Vietnam Market Entry Decisions Essay

982 words - 4 pages

Does Vietnam represent an attractive investment opportunity?Absolutely; all of the factors are present to allow Vietnam to emerge as an "Asian Tiger":* Economic Growth. Vietnam has been enjoying robust economic growth due to economic reform, a growing GDP, an increase in private Vietnamese-owned organizations, as well as the momentum from the large number of emerging foreign joint ventures.* Increasing FDI. It is the consensus of many countries that Vietnam is proving to be an increasingly attractive region to do business. Vietnam is widely considered to be one of the most attractive investment opportunities in Asia, second only to China and India.* The Government. The government's commitment to economic reform will be the key to opening relationships with foreign firms. The government will have to make improvements across the board in order to ease market entry, but it has been moving in this direction through its entry into the ASEAN and the EU.* Population. A large (the 12th most populous in the world), youthful (50% 21 or under) population with growing pocketbooks and a taste for Western culture.* Labor Pool. Generally well-educated, low cost and available workforce.On the other hand, Vietnam still must overcome some obstacles. First, its transportation infrastructure is still primitive, a result of years of war. Substantial investment in improving roadways and airports is crucial in order to facilitate distribution across the area. Next, the Communist government's tight controls, despite its recent openness to investment, must be loosened. Likewise, corruption continues to be a major concern for investors. Therefore, although Vietnam is an attractive opportunity, investors must be cautious, but willing to assume some risk at the same time. The potential ROI may be worth the risks inherent in investing in the region.Is it too late for U.S. companies to enter Vietnam?No; in fact, many firms have wondered if it is still too early, given the problems with dealing with a communist government, wide-scale corruption, lack of infrastructure and a retail market still in its infancy. However, early entry can be advantageous in that it would enable U.S. firms to gain exposure to the market (via exporting or distribution agreements), and the ability to further research future investment opportunities while at the same time avoiding too much exposure.What recommendations would you make to each of the three U.S. Multi-National Companies regarding whether to enter Vietnam, mode of entry, and timing?Chemical Corporation:It may be a bit early to consider entry into this market, although Chemical Corporation's preferred mode of distribution seems to be a good fit with the Vietnamese structure of many independent distributors. A major concern is that Chemical Corporation will have an extremely difficult time competing on price and overcoming the lack of the distributor's interest in "immersing themselves in the technology and the benefits it can deliver to its...

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