Table of Contents

 

Executive Summary

1.0  Introduction

1.1  Purpose and score

1.2  Company and product profile (optional)

2.0  Economic Environment

2.1  Economic status

2.1.1      GPD

2.1.2      Economic freedom

2.2  Key Economic Indicators

2.2.1      Inflation

2.2.2      Market demand [Or this is a business factor?]

3.0  Political Environment and Risk

3.1     Taxation and tariffs

3.1     Laws and regulations

4.0  Business Environment

4.1  Environment comparison

4.1.1      Culture

4.1.2      Effort to attract business

4.1.3      Free trade agreement

4.2  Product Potential

5.0  Country Choices

6.0  Weighted Index

7.0  Conclusion

List of References

Appendix

 

 

 

 

Executive Summary (on its own page – 100 words)

Despite the universal financial crisis, the organic production sector has stayed unaffected and has continued to grow and experience complete turn overs of profit at the moment. Numerous countries have seen tremendous increase in the sector of organic production and consumption of the same has escalated throughout the years. Countries that had little or no knowledge about organic farming in the past years have now begun to consume and produce products of organic nature by themselves. Every year, businesses upon businesses are being developed in the name of meeting consumers organic needs while at the same time developing support of agriculture and organic farming. Asian countries have not been left behind in organic plantation and developments as they have also been found at the frontline of starting successful initiatives and projects around organic agriculture.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2.0 Economic Environment (350-400 words)

 

In order to explore the market opportunities in Asia, it is critical to consider key economic environment factors that play a fundamental role in determining the next steps of investment for Organic Bean. To investigate this further, the following variables will be discussed: Economic status and the breakdown of GDP and economic freedom followed by key economic indicators, such as market demand.

 

2.1 Economic Status

 

For a critical analysis on the economic status, a detailed snapshot on the gross domestic product (GDP) is imperative to understand the differences between the markets in Japan and South Korea. The GDP refers to the market values of all goods and services accumulated within a country during a given period of time, essentially mapping the standard of living within that country (What Is GDP? (Gross Domestic Product), 2010).

 

To compare Asian markets, it is crucial to firstly graph the Australian market that Organic Bean currently operates in. In the final quarter of 2015, the Australian economy exceeded predicted forecasts by rising 0.6% in the GDP rate of growth (Scutt 2016). This is commented on by Rida Husna from Trading Economics as unforeseen as compared to an incline of 1.1% growth in the previous quarter (Husna 2016).

 

On the contrary, the Japanese consumption was termed as weak by Yuichi Kodama, chief economist at Meiji Yasuda Life Insurance Co and further predicted the decline to continue due to the lack of driving economic support (Ujikane, 2016). As seen in Appendix One, there is a clear trend of instability. This is demonstrated through the erratic recovery from a dramatic -2.0% drop in 2014. As such, it is clear the Japanese market is far below the standards of those mentioned in the Australian market.

 

In comparison, the economic status of South Korea has seen its most accelerated growth in the past five years. Peaking at a 1.2% GDP increase in the final quarter of 2015 marks the greatest expansion since 2010 (Kwanwoo, 2015). This was similar to the expectations of Australian GDP growth, as the South Korean economy also surpassed economists’ predictions of 0.9% rise. Despite this upward trend, 2016 has seen a slow advance of 0.4% in March from 0.7% in the previous quarter (Husna 2016).

 

Through a detailed GDP summary of the Japanese and South Korean markets, there is a strong partiality toward South Korea due to the similar nature to the Australian market status. However, to pinpoint this further, the aspect of economic freedom must be analyzed.

 

Economic freedom is referred to as the fundamental right of every individual to govern his own labor and property (Knoema, 2016). As such, Japan’s 2016 economic freedom score is 73.1, placing Japan 22nd on the global scale. The trade freedom score is 82.6 and is predicted to decline (Index of Economic Freedom, 2016).

 

Furthermore, the 2016 South Korean economic freedom score sits on 71.7, placing South Korea 27th on the global scale. Additionally, the score of trade freedom is 74.6 and is expected to increase (Index of Economic Freedom, 2016). Despite having lower trade freedom than Japan, the overall economic freedom score is only 4.3 below the United States. (Marotta, 2014).

 

Therefore, with a consideration of GDP and economic freedom a clear perspective of the two markets economic status’ are able to be analyzed. It is shown that South Korea has a stronger grip on GDP and have a more stable economy than Japan. However, when examining economic freedom, it can be noted that Japan allows more trade freedom than South Korea. Despite the strong competition, the South Korean market may be a better option for Organic Bean. This is because not only is GDP more weighted than economic freedom, but because

4.0 Business Environment (350-400 words)

Business environment refers to all external and internal factors that can influence a business, but in general, internal factors are usually under the control of business (Cherunilam & Ebrary, 2010). Therefore, only external factors will be discussed in the following context.

