vinamilk’s final report

Political risk Malaysia was ranked 70 out of 138 countries in the index that seeks to measure theth number of terrorist incidents, fatalities and casualties as well as damage to property

UEH UNIVERSITY UEH COLLEGE OF BUSINESS SCHOOL OF INTERNATIONAL BUSINESS - MARKETING

FINAL REPORT

Name: Vo Que Tram

Student ID: 31191025103

Class: DH45IBC04

Class Section: 21C1BUS50305802

Tutor: Nguyen Kim Thao

TABLE OF CONTENT

A COMPANY AND PRODUCT REVIEW 1

I Company 1

II Product 1

B OVERVIEW OF THE TARGETED MARKET - Malaysia 1

I Geography and demographics 1

II Economic environment 2

III Political and legal environment 3

IV Cultural environment 3

C ENTRY MODE 4

I What constitutes a viable entry mode 4

II Viable options 4

III Pros and cons 5

IV The best choice 6

D STAFFING STRATEGY 6

I A viable staffing strategy 6

II A list of viable options 7

III Pros and cons 7

IV The best choice 8

E MARKETING STRATEGY 9

I The product should be modified to the market or not 9

II The most effective advertising channels 11

VINAMILK’S FINAL REPORT

A COMPANY AND PRODUCT REVIEW

I Company

Vinamilk was established on August 20, 1976 In the UNDP 2007 Top 200 largest firms in Vietnam report, it is the 15th largest company in Vietnam

It is said to account for about 75% of Vietnam's dairy market when distributed in 63 provinces and have more than 251.000 sales points across the country In addition, Vinamilk is recognized by 43 countries around the world With more than 40 years of establishment and development, 1 representative office in Thailand, the company today has built 14 production factories, 3 branches of sales offices, 2 logistics factories, 1 dairy factory in Cambodia

II Product

1 Product line

 Organic nutrient

 Liquid milk

 Yogurt

 Powdered milk

 Condensed milk

 Infant cereals

 Special nutrition products for adults

 Beverages

 Ice cream

 Cheese

 Soy milk

2 Main product

Vinamilk liquid milk is the first product line that is always favored by Vietnamese families and placed in the daily drink cart It is dubbed "Health gifts from nature", ensuring absolute quality for consumers' health from 100% pure and healthy cows that always meet the needs of consumers Liquid milk is a key product that Vinamilk focuses on investing in There are some competitive advantages that are believed in making Vinamilk outweigh other competitors

B OVERVIEW OF THE TARGETED MARKET - Malaysia

I Geography and demographics

1 Location

Malaysia, country of Southeast Asia, lying just north of the Equator.

2 Climate

Malaysia has a tropical climate Malaysia’s mean annual temperature is 25.4°C

3 Size

Malaysia is the 66th largest country by total land area, with a land area of 329,613 km2

4 Age

Median age of population for Malaysia is 32.5 years, ranks 15 in the world.th

5 Income distribution

The distribution of income in the urban area is more unequal than in the rural area within each race

6 Education level

 Six years of compulsory primary education beginning at age seven

 Three years of lower secondary education

 Two years of upper secondary

 Two years of pre-university senior secondary study

II Economic environment

1 GDP levels

In 2020, the GDP per capita in Malaysia amounted to around 10,401.794 U.S dollars The GDP per Capita in Malaysia is equivalent to 92 percent of the world's average Malaysia's GDP growth forecast in 2021 is 3.5% And in 2022 it is predicted to grow

to 6% along with the hope that Malaysia's economy is more resilient thanks to higher vaccination rates

2 Unemployment

The unemployment rate in June 2021 climbed to 4.8% after fourconsecutive months

of decreases The number of unemployed persons escalated by 40.600 persons to 768.700 persons

3 Infrastructure development

Infrastructure in Malaysia is excellent and constantly improving It is arguably one of the most well-developed countries in Asia, making it a great choice for both lifestyle and for business or investment

4 Ease of doing business

Malaysia is ranked 12 among 190 economies in the ease of doing business, according

to the latest World Bank annual ratings The rank of Malaysia improved to 12 in 2019 from 15 in 2018

III Political and legal environment

1 Political system

The politics of Malaysia is based on a federal constitutional monarchy, in which the King is head of state and the Prime Minister is the head of government Executive power is exercised by the federal government and the 13 state governments Federal legislative power is vested in the federal parliament and the 13 state assemblies

