VinFast Trading and Service Company Limited

VinFasts full name is VinFast Trading and Service Company Limited. This is a Vietnamese car manufacturer that was formed in 2017. The head office of this business is located in Hai Phong city. The CEO of VinFast Trading and Service Company Limited is Mr. James Benjamin Deluca. This company is a member of VinGroup, founded by billionaire Pham Nhat Vuong.

UNIVERSITY OF FINANCE – MARKETING

DEPARTMENT OF BUSINESS ADMINISTRATION

INTERNATIONAL BUSINESS MANAGEMENT

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Ho Chi Minh City, April 2023

ANSWER ESSAY

A Introduction about VinFast

VinFast's full name is VinFast Trading and Service Company Limited This is a Vietnamese car manufacturer that was formed in 2017 The head office of this business is located in Hai Phong city The CEO of VinFast Trading and Service Company Limited is Mr James Benjamin Deluca This company is a member of VinGroup, founded by billionaire Pham Nhat Vuong

VinFast is the company name that is abbreviated from the phrase “Việt Nam – Phong cách –

An toàn – Sáng tạo – Tiên phong” The meaning of this name is to express the aspirations of bringing the Vietnamese brand to the international community through the production of cars VinGroup wants to contribute to creating motivation, promoting heavy industry, manufacturing industry and supporting industries in Vietnam to have the opportunity to develop VinFast's logo is made up of 3 consecutive V-shaped lines The meaning of the VinFast car company logo is to represent Vietnam, Vingroup and Rise Before the time of choosing to use a stylized V-shaped logo, VinFast continuously edited the logo design thought The company's logo is built by 2 famous studios in the world

VinFast is a startup in the automotive field with the backing of VINGROUP - the largest private enterprise in Vietnam Right from the start, the brand's goal is to be able to create world-class products with Vietnamese identity

 VinFast Trading and Service Company Limited was established in June 2017

 02/09/2017: officially started the construction of the VinFast electric motorbike-car production complex

 02/10/2018: launched two models of VinFast Lux A2.0 and VinFast Lux SA2.0 at the Paris Motoshow and was honored to be the leading automobile organization in Europe - AutoBest considers it a "new star" of the automotive industry paint the world

 03/11/2018: opened an electric motorcycle factory and launched the first product in Vietnam market, VinFast Klara

 06/03/2019: rolled the first VinFast Lux SA2.0 off the factory conveyor

 14/06/2019: in Cat Lai, Hai Phong officially inaugurated VinFast car factory after 21 months of construction

 17/06/2019: Start handing over 3 models of VinFast Fadil, VinFast Lux A2.0, VinFast Lux SA2.0 to the first customers in Vietnam

 23/10/2019: was awarded the highest safety certification by ASEAN NCAP for two lines VinFast Lux A2.0 and VinFast Lux SA2.0 The class A urban car VinFast Fadil was also awarded a 4-star certificate

 07/09/2020: launched the first luxury supercar line VinFast President V8 unique and limited edition

 01/2021: announced its vision to become the world's leading smart electric car company

 16/02/2021: won the award "New car company with a high commitment to safety" according to the Grand Prix Awards 2020

 24/03/2021: officially opened for sale the first smart electric car in Vietnam – VinFast VF E34

 03/2021: 3 models of VinFast Fadil, VinFasts Lux A2.0 and VinFast Lux SA2.0 won the award "most favorite car in the segment" voted by consumers across the country

 06/2021: VinFast Fadil becomes the top selling car in the first half of 2021

With VinFast, VinGroup has created an international brand that Vietnamese people can be proud of VinFast meets the needs of domestic drivers, as well as addresses the needs of the growing domestic market

B Why VinFast choose North Carolina (USA) to locate their plant?

