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Pestle Analysis Korean Chocolate Industry

2717 words - 11 pages

YuFong Fan (ID No. 0655330)
Jitin Kochhar (ID No. 0654351)

ITM151: Global Trade Research

Assignment #2

Research Outline 1

Oct. 14, 2012

Professor Floyd Simpkins

St. Clair College


1. Political Environment
Political Stability: Political stability of the country indicates towards the positive or negative affect on the Trade of a particular product. Our product is Canadian chocolate which can have a great potential to perform business in Japanese market because of its strong Political Stability. The Political Stability  is based on a given country's record of peaceful transitions of power, ability of a government to stay in office and ...view middle of the document...

( Jeremy Smerd, 2008)

Consumers will reduce to eat candy, snacks/desserts in order to control the weight and maintain slimmer figures, it will impact the consumption of confectionery market.

Health Consciousness an Opportunity
Health consciousness will inspire health food products, such as dietary supplements, and functional foods.

high-quality chocolate and products used as ingredients in cereal bars Japanese health concerns are similar to those of other developed countries and include: weight maintenance, metabolic syndrome, fatigue, diabetes, and allergies. There are market opportunities for products addressing these concerns, especially for seniors who are not satisfied with their health status. (AAC, “Japanese Confectionery”, 2010)

3. Economic Environment
The Gross Domestic Product (GDP) in Japan expanded 0.20 percent in the second quarter of 2012 over the previous quarter. Historically, from 1980 until 2012, Japan GDP Growth Rate averaged 0.5 Percent reaching an all time high of 3.2 Percent in June of 1990 and a record low of -3.9 Percent in March of 2009. The Gross Domestic Product (GDP) growth rate provides an aggregated measure of changes in value of the goods and services produced by an economy. Japan's industrialized, free market economy is the second-largest in the world. Its economy is highly efficient and competitive in areas linked to international trade.  (“Japan GDP GR”, 2012)

Risk: Existing competitors
Japan has large chocolate processing and packaging facilities to supply domestic and export markets. The leading chocolate producers in Japan are Lotto Group, Meiji Seika Kaisha Ltd, and Ezaki Glico which, in 2008, had market shares of 22%, 22% and 21%, respectively. The remaining 35% of the chocolate industry was divided among Bourbon Corporation, Nestle S.A., Morinaga & Co, Fujiya, Kabaya Foods Corporation, and Cadbury. Private label chocolate had less than 2% of the market in 2008 (Datamonitor). (AAC, “Japanese Confectionery”, 2010)

Japan and Canada’s Trade Relationship:
Japan is the world’s fifth largest agri-food importer and one of the most significant export destinations for Canadian agri-food products. Japan is the largest confectionery market in Asia for chocolates with a market value of $9.1 billion. The market is expected to grow by 14% between 2008 and 2013, increasing to $11.4 billion.
Canada is recognized as a high-quality food and ingredients supplier among Japanese buyers. The confectionery and chocolate products market in Japan may provide opportunities for Canada’s high-end chocolate and specialty sugar confectionery producers and exporters, as well as specialty ingredients exporters.
In 2008, Japanese consumers spent $78 per capita on confectionery products. This was high relative to other Asian countries (see Figure 1) (AAC, “Japanese Confectionery”, 2010, page 3)

Figure 1
4. Market Infrastructure Environment
Distribution system –Wholesale,...

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