2 Political risk

Malaysia was ranked 70 out of 138 countries in the index that seeks to measure theth

number of terrorist incidents, fatalities and casualties as well as damage to property in

a country Terrorism Index in Malaysia decreased to 2.09 in 2019 from 2.5 in 2018

3 Government policy toward trade and foreign direct investment

3.1 Government policy toward trade

Malaysia is a founding member of the Association of Southest Asian Nations and the Organisation of Islamic Cooperation

Through ASEAN, Malaysia has regional FTAs with: China, Japan, Korea, India, Australia and New Zealand, and also participates in the ASEAN Trade In Goods Agreement (ATIGA)

3.2 Foreign direct investment

Statistically FDI is behind the huge growth of the Malaysian economy In 2020, the amount of foreign direct investments in Malaysia amounted to approximately 3.5 billion U.S dollars This was the lowest FDI inflow to Malaysia in the last ten years

4 Property rights and intellectual property right protection

Malaysia generally adheres to the international standards on intellectual property established by the Agreement on Related Aspects trade of intellectual property rights Malaysia is also a party to the Patent Cooperation Treaty and the Madrid Protocol Registrar and Trademark applicants can use the international system to file a trademark application and the international light scheme for protection in Malaysia

5 Corruption

Corruption is a problem in Malaysia when they had a corruption score of 51 out of

100 compared to the world average score 43, and ranked 57 in 180 countries

IV Cultural environment

1 Cutural values

The people of Malaysia are a mosaic of Chinese, Indian and native Malay influence The Malays make up the largest ethnic group, and tend to practice both Islamic and Malay traditions, and speak in the native Malay language

2 Predominant religion

The constitution states Islam is the “religion of the Federation; but other religions may

be practiced in peace and harmony.” Federal and state governments have the power to mandate doctrine for Muslims and promote Sunni Islam above all other religious groups

3 Language

The national language of Malaysia is Malay, apart from being one of the two official languages, it is spoken by over 80% of the population The second official language of Malaysia is English, which is also one of the most commonly spoken languages

4 Social class structure

 Upper class: 0.1% or 21.7K families

 Middle class: 25.2% or 4.7M families

 Lower class: 74.3% or 14M families

 Income poor only: 12.6% or 2.5M families

 Food poor: 7.9% or 1.55M families

C ENTRY MODE

I What constitutes a viable entry mode

Choosing the right market boils down to issues over control, resources, appetite for risk, and familiarity with the market Other factors include legal restrictions or the availability of distributors and partners It usually makes sense to employ different methods for different markets In addition, the nature of the product is also key – one requiring a significant after-sales service, or a substantial amount of interaction with the consumer, might not be suitable for anything other than direct ownership

II Viable options

1 Licensing

Licensing is defined as a business arranement, wherein a company authorizes another company by issuing a license to temporarily access its intellectual property rights, manufacturing process, brand name, copyright, etc

2 Franchising

Franchising is a method of distributing products or services involving a franchisor, who establishes the brand’s trademark or trade name and a business system, and a franchisee, who pay a royalty and often an initial fee for the right to do business under the franchisor’s name and system

3 Joint Venture

A Joint Venture is a commercial enterprise in which two or more organizations combine their resources to gain a tactical and strategic edge in the market

4 Wholly owned subsidiary

A wholly owned subsidiary is a company whose common stock is completely owned

by a parent company Wholly owned subsidiaries allow the parent company to

diversify, manage, and possibly reduce its risk

III Pros and cons

Licensing

 Obtain extra income for technical know-how and services

 Pave the way for future investments in the market

 Loss of control

 Risk of having the trademark and reputation ruined by

an incompetent partner

Franchising

 Low cost

 Low risk

 Allow Vinamilk to use the cultural knowledge and know-how of local managers

 The franchiser will not have much control over the franchisee and the company that owns the franchising rights may become a future competitor

Joint Venture

 The costs will be shared

 Vinamilk can benefit from the knowledge of local partners

 Combining resources of both companies to create favorable conditions for business

