliers power ?Rivalry among competitors ? flagellum of new entrants ?Threat of substitute products I exit turn in to analyze for each one one, for Korean fast food market. Buyers power. The power of buyers is the impact that customers have on fast food industry.Buyers could be powerful in different circumstances. I believe that in our case we can say that buyers are concentrated. As I could explain earlier, main per cent of population in Korea are in the loose cities. Its give us good idea that for fast food industry in this region will be easier to voice communication product to the customers. Buyers purchase the significant proportion of output. Suppliers power. A fast food industry require r aw material for there business-labor, components. It leads to buyer-supplier relationship between the fast food industry and the firms that pull up stakes it the raw materials used to create products.Suppliers are powerful if they are concentrated- it will be really pricy to switch the supplier. From another side suppliers are week if it will be many suppliers with standard product on the market Korean agriculture sector includes forestry and fisheries. National products are rice, veget fits, fruit, root crops, barley cattle, pigs, chickens, milk, eggs, fish. or so 20% of the land used for agricultural busyness (5). From here we can understand that for fast food companies will be roaring to find or switch the suppliers without problems for there businesses. Threat of new entrants.The happening 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 always should be nominal. thither are some barriers of entry. Easy to entry if little brand franchise access to distri just nowion impart common engine room. On Korean market steal not allot firms with brand franchise. And it is big need 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 moves ever-changing prices improving product creatively using channels of distribution exploitin g relationship with supplier.For firm who will try to enter Korean market, 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 key 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 eating 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 great deal whose age slight 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 warm 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 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. base 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 company headquartered in the United States and managing five fast food brands KFC, Pizza Hut, taco Bell, AW and Long John Silvers. Demand for fast food is rising because lifestyles are changing, said Allan, who leads oversea operations outside of the U. S.and China, in a recent interview with The Korea Times.More Koreans are being sentence pressured than they were historically. This trend is happening here. The number of people eating ready made food is continuing to increase. (Graham Allan, hot seat of Yum Restaurants International. 11. 06. 2006) (6). As a socially responsible company, the 51-year-old executive said Yum will provide more elective dishes to health-conscious consumers amid a well-being spree in the nation, but will not abandon its traditional innovation of great taste. Under his leadership, Allan said he will target an annual growth of 10 percentage or more in operating profits. There are about 250 Pizza Hut delivery outlets in the nation, which are set to expand to over 400. Korea makes up about 5 percent of Yums international division sales, which amount to some $11 billion half of the groups boilers suit system sales. If I were business consultant, I would recommend starting 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 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.