Strategic Management – Global Strategy

Vietnam – Market Entry Decision

Group-2
Kalpesh Nishikant HARIHARAN
N R S H Srinivas
(EMP21/A/01) (EMP21/A/20) (EMP21/A/10)
(EMP21/A/38)
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1. Identiy the factors suggesting that Vietnam is a good market destination

Companies enter into international markets for mainly three reasons:

• Economic Reasons

Vietnam is the world’s 12th most populuous nation, with a fast growing economy
and a substantial inbound FDI. Its also one of the last countries to open its
markets, lending a high potential growth and well educated low cost workforce
available in abundance.

Japan has also identified Vietnam in top of its list of most favoured destination
for future investments.

Geographically, Vietnam is located amidst other developed and fast growing

south-east asian economies like malaysia, hong kong, thailand, taiwan,
singapore etc. Reducing the capital investment risks being a communist
country.

Fueled by the economic reforms started in 1986, Vietnam’s economy has grown
rapidly due to high FDI and establishment of new local companies.

Vietnam is becoming investment friendly counry by reducing tarrifs, changing

regulations to attract foreign investment.

Real GDP growth has increased from 7.8% in 1992 to 9.5% in 1995 and their
exports have doubled during this period from USD 2600 million to USD 5200
million. Imports has tripled during the same period. Inflation is also mangaed
quite well. Purchasing power parity is well ahead of countries like India. In
terms of GDP growth, Vietnam is ranked 3rd among asian countries.

• Technological Reasons

Since, Vietnam is one of the countries which has recently opened its doors for
liberalization and moreover its geographically placed between the emerging
and grown economies, it is possible for companies to introduce its products in

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 Strategic Management – Global Strategy
Vietnam – Market Entry Decision
Group-2
Kalpesh Nishikant HARIHARAN
N R S H Srinivas
(EMP21/A/01) (EMP21/A/20) (EMP21/A/10)
(EMP21/A/38)
---------------------------------------------------------------------------------------------------------------------
------------------

various stages of “Product Life Cycle” to introduce in one market and move it
further to the other places as per the demand pattern. Different positions on
the

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 product life cycle would help a firm to exploit its “rent seeking behaviour” by its
multiple presence in multiple markets, it also allows a firm to explore different
innovation process across different markets. The companys core product range
which alays formed the introductry line when entering new markets, was
positioned as a replacement technology, offering superior performance and
cost relative

• Strategic Reasons

There can be various strategic reasons to enter a new market like Vietnam:

-To exploit the first mover advantage

- To erect entry barriers for entry of future competition

- To negate the possibility of developemnet of generic substitutes

MNCs which are looking to enter new markets in terms of products, scale of
expansion and volumes are attracted towards Vietnam. Labor rates are also
very low in Vietnam, the firms which are more labour intensive can reduce
costs by relocating manufacturing operation into Vietnam. Also, Vietnam goods
are named “Most Favoured Goods” in 15 Europian nations, lending it credibility
in terms of quality.

Vietnam is very attractive for being a new market as it has great potential in terms of
growing economy, technological opportunities and relatively barren market to gain
competitive advantage. Thus, Vietnam is a very good market desitnation.

2. Suggest entry strategies for each of the three corporations.

• Chemical Corporation

Chemical Corporation’s core business is of chemical adhesives and

sealant’s, offering superior performance-cost relative to more traditional
mechanical fastenings and seals into relatively new market. With a
strong International distribution network,

• Sports Corporation

• Children Corporation

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