The document provides an analysis of Vietnam as a potential market entry for three different companies - a chemical company, a sports company, and a children's toys company. For the chemical company, the summary recommends a non-equity strategic alliance with local distributors through business cooperation contracts to minimize risks while gaining access to the market. For the sports company, the summary suggests opening a representative office to license local manufacturers to produce and distribute its products, requiring minimal investment. For the children's toys company, the summary proposes a processing contract to directly control local manufacturing through a leased facility in order to protect its brand reputation and quality.

1. By
Swapnil Kosare - 13146
Ashish Girhe - 13154
Pratik Rajurkar - 13311
Saurabh Karandikar-13335
Vijay Bokde - 13338
Swapnil Jagtap - 13149
Vietnam : Market Entry Decisions

2. Case Facts
 A country out of war
 In the process of liberalization (opening up)
 Ban by American Govt for trade till 1994
 12th highest population with 90% literacy
 Large number of SOEs
 Highly concentrated wealth and power in
two cities, Hanoi and Ho Chi Minh
 Huge potential but still underdeveloped

3. Pestle Analysis

4. Political
 Governed by a single party over the years
 Negotiation with US after free trade
 Govt. trade policies regarding market entry
 Control over SOE and the market
 Most Favored Nation status in EU
 Restoration of full diplomatic relations with US
 Reduction in trade tariff as a member of AFTA

5. Economic
 Total GDP - $19 million
 FDI averaged between$14M - $15M
 Local entrepreneurs faced shortage of capital
 GDP per capita: $235
 Doi moi (economic renovation) was launched in 1986
 Deregulation of prices
 Reduction of subsidies
 Ending collective agriculture system
 Encouraging private enterprises
 New foreign investment laws
 Stabilization and convertibility of the dong
 Privatization of SOE
 40% of GDP from SOEs
 Underdeveloped banking

6. Social
 Low savings
 Lack of purchasing power
 Population of 74 million growing at 2% per
annum
 50% population was 21 or younger
 Unemployment was at 12%
 High level of corruption
 Old concept of marketing

7. Legal
 Domestic trade requires licenses for import status
 License for specific products
 70% cap for ownership
 Local parties workforce, premise, equipments, land
use rights creating valuation problems
 Locals are able to buy ownership in stipulation over
years
 Managerial control of company by voting and not by
equity
 Variation in Tariffs, 5 to 100%
 Differential tax for domestic and foreign owner’s
profit

8. Internal environment
 Viet Kieu (returning to the homeland)
 Population of 74 million growing at 2% per
annum
 50% population was 21 or younger
 Unemployment was at 12%
 High level of corruption

9. External environment
 Reduction in trade tariff as a member of
AFTA
 Most Favored Nation status in EU
 Restoration of full diplomatic relations with
US
 Slow growth in US and Europe

10. Modes of Market Entry
 Appoint a Vietnamese import agency
 JV with local SOEs
 Rare case of wholly owned organizations
 A processing Contract
 Business Cooperation contract
 Build-operate-Transfer ventures
 Representative offices
 Export Processing Zones (EPZ)
 Distribution – 1. Govt 2. Private
 License per transaction (unloading)

11. SWOT
Strengths
•Large and cheap educated
workforce
•Fastest growing country
•In process of liberalization
•50% population is below 21
•Viet Kieu
Weaknesses
•Distribution System
•Infrastructure (ports, airports)
•High level of govt intervention in
trade
•Corruption (licensing)
•Strict ownership laws
Opportunities
•Huge market
•Scope of development
•First mover advantage
•Recently entered free trade
Threats
•Counterfeit products
•Inconsistency in tariffs

12. Chemical company
 Global Competitive Position - 1
 International Experience - High
 Percentage of sales in Asia - 13%
 Manufacturing in Asia - 2 plants
 JV in Asia - No
 Importance of operation control - Medium
 Important Tariff - 30%
 Marketing Challenge - distribution,
customer reach

13. Chemical company
 For Chemical Corporation, horizontal entry into the
Vietnam market through a non-equity strategic
alliance with independent distributers is our
recommended course of action.
 It should enter into business cooperation contracts
with interested distributers with the intent of creating a
mutually beneficial relationship between distributers
and the company.
 So overall risk to the corporation is minimized in many
ways, while at the same time providing a gateway to a
new and potentially lucrative market. (low capital -
less risk )
 Specifically, risk is minimized through the lack of
capital investments in new factories, new supply
chains, or the development and creation of a
subsidiary distributer.
 Continue value pricing and maintain Brand image

14. Sports company
 Global Competitive Position - 1
 International Experience - Medium
 Percentage of sales in Asia - 7%
 Manufacturing in Asia - N/A
 JV in Asia - Yes
 Importance of operation control - Medium
 Important Tariff - N/A
 Marketing Challenge - Poor retail
Distribution
Local Manufaturer

15. Sports company
 Entry into the Vietnam market with Sports Corporation should
be accomplished by opening up a representative office (FDI,
Horizontal Entry).
 This representative office will seek out entrepreneurs who
desire licenses to produce and distribute Sports Corporation
products in Vietnam with the option to export.
 This strategy requires only a minimal investment in office space,
employees, and associated logistics. Risk is also mitigated,
because the company will not make any capital investments to
enter the market.
 Licensing will ultimately allow for quick market entry by utilizing
existing infrastructure to produce product and bring it to market
rapidly.

16. Children’s Toys company
 Global Competitive Position - 1
 International Experience - Medium
 Percentage of sales in Asia - 11%
 Manufacturing in Asia - 3 plants
 JV in Asia - No
 Importance of operation control - High
 Important Tariff - N/A
 Marketing Challenge - lack of buying power

17. Children’s Toys company
 Children Corporation should enter the Vietnam
market horizontally through a processing contract
(FDI).
 In order to safeguard the brand reputation,
quality, and prevent counterfeit products from
entering the market, controlling the manufacturing
process from start to finish by leasing the needed
infrastructure helps to protect the company’s
interests.
 Entry into the market through this path plays to
the strength of the company’s abilities to enter
new markets and quickly gain share in any
market that they enter.

18. Thank You