Business Communication Report:

MDO Inc. “Hanriver”

This is the full planned research for the MDO Inc. in order to expand their
footwear business overseas. The life in South Korea and the cultural
norms and values with full researched analysis of the country.
Dipta – Sanaf – Aurin – Muntasir - Jawad

[0]
 Business Communication Report
Expansion of footwear business in South Korea by MDO Inc.

Team: Nova Corps.

BUS251.02 (Fall 2020)

Submitted to: Tanya Ahmed (Tya)

Nova Corps’ Members:

Dipta Chowdhury 1811951030

Md. Jawad Masroor 1812334030

Sanaf Ahmed 1811955030

Jannatul Sanzida 1813075030

Md. Muntasir 1811699030

[1]
Letter of Transmittal
January 11, 2021

Ms. Tanya Ahmed (TYA), Lecturer,

Department of Management,

School of Business & Economies,

North South University, Bangladesh.

Dear Ma’am,

It is our pleasure to submit the report on “Expansion of footwear business in South Korea by MDO Inc.”

We are glad to present you our group report as per our course requirement. This project has been very
interesting and challenging to us and also helped and inspired us to get practical knowledge about how to
find a good ecosystem overseas successfully for a business. We hope to apply this knowledge in our future
endeavors. However, if you have any further questions, we would really appreciate it if you contact us
without any hesitation. Kindly accept our report and our tremendous effort of bringing forward our
research and analysis that we have done.

Moreover, this report is done and compiled under strict supervision of our leader Dipta Chowdhury and
we can assure you that none of these parts are plagiarized and copied directly from the internet sources
or any other past reports/projects/Term-Paper from North South University.

Sincerely yours,

Dipta Chowdhury

Md. Jawad Masroor

Sanaf Ahmed

Jannatul Sanzida

Md. Muntasir

[2]
Acknowledgement

We would like to thank our course instructor Ms. Tania Ahmed (Tya) for giving us the opportunity to
prepare report for this business communication course on a new market expansion feasibility. Without
her guidance, it would not be possible for us to finish the report within this limited time.

[3]
Executive Summary

In this particular report we have done a long process of research of a country in order to invest for
establishing a new business line. The MDO Inc. has done many successful businesses in many parts of the
world, now The CEO has contacted us to recommend and help them to establish a new footwear business
named “Hanriver” in South Korea. The CEO wanted a complete research from our side. We have gone
through all the ins and outs of the country. We have analyzed the and discussed about the culture,
economy, market system and other important factors to find out the flexibilities. At the final part of the
report recommendations all the factors are understandable weather the company should go for the
following investment or not. In the conclusion part the final decision gets a perfect finishing of an
announcement. Every aspect and the exception about the country is added the report alongside the
opportunities of blooming the footwear business. The CEO of MDO Inc. will find this report very useful in
order to expend Hanriver’s business and cover up the South Korean market.

[4]
Table of Contents
1. Introduction ..............................................................................................................................................................6
2. Findings and Analysis of South Korean Culture .......................................................................................................8
• History ..............................................................................................................................................................8
• Geography ........................................................................................................................................................8
• People ...............................................................................................................................................................9
• Custom ...........................................................................................................................................................12
• Currency .........................................................................................................................................................13
• Economy .........................................................................................................................................................13
• Technology .....................................................................................................................................................15
• Legal ...............................................................................................................................................................17
3. South Korea and USA relationship .........................................................................................................................17
4. Competition ............................................................................................................................................................20
5. Marketing strategy..................................................................................................................................................21
• 4Ps ..................................................................................................................................................................21
Product ........................................................................................................................................................................... 21
Price ................................................................................................................................................................................ 22
Place ............................................................................................................................................................................... 22
Promotion ....................................................................................................................................................................... 22
6. Marketing Communication Tool .............................................................................................................................25
7. Staffing .....................................................................................................................................................................27
8. Communication .......................................................................................................................................................27
9. Critical Analysis .......................................................................................................................................................28
10. Financial Analysis ..................................................................................................................................................29
11. Budget Assumption ...............................................................................................................................................30
12. Conclusion .............................................................................................................................................................31
13. Bibliography ..........................................................................................................................................................32

[5]
1. Introduction
MDO Inc. is an American manufacturer of leather footwear, textile footwear, rubber footwear, and
footwear parts situated in Grand Rapids, Michigan. Because of the massive competition in the local
market, the company couldn't deliver the promises they made to their shareholders. So, in the last AGM,
the company directors have decided to expand the business in a non-European and predominantly non-
English speaking country. With goals to explore the international market, ensuring successive growth in
the future operation – in addition, the company wants to ensure the entry compiles up to a plummeting
increase in sales revenue, developing new product line in the host market, possibilities of domestic or
foreign investment opportunities, diversification and reduction of operating costs, legal factors and
exploring for human capitals in the host country.

We will assist the CEO. Mr. Mark Orr and his corporation to accomplish their goals to expand globally with
our analytical findings, consumer research, and the condition for foreign direct investment in the host
country.

For the expansion, we are proposing South Korea. The Republic of Korea is a sovereign East Asian state in
the southern half of the Korean Peninsula that shares a border with North Korea to the north and the
coastal border with Japan and China. South Korea has a mixed economic system that is driven by an
export-oriented financial strategy. The country has become the fourth-largest economy in the world in
Asia and the twelfth largest in the world. According to "World Integrated Trade Solution-2018," South
Korea is in the top ten list of US's leading footwear export partner. South Korea got Trade Value
($):41,403.66, and the Share percentage is: 1.98. Invalid source specified.

In the process, we will be creating a sister concern for MDO Inc to run South Korea's operations. We will
brand the company as "Hanriver," after a significant and fourth-longest river in the Korean peninsula
named Hanja River. This name will carry a subtle message of a long-bound relationship with the USA and
the Korean Republic in terms of trading, cultural exchange, and the long route that MDO Inc has taken to
reach the Korean people. The brand tagline will be “The Trend Is You," – where we want our consumers
to feel the importance of inner self-beliefs.

