group report strategic international business management trung nguyen pestle analysis

Background of Trung Nguyen Corporation Trung Nguyen Coffee is the number one brand in Vietnam established in 1996.. Currently, Trung Nguyen Legend is available in more than 100 countries

MINISTRY OF FINANCE UNIVERSITY OF FINANCE —- MARKETING

TÀI CHÍNH - MARKETING

GROUP REPORT STRATEGIC INTERNATIONAL BUSINESS MANAGEMENT

TRUNG NGUYEN: PESTLE ANALYSIS

LECTURER: TRAN THE NAM COURSE CODE: 2331910007404 TEAM MEMBERS’:

Nguyễn Thị Kim Thùy — 2121013676

Lê Gia Han — 2121013155 Nguyễn Linh Dan — 2121012310 Tran Quéc Huy — 2121011992 Nguyễn Hoàng Yến Chi - 2121012880 Huỳnh Hy Ngọc - 2121013922

Ho Chi Minh City, October 22°

TABLE OF CONTENT

1 INTRODUCTION

I.1 Background of Trung Nguyen Corporation

Trung Nguyen Coffee is the number one brand in Vietnam established in 1996 Founder and chairperson of rung Nguyen - Dang Le Nguyen Vu with the vision “The great organization, through serving humanity” has brought Trung Nguyen Coffee to the leading position in Vietnam Trung Nguyen has a wide range of the best products

of energy coffee and a large special and different cafe chain G7 is a source of pride for the Vietnamese coffee industry, and it has become one of the favorite instant coffee brands globally Trung Nguyen Group has received prestigious achievements during 27 years of establishment and development Currently, Trung Nguyen Legend

is available in more than 100 countries and territories around the world In 2018, "Giai thuong thanh tuu cua nam" for imported brands with the most achievements In 2022, Trung Nguyen got the reward with “Quan Ca Phé Tét Nhat nam 2022” and “Quan Ca Phê Nổi Tiếng Của Nam” after 6 months launching coffeeshop in Shanghai (Nhip Sống Kinh TẾ Việt Nam & Thé Gidi, n.d.) (Trung Nguyén Legend, n.d.)

1.2 Overview South Korea

South Korea, officially known as the Republic of Korea, is located in East Asia

on the Korean Peninsula It shares its northern border with North Korea and has sea borders with China to the west and Japan to the east South Korea is renowned for its rich culture influenced by oriental traditions, distinctive cuisine, and a globally popular entertainment industry

South Korea is one of the wealthiest, strongest, and most modern countries in Asia, providing a huge development investment market for enterprises around the world, including Trung Nguyen Corporation in Vietnam The analysis of the PESTLE macro environment will help Trung Nguyen have an overview of the aspects of the political, economic, legal, cultural, social, technological, and ethical systems, thereby showing the opportunities and challenges in this large market

II POLITICAL ENVIRONMENT

South Korea's current President since 10 May 2022 is Yoon Suk Youl

ITI Political Ideology

South Korea operates under a multi-party democratic system with consistent political ideology The major political ideologies in South Korea include conservatism,

progressivism, and liberalism The conservative party is typically associated with

economic liberalism, emphasising free markets, deregulation, and a strong national

defence

47.1.2 Political Stability

A survey conducted by US News shows that South Korea currently rank #24 in

Politically Stable

South Korea generally enjoys a stable political environment However, like any

democracy, it experiences periodic shifts in power as different parties come to

prominence

HỊ.L3 Government Perspectives on International Trade and International

Business

South Korea is known for its strong commitment to international trade and is one of the world's leading exporting nations

The government actively promotes free trade and has signed numerous bilateral and

multilateral trade agreements, including the Korea-U.S Free Trade Agreement

(KORUS) and the Comprehensive and Progressive Agreement for Trans-Pacific

Partnership (CPTPP) South Korea has a strong export-oriented economy and

encourages foreign investment

TỊ 1.4 Political Relationships between Vietnam and Republic of Korea

Regarding politics, Vietnam and South Korea maintain good relations across all

channels of the Party, Government, National Assembly through regular exchanges

of high-level delegations in many flexible forms, despite the impact of the pandemic Covid-19 Thereby, this helps both sides continuously strengthen political trust South Korea continues to consider Vietnam a key partner in Southeast Asia