VinFast's factory will be located at Triangle Innovation Point industrial park, Chatham County with an area of about 800 hectares The factory consists of 3 main areas: production and assembly area of electric cars and electric buses; battery production area for electric vehicle products and ancillary industry area for suppliers

Phase 1 of the plant will be started in 2022 after receiving the construction permit and is expected to be operational in July 2024 According to VinFast, the capacity of phase 1 is expected to be 150,000 vehicles/year

In fact, electric cars are the trend of the world Therefore, one of the reasons VinFast chose the US as the place to build the factory is because the US is one of the leading countries in this trend According to the International Energy Agency (USA), the administration of US President Joe Biden is very drastic in reducing emissions from vehicles into the environment By 2030, Joe Biden wants 50% of cars sold in the US to be zero-emissions vehicles Currently, the US is a country that favors electric vehicles more than many other major countries in the world To implement the strategy to reduce emissions, Mr Joe Biden also issued many tax incentives for companies producing electric vehicles According to The New York Times, the US presidential administration has launched a $2 trillion infrastructure plan to tackle climate change by encouraging Americans to switch to electric vehicles In it, part of this huge amount will be used in the construction of electric vehicle charging systems

The next reason that VinFast chose to build a factory in the US is that the electric vehicle development infrastructure has been completed for a long time and is still being continuously upgraded According to CNBC, recently, President Biden has promised to invest $ 400 billion in clean energy, including battery technology and electric vehicles Part of that plan includes earmarking government spending to support electric vehicles, with 500,000 new electric vehicle charging stations by the end of 2030

Another advantage when VinFast opens an electric vehicle factory is that the skill level of electric vehicle manufacturing workers in the US is very developed According to the Center for American Development (CAP), the auto industry is playing an important role

in creating many jobs for the US workforce Therefore, for many years now, the US has been actively improving the skills of workers in the automobile manufacturing industry According to CAP, the US has organized human resource training in the field of electric car production, practical training to install both civil and public charging stations, etc One of the training programs is typical is an electric vehicle infrastructure training program that employs approximately 3,000 electricians nationwide to install and maintain charging stations

For this reason, VinFast opening an electric vehicle factory in the US will take advantage

of the world's top quality and abundant human resources According to Electrek (USA),

VinFast opening a factory in the US will save more costs in recruiting and training human resources

C Which kind of entry mode VinFast chosen when decide to build this EV plant in USA? Explain the pros and cons for this entry mode from the international business’s point of view?

Greenfield Investment is one of two types of foreign direct investment (FDI), in which the parent company establishes a subsidiary in another country In addition to the construction of new manufacturing facilities, these projects may also include the construction of new distribution centers, offices and housing Developing countries tend to attract promising companies with offers of tax breaks, or they may receive subsidies or other incentives to set up an investment in the green sector

Wholly - owned subsidiary is a form of foreign direct investment (FDI), the investor owns 100% of foreign assets This method will help VinFast increase control and flexibility

in business management and operation without obstacles or delays in plans from local factors VinFast will build a manufacturing plant manufactures automobiles in the United States after establishing the Automotive Research and Development Institute in San Francisco

1 The pros

 Because VinFast's competitive advantage is built on the ability to control, especially

in terms of technology capacity for electric vehicles, when established by this method, it will reduce the risk of losing and controlling technology , protect technology secrets better than other methods

 This method will help VinFast closely control business activities in the US from marketing, production, transportation and resource distribution in all aspects It can

be seen that this control is absolutely necessary for a company to reach out globally

It is possible to establish a management model and build a base in accordance with the proposed VinFast development plan Moreover, this investment is often encouraged by the US to receive a large, long-term and stable investment, so it will receive preferential conditions on licensing time as well as preferential tariffs

 VinFast's investment in a wholly owned subsidiary can speed up the penetration

process, while joint ventures, franchising and licensing methods often require lengthy negotiations and procedures This advantage is important because the advantage of occupying the target market in the US when penetration is inevitable, it will be disadvantageous after all when the market share in the US market is already taken by competitors