[6]
Hanriver will rely on MDO Inc's production back in the USA. All of the shipments will directly come to
various stores of South Korea from MDO Inc's dedicated manufacturing facilities on American soil. As the
company will not be directly involved in manufacturing shoes in the Korean market, their target is to
initially grab the market share. The USA is a part of the Korean free trade agreement, and this policy will
help the sister focus more on marketing and less on running a new facility in a new economy.

Problem Statement

MDO Inc. is a renowned country in the USA who mainly famous for manufacturing leather footwear,
textile footwear, rubber footwear. Mr. Mark Orr, the CEO of MDO Inc., is planning to expand their business
globally. He wants to expand their manufactured shoes to a new suitable country in Asia. For this, MDO
Inc. needs to go through every necessary detail of the host country. It is a challenge for the company to
collect essential data.

Purpose statement

As we are assigned to advise MDO Inc., the most appropriate country to make an investment suitable for
establishing a sister concern and expanding it, we had to do lots of research on many attributes for this
report. The objective is to find out the most significant aspects of why the MDO company would invest in
South Korea and how sustainable it would be. Throughout the whole report, some analysis has been done,
which figured out some opportunities and challenges for the company. Via proper explanation, data,
graph and chart we tried to prove why we suggested South Korea for their Footwear industry investment.

Limitation

Though all of our research is based on online sources and a portal, we still do not understand the overall
market situation because of the pandemic. Because after this pandemic economy is not going to be like
before, huge changes in the economy will bring changes in business sectors too. We cannot think what
will be the challenges that South Korea is going to face after the pandemic, so we just made a report based
on the present information given on the internet. That's a limitation. Another limitation is, we couldn’t
perform primary research. Primary research is more direct and attainable. If we had that opportunity to
look over the actual industry by thyself, it would definitely be very favorable for us.

Methodology

Since it is not possible to visit any country to observe their business market, environment, or industry as
primary research, therefore, conducting the report, we had to do research based on secondary sources.
We collect most of the information from the internet. As per the secondary research, we intended to
exercise the websites regarding the Korean business market and norms, their creation and development
in the footwear industry for matching the right ecosystem for MDO Inc. to establish their business.
Moreover, we have performed some reading related to the subject through online journals, online news
portals, articles, Government websites, blogs, magazines, and reviews associated with South Korea.

[7]
2. Findings and Analysis of South Korean Culture
• History
The institution of the United States of America military government in Incheon on September 8, 1945
when the defeat of the Japan to the Allied Powers signals the start of Republic of Korea’s history. Lt.
General John R. Hodge took management of the recently created government. throughout this period,
South Korea was below nice political and economic chaos thanks to totally different reasons together with
the results of the war. The nation’s first constitution was established on 17th July 1948 following the final
election of could 10th May, 1948. Consequently, the primary Republic of South Korea was formally
supported on 15th August with Syngman Rhee as the first president. South Korea’s Second Republic was
characterized by large democratic ruling. Yun Po Sun was voted president on August 13, 1960 with Prime
Minister Chang Myon acting as head of state (South Kr. History, n.d.). On could 16, 1961 Major General
Park Chung-hee headed a coup d’ etat put that eventually overthrew the Second Republic. Park was
reelected within the 1967 election assumed presidency for two years and once more won the elections in
1969 and 1971. Throughout his administration, Republic of Korea began to determine its international
roles in the world community and its economy conjointly grew significantly. In Nov 21, 1972, the country
adopted the Yusin Constitution that provided Park with valuable management of the parliament (South
Kr. History, n.d.). In 1979, Park was dead by Kim Jae-kyu that resulted in sturdy opposition against
authoritarian rule and also the Fifth Republic emerged. town of Gwangju witnessed a historical and violent
conflicts and riots among National University students and the armed forces. The Sixth Republic started
with Roh Tae-woo who was non-appointive in 1987 and one amongst Major General Chun Doo-hwan’s
colleagues. In 1992, Kim Young-sam was elected president and have become South Korea’s initial civilian
leader in thirty years. throughout this period, the country pursued the alleged “Sunshine Policy” that was
a progression of efforts to resolve problems with North Korea (South Kr. History, n.d.).

• Geography
South Korea also known as Republic of Korea is in Eastern side of Asia at about 37° North, 127° 30 East, at
the southern 1/2 of the Korean Peninsula jutting out from a long way east of the Asian land mass into the
Yellow Sea. Total land area of the country is about 100,210 kilometers per square. South Korea's northern
boundary is marked with the aid of using the 238 km lengthy Korean Demilitarized Zone DMZ, which
additionally paperwork the southern border of North Korea or the Democratic People’s Republic of Korea.
South Korea's capital city, Seoul, lies most effective thirty miles south of the DMZ (New World
Encyclopedia, n.d.).

[8]
Surrounded on its exclusive three aspects
with the resource of the use of water, South
Korea has 2,413 km of coastline along three
seas: The Yellow Sea to the west; the East
China Sea to the south; and therefore, the
Sea of Japan (East Sea) to the east. South
Korea, with 98,480 square kilometers,
measures slightly massive than the American
state of Indiana. The Country a has 290
rectangular kilometers of lakes and rivers.
This country is occupied with natural
connecting route between Japan and China.
This country has experienced invasions in the
past by these two countries in the past (New
World Encyclopedia, n.d.).