In the latest meeting between the 2 presidents of 2 countries, both parties have stated

to be closely bonded, and Republic of Korea takes Vietnam as a key partner to

enhance the ASEAN-RokK relationship and Mekong-RokK relationship

Hr ECONOMIC ENVIRONMENT

II1.1 The economic growth

In recent years, Korea has been considered one of the four Asian dragons with outstanding economic development In 2020, Korea's GDP was 1,644.68 USD ranking 10th in the world, and maintaining this ranking in 2022 However, Korea's economic scale has decreased by 3 levels due to the decline in overall growth vitality by 2022

South Korea: Gross domestic product (GDP) in current prices from 1987 to 2028 (in

billion U.S dollars) 1,810.97

1,725.37

111.2 The income growth

The Central Bank of Korea (BOK) said that Korea's Gross National Income (GNI) per capita in 2022 was 32,886 USD which declined 7.9% compared to 2021

(35,523 USD)

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IH.3 The disparity in income

The Korean National Tax Service said the income gap between classes in Korea is increasingly widening In 2021 the minimum wage in Korea was 9,860 won and the income of the richest class was 15.1 times higher than that of the lowest In

addition, Korea was in the top 15 countries with the largest gap between rich and poor

in the world in 2019 Income inequality affects consumer purchasing decisions, with high-income people choosing expensive products and low-income people opting for cheaper ones

Trung Nguyen coffees are priced between 40,000 VND and 55,000 VND (2,200 — 3,030 won) Koreans often drink 1-2 cups of coffee a day, and with prices affordable, Trung Nguyen will meet their needs However, this can also be a drawback because people with low or high incomes cannot consume too many products a day

IHL.4 The economic relationship between Vietnam and Korea

years, their relations have continuously developed

THUONG MAI SONG PHUONG QUA CAC NAM

and have now reached the level of Comprehensive © Vit Nam sg Hi ae Hn Oa tag Vt

60 ty USD

Strategic Partnership Besides, Korean President | ,,,,,

Yoon Suk Yeol made their first state visit since | °’™ ee

WUD =

taking office on June 22 Vietnam is the first | 2

Southeast Asian country that Mr Yoon visited

showing Seoul's respect for this relationship (Tdi

MOT SO MAT HANG XUAT KHAU CHINH

countries reached 86.55 billion USD and they aim

to increase their bilateral trade turnover to 100

billion USD in 2023 (Bao Dau Tu, n.d.)

Additionally, Korea imported 187,790 tons of coffee, with an annual import turnover exceeding | billion USD for the first time in 2022 With coffee consumption continuously increasing, it will help Vietnamese coffee gain traction im Korea

(VietnamPlus, 2023)

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V CULTURAL ENVIRONMENT

V.1 Consumer behavior

Korean consumers are highly brand-conscious and prefer to buy products that are visually appealing, reasonably priced, well-designed, and from well-known brands The MZ generation (millennials and Gen Z), is willing to invest in luxury and premium goods to meet their demands This is evident from the projected spending on luxury goods, which is expected to reach 21.8 trillion won by 2022 (VietnamPlus, 2023) However, the use of credit cards in Korea is higher than in any other country, with credit card spending accounting for 40% of Korea's GDP As a result, Korean consumers, especially young people, face significant amounts of credit debt However, due to the rising cost of living, Korean people have become more cost-conscious, particularly when it comes to their food expenses

In today's fast-paced world, keeping up with trends is essential for Trung Nguyen Legend to enter the Korean market successfully Korean consumers are highly influenced by K-pop stars who recommend their favorite products Therefore,

it is crucial to stay updated with popular social media platforms, influencers, and market research to capture the latest trends and connect with customers (Marketing in Korea, 2023)

V.2 Coffee Culture

South Korea also has a unique coffee culture that presents a potential market for rapid development It is considered the world's second-largest consumer market, with a market size of $6.5 billion Coffee is a prominent feature in Korean movies, and according to the National Council of the Korean Consumer Organization, the average Korean person drinks 367 cups of coffee per year Korean people's coffee preferences differ from those of Vietnamese people, as they prefer Arabica coffee with less caffeine, such as Americano (77W7TO VCCI, n.d.)

