8-1 Case Study.docx - Natasha Cortez OL 325 Southern New...

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Natasha Cortez OL - 325 Southern New Hampshire University October 25, 2020
2 8-1 Case Study: Acquiring a Company in South Korea When acquiring a company in South Korea, Chapman Auto Parts needs to clearly understand South Korea’s labor practices. Businesses that are new to the Korean labor market often face problems that might arise due to Korea’s unique labor market. The purpose of this paper is to inform the executive team about current labor practices and any compensations or drawbacks Chapman Auto Parts may experience by expanding in South Korea. This will also address legal concerns and labor costs when operating in South Korea. South Korea has one of the most exceptional labor markets in the world. It was reported that in 2016 they held the second highest average number of hours worked annually per worker coming in at 2,069 while the United States of America came in with only averaging 1,783 hours annually (Umeda, 2018). South Korea transitioned to democracy in the late 1980s and early 1990s. It’s political labor and employment laws are a work in progress and are very different than those in the United States (Hyun, 2014). The labor market in South Korea is very stern and some may even say that is contains a lot of government regulations. For example, South Korean government can stop a company from initiating mass layoffs or even terminating an employee if specific requirements are not met. (Hyun, 2014). Chapman will need to be very well educated and be able to stay up to date with all the government regulations in order to manage challenges that they might face and disadvantages that could arise to be able to implement effective solutions. The World Economic Forum ranked South Korea at 121 out of 140 countries regarding the standings of labor-market flexibility. South Korea is 86th for overall labor market effectiveness and 106th for flexibility in hiring and firing.

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