• People
It became lengthy believed that the Korean human beings in the beginning can also additionally have had
hyperlinks with the human beings of Central Asia, the Lake Baikal vicinity of Siberia, Mongolia, and the
coastal regions of the Yellow Sea. Tools of Paleolithic kind and different artifacts observed in Sokch’ang,
close to Kongju, are pretty just like the ones of the Lake Baikal and Mongolian regions. In 2017, genetic
evaluation of bones observed in Primorye-Kray in Far Eastern Russia counseled that Koreans had been
associated with a populace that had inhabited that place for at the least 7,seven hundred years.

South Korea is a country who are famous for their manufacturing/ production sector. As per statistic in
2020, the population is about 51.2 Million (World o Meters, 2020). The people are very productive here.
This country has the lowest fertility rate in the world, in numbers it is 0.92. That means on average a
woman is having less than one child. They think that having a child as more than one will hamper the work
tendency and the higher cost of education and house rent cost is the reason why don’t they prefer having
children. This situation is very threatening for the senior citizen of South Korea as they are expected to be
over age of 65 by 2065, which is not good for the workforce, economy and military capabilities (World
Population Review, 2020).

All Koreans talk the Korean language, that is regularly defined as one in every of the Altaic languages,
has affinities to Japanese, and consists of many Chinese loanwords. The Korean script, acknowledged in
South Korea as Hangul (Han’gŭl), consists of phonetic symbols for the ten vowels and 14 consonants.
Korean regularly is written as an aggregate of Chinese ideograms and Hangul in South Korea, even though
the fashion is in the direction of the use of much less Chinese. A massive range of English phrases and
terms have crept into the language—both intact and changed through neighborhood usage—because of
the American presence withinside the USA in view that 1950 (South Korea, n.d.).

[9]
Hofstead Insights Between South Korea vs USA:

Dimensions South Korea United States

1. Power Distance Index • PDI 60 indicates that • PDI 40 Indicates that USA
(PDI) South Korea is believes in equality.
moderately a • They don’t maintain a
hierarchical society. hierarchical order and
• They maintain a everyone has the right to share
hierarchical order and their opinions.
everyone has their own • Here they respect the elderly
position. people but they prioritize
• Power is concentrated young people decision in
and managers depend decision making.
on rules and their
supervisors.

[10]
 2. Individualism Vs • IDV 18 indicates that
Collectivism (IDV) South Korea has a
collectivistic society.
• For South Koreans,
family values are
extremely significant.
• They believe in unity
and group loyalty.
• They maintain good
relationship with
everyone and take
responsivity for fellow
members.
3. Masculinity Vs • MAS 39 indicates that
Femineity (MAS) South Korea is a
Feminine society.
• They focus on “Working
in order to live”
• Conflicts there are
resolved by
compromising and
negotiating.
4. Uncertainty Avoidance • With 85 points South
Index (UAI) Korea avoids risks at any
cost.
• They believe “Time is
money”, for that they
like to keep themselves
busy by working hard
and love to maintain
time properly.
5. Long-Versus VS. Short- • With 100 points South is
Term Orientation / a very pragmatic
"Pragmatic Versus Normative culture.
(PRA)* • Believes in truth to be
depending on situation,
context and time.
• Determination towards
achieving results.
[11]
• 91 points of IDV indicates that
USA is a individualistic society.
• They are influenced by
Protestantism that’s why they
are connected to individualism.
• They don’t judge people based
on their family background or
their group.
• The diversity of Americans is
just another important reason
to be an individualist.
• 62 points of MAS indicates US is
a Masculine society.
• They believe in “the winner
takes it all” attitude.
• They Have a tendency of “live
to work” to accomplish higher
status.
• UAI 46 makes USA a
highly risk-taking
nation means new
ideas are welcome,
exploring different
options are
encouraged.
• Open to opinion,
freedom of expression
is a norm.
• With 26 points it makes USA to
be normative.
• Tendency to analyze new
information to verify its truth.
• Strong sense of differentiating
between good and evil.
• Business performance is
evaluated on quarterly (short
term) basis - individuals prefer
 • serve the durability of speedy results within the
the companies workplace.

6. Indulgence VS. Restraint • IVR 29 makes South • IVR 68 makes USA to be an

(IVR) Korea to be a restrained
society.
• Propensity to cynicism
and pessimism.
• Take less time for self-
care or leisure.
• Good at controlling
desires
indulgent nation which means
they are weak at controlling
their impulses.
• Despite the government’s war
against drug addiction, the rate
is higher than most other
wealthy nations.

(Hofstede Insights)

• Custom
Different countries people follow different types of custom. As MDO Inc. is an American company, and
they follow different gesture between them in the meeting. They kissed each other on both chicks. But in
South Korea, you have to bowing slightly as greetings. You have to keep your hand straight or folded in
front your stomach and during that time your legs have to be together. And most important point is your
head should stay bowed. (Business Etiquette in South Korea – From Table Manners to Conversation, n.d.)

[12]
• Currency
The South Korean currency known as South Korean
Won. The symbol of the Won is "₩”, for example
"₩1000”. (Fernando, 2020) Since 1945, this is the
official currency of South Korea. As of late 2020, the
USD/KRW exchange rate is 1107.12 –
approximately 1100 KRW = 1 USD. As of 2020, only
four south Korean coins used across the country –
₩10, ₩50, ₩100, and ₩500. And the bank notes
are ₩1000, ₩2000, ₩5000, ₩10,000, and
₩50,000. (What is the South Korean Won (KRW)?,
n.d.)

