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 for the last 60 years. It is officially known as the Republic of Korea.
Political forces examined in the PESTEL analysis of 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. South Korea ranks 31st in the Corruption Perception Index (Transparency International, 2023).
Economic forces examined in the PESTEL analysis of South Korea
South Korea made remarkable economic progress in the last sixty 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. Its GDP by the end of 2023 is expected to be around $1827 billion (Trading Economics, 2023).
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 larger markets with limited or no barriers at all.
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, 2023).
South Korean has a strong automobile industry. Its automobile manufacturers, such as Hyundai and Kia, have made a significant impact on the global stage. With a focus on innovation and sustainability, these companies have developed a range of electric and hybrid vehicles, which have been warmly received by consumers worldwide.
South Korea’s fashion and beauty industry has also made a significant impact on the global market. Known for its innovative products and trends, its beauty brands have become extremely popular worldwide. This popularity is due, in part, to their focus on natural ingredients, affordable pricing, and cutting-edge technology.
South Korea’s economy contracted in the final quarter of 2022; however, grew 0.3% in the first quarter of 2023 (Al Jazeera, 2023). Experts are not ruling out further economic declines amid current challenging global conditions.
Social forces examined in the PESTEL analysis of 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, 2023). Other big cities are Busan, Incheon, and Daegu.
Korean is the major language in South Korea, while both Buddhism and Christianity are the most practiced religions (BBC, 2023). The life expectancy for men is 80 years while 86 years for women.
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, 2023).
The Korean Wave is a term that refers to the global influence of South Korea’s culture and entertainment. It has been gaining significant momentum over the past two decades and has evolved into a cultural phenomenon with an increasing global impact on various industries. South Korean TV soaps are popular across the region, including in China (BBC, 2023).
South Korean cinema has become an influential force in the global film industry. Over the past few years, the international recognition of South Korean films has skyrocketed. The success can be attributed to unique storytelling, which often blends different genres and tackles social issues.
Furthermore, South Korea’s film industry has been actively investing in talented filmmakers and actors, leading to the creation of high-quality productions. As a result, it has not only gained international recognition but has also inspired filmmakers from other countries to explore new storytelling techniques and push the boundaries of their own industries.
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, South Korea is converting hotels and offices into rental units in Seoul to deal with the crisis. Many people live in ‘piece rooms’ where there is hardly any space to lie down (Kim, 2023).
Technological forces examined in the PESTEL analysis of 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. Robots are already working as teachers at many preschools and kindergartens in the country.
South Korea is home to some of the world’s leading technology companies, such as Samsung, LG, and Hyundai. These multinational corporations have played a significant role in shaping the global technology landscape, offering cutting-edge products and services that have transformed the way people live and work.
South Korea is famous for high-speed and wireless internet and nearly every household is connected (BBC, 2023). Instant messaging and gaming enjoy huge popularity. In fact, South Korea has long been a dominant force in the global gaming and esports industry.
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 examined in the PESTEL analysis of South Korea
South Korea offers 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 (2022) 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 examined in the PESTEL analysis of 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, some 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.
Another legal issue in South Korea is the prevalence of cyberbullying and online harassment, which has affected many celebrities and public figures. In response to this growing concern, the South Korean government has introduced stricter laws and regulations to combat cyberbullying and protect the privacy of its citizens.
Summary of the PESTEL analysis of South Korea
South Korea is a great tech giant. It is also great for entertainment and popular culture. Its impact on global entertainment, technology, and culture cannot be ignored. In fact, the Korean Wave has taken the world by storm. However, like all other major economies, South Korea faces certain challenges as well.
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Last update: 26 April 2023
Al Jazeera (2023) South Korea’s economy barely avoids recession amid rocky outlook, available at: https://www.aljazeera.com/economy/2023/4/25/chk_southkoreaseconomybarely-avoids-recession-amid-rocky-outlook (accessed 26 April 2023)
BBC (2023) South Korea country profile, available at: https://www.bbc.co.uk/news/world-asia-pacific-15289563 (accessed 26 April 2023)
Encyclopaedia Britannica (2023) Daily life and social customs, available at: https://www.britannica.com/place/South-Korea/Daily-life-and-social-customs (accessed 23 April 2023)
Kim, M. (2023) In Seoul’s piece rooms…., available at: https://www.latimes.com/world-nation/story/2023-04-11/in-seouls-piece-rooms-theres-not-even-enough-room-to-lay-down-inside-south-koreas-brutal-housing-crisis (accessed 26 April 2023)
OEC (2023) South Korea, https://oec.world/en/profile/country/kor (accessed 23 April 2023)
So, W. (2022) Most concerning environmental issues in South Korea, available at: https://www.statista.com/statistics/999569/south-korea-leading-environmental-issues/ (accessed 25 April 2023)
Transparency International (2023) South Korea, available at: https://www.transparency.org/en/countries/south-korea (accessed 25 April 2023)
Trading Economics (2023) South Korea GDP, available at: https://tradingeconomics.com/south-korea/gdp (accessed 25 April 2023)
Worldometer (2023) South Korea population, available at: https://www.worldometers.info/world-population/south-korea-population/ (accessed 25 April 2023)
Author: M Rahman
M Rahman writes extensively online and offline 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.