Pest South Korea

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Introduction and Methodology

12

1 INTRODUCTION & METHODOLOGY
1.1

WHAT DOES THIS REPORT COVER?

The primary audience for this report is managers involved with the highest levels of the strategic planning process and consultants who help their clients with this task. The user will not only benefit from the hundreds of hours that went into the methodology and its application, but also from its alternative perspective on strategic planning in South Korea.

This report helps executives evaluate strategic investment and entry alternatives in South Korea. As the editor of this report, I am drawing on a methodology developed at INSEAD, an international business school (www.insead.edu). The methodology decomposes a country’s strategic potential along three key dimensions: (1) latent demand, (2) accessibility, and (3) trade indicators. A country may have very high latent demand, yet have low accessibility, making it a less attractive market than many smaller potential countries having higher levels of accessibility. With this perspective, this report provides a strategic profile of South Korea. It does so by compiling published information that directly relates to latent demand and accessibility. The reader new to South Korea can quickly understand where South Korea fits into a firm’s strategic perspective. In what follows, Chapter 2 is a general evaluation of the accessibility of South Korea, with particular focus on investment and business conditions. In Chapter 3, I report my findings on the real economic potential, or latent demand, represented by South Korea when defined as an area of dominant influence. Chapter 3 is followed by trade indicators for key industries, categories, and products in South Korea.

1.2

HOW TO STRATEGICALLY EVALUATE SOUTH KOREA

Perhaps the most efficient way of evaluating South Korea is to consider key dimensions which themselves are composites of multiple factors. Composite portfolio approaches have long been used by strategic planners. The biggest challenge in this approach is to choose the appropriate factors that are the most relevant to international planning. The two measures of greatest relevance are “latent demand” and “market accessibility”. The figure below summarizes the key dimensions and recommendations of such an approach. Using these two composites, one can prioritize all countries of the world. Countries of high latent demand and high relative accessibility (e.g. easier entry for one firm compared to other firms) are given highest priority. The figure below shows two different scenarios. Accessibility is defined as a firm’s ease of entering or supplying from or to a market (the “supply side”), and latent demand is an indicator of the potential in serving from or to the market (the “demand side”).

www.icongrouponline.com

©2007 ICON Group International, Inc.

Introduction and Methodology

13

Framework for Prioritizing Countries
Demand/Market Potential Driven Firm
High

Highest
Priority

High
Priority
Latent
Demand

Moderate
Priority
Low
Priority

Low

Lowest
Priority
Low

High

Relative Accessibility

Accessibility/Supply Averse Firm
High
Highest
Priority
High
Priority
Latent
Demand

Moderate
Priority
Low
Priority
Lowest
Priority

Low
High

Low
Relative Accessibility

www.icongrouponline.com

©2007 ICON Group International, Inc.

Introduction and Methodology

14

In the top figure, the firm is driven by market potential, whereas the bottom figure represents a firm that is driven by costs or by an aversion to difficult markets. This report treats the reader as coming from a “generic firm” approaching the global market – neither a market-driven nor a cost-driven company. Planners must therefore augment this report with their own company-specific factors that might change the priorities.

1.3

LATENT DEMAND AND ACCESSIBILITY IN SOUTH KOREA

This report provides an extremely detailed overview of...
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