• Economy
South Korea has followed the mixed economic system, and South Korea’s economy helps them to reach
12th position among the world largest economic power and 4th in Asia. South Korea was one of the poorest
countries in the world, but it is now become a high-income country in just one generation. South Korea’s
mixed economy dominated by family-owned conglomerates called chaebols. The most revenue-
generating industries in South Korea are comprised of textile, steel, car manufacturing, shipbuilding, and
electronics. Innovation and technology are the main factors that make the South Korea’s economy
stronger. South Korea's GDP per capita is increasing, on the other hand, the inflation rate is decreasing.
The unemployment rate has risen a bit, which will lead to cheap labor for companies to hire. (The
economic context of South Korea, 2020)

Ups and Downs of South Korea Economy

In 1960, South Korea was one of the poorest countries in the world. Then South Korea grew rapidly from
the 1960s through early 80’s. The growth rate fell to about 6.9 percent annually during the 1993-97
period. GDP contracted by 6.7 percent in 1998 alone because of the financial crisis, which pushed the
unemployment rate to 6.8 percent (1,461,000 workers), a large increase from the 1997 rate of 2.6 percent
(556,000). Inflation jumped from 4.5 percent in 1997 to 7.8 percent in 1998. Two factors helped economic
recovery in 1999: the growth of the U.S. economy, which is South Korea's largest export market, and large
direct foreign investments, made possible by economic liberalization. (Korea, South - Overview of
economy, n.d.)

In 2010, South Korea was able to avoid the recession during the global financial crisis. They recovered very
easily from the financial crisis hit. South Korea’s growth rate was 2.3% in 2008 and 0.2% in 2009 when the
financial crisis hit, but they recovered in the next year. Their growth rate was 6.1% in 2010. Then in 2013,
they reached the record-breaking level. They increased their growth level to 47% in 2013. ( Economy and
Business Opportunities from South Korea, n.d.)

[13]
Trade Agreement
South Korea has some trade agreements in term for trade with other countries. Korea has Free Trade
Agreements with ASEAN, Australia, Canada, Central America (Partial), Chile, China, Colombia, India, New
Zealand, Peru, Singapore, the European Union, and the European Free Trade Association (Norway,
Switzerland, Iceland, and Liechtenstein), U.S., Turkey, and Vietnam.

Some of the agreements are EFTA and Chili in 2004, Singapore and ASEAN 2005 and 2007 respectively,
USA in 2007 further ratified in 2011, successive trade agreements with Peru and Turkey in 2011 and 2012.
(Kim)

Economic Freedom
The score of economic freedom is 74.0 which making the South Korea 25th freest economy in 2020 index.
The score is increased by 1.7 points. It is the 7th ranked country among Asia-pacific region and the good
news is it is above the world average. (World Bank, n.d.)

The GDP growth of South Korea has increased averaging 7.3% annually between 1960 and 2019.

Chart: GDP of South Korea (2010-2020)

The employment rate is projecting up since 2009, and it will be continued till 2021. In 2019 the
unemployment rate was 3.78% which is increased in 2020. (Plecher, 2020)

[14]
 Chart: Unemployment rate of South Korea (2009-2021)

That’s why this is a good opportunity for the MDO Inc. to enter into the South Korea because of their high
unemployment rate and growing GDP.

• Technology
South Korea is one of worlds technologically advanced countries. South Korea is one of those countries
which had a remarkable turnaround after the World War II. With the help of its communication and
advanced technology South Korea became one of world’s fastest growing and high-income countries.
During the Asian crisis in 1997 South Korea were also one of those countries who had a very negative
impact on their GDP. But in 1999 South Korea regain their growth whereas most of the Asian countries
were struggling to keep the expected growth rate. But South Korea made it possible although they are
not enriched with vast natural resources. South Korea has a very aggressive investment towards
technology and innovation.

[15]
“After Israel South Korea is the country who spent 4.5% of its Gross Domestic Product on Research and
Development sector (R&D)” (Nature Index, 2020). It reflects why South Korea is one of worlds
technologically advanced and innovative countries. South Korea is one of the world’s top 10 globally
innovative countries according to innovation index ranking 2020. “The average value for South Korea
during the period 2011-2020 was 55.66 points with a minimum of 53.3 points in 2013 and a maximum of
57.7 points in 2017” (South Korea: Innovation index, 2020).

“South Korea has the reputation of having one of the fastest internet networks in the world. Around 91.6%
of its population are connected to high-speed internet” (Waldeck Y. , 2020). With the percentage of
internet users in South Korea it is also considered to be one of world’s biggest e-commerce markets.
“Industry figures suggest that it has the potential of growing its retail e-commerce volume to 90.5 billion
U.S. dollars by 2024 from 41.9 billion U.S. dollars” (Waldeck Y. , 2020).

[16]
• Legal
South Korea is located in the East side of the Asia and known as Republic of Korea. In order to conduct
business in South Korea some rules and procedures are needed to follow. South Korea has the practice of
civil law referred as European Continental law. That is why it is influenced hugely by the European civil
law system. As most of the countries in the world South Korea is also a democratic government. It is
consisting of three branches- 1) judicial 2) Executive and 3) legislative. Supreme Court highest court of law
in South Korea. The legal decision is taken in accordance with the code and judge makes his decision
referring the existing law that have been passed in the constitution.

The republic of Korea passed a Foreign Investment Promotion Act in order to facilitate the foreign
investors and provide them necessary aid to conduct business in South Korea. South Korea encourages
foreign investors to operate business in Korea and promote to contribute in the growth of the nation. In
order to have a sound and prosperous economic relation between U.S. and Korea A free trade agreement
were singed in 2007. It came into effect in 2012. The FTA allows both U.S. and Korean investors to conduct
business with tax-exempt facility and it also provides them exemption from custom duty.

3. South Korea and USA relationship

The relationship between South Korea and USA has been an intense and inevitable one. South Korea and
U.S. are the major trading partner. The relationship between these two countries has been improved after
late 1980s. South Korea and U.S. managed their trade dispute after a near collapse in the economy in early
1990s. The trade agreement and several economic policies were reformed in order to flourish the
economy of both countries. South Korea is known for one of the fastest and booming economy in the
world. “This South Asian country ranks 12th among the world's biggest economically powerful countries
and 4th in Asia. This country has a reputation for its remarkable turnaround from being one of the poorest
countries in the world to a developed country. Now it’s considered as worlds one of the highest income
countries” (The economic context of South Korea, 2020). Specially the free trade agreement between U.S.
And South Korea changed the dynamics of both countries.