From a cultural standpoint, Trung Nguyen has many advantages when entering the Korean market, given its coffee culture and high coffee consumption Korean consumers are willing to spend more on famous brand products with unique styles, just like Trung Nguyen Legend However, Trung Nguyen Legend needs to consider the different tastes between countries to offer the most suitable products

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VI SOCIAL ENVIRONMENT

In 2022, the population of South Korea was approximately 52 million However, the country is facing a major challenge in the form of a record-low birth rate

of 0.78% (the number of babies born per woman) This alarming trend has resulted in

a situation where the population of individuals over 65 now exceeds the number of children under 15 Meanwhile, South Korea's life expectancy is the fastest growing in the world Currently, the average life expectancy of Koreans is 84.14 years (80.83 years for males and 87.23 years for females) (https://suckhoedoisong.vn, 2023) The aging population has placed significant pressure on social welfare expenditures, as the government strives to provide adequate support and care for the elderly From a business perspective, it is important to note that there are distinct differences in spending habits between the younger and older generations in South Korea While the younger generation may embrace a more spontaneous and carefree "You Only Live Once" (YOLO) lifestyle, the older generation tends to adopt a more frugal approach to their finances As a result, they often do not have the habit of spending significant amounts of money Some older individuals even live in extreme poverty, highlighting the economic disparities that exist within the country

VI TECHNOLOGICAL ENVIRONMENT

VIL1 E-commerce

Online shopping is incredibly popular in Korea, and a large percentage of consumers make their purchasing decisions through e-commerce platforms Korea's e- commerce market is expanding rapidly, making it one of the biggest worldwide The Korean e-commerce market is predicted to develop in the future, with a total estimated value of 104.5 billion USD in 2020, according to a report by Euromonitor International

Businesses investing in the Korean e-commerce market can take advantage of the opportunity to reach many potential customers Asia Pac research shows that Korea, a country of 51.29 million people, has an urbanization rate of 81.4%, 97% of Koreans use the Internet and 45.79% of the country's population uses the Internet, accounting for 89.3% of the entire population A complex economy and rapidly evolving consumer culture are also present in South Korea, where the popularity of

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Internet goods and services is increasing Therefore, Trung Nguyen can save costs on building a physical store chain when Korea has a vibrant e-commerce market

Furthermore, social media platforms such as KakaoTalk and Instagram also have an abundance of users in Korea Currently, almost all businesses use these platforms and mobile payments to connect with customers and promote their products

or services (Marketing in Korea, 2023)

VII.2 Copyrights

In Korea, copyright issues are promoted in all industries, protecting the rights

of businesses, authors, etc Under Korean Copyright Law regulated by the Korea Copyright Commission, the law protects the intellectual property rights of authors, manufacturers, and distributors Businesses can register copyrights for their products

to protect intellectual property rights and prevent plagiarism (Copyright Law, n.d.)

For businesses, a country needs to have fair intellectual property rights, it helps protect businesses from copying, avoid lawsuits, and protect the business's products

In addition, copyright protection also helps Trung Nguyen increase brand value and create many business opportunities for Trung Nguyen

However, in addition to the fact that Korea has fair copyright laws, Trung Nguyen also needs to note that copyright protection will also face many challenges Therefore, Trung Nguyen needs to build a clear, coherent, and effective strategy to protect Trung Nguyen in Korea

VIII ETHICS

VIIL.1 Labor

In Korea, the issue of protecting children's rights is always of concern to the government According to the Labor Law in Korea, the minimum working age in this country is 15 years old, for dangerous jobs or in the chemical industry, the minimum age is 18 years old, maybe higher depending on the level of danger of the job

Regarding regulations on protecting the rights of employees, employees work from Monday to Friday every week, 8 hours a day, for a total of 40 hours per week In addition, the Korean government always has laws to protect the rights and protection

of domestic workers and foreigners working in Korea (Labor Standards Act, n.d.)

VHL2 Environment

Korea's environment has seriously deteriorated after 30 years of industrialization and urbanization Therefore, starting in the 1990s, a series of policies and measures including traditional management measures as well as measures based

on market principles were implemented Green Korea 2006 is a huge set of environmental policies, demonstrating the balanced development between economic growth and environmental protection

Regulations on air quality, water quality, and waste management have an impact on businesses investing in Korea Trung Nguyen will encounter many difficulties in choosing input materials and environmentally friendly materials, which will increase production costs, making it difficult for Trung Nguyen to enter the Korean market (M6 Truong, n.d.)

VITIL3 Corruption

Based on Transparency International's report on corruption rankings of countries around the world According to the report, Korea is currently ranked 31st with a CPI Score of 63, a quite high score, showing that the Korean government is quite transparent, and the level of corruption is also quite low If the level of corruption in a certain country is high, it will cause negative effects on businesses such as increasing costs, reducing profits, making it difficult to invest in development, reducing the reputation of a country, and making it difficult to difficulty in complying with regulations Therefore, with a relatively low level of corruption in the Korean

government, Korea has been a fertile, opportunistic, and quite safe market for Trung Nguyen to invest in (2022 Corruption Perceptions Index, n.d.)