Business, Cultural and Political Issues Facing Coupang, Research Paper Example

Business factors

Business factors are internal factors that can be controlled by the business and affects its operations. Coupang has consistently recorded business losses due to weak management. This hinders the company’s expansion and diversification programs as well as its existence. Coupang revenues are difficult to forecast due to their fluctuations. However, many of its expanses and fixed and are unable to adjust to the company’s spending patterns. Failure to adjust expenses affects the business operations in any given fiscal quarter. It contributes to net losses and low return on investment, additionally; unpredicted revenues increase the company gearing ratio because it has to borrow to meet its operational costs. Coupang is facing challenges in expanding its sales and technology personnel due to intense competition from other leading –commerce platforms; this threatens its operational plans and strategies.

Cultural factors

Cultural factors include belief systems and cultural practices, customs, norms, consumer behaviors, fashion trends, and market activities that influence their actions and decisions (Shin, Ishman and Sanders, 2007; Koe and Majid, 2014). Coupang eats services delivers food prepared by independent restaurants. Some consumers believe that ready-to-eat food are unhygienic and is of poor quality.  A negative report related to food, preparation, or delivery adversely affects the business by decreasing the number of orders leading to low sales revenues. Some cultures also discourage consumers from purchasing food prepared outside the home because they make women lazy and less submissive to their husbands. Preparing food at home is a way of expressing love and submission to the spouse; this cultural belief reduces the Coupang market. Aesthetics as a cultural aspect affects Coupang business. Aesthetics refer to beauty and good taste as expressed in the arts -music, art, drama, and dancing and the particular appreciation of color, form, and package. South Korean believes in products that are packaged in colors that represent their culture and national heritages. Coupang retails products from different countries with distinct cultures. Therefore it does not offer products that meet consumers’ cultural values and beliefs. Repackaging these products presents additional costs to the company and may lower its profitability and competitiveness in the industry.

Political factors  

Most of the merchandise that Coupang sells on its apps and websites are subjected to South Korean laws and regulations. Failure of suppliers to provide goods that comply with laws and regulations, including product safety and intellectual property regulations as well as statutes, can result in liability, damaging the company’s reputation and brand, and increased enforcement activities or legal expenses. Coupang is subject to general business regulations, including laws and regulations specifically governing e-commerce and mobile commerce. E-commerce and mobile commerce laws involve additional taxes, tariffs, consumer protection, and data policies. Actions and legal proceedings against the company for failing to comply can damage its reputation and result in additional legal expenses to pay lawyers and fines imposed by law courts. Coupang may also be contractually held liable to indemnify and hold harmless third parties from the costs or consequences of non-compliance with e-commerce and e-mobile laws or regulations.

Coupang is subjected to regulations regarding the privacy and use of confidential information of its users and other third parties.  The Personal Information Protection Act and related legislation, regulations of South Korea require consent by consumers for the use, dissemination, or reproduction of personal information. Failure to comply with these regulations can lead to legal proceedings brought against the company (United States Securities  Exchange Commission, 2021). The proceeding may damage the reputation of Coupang. The company may also incur additional legal and related expenses.

Coupang is subjected to claims, litigations, government audits, inspections, and other legal proceedings related to labor, assignment of tasks and work classification, employees’, private information, personal security, and fair trade.  If the company contravenes these policies and regulations, the government may institute legal proceedings against it. Political stability and instability affect Coupang Company. Some suppliers stop providing the company with their goods due to reduced productivity caused by political uncertainties.  Low supply leads to unsatisfied demand that can potentially result in consumers switch off. The company is also subjected to environmental laws. The products listed on the company websites or apps must be environmentally friendly, including their packages. Failure to obey these laws may cause on to be fined or banned.

References

Koe, W.L. and Majid, I.A., 2014. Socio-cultural factors and intention towards sustainable entrepreneurship. Eurasian Journal of Business and Economics, 7(13), pp.145-156.

Shin, S.K., Ishman, M. and Sanders, G.L., 2007. An empirical investigation of socio-cultural factors of information sharing in China. Information & Management, 44(2), pp.165-174.

United States Securities Exchange Commission, 2021. COUPANG INC.. [online] Available at: <https://www.sec.gov/Archives/edgar/data/1834584/000162828021001984/coupang-sx1.htm> [Accessed 17 August 2021]