U.S.-South Korea Free Trade Agreement: In 2007 a free trade agreement was signed by the U.S.
government and the Republic of South Korea known as KORUS FTA. From the beginning of the U.S.-South
Korea trade agreement it started to create many possibilities and generate new opportunities for U.S.
manufacturers to South Korea. Thus, providing American manufacturers a huge marketplace and
flourishing the trading activities in two major ways-

• The free trade agreement eliminated the export duties, tariffs and relevant charges between U.S.
and South Korea.
• South Korea reformed some of the major trading obstacles for American manufacturer and
addressed few other issues which may arise in the future.

[17]
The free trade agreement between U.S.-Korea came into effect in 2012. And the trading activities between
these two countries increased by significant numbers. “In 2019 the trade between U.S. and South Korea
were estimated $168 billion from which the exports of goods and services were $80.5 billion. After the
FTA negotiations and reform process South Korea became Americas 6th largest trading partner ahead of
France and Italy. The trade deficit between South Korea and U.S. were reduced in large number in the last
decade” (Chatzky, 2019). It shows how much the economic activities flourished between these two
countries.

The following graph represents the growth of exports in South kore since the implementation of free trade
agreement KORUS FTA. After the agreement came into effect in 2012 the growth increased to 78% in just
6 years.

[18]
The Korea-U.S. Free Trade Agreement also had a very influential significance in the Korean economy as
well. As we can see in the graph the following year after the agreement Korea’s trade surplus with the
U.S. by 44%. A significant increase also in the export of automobile sector as well. Although there was a
slide decrease on the imports of agricultural products overall trading activities increased and both
countries had a very influential impact in their economy.

Foreign Direct Investment (FDI): The foreign direct investment also increased between two countries
significantly. The following table represents the data from year 2015 to 2019. These data represent how
big the Korean market is for the American exporters.

[19]
4. Competition
After the Beijing-Washington trade dispute South
Korea has become the major market in the central
Asia for American investors. The ongoing trade war
between china-U.S. government created a lot of
opportunities for investing in South Korea. So, this is
the best time for MDO Inc to introduce Hanriver in
South Korean market and introduce their business
globally.

As per our analysis there are domination of global

brands like Nike and Adidas footwear sector here in South Korea. But as we are focusing on the mass
market our priority here is the leading local brands, Big names like: FILA, SHOOPAN, DOMBA and KOLCA
are well established. Those brands more affordable in price so the mass market have attraction upon
them., They are already on and off ruling the market. From the above mention brands, FILA is one of the
market leaders.

These brands are the direct competitors of our Hanriver Footwear. It’s kind of challenging for our
footwear corp. to enter the market. But as per the quality and the diversifying product line there is a good
chance to penetrate the market and get into a competition.

[20]
5. Marketing strategy
• 4Ps
This is a long-term, forward-looking approach with the fundamental goal of achieving sustainable
competitive advantage. Marketing strategy is the section of any business plan that outlines its overall
game plan for finding clients and customers for your business. That Inspire Strategic Thinkers.

Product
The core product includes
leather footwear, textile
footwear, rubber footwear,
which we will categorize into
different segments based on
gender and age. Besides
MDO Inc's production, there
will be other renowned
brands like Nike, Air Jordan,
Puma, Adidas, and many.

Products mainly are, Men’s

wear: Oxford, High Tops,
Monk Strap. Women’s wear:
Wedges, Cone Heels, Lita and
Unisex products like; Running
shoes, Flip Flops, Sneakers
and many.

Many will need some

supplementary products
related to the core product;
therefore, there will be
related products like Insoles,
Shoe Laces, Overshoes, Shoe
Treatments & Polishes, Shoe
Horns Shoe Decoration
Charms, Shoe Care Kits, Shoe
Brushes.

[21]
Price
To offer a competitive
environment, we will be
offering a relatively low initial
entry price, which will
eventually create pressure
among the competitors and
attract a new customer. The
goal is to build a customer
base and a positive word of
mouth in the market and
then, over time, we will
gradually increase the price.
There will occasion-based
sales each year.

Place
The target is to establish
more than 30 dedicated
stores with enough
storefront facilities with a
shelf to display products,
walkways, and payment
checkout points for year one.
Hanriver will choose major
metropolitan cities like Seoul,
Incheon, Daejeon, Daegu,
Gwangju, Ulsan, Busan. Factor like the best prime location for shopping, business hubs and shopping malls
are some of the only priorities to open a store.

Promotion
Social Media
Content Marketing
Marketing
in Digital Platforms

Celebrity Website Booster

Endorsement (SEO/SEM)

Occasion Based
PR Activities
Sales and Offers [22]
The main focus is to brand the products through a digital platform as South Korea's communication
technology is best among many, they are among few that uses 5g technology. This might be a key factor
reach the targeted customer more swiftly and efficiently.

Then we will open Facebook, Instagram pages, some touring advertisements on television, Billboard, an
Instagram account to attract the people, different types of campaign, our OVC in YouTube and website.
We will increase the traffic of our pages and website through Search Engine Optimization also. We will
hire different bloggers and influencers and also work with Korean celebrities to make videos, OVCs.

Content Marketing: According to Philip Cotler's “Marketing 4.0”, people nowadays listen more to
Facebook friends than traditional TVC. The complete digital marketing trend has taken over the older
ones. Companies are investing more in YouTube, FB & IG content marketing and sponsored OVCs.

Our primary focus is to make content in Korean language for both social media and website, as the Korean
people are much comfortable communicating in their own language rather than a foreign language. To
make things easy there will be local copywriters and content creators working with Hanriver. They will
help us with the content, viewers psychology and perception.