 High - quality human resources: VinFast's leadership team are all seniors and capable

in the manufacturing and mechanical industries Especially, Mr James B.DeLuca (General Director of VinFast) - is a former vice president of the largest automobile corporation GM Motors in the US Mr James has extensive knowledge of the car market in the US as well as other markets around the world There are also VinFast's deputy general director, Mr Vo Quang Hue (former general director of Robert Bosch Vietnam) and Ms Le Thi Thu Thuy (former vice president of Lehman Brothers)

 Brand factor: Using technology from GM Motors and BMW, VinFast initially created a positive brand image in the eyes of consumers Not only that, with the policy of replacing battery cells when below 70% (with Samsung battery cells) and deploying battery replacement service in the United States market

 High degree of standardization: VinFast's VF 8 products are compatible with the rigorous quality standards of the United States and Europe

 Government Support: The US government has been actively promoting the use of electric vehicles by offering tax incentives and subsidies This provides an excellent opportunity for VinFast to introduce its electric vehicles in the US and establish a loyal customer base

2 The cons

 Construction can be lengthy and complicated, and delays may affect VinFast's ability

to deliver vehicles on time VinFast may face regulatory and cultural challenges in the United States VinFast has to face pressure on tax and license barriers when entering and investing in manufacturing plants in the US market

 More complex to plan: Difficulties in adapting to American culture In order to always maintain opportunities and take long - term action abroad, VinFast must actively follow and adapt well to the diversity in cultural and social native factors

 Marketing activities: Despite hiring some famous KOLs (for example, David Beckham in the Paris Motor Show), VinFast's marketing activities have not been really focused Currently, VinFast's marketing activities in the US are only available through TVC (Television Commercials) on a few channels and outdoors

 Inability to research and produce on its own, dependent on foreign technology: VinFast's models currently use mostly technology, components, production lines as well as experts from abroad This dependence on technology will be a big obstacle on VinFast's development path in the future

 VinFast headquarters in Vietnam will bear full responsibility for potential losses The initial capital and resource requirements are huge VinFast must accept significant risk and uncertainty as it requires a substantial investment in the US in the form of fixed and long-term assets Therefore, it will have to face the risks that the US brings (institutional risks, political risks) government intervention, inflation Strongly influenced by cultural and social factors of the US nation In order to maintain and operate long-term abroad, VinFast must actively follow and adapt well to the diversity of local cultural and social factors in order to minimize the potential risks that the US market brings

D What kinds of international business strategy which VinFast chosen to apply when establish this plant in USA?

1 Definition

A globally standardized strategy is a plan or approach that is created and implemented consistently across different countries and regions of the world It typically involves a set of guidelines or rules that apply universally, regardless of local customs, laws or cultural differences A globally standardized strategy can be beneficial for multinational organizations as it helps to streamline operations, reduce costs, minimize complexity, and maintain consistency in the brand image and messaging However, it can also pose challenges in terms of adapting to local markets and meeting the specific needs and preferences of customers in different regions

Transnational strategy is a business strategy that combines the benefits of a global and

multi - domestic strategy by leveraging the global operations of a company while also adapting to the specific needs and preferences of local markets A transnational strategy is a competitive strategy that seeks to increase profits by cutting costs globally, while adding value by adapting products to each market Business units have a high degree of autonomy

in performing basic business activities such as production and marketing (to adapt well), and at the same time have close coordination with each other (to reduce costs) A transnational strategy can be chosen when the business is facing great pressure both to reduce costs and to adapt to local conditions

2 What kinds of international business strategy which VinFast chosen?

A transnational strategy involves blending characteristics of both multinational-domestic and global strategies VinFast will focus on producing electric vehicles using standardized processes while considering the local market's needs VinFast is a new car manufacturer with the potential to create a global market for its products VinFast has established factories and partnerships in many different countries However, it is essential to tailor their products

to the preferences and regulations of different markets For example, electric vehicles in the United States have different regulatory standards than in Europe or Asia Therefore, VinFast needs to adjust its products to meet these requirements

E Which marketing strategies that VinFast should consider to apply for EV plan’s products according to you? Explain the reason why they should choose such marketing strategy to apply for?

