CHAPTER 3: VIETTEL'S INTERNATIONAL BUSINESS STRATEGY AND
3.2. Viettel's entry into the Laos telecom industry
Viettel Global selects a joint venture in Laos. It established a joint venture with Laos Asia Telecom Company, namely, Star Telecom, to create the Unitel telecommunications brand, with Viettel Global contributing 49 percent of the capital investment in the form of equipment.
3.2.1. Company Information
+ Company name: Star Telecom. Co, Ltd.
+ Address: Nongbone road, Phonxay village, Saysettha district, Vientiane Capital, Lao P.D.R.
+ Website: www.unitel.com.la
+ Brand name: Unitel
“Uni” is extracted from the word “United” – which has similar meaning to solidarity. This is a social value highly respected by Laotian people. Unitel is created as a telecom network to connect the Laotian and bring them a better life.
+ Established: 2007
+ Service launching: November 2009 + Employees: 1.540 staffs.
+ Services providing: Mobile, Internet, fixed broadband
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Unitel is the leading mobile operator in Laos accounting for 47% market share with 1.8 million customers, owning the biggest telecom network in terms of:
Network infrastructure with more than 21,000 km fiber optical cable and 3,100 base stations (2G and 3G).
Distribution channels with 143 shops, 174 agents and sales points, 400 salespeople.
Customer care system with 200 agents/shift at the same time.
International Awards achieved: Best Operator in Emerging Market by World Communications Awards (2012).
Star Telecom created 3,500 km of fiber-optic transmission network for 17 cities throughout the nation in less than a year, which is joined by Viettel Vietnam and Viettel Cambodia to establish a Vietnam-Laos-Cambodia Central transmission line. Star Telecom completed the greatest fiber-optic transmission network of 17,000 km and 2,500 transmitters in July 2012, covering all districts and being utilized by 95 percent of Laos' population. It was a similar approach to Cambodia's of investing in high-quality, systemized technology infrastructure to deliver the greatest services for local citizens by making communications services more accessible.
3.2.2. Viettel Global selected a joint venture to enter the Lao telecoms market The entry modes always play an important role for any organization that wants to enter international trade and workplace. They are very important in determining the profitability and success of an organization or a business entity. It sets the objectives, goals, resources, and policies that always guides the operations international business. It aims at ensuring that an organization attains sustainable growth in the global markets.
The main three entry modes to international markets will include:
The factors that influence the entry modes are the key issues that an organization has to check before it involves itself in selecting the way its going to enter the foreign market.
Based on the models, certain factors are suggested for Viettel's choice to choose a market entrance option in Laos. The most appropriate market entrance strategy for Viettel should be joint venture for various reasons:
a. Government assistance
Viettel Global has a significant edge in the Lao market because to governmental backing and economic collaboration between Vietnam and Laos. Viettel is a state-owned enterprise. With government backing, notably in the telecommunications sector, Viettel may find it simpler to penetrate the new market.
Opening a joint venture with the Lao government's telecom business might be a huge chance for Viettel to compete with other current market competitors.
b. Lower the expenses
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Because of the party's existing infrastructure, Viettel just has to engage in further modifications to deliver better quality telecom services generally to suburb regions, requiring less expenditure. As a consequence, the costs of modifications and innovations may be reduced.
c. Suit the market's culture
Viettel has successfully implemented the worldwide business model of joint venture in 5 countries across the globe. With the strategy of transforming the brand name into the local language and culture, the joint venture market entrance method may be the best option, as it has a high potential of agreement from the parties that share the same goals and achieve the same success.
CONCLUSION
In conclusion, internationalization currently is a business strategy that a lot of companies around the world chooses to expand their operations. Without a doubt, this strategy could bring a huge of benefits to the enterprises, extent the market share and increase sales and profit. However, it also brings challenges and obstacles, required the companies to have strategic plans to overcome. Viettel Telecom Corporation has also gained a lot of success in internationalization. The company expands its market share in over 13 countries in Asia, Africa and America areas, becomes one of the largest telecommunication providers in Southeast Asian area. In each country, Viettel provides a new brand name of joint venture, provides high quality telecom services to local citizens.
In the potential context of global economy, Viettel can consider opening a new market into global. The most suitable selected market is Laos. Based on analysis of market analysis (both macro-environment and micro-environment) using theoretical frameworks such as PESTLE analysis, SWOT and Five Forces Models, a lot of reasonable characteristics that makes the company to choose Laos, for example, the supports from host country's government, the current situation of society and economy of the host country, the convenience in relationship between Vietnam and Laos, the current poor quality of telecommunication industry in the host country market, etc. After choices of market selection, the company should focus on choosing market entry mode for the most suitable internationalization strategy. The chosen market entry mode is joint venture which is a successful business model that Viettel has been operating in 5 countries around the world. With the huge advantages from joint venture ownership model, it could be the most suitable one for Viettel to enter Laos market.
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