PR Activities: Good public relations efforts can help a firm create connection with its clients, promote
what it has to show, and supplement its sales efforts. Public relation puts a positive spin on news stories
and is often perceived as more neutral and objective than other forms of promotion. Much of the
information is presented to sound as if it has been created by an organization independent of the seller.
Some kind of activities are:

Program
Planning

Measiring Analysis
Result problems and
opportunities

Recommending
and Planning Defining Goals
activities

We can also write and edit media relations, corporate identity, speaking, production, special events,
sponsored programs, research, and evaluation to help our brand create an enormous awareness.

Celebrity Endorsement: Celebrity and influencer endorsement can play as a critical factor in our
promotional activities. As many personalities and bands represent Korea on many international platforms,

[23]
including them might help the brand earn a quick
response among Korean people. South Korea has
been renowned for its influential pop culture,
particularly in K-pop, TV dramas, cinema K-pop
idols, and tv actors viewed as sensation in Korea.
There are many athletes also representing the
country in the west.

Our many targets are to promote the brand with

boy band BTS and Tottenham midfield Son Heung-
min. As well as there will be influencer marketing
with lifestyle content creators and bloggers.

Occasion Based Sales and Offers: Hanriver

will offer sales in different local events like
Chuseok, which happens to be Korea's most
significant holiday, similar to USA
thanksgiving. Many other provincial-based
festivals like Sakura season, Jeju Fire Festival,
Boryeong Mud Festival, Gochang Green
Barley Field Festival, Seoul Lantern Festival
also will be part of those sales and offers.

We will try to cover many other occasions

consider as the shopping holidays like Black
Friday, Super Bowl, New Year, Christmas, and
others.

Search Engine Optimization: As we found

out in the previous item, our target audience
has to find our website for it to be effective.
That's where search engine optimization
comes in. This is such a vital piece of the
online marketing puzzle that high-growth
firms list it as the most effective internet
marketing technique available to them in our studies. This SEO will help us to create a first priority-based
company.

[24]
6. Marketing Communication Tool
“Hanriver" is following different types of communication tools to the customers. The various types of
communication tool that followed by "Hanriver" are given below with samples-

Website: With a smooth, user-friendly and brand-colored based theme Hanriver will launch its own
site “hanriver.com”. We will use a safe domain hosting, "https," and security background check and
sitemaping will be handled by the best person possible. The site may contain both English and Korean
content, a user can select between both of the language as preferred. The site will automatically
recommend our customer as its teste. Users can choose among the varieties of categories considering
own preference. We will boost our website using SEO and pay per click marketing to reach a sustainable
number of traffic each month. Besides those main points, the website will be used for customer care,
delivery taking and monitoring, product information, store location and other relevant information.

[25]
Application: To make life easy for our customers, we will use Haniver’s Mobile application as a core
information exchange method. This will be the ultimate fashion solution for every gender and age within
a single platform. We will develop the latest AI solution to serve the application.

Social Media: There will be multiples account in the name of "Han Korea or Han river” on Facebook,
Instagram, Twitter. Our commutation team will be online 24/7 for the service. The communication team
will assist our customers with any relevant information. There will be posts about sales, offers, new
arrivals, problem-solving, complaints, and other guidelines that they will need.

[26]
7. Staffing
The company needs to make an organizational structural design to invest in Korea. For this, they need to
find out the best resource with the right skills, ability, and knowledge. For an organization, people are the
most important resource. Because they will help the company to grow with a good reputation. So, if they
work with only American people in a foreign country, then they might face several problems. And if they
work with only local people, then they might not understand the actual motive of the company. So, the
company will need the right employees to ensure its future success. For this, the company needs to look
into the Hofstede cultural dimension to find out which country’s employees will fit in which department.

Hofstede cultural dimension

Hofstede Insights Between South Korea vs the USA (Hofstede Insights):
▪ Power Distance: South Korea scores 60, USA scores 40
▪ Individualism: South Korea scores 18, USA scores 82
▪ Masculinity: South Korea scores 39, USA scores 61
▪ Uncertainty Avoidance: South Korea scores 85, USA scores 15
▪ Long-term Orientation: South Korea scores 100, USA scores 0
▪ Indulgence: South Korea scores 29, USA scores 71

If the company looks into the Hofstede cultural dimension, then they will notice that the culture of Korea
and the USA are different. So, if they only hire from one country then they might face a problem in the
future. If they only hire USA people for the Korean branch, then those employees might fail to understand
their culture and their way of working. And it will be difficult for them. On the other side, if the company
only recruits Korean people then they might snatch the authority from the company. For this reason, the
company should recruit 70% from Korea and 30% from the USA. They should hire top-level positions like
CEO, department heads like (finance and accounting, IT, supply chain, HR) from the USA. But the
departments like Marketing &Sales and other employees from Korea. If the company follow the idea, then
they will have the authority and will also have a good sale.

8. Communication
Verbal communication will be used by Hanriver with both the employees and stakeholders.

Communication with internal employees: Both the Korean and English languages will be used to
communicate with internal employees. As the USA and Korean employees will work together so they can
use both languages. As the Korean language is the official language of South Korea. so, The Korean
employees can verbally communicate in the Korean language within themselves. But while
communicating with the USA employees, Korean employees will have to use English as the USA employees
will not understand the Korean language. Employees can communicate with top-level employees for any
kind of discussion and vice versa. As their medium of contact, they can use emails, phone calls, meetings,

[27]
and written documents. For their communication, they can also use memorandums as a communication
medium. These kinds of communication will make their tasks easy and will also help them to handle their
tasks properly.