There are several marketing strategies that VinFast could consider applying for their EV plan products:

1 Social Media Marketing: VinFast could leverage social media platforms like Facebook, Instagram, and Twitter to create buzz around their EV products They could post engaging content, run ads, and launch social media campaigns to target their audience

2 Content Marketing: VinFast could create informative and engaging content about their

EV products to educate potential customers For example, they could create blog posts, videos, and infographics that explain the benefits of owning an EV

3 Influencer Marketing: VinFast could collaborate with influencers in the automotive industry to promote their EV products This would help them reach a wider audience and

build credibility for their brand.

4 Event Marketing: VinFast could participate in automotive events and launch their EV products at these events This would give potential customers a chance to see and test drive their products

5 Email Marketing: VinFast could create an email marketing campaign to keep potential customers informed about their EV products They could send out newsletters, product updates, and special offers to keep customers engaged The reason why VinFast should choose these marketing strategies is that they are cost-effective and can reach a large number of potential customers by leveraging

However, when conducting marketing strategies in USA for VinFast's products, there are several important factors that the company should pay attention to:

Firstly, VinFast needs to consider the automotive consumption culture in the USA This includes factors such as the level of importance American consumers place on brand and image when selecting a car as well as their preferences for different types of vehicles Understanding the cultural nuances of automotive consumption in the USA will help VinFast tailor its marketing efforts to better appeal to US consumers

Secondly, VinFast needs to understand the automotive consumption habits of American consumers, such as shopping behavior, financing options and dealer relationships Affter that, VinFast can adjusts its marketing approach to better align with the ways in which US consumers shop for cars

Finally, VinFast needs to consider the attributes of its products, such as their design, performance and features Understanding what US consumers are looking for in a car and how VinFast's products compare to other options in the market will help the company develop messaging that resonates with potential customers

In my opinion, below are the marketing strategies that VinFast should consider applying to their electric vehicle products:

- Social Media Marketing: With the rise of social media platforms, this type of marketing could be a good choice for VinFast to connect with potential customers VinFast should leverage social media platforms such as Facebook, Instagram, Twitter and YouTube and they could create content such as videos, blogs and info graphics that educate potential

customers about the benefits of electric vehicles, highlight VinFast's unique features and how VinFast's products stand out from competitors can help build brand awareness and drive sales

- Events and sponsorships: Participating in relevant industry events and sponsoring events such as auto shows and sustainability conferences can help VinFast showcase their products and build relationships with potential customers and partners VinFast could host events like roadshows or car exhibitions to showcase their EVs and engage with potential customers They could arrange for test drives, conduct surveys, gather feedback, and use the data to improve their products and marketing strategies

F From international business’s point of view, propose the suitable organization structure for this EV plant and explain the reason why proposing such structure for this plant

Based on the nature of the EV plant, a matrix organizational structure would be suitable This structure allows for effective coordination and communication between different departments and functional areas, which is crucial in the production of electric vehicles In a matrix structure, employees report to both a functional manager (such as engineering or production) and a product or project manager This allows for cross-functional collaboration, which is essential in a complex project like an EV plant For example, the engineering department may work closely with the production department to ensure that the production processes are optimized for the specific needs of the EVs The sales and marketing department may work closely with the engineering and design departments to ensure that the final product meets the needs and expectations of the targeted market A matrix structure also allows for flexibility and agility in responding to changing market conditions, technological advancements, and other external factors that may impact the business It encourages cross-functional communication, problem-solving, and innovation, which are all crucial for success in the competitive international business landscape Since the structure is flexible, it can adapt to the dynamic and ever-changing nature of the automotive industry Functional structures provide a clear chain of command and specialization, enabling the company to strive for efficiency in operations The functional departments in this structure, such as manufacturing, purchasing, research and development