 Receive positive feedback and improve the

 Needs to improve technology and liquid milk product quality

 Language, thinking and cultural barriers

 The labor and development costs

acceptance of local people

Wholly

owned

subsidiary

 Complete control over the day-to-day operations in markets overseas

 Vinamilk can buy a company as a subsidiary

 Easier to take control

 Reduce costs for both companies

 Take time to train staff

 Cultural differences

 Requires substantial resources, highest commitment

 The staff must be well-trained

 The formed process can

be not suitable

IV The best choice

A wholly owned subsidiary may be in a country different from that of the parent company The subsidiary most likely has its own senior management structure, products, and clients Having a wholly owned subsidiary may help the parent company maintain operations in diverse geographic areas and markets or separate industries These factors help hedge against changes in the market or geopolitical and trade practices, as well as declines in industry sectors

D STAFFING STRATEGY

I A viable staffing strategy

1 Cost

 Recruitment

 Pre-employment background checks

 Salary

 Health insurance

 Health insurance

 Tax Reporting

 Visas

 During the COVID -19 Updates

2 Risk

 Risk of Limited stay visas

 Risk of the availability in position for foreigners

3 Personnel skill

 Flexibility

 Adaptability

 Planning

 Control risks related to foreign trade

 Minimize cost

II A list of viable options

1 Ethnocentric

Ethnocentric staffing is a policy in which a company's activities outside of its host country are managed by individuals from the host country This type of policy tends to appeal to companies that want to keep tight control over decisions made by branch offices abroad

2 Polycentric

A polycentric staffing policy requires host-country nationals to be recruited to manage subsidiaries, while parent country nationals occupy key positions at corporate headquarters

3 Geocentric

The Geocentric Approach is a method of international recruitment where the MNC’s hire the most suitable person for the job irrespective of their Nationality With this policy, you can use Locals, expat and also Third-country nationals type of staffing

III Pros and cons

Ethnocentric

 Help transfer core competencies

 Never happens status discrimination

 Have the opportunity to meet, interact with a lot

of international friends

 Reinventing local business operations in the true image of the host country's operations

 Can be easily transferred

to a subsidiary

 Better transfer of technical know-how

 The pressures of cultural differences and long-term separation from family and friends

 Expensive to arrange for managers to come from home

 Creating barriers

 Face a lot of difficulties to survive

in the foreign market

 Government restrictions

Polycentric

 Unlikely to make mistakes

 Less expensive in

 Few opportunities to gain experience outside

 Gap constraints

creating value for employees in recruiting

 Having the support of the host country's governments

 Labor productivity for highly skilled workers

 Language barriers, national loyalty, and a range of cultural differences can cause headquarters staff

 Difficulty in Paying for local managers

Geocentric

 Make best use of its human resources

 Develop a pool of senior executives

 Reduction in resentment

 Be better able to create value from the pursuit of experience curve and location economies

 Expensive to implement

 Highly centralized control of staffing is required

 Proper scrutiny is required

 Foreign workers are not allowed to bring their families, not to

be pregnant

IV The best choice

Choose Polycentric Staffing Policy as the best strategy for Vinamilk in Malaysia market

Firstly, this strategy addresses most of the disadvantages of the others Including cost issues, cultural barriers of manager and more than that, complying with the policy of the host country The subsidiary with a manager who has an insight about Malaysia culture will be a huge advantage Because he is familiar with local business practices,

he can read subtle hints even if they are not spoken He also tends to understand the needs of their employees better, as well as the demands of customers and suppliers Moreover, he has a close relationship with the country's government agencies so this can help Vinamilk get the procedure for applying for a business license in Malaysia faster

Besides, one of Vinamilk’s goals is market-oriented research and development so this approach is very suitable for business that maintains the operation of subsidiaries in different markets to a certain extent A Malaysian manager is allowed to operate the branch in his own way and it may differ from those of other foreign subsidiaries But

Vinamilk needs to regularly monitor the branch's operations, ensuring that the subsidiary's strategies and plans remain under the control of the parent company

E MARKETING STRATEGY

I The product should be modified to the market or not

Culture

Structure

adolescents under 15 years old (29.6%)

aged 15 to 64 years old (65.4%)

multicultural society

32.9

adolescents under

15 years old (25.2%)

people aged 15 to

64 years old (69.3%)

Age

drinking was highest among aged 1-3 years (90.6%) followed by 86.1% aged 4-6 years, and 73.7% among ages 7-10 years

children under five years of age who are malnourished is on average 40%, higher than the global average

of more than 33%

 Rate of malnutrition and stunting among children under 5

nationwide 19.6%