Communication with external stakeholders: Hanriver will use verbal communication with its external
stakeholders. MDO. Inc.’s external stakeholders are consumers, suppliers, and distributors of the market.
As the Korean language is the official language of South Korea and all Korean people are not good enough
in English so the Korean language will be used to communicate with the external stakeholders. The
employees will talk with the external stakeholders via mobile phone or through face-to-face conversation.
So that they can ensure effective communication with the external stakeholders. These kinds of
communication will help to increase sales and making good relations with the suppliers and distributors.

9. Critical Analysis
MDO Inc is planning to expand its business in South Korea it has to bear in mind that there are going to
have some obstacles. “South Korea is a devolved country, but it has a restraint society. This country is
always restricted by its norms and culture. It respects and follows their norms strictly which may appear
to be mysterious for other countries. The people of South Korea share a common language, ethnic
identity, and culture which is homogenous” (Hofstede insights, 2020) .A survey conducted by Australian
International Business (AIBS) reports that language, culture and business environment are the largest
barrier to conduct business in South Korea. Being a central Asian country, the majority of the people are
not aware of English language. So, it is very important for MDO Inc to be aware of some of the basic
Korean cultural and practices them within the business context. Some of the major obstacles MDO Inc
might face in South Korea are given below-

Business etiquette: Koreans have their own business etiquette. For example, respecting based on the
hierarchy, exchanging business cards for meetings, valuing employees, maintaining good relationships.
Besides that, they barely shake hands and does it differently. They speak very politely and formally. But
Americans are totally different from them. They don’t follow these kinds of rules in business also they are
very informal in their workplace (Catherine).

Problems in Decision Making: Decision making is the most crucial part of any organization working in a
foreign country. Americans may consider themselves greater than Koreans. Because the top management
from America might think that their decision will be the best than the Korean employees. And they will
decide without consulting with the local employees. Whereas Koreans can make the best decisions as
they know the cultures and other aspects more than the Americans.

Agency Problem: As MDO Inc is going to conduct its business in a foreign country the organizational
structure will be different. The majority of the employee MDO Inc will hire is going to be local. Due to
cultural and organizational differences the company might not work as the same way it used to work in
America. The interest of the local employees might be different from the stakeholders of the company.
And it may lead to conflict of interest between company’s management and stakeholders and it is going
to cause the agency problem.

[28]
Managing employees: As there will be employees from both Korea and America, so managing them might
be difficult as both countries' cultures and ways of working are different. Misconceptions might happen
between Korean and American employees. So, managing both sides might be difficult for HR.

Slow pace: Korean people don’t rush from one activity to another. The Koreans maintain a much slower
pace than Americans. They take their own time to finish work. At a leisurely pace, all of their work is
finished. Also, Korean people love to sleep anywhere at any time. so, as an American company, they might
face problems while working with Korean people (Catherine).

Building Relationship: Bowing And handshaking As MDO Inc is going to conduct its operation in South
Korea it’s very important to build a good relationship. As South Korea is culturally different from America
the way of showing respect and greetings is different. Koreans bow to their seniors while greeting and
shows respect. Koreans sometimes prefers handshaking with both hands. In order to build a good
relationship, the informal gathering is also important. Social gatherings can give the opportunity to discuss
business in a relaxed way.

Giving gifts: In South Korea people always welcome the culture of giving gifts to each other and it reflects
the importance of the relationship to Korean people. In order to maintain a good relationship with Korean
stakeholders this gift giving culture can be good for business. “Gifts wrapped up with nice colures like:
Red and Yellow which represents peace and happiness can send a positive vide. Presenting the gifts with
two hands is also a norm in South Korea” ( Asialink Business: Building a Asia capable Australlia., 2020).

10. Financial Analysis

In the proforma income statement, we have calculated the sales revenue of Hanriver from the sales of 3
different kinds of footwear, Men’s Wear, Women’s Wear and Unisex. In the second year we have assumes
Hanriver’s sales growth will be 68% and in the third year we have assumes higher sales growth which will
almost 82%. We assume the higher sales growth rate in year 2 and 3 because Hanriver will invest more in
Celebrity endorsement and marketing campaign. And we assume that because of these reasons more
demand will create in South Korea.

[29]
 Financial Statement

2021 2022 2023

Sales Revenue $2,310,000.00 $3,890,000.00 $7,060,000.00

Cost of Goods Sold $600,000.00 $1,300,000.00 $2,300,000.00

Shipment Cost $700,000.00 $1,100,000.00 $2,100,000.00

Gross Profit $1,010,000.00 $1,490,000.00 $2,660,000.00

Total Operating Expense $121,900.00 $137,800.00 $156,600.00

Net Profit Before Tax $888,100.00 $1,352,200.00 $2,503,400.00

Tax rate (25%) $222,025.00 $338,050.00 $625,850.00

Net Profit $666,075.00 $1,014,150.00 $1,877,550.00

11. Budget Assumption

Revenue:
Men's Wear Women's Wear Unisex Monthly Yearly
Month Quantity Revenue Quantity Revenue Quantity Revenue Total QuantityTotal Revenue Total Quantity Total Revenue
Jan - June 800 $300,000.00 900 $450,000.00 400 $220,000.00 2100 $970,000.00
2021 5080 $2,310,000.00
Jan - June 1100 $410,000.00 1180 $580,000.00 700 $350,000.00 2980 $1,340,000.00
Jan - June 900 $600,000.00 1220 $750,000.00 720 $370,000.00 2840 $1,720,000.00
2022 6310 $3,890,000.00
Jan - June 1300 $950,000.00 1310 $810,000.00 860 $410,000.00 3470 $2,170,000.00
Jan - June 2000 $1,210,000.00 1980 $1,310,000.00 1200 $550,000.00 5180 $3,070,000.00
2023 11580 $7,060,000.00
Jan - June 2300 $1,600,000.00 2400 $1,780,000.00 1700 $610,000.00 6400 $3,990,000.00

