Table of Contents Introduction 3 Political Analysis 3 Economic Analysis 3 Social Analysis 4 Technological Analysis 4 Legal Considerations 5 Discussion 5 Conclusion 5 Appendices 5 Appendix 1 5 Appendix 2 6 Appendix 2.a 6 Appendix 2.b 6 Appendix 2.c 7 Appendix 2.d 8 References 9   Introduction The purpose of this report is to analyse and examine the prospects of expanding Lockheed Martin (Lockheed) into South Korea (SK). As the leading organisation in the aerospace and defence industry, the assessment of country’s aspects in terms of its political, economic, social, technological and legal capabilities are critical in the determination of company operation viability for Lockheed. From the report’s analysis, recommendations will be proposed. Political Analysis SK’s internal politics has a centralised power enabling its decision made in the nation to be fairly standardised and having a linear goal towards economic progression. SK is a nation willing to undertake drastic economic reforms in order to achieve economic stability and growth. According to Kang (2002) on money politics in SK, the nation’s aims to work towards providing public goods and nurturing investment goals regardless of how power has been attained. The development of roads, public schools and infrastructure improvements were the results of furthering the interests of small groups of elites. Corruption in terms of bribes and transfers occurs in SK politics (Kang, 2002) but has not hindered the goals and initiatives mentioned above. In terms of foreign, diplomatic relations, SK has been a member of the United Nations since 1991 with firm relations with the United States, Russia and China. However, SK currently experiences political and military tension against North Korea since their separation after the cold war. Furthermore, SK’s geopolitical locations have increased the United States interest in the nation regarding the conflict with North Korea. Economic Analysis The SK economy is steadily increasing with support of the labour force. The ageing population and the younger generation leaving the country to seek a better future are the effects of the slow growth economy. The country’s GDP is consistently expanding since the 1970s primarily due to the strong labour force across all industries (See Appendix 1). However, because of the slow growth experienced in 2014 its GDP increases have become inconsistent because of changing free trade policies amongst other nations (Weforum). SK is also experiencing a struggling shipping and building industry (Bloomberg) which suggests that its labour force is volatile to significant externalities such as the GFC. It was also noted that in 2013, military demand dependence for local (SK) production fell by 10% as a result of recently-forged commercial growth (Korean Aerospace Industries Association (KAIA) 2013). This has also been supported by a mere increase of 1,111 jobs within the SK aerospace industry from 2010 to 2011, and was forecasted to increase to 11,544 in 2014 (KAIA 2013). SK have since experienced growth within their domestic production of aerospace parts, where production value was recently estimated at $3.6b (KAIA 2013). Within this total, 32% was estimated for commercial export of parts (KAIA 2013) (See Appendix 2.b). Despite this, KAIA (2013) reports there are at minimum 11 countries which are supplied SK-produced aerospace parts and products (See Appendix 2.c). Social Analysis Working with South Koreans can be very challenging especially for foreigners. The interpersonal relationship between two parties must be established in the early stages, for example you must build trust with your co-workers or partners in and out of the office but keeping in mind, that power distance plays a big role in their cultural dimension. South Koreans are well known for their intelligence and differ from western cultures in regards with work ethic, and choosing to work longer hours. “According to numbers on Koliaf.net “53.5% of the total workforce (as of August 2011) work 5 days a week. In addition, about 21.8% suffered from unlawfully long working hours, exceeding 52 hours per week last year”.” (no author, n.d.). One of motivating factors to South Koreans would be their parent, because at an early age they have sought their children to bring glory to the family name and the better their job and education the more goodwill or reputation they will achieve. Education plays a big role to South Koreans, as their governments has funded in subsidizing their educational system. Technological Analysis SK was ranked 21st