by: denece oplinus south korean export business plan

By: Denece Oplinus

South Korean Export Business Plan

Table of Contents Introduction Michele Cosmetics: Our Product South Korea: Our Target Market Basic Needs Potential Exchange Rates Import Restrictions & Price Controls Government & Public Attitude The Competition Cultural Attitudes & Beliefs Language & Education Marketing Strategies Promotions Conclusion References

IntroductionOur product chosen to export is our makeup

lineSouth Korea is the target marketStable exchange rates with the U.S. dollar

and the Korean WonKoreans want the American lifestylePositive government and public attitudesNo import restrictions for American productsMarketing and promotional strategiesFinal recommendations

Michele Cosmetics: Our ProductFull line of low priced designer makeupProducts are tested on artificially grown

skinSpecialized product categories

Moisturizer lineAnti-aging lineAcne line

Current packaging is acceptable: red case with gold lettering

South Korea: Our Target MarketTerrain has mountains, deep valleys, and

cultivated plainsClimate is temperate with heavy summer

rainfallsPopulation is 48.3 million with annual growth

rate of 0.26%Capital is Seoul with population of 10.3 millionGDP purchasing power parity for 2007 is $1,201

trillionGDP growth rate for 2007 is 5%Market Segment: over 17 million females ages

15-64 (U.S.D.S. 2008)

Basic Needs PotentialPer capita GNI was $20,045 in 2007 (U.S.D.S. 2008)

U.S. government says cosmetics are wanted in South Korea (U.S.C.S. 2008)

Exchange RatesCurrent exchange rate is 1$ to 1,483.45

South Korean Won (OANDA Co., 2009)

Exchange Rate Trends for the KRW and US Dollar (OANDA Co., 2009)

Import Restrictions & Price ControlsNo Import restrictions for U.S. companiesNo price controls for U.S. companiesSouth Korea has a 10% sales tax (U.S.C.S. 2008)

Passage of KORUS-FTA lifts current tariffs & barriers (U.S.T.R. 2007)

Government & Public AttitudeU.S. and South Korea have relations since

1953 (U.S.D.S. 2008)

Structural reforms in 1998 improved access to markets (U.S.D.S. 2008)

U.S. and South Korea have concluded negotiations for FTA (U.S.C.S. 2008)

Koreans are fascinated with the American lifestyle (U.S.C.S. 2008)

Koreans place a high quality on American products (U.S.C.S. 2008)

The CompetitionSeveral chain stores with cheap

alternativesMain competition on our level is AvonAvon’s total gross sales in 2007 were $9.8

billion (Avon 2007)

Avon’s Asian sales in 2007 were $850.8 million (Avon 2007)

Avon has a very high debt ratio of 87.6% (Avon

2007)

Avon only sells door to door

Cultural Attitudes & BeliefsSelf sufficiency is valued by KoreansEthnic majority is Korean with 20,000

Chinese minorityHalf of Koreans practice religionKorea’s two major religions are Christianity

and BuddhismA quarter of all Koreans practice Buddhism

(U.S.D.S. 2008)

With Buddhism, material things are frowned upon (Ball et al, 2006)

Language & EducationNational language is Korean (U.S.D.S. 2008)

Language barrier & established social circle require Korean representation (U.S.C.S. 2008)

English is widely taught in elementary and high school (U.S.D.S. 2008)

Korean literacy rate is 98% (U.S.D.S. 2008)

Marketing StrategiesSame marketing plan is usedExchange rates determine the price of

productUse Korean representative for distribution

within existing department stores (U.S.C.S. 2008)

Product name needs to be translated (Ball et al,

2006)

Hire local legal counsel to file for trade name license (U.S.C.S. 2008)

PromotionsSame product with the same message (Ball et al, 2006)

Michele Cosmetics – Beautifying Women Everywhere

Must register with authorities in order to advertize in South KoreaAdvertize online! Korean E- commerce sales over

$400 billionAdvertize with the nine television stations and

shopping channels (U.S.C.S. 2008)

Advertize with the three major newspapers (U.S.D.S. 2008)

Use dollar-off coupons to promote our product (Ball et

al, 2006)

Public relations are important in South Korea (U.S.C.S.

2008)

ConclusionSouth Korea is our allyKORUS-FTA reduces red tape and increases

profitAvon is our main competition at home

Let’s hit them in their international markets too!

References Avon (2007). 2007 Annual report. Retrieved March 13, 2009 from the Avon Web site at

http://www.avoncompany.com/investor/annualreport/pdf/annualreport2007.pdf

Ball, D. A., McCulloch, W. H. Jr., Frantz, P. L., Geringer, J. M., & Minor, M. S. (2006).

International business: The challenge of global competition (10th ed.). New York: McGraw-

Hill.

OANDA Co. (2009). FX History: Historical currency exchange rates. Retrieved March 14, 2009

from the FX History Web site at http://www.oanda.com/convert/fxhistory?date_fmt=us&date=03/09/05&date1=03/09/04&exch=USD&expr=KRW&format=HTML&lang=en&margin_fixed=0

United States Commercial Service. (2008). Doing business in Korea: A country commercial

guide for U.S. companies. Retrieved March 14, 2009 from the U.S. Commercial Service Web

site at http://www.buyusainfo.net/docs/x_3151071.pdf

United States Department of State. (October 2008). Background note: South Korea. Retrieved

March 15, 2009 from the U.S. Department of State Web site at

http://www.state.gov/r/pa/ei/bgn/2800.htm

United States Trade Representative. (June 30, 2007). United States and the Republic of Korea

sign landmark free trade agreement. Retrieved March 13, 2009 from the U.S. Trade

Representative Web site at http://www.ustr.gov/Document_Library/Press_Releases/2007/June/United_States_the_Republic_of_Korea_Sign_Lmark_Free_Trade_Agreement.html