4.1 Environment Comparison

Cherunilam and Ebrary (2010) stated that some factors have favourable effect for certain businesses. For an organic coffee organization who wants to export to foreign countries, under PESTLE analysis, political, economic, social culture, the commercial relations between Australia and Japan/South Korea and relevant law are crucial, all remaining elements are less important.

4.1.1 Social Culture

As an Eastern Asian country, Japan are recognized as a tea-drinking country, however, coffee still earned a place of honour (Grinshpun, 2014). It is common because of the effect of globalisation, world culture is coalescing for centuries. Actually, according to Grinshpun’s research (2014), the consumption of coffee (As of year 2004, 147 tons of roasted coffee and 105 tons of instant coffee were consumed, as compared with 128 tons of green tea) are doubled as the consumption of green tea in Japan. On the other hand, instant coffee dominate the coffee market in Korea with 94% market share of off-trade value sales which is completely different from Japan although Korea and Japan have a similar consumption of coffee (Park & Moon, 2015).

4.1.2 Effort to Attract Business

It should be highlighted that Japan, Korea and Australia are members of APEC, and similarly, both of Japan and Korea are resources scarcity country, however, Japan and Korea has different attitude in agricultural products import. Japan has been the most significant member to Australian international trade for over 50 years after 1957, to be more exact, it accounted for 18 per cent of Australian exports of goods and service in 2005(Constable et al, 2014). However, the close cooperation is not for all aspects. Japan has restrictive tariffs and quotas on agricultural products which is unlikely to be removed or relieved recently, and unfortunately, Australia is quite competitive and highly export oriented in agriculture (Constable et al, 2014). On the contrast, the agricultural and mineral commodities are the backbone of Australia-Korea trade (Jones & Blayney, 2014).

4.2 Product potential

As the information above, it is struggle to assess that which country is better for Organic Bean. Japanese has a preference of coffee bean but the limitation is hard to solve, and instant coffee is the majority of Korean coffee market although Korean market is open for Australia. Nevertheless, Park and Moon researched (2015) that there is a trend of increase in import of fresh coffee bean in Korea according to the change of taste.  Therefore, Korean coffee market would be a good choice to Organic bean in future.

 

5.0 Country Choices (100-200 words)

The European and Japanese markets are better and popularly known for having the greatest market share for organic sustainable coffees. The share of organic coffee in each of the mentioned countries range above the mark of 3.4 providing a sustainable average of 1.6 percent slightly above the weighted average that is assumed to be at the 1.1 mark. Preliminary research has indicated that those Japanese and European markets have the highest number of shares in organic coffee production and therefore for a similar business to get to higher heights, we shall invest more in the Japanese market particularly the Korean market. The Korean market is reported to have an improved state of natural resource management within its biodiversity in conservation. At the same time, investing in the Korean market does not only bring organizational development but equally community development because of the increased use of human labor in coffee farms. Farmers are looking for crop resilience to climate risks and weather changes and the Korean market I believe present businesses with a high level provision of the same. Korea also provides farmers and businesses with on-farm diversification and less external costs of input while at the same time reducing financial exposure. For organic bean that is in the search for long term settlement in organic production, the Korean market is a perfect environment especially because of the gradual change in the market.

(For a long term plan, Korea is better for Organic Bean although Japanese consumer more coffee by coffee bean now. The taste of Korean is changing gradually; the consumption and market share of coffee is increasing. As a result, Korean market has more capacity unless Japan changes its restriction of fresh food in the future.)

6.0 Weighted Index

Paragraph explaining the scores

The GDP is classed 15% in the Weighted Index due to importance on the product and how to economy will react. This notion should particularly affect Organic Bean’s decision as it gives an insight into the value of consumer products with the Asian markets, ultimately forecasting the outcome of Organic Bean’s product.

Economic freedom is graded 10% in the Weighted Index. The importance of economic freedom is defined particularly by the notion that individuals may consume in any way they please. This allows Organic Bean to know whether consumers have the financial ability to invest in their product.

Regulations and social taste is extremely vital and take 25% and 35% respectively, because regulations determined whether product from Organic bean can enter the market, after that, social taste determined whether people in this country will buy it.

 

 

7.0 Conclusion (100-200 words)

The continuum of sustainability is a dynamic one and can be perfectly viewed as an ongoing process rather than being in a state of static achievement. In order to ensure that a business stays successful and meets the demands of sustainability, it is important to consider factors such as the potential of the product, the social culture, the economic state of a country at the present, the environmental demands, the kind of efforts the business is able to put in, the business environment at large at also the laws and regulations of the area in which the business chooses to operate from. After all these consideration to success and sustainability, organic bean decided to settle on the Korean market because of the numerous benefits that the market has to offer. Although the Japanese market competes the Korean market, the Korean market still manages to meet all the demands and requirements that a business might need to be successful. Organic bean is cautious in their business development initiative but from the examination presented above, it seems like the overall organic industry is cautious though optimistic about the future. In a nutshell, the future of organic production is bright in the Korean market and for organic beam that has chosen to perform their organic production in the Korean market as well.