PESTEL analysis of South Korea
This detailed ‘PESTEL analysis of South Korea’ aims to address some of the key factors that affect South Korea today. South Korea is highly developed and one of the major economies in the world. It has been making enormous progress since the 1960s. It is officially known as the Republic of Korea.
Political forces that impact on South Korea
South Korea is a fully functioning democracy. It has a presidential system where the President is the head of state. Its constitution ensures that political parties can be established freely; however, political parties must be democratic in their objectives and activities.
South Korea is a politically stable country. It is an ally of the USA and maintains a close relationship with many countries. Its relationship with China and Russia is very good; however, it has a challenging relationship with North Korea as both South and North Korea lay claims of complete sovereignty over the entire Korean peninsula.
One of the challenges for South Korea today is corruption. Bribery and abuse of office by some politicians and big bosses in some corporations have revealed the enormity of the problem. For instance, the Supreme Court upheld a 17-year prison sentence on the former President Lee for corruption charges. He was convicted of taking bribes worth millions of dollars from big companies including Samsung (Kim, 2020). This shows that corruption is a big problem, though it presents moderate risks for businesses currently operating or planning to set up operations in South Korea.
Economic forces that impact on South Korea
The next element to address in the PESTEL analysis of South Korea is the country’s economic environment. South Korea made remarkable economic progress in the last fifty years. It is a key development partner of the World Bank Group and contributes immensely to the Bank’s fund that are used to support the poorest countries in the world (The World Bank Group, 2020). Its GDP in 2019 was worth $1642.38 billion (Trading Economics, 2020).
South Korea is a manufacturing powerhouse and relies heavily on exports. Its exports such as integrated circuits, refined petroleum, cars, vehicle parts, and mobile phones mostly go to countries such as China, the USA, Vietnam, Hong Kong, and Japan. Likewise, it imports many products and commodities from countries such as China, the USA, Japan, Saudi Arabia, and Germany (OEC, 2020).
South Korea has Free Trade Agreements with a number of countries and trading blocs e.g. ASEAN, Australia, Canada, China, Colombia, India, New Zealand, Singapore, the European Union, the USA, Vietnam, Turkey and many more. These free trade agreements allow South Korean companies to enter into larger markets with limited or no barriers at all.
South Korea was one of the countries that was least affected by the 2008–09 financial crisis and indeed recovered very quickly. However, like many other countries in the world, it was also affected by global economic lockdown in 2020. Having said that, its quick decision to inject approximately $12.2 billion to support people and businesses, and a commitment worth of $230 billion in the form of loans and guarantees have resulted in estimated just 1% GDP contraction for 2020.
Social forces that impact on South Korea
South Korea is highly developed and one of the most affluent countries in Asia. Its current population is over 51 million and the largest city by population is Seoul (Worldometer, 2020). Other big cities are Busan, Incheon, and Daegu. Korean is the major language, while both Buddhism and Christianity are the most practiced religions (BBC, 2018).
Though in a lesser degree compared to the past, the South Korean society is influenced by factors such as respect for ancestors, age, and seniority. Likewise, factors such as marital and economic status, and hierarchy also a play a big role (Encyclopaedia Britannica, 2020).
Food, arts, sports, and architecture are some of the key features of the Korean society. However, it should be mentioned that the country is facing a number of challenges e.g. low fertility, disparity between the rich and the poor, and ageing population. Likewise, housing crisis is acute in big cities. Therefore, the country is converting hotels and offices into rental units in Seoul to deal with the crisis (Jung-a, 2020).
Technological forces that impact on South Korea
South Korea is one of the most digitally advanced countries in the world. Its largest airport Incheon Airport is the best in the world which aims to bring in walkthrough tunnel security, facial recognition and artificial intelligence robots by 2023 (Cooke, 2020). Robots are already working as teachers at many preschools and kindergartens in the country.
South Korea made great progress in the field of aerospace engineering, biotechnology, and robotics. Most Koreans see artificial intelligence as part of the solution, not the problem. Over 85% of the population use social media. However, cyber security is a concern for the country as many government institutions, corporations, media, and others came under cyberattacks in the past.
Environmental forces that impact on South Korea
South Korea offers its tourists beautiful seasons, mountains, world heritage sites, theme parks, futuristic architecture, delicious food, and many more. Streets are mostly clean, especially because many Koreans care about disposing of things properly.
However, the country faces some environmental challenges. So (2020) reports that 70% Koreans consider air pollution the most concerning environmental issue. Other major issues they consider are waste management, global warming, future energy sources and supplies, emissions, water pollution, and over-packaging of consumer goods.
Legal forces that impact on South Korea
The legal system in South Korea is modelled on European systems and has Anglo-American and Japanese influences. The judiciary is fairly independent; however, many analysts argue that it is not entirely free from political influences. They also argue that some of the public prosecutors are corrupt and are not politically neutral. This is a concern as a full judicial independence is extremely important to protect the rights and freedoms of people (Miyake, 2019).
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Last update: 18 December 2020
BBC (2018) South Korea country profile, available at: https://www.bbc.co.uk/news/world-asia-pacific-15289563 (accessed 17 December 2020)
Cooke, E. (2020) 11 reasons to visit South Korea as it basks in Oscars glory, https://www.telegraph.co.uk/travel/destinations/asia/south-korea/articles/south-korea-why-to-visit/ (accessed 14 December 2020)
Enclycopaedia Britannica (2020) Daily life and social customs, available at: https://www.britannica.com/place/South-Korea/Daily-life-and-social-customs (accessed 18 December 2020)
Jung-a, S. (2020) Seoul converts hotels into studios to ease housing crunch, available at: https://www.ft.com/content/63284d62-64d9-453a-a907-f63e58f22f5e (accessed 15 December 2020)
Kim, H. (2020) South Korea’s Supreme Court Upholds 17-Year Jail Term for Ex-President Lee, https://thediplomat.com/2020/10/south-koreas-supreme-court-upholds-17-year-jail-term-for-ex-president-lee/ (accessed 18 December 2020)
Miyake, K (2019) Keep South Korean judiciary independent, available at: https://www.japantimes.co.jp/opinion/2019/09/30/commentary/world-commentary/keep-south-korean-judiciary-independent/ (accessed 18 December 2020)
OEC (2020) South Korea, https://oec.world/en/profile/country/kor (accessed 15 December 2020)
So, W. (2020) Most concerning environmental issues in South Korea, available at: https://www.statista.com/statistics/999569/south-korea-leading-environmental-issues/ (accessed 17 December 2020)
Trading Economics (2020) South Korea GDP, available at: https://tradingeconomics.com/south-korea/gdp (accessed 15 December 2020)
Worldometer (2020) South Korea population, available at: https://www.worldometers.info/world-population/south-korea-population/ (accessed 18 December 2020)
Author: M Rahman
M Rahman writes extensively online with an emphasis on business management, marketing, and tourism. He is a lecturer in Management and Marketing. He holds an MSc in Tourism & Hospitality from the University of Sunderland. Also, graduated from Leeds Metropolitan University with a BA in Business & Management Studies and completed a DTLLS (Diploma in Teaching in the Life-Long Learning Sector) from London South Bank University.