within the global aerospace market in the late 1990s. The President of SK at the time, King Young Sam, aspired for SK to fall within the top ten nations by 2000 (Mecham 1996). To support this, the SK Trade and Energy Ministry invested approximately $5b into aerospace development (Mecham 1996). According to KAIA (2013), the industry will continue to grow. However, the objective of increased domestic demand must be met (KAIA 2013). (See Appendix 2.a) The current presence of the Korean aerospace industry may be argued to have established upon maintenance of the L-19 reconnaissance and the C-130 in 1955 and the early 1970s, respectively (KAIA 2013). Despite the recent need for recovery and lower volatility in its current global position, the SK aircraft industry experienced positive growth from recent high-profile projects (See Appendix 2.d). Recent projects handled within SK are to be commended, operating various innovative programs (See Appendix 2.d). Furthermore, KAIA (2013) reports that minimal emergence within the space industry has developed. SK still has a significant amount of development in terms of aerospace and defence within the global industry (McGlade 2014; KAIA 2013). Legal Considerations (Cite Handbook Here) There are various legal restrictions when carrying out business in SK. Furthermore, the handbook suggests that aerospace and defence is welcomed in SK because of the lowered tariff rates on imported defence goods. Discussion and Conclusion From the PESTL analysis above, SK does not have the capabilities in all the aspects analysed to feasibly host the aerospace and defence industry in the country. While in some aspects its findings conclude viability, the economic and technological factors significantly determine the direction SK should take. Economically, SK has experienced inconsistent GDP growths in the recent years. The resource allocation prioritisation in SK Is predominantly focused on local project (See Appendix 2.d). Furthermore, from the technological aspect, Lockheed’s development and operations differ to that of SK’s resulting in the need for training and additional investments towards education in aerospace and defence. Appendices Appendix 1 Appendix 1.a http://www.tradingeconomics.com/south-korea/gdp-growth-annual “The SK economy progressive 3.3 percent year-on-year in the three months to June of 2016, better than a 2.8 percent expansion in the previous period and preliminary estimates of a 3.2 percent increase. It is the highest growth rate since third quarter of 2014, as manufacturing, construction and services expanded at a faster pace, final figures showed. GDP Annual Growth Rate in SK averaged 6.91 percent from 1971 until 2016, reaching an all-time high of 18.20 percent in the third quarter of 1973 and a record low of -7.30 percent in the second quarter of 1998. GDP Annual Growth Rate in SK is reported by the Bank of Korea.” "According to Reuters, the SK government will submit a $US9.7 billion supplementary budget to parliament later on Tuesday, which will focus on creating 68,000 new jobs to make up for severe job cuts as the struggling shipping and building industries are overhauled." Appendix 1.b Appendix 2 Appendix 2.a Appendix 2.b Appendix 2.c Appendix 2.d Note – All diagrams were sourced from KAIA (2013): http://www.flandersinvestmentandtrade.com/export/sites/trade/files/market_studies/28150507103312/28150507103312_3.pdf   References Korean Aerospace Industries Association 2015, ‘Korea Aerospace Industry 2015’, Korean Aerospace Industries Association, viewed 1 September 2016, . McGlade, A 2014, ‘Why SK will be the next global hub for tech start-ups’, Forbes website, 6 February, viewed 7 September 2016, < http://www.forbes.com/sites/alanmcglade/2014/02/06/why-south-korea-will-be-the-next-global-hub-for-tech-startups/#17e39aa174d9>. Mecham, M 1996, ‘SK seeks a slice of the world’s aerospace pie’, Aviation Week & Space Technology, vol. 145, issue 16, p. 42, 14 October, viewed 10 August 2016, ProQuest Central database, ProQuest. https://www.weforum.org/agenda/2015/01/how-south-korea-can-sustain-strong-growth/ http://www.bloomberg.com/news/articles/2016-08-30/korea-s-hanjin-shipping-becomes-symbol-of-industry-in-trouble http://www.tradingeconomics.com/south-korea/gdp-growth-annual http://www.businessinsider.com.au/south-korean-economic-growth-acclerated-in-the-june-quarter-2016-7 kdevelopment, n.d., PESTLE Analysis, DATA MONITOR. Kang, D. C. (2002). Bad loans to good friends: money politics and the developmental state in SK. International organization, 56(01), 177-207.