[30]
 Major Purchase

2021 2022 2023

Land $180,000.00 $0.00 $0.00

Building $140,000.00 $0.00 $0.00

Furniture and Interier $30,000.00 $0.00 $0.00

Total Major Purchase $350,000.00 $0.00 $0.00

Operatng Expenses
2021 2022 2023
Jan-June Jul- Dec Total Jan-June Jul- Dec Total Jan-June Jul- Dec Total
Rent $14,000.00 $14,000.00 $14,000.00
Salaries $10,000.00 $10,000.00 $20,000.00 $14,000.00 $14,000.00 $28,000.00 $19,600.00 $19,600.00 $39,200.00
Utilities $6,000.00 $3,000.00 $9,000.00 $6,500.00 $4,500.00 $11,000.00 $7,500.00 $7,000.00 $14,500.00
Office Supplies $5,000.00 $4,000.00 $4,000.00
Website development $400.00 $300.00 $300.00
App Development $500.00 $500.00 $600.00
Celebrity Endorsement Cost $20,000.00 $22,000.00 $22,000.00
Advertising and Marketing $9,000.00 $9,000.00 $18,000.00 $10,000.00 $10,000.00 $20,000.00 $13,000.00 $13,000.00 $26,000.00
Insurance Expense $10,000.00 $10,000.00 $10,000.00
Legal Expense $8,000.00 $8,000.00 $8,000.00
Lawyer payment $5,000.00 $5,000.00 $5,000.00
Other Expense $7,000.00 $5,000.00 $12,000.00 $5,000.00 $10,000.00 $15,000.00 $6,000.00 $7,000.00 $13,000.00
Total Operating Expense $32,000.00 $27,000.00 $121,900.00 $35,500.00 $38,500.00 $137,800.00 $46,100.00 $46,600.00 $156,600.00

12. Conclusion
With this all research and finding we hope that MDO Inc and CEO Mr. Mark Orr will get enough data to
make a decision about the future of this expansion. South Korea offers the best ecosystem for the
expansion in terms of policy, legal terms, people and places. Our research has already showed the
pathways and future possibilities of creating other sister concern companies to anchor in the region and
then exploring other Asian countries. This expansion is like a doorway to many opportunities for MDO
Inc’s footwear business as a global brand.

[31]
13. Bibliography
(n.d.). Retrieved from New World Encyclopedia:
https://www.newworldencyclopedia.org/entry/Geography_of_South_Korea

Asialink Business: Building a Asia capable Australlia. (2020, February 4). Retrieved from
asialinkbusiness.com.au: https://asialinkbusiness.com.au/republic-of-korea/conducting-
business-in-korea/korean-business-culture-and-etiquette?doNothing=1

Economy and Business Opportunities from South Korea. (n.d.). Retrieved from Globa Tenders:
https://www.globaltenders.com/economy-of-south-korea.php

(2020, 12 31). Retrieved from World o Meters: https://www.worldometers.info/world-

population/south-korea-population/

(2020). Retrieved from World Population Review: https://worldpopulationreview.com/countries/south-

korea-population

Business Etiquette in South Korea – From Table Manners to Conversation. (n.d.). Retrieved from Planet
Depos: https://planetdepos.com/trending/content/business-etiquette-south-korea-table-
manners-conversation

Catherine. (n.d.). 15 Huge Cultural Differences: America vs. South Korea. Retrieved from Diapers On A
Plane: https://diapersonaplane.com/15-cultural-differences-america-vs-south-
korea/?fbclid=IwAR15xBobs0Rdm_hRXdcJJCRTq0cTu_WUBhVGYojNArFzGyMZmeLOkjGc3Bo

Chatzky, J. M. (2019). Council on foriegn relations. washington.

Fernando, J. (2020, December 3). Korean Won (KRW). Retrieved from Investopedia:
https://www.investopedia.com/terms/forex/k/krw-korean-won.asp

Hofstede insights. (2020). Retrieved from www.hofstede-insights.com: https://www.hofstede-

insights.com/country/south-korea/

Hofstede Insights. (n.d.). Country comparison. Retrieved from Hofstede Insights: https://www.hofstede-
insights.com/country-comparison/south-korea,the-usa/?fbclid=IwAR1DgVt9S-Lqk75mp0OVA-
z6JrkTJ3npQr8nOEX1IEntY8adk_mY3iexTgs

Kim, C. (n.d.). South Korean Trade Policy and FTAs. Japan Spotlight.

Korea, South - Overview of economy. (n.d.). Retrieved from Nations Encyclopedia:

https://www.nationsencyclopedia.com/economies/Asia-and-the-Pacific/Korea-South-
OVERVIEW-OF-ECONOMY.html

Nature Index. (2020). Retrieved from OECD Gross domestic spending on R&D (indicator) :
https://doi.org/10.1787/d8b068b4-en

Plecher, H. (2020). Unemployment rate in South Korea 2021. South Korea: H. Plecher.

South Korea. (n.d.). Retrieved from Britannica: https://www.britannica.com/place/South-Korea/Plant-

and-animal-life

[32]
South Korea: Innovation index. (2020). Retrieved from www.theglobaleconomy.com:
https://www.theglobaleconomy.com/South-Korea/GII_Index/

The economic context of South Korea. (2020, December ). Retrieved from Nordea:
https://www.nordeatrade.com/dk/explore-new-market/south-korea/economical-context

(2020). The economic context of South Korea. Export Entreprises SA.

Waldeck, Y. (2020). E-commerce in South Korea - Statistics & Facts .

Waldeck, Y. (2020). Internet usage in South Korea - Statistics & Facts .

What is the South Korean Won (KRW)? (n.d.). Retrieved from CFI:
https://corporatefinanceinstitute.com/resources/knowledge/finance/south-korean-won-krw/

World Bank. (n.d.). South Korea. Retrieved from 2020 Index of Economic Freedom:
https://www.heritage.org/index/country/southkorea

[33]