In order to advance in a new market and gain loyal customers quickly, expand the supply chain, and gain traction in a new setting, one must have an accurate understanding of the characteristics that make the specified environment different from the home one. For this reason, comparing the South Korean economy to the American one is vital for AutoEdge’s financial performance in the long term. Though the global crisis caused by multiple factors, from COVID-19-related concer5ns to the ongoing war in Ukraine, has aggravated the economic situation both for the U.S. and South Korea, the two countries have been showing impressive progress in all areas, which indicates that the South Korean market is worth AutoEdge’s investments.
Gross Domestic Product (GDP)
Over the past two years, there have been substantial fluctuations in the levels of GDP both in the U.S. and in South Korea, especially given the circumstances. Due to the increasing strain in the global political arena, which has driven the productivity of numerous supply chains down, the U.S. has shown negative GDP trends recently (Smart, 2022). Specifically, according to the official statistical data, the first quarter of 2022 has delivered a 1.6% decrease in the GDP level across the U.S. (Smart, 2022). Although the specified outcome was not homogenous across the states, with some performing marginally positive, while others showed a substantial drop in economic growth, the overall trend appears to be slightly worse than expected.
Similar developments have been observed in South Korea, where, despite the overall positive tendency of the GDP to rise observed recently, the 2022 results have been less satisfying. Specifically, official reports mention a 0.9% drop in the GDP rates of the South Korean economy in the first quarter of 2022 (“South Korea GDP annual growth rate,” 2022). Caused by the same set of factors attributed to global politics. Specifically, the resurgence of the coronavirus and the ongoing military conflict in Ukraine. The drop in South Korean GDP is indicative of a similar set of issues that AutoEdge will have to address in the South Korean market. Therefore, minor changes in the business strategy, particularly in relation to financial management and especially risk management strategies, will be required.
Unemployment
In turn, the unemployment rates observed in South Korea are quite different from those currently present in the U.S. Specifically, studies show that South Korea’s unemployment rates are currently at their historical low, reaching only 2.8. In turn, according to recent reports, the U.S. has lately seen an unprecedented rise in unemployment rates, which has added to the economic strain (“South Korea unemployment rate,” 2022). Namely, the extent of seasonally adjusted unemployment in the country was minimized to 2.7% in March 2022, which is quite an accomplishment (“South Korea unemployment rate,” 2022). Thus, some of the recently observed South Korean employment issues remain unresolved.
Compared to the specified outcomes, the U.S. unemployment rates can be considered slightly better. Specifically, the propensity for unemployment rates to remain in place, which currently amounts to 3.6%, deserves a mentioning (“United States unemployment rate,” 2022). Though the observed trend indicates the lack of development and, therefore, cannot be characterized as positive, it is also devoid of any obvious negative trends. Therefore, when entering the South Korean economic setting, the company should be prepared for a slightly larger range of options in relation to recruiting the labor force.
Interest Rates
Furthermore, the changes in the interest rates within the U.S. indicate the presence of certain economic issues. Currently, the interest rate in the U.S. amounts to 1.65%, which can be considered quite low (“Board of Governors of the Federal Reserve System”, 2022). Compared to the economic environment observed in South Korea, the described interest rate still provides an opportunity for open market interactions, including in digital settings (Kim & Roh, 2022). Specifically, in South Korea, the interest rate is also comparatively low, reaching 1.75% (Kim & Roh, 2022). Thus, the specified aspect of the target economic context makes the two countries quite comparable.
Inflation
Finally, inflation rates in the U.S. and South Korea deserve to be discussed. In South Korea, the current inflation rate is 5.4%, which is significantly lower than the U.S. index. Specifically, in the American economy, inflation levels have reached 7.6%, which can be explained by noticeable supply shortages and the resulting disruptions of supply chains in numerous organizations (”United States inflation rate,” 2022). The specified indicators are minuscule compared to South Korea, where inflation has been reaching an unprecedented level (“Development of inflation rates in South Korea, 2022”). While the 5.4% difference rate might not seem large, the price increase proves the necessity for financial intervention.
Despite the slight setbacks that the current global political conflicts, specifically the war in Ukraine, and the resulting economic constraints have created significant obstacles for countries to advance, both South Korea and the U.S. have demonstrated similar and impressively positive results. Specifically, the economies of both states are comparable and have notably high potential, which is why only slight adjustments will have to be made when entering the South Korean market. Therefore, AutoEdge will need to focus on the development of promotion strategies that will help it advance and attract new investors.
References
Board of Governors of the Federal Reserve System. (2022). Implementation note issued June 15, 2022. Federal Reserve. Web.
Development of inflation rates in South Korea. (2022). WorldData. Web.
Kim, C., & Roh, J. (2022). South Korea steps up inflation fight with back-to-back rate hikes. Reuters. Web.
Smart, T. (2022). 1st quarter GDP growth revised down 1.6%. US News. Web.
South Korea GDP annual growth rate. (2022). Trading Economics. Web.
South Korea unemployment rate. (2022). Trading Economics. Web.
United States inflation rate. (2022). Trading Economics. Web.
United States unemployment rate. (2022). Trading Economics. Web.