TRYING TO CREATE A STIR: OPENING A COFFEE SHOP IN KOREA

QUESTION 1:
EVALUATING THE DECISION OF KIM AND ANDES TO OPEN A COFFEE SHOP IN
KOREA
Frankly speaking, opening a coffee shop is a good fit for Kim and Andes as
entrepreneurs. Possessing tremendous knowledge of business management in Korea,
this will be a valuable asset and come into handy when they need training and
management their staffs. Furthermore, being a Korean this has given the firm the
insiders knowledge which is a great competitive advantage over foreign-base entities.
Secondly, obtaining the funding from investors is an important key element for a young
firm; this can be achieved with the help from Andes. Upholding such optimistic scenario,
this has gained Kim and Andes a competitive advantage and ahead others who want to
enter the market. Thirdly, as mentioned in the case, the market potential in opening a
coffee shop in South Korea is huge as with numerous of target audiences both coffeedrinker and non-coffee drinkers ranging from high-school to universities students, office
workers etc. With a dynamic culture of coffee culture in Korea, even non-coffee drinkers
will pay their visit to the coffee shop as the concept of third place is strongly adopted.
Hence, Kim and Andes might not need to limit their target audience to those who drink
coffee but in fact, can widen up to include those non coffee drinkers as well. Through
this, this report believes it is a good idea for Kim and Andes to open a coffee shop in
South Korea even though the decision is quite contentious as there are many things that
need to be taken into a great consideration before making a decision e.g. market size and
its potential, competition, entry barriers, etc. Each of those elements need to be
evaluated carefully as it will determine the success rate of the shop itself.
QUESTION 2
I.FACTORS INFLUENCE THEIR MODE OF ENTRY
There are many factors that influence their mode of entry decisions, they are:
1/ Entry barriers
As mentioned, South Korea has a dynamic market for caf. There are quite a number of
barriers to entry such as:
-Competition: quite a fierce competition as large firms is competing for the market
leader position. There are 740 different coffee brands listed in Seoul in 2007.
-Differentiation of product ranges that are offered by existing firms especially the
foreign-based firms like Starbucks or Coffee Beans as they already had a ranges of
developed products and R&D department who