International Business Strategy in Vietnam

International Business

Strategy in Vietnam

Based on the product life cycle, the sports equipment is in an incipient stage and this specifically restricts the strategy which can be selected to support its manufactory in Vietnam. In this order of ideas, the best means to identifying the strategy is that of assessing the nature of the product as well as the features of the market in which the product would be introduced, and then selecting the adequate strategy from the Ansoff matrix, which is depicted below:

In the particular case of the Australian organization entering Vietnam, the product is a new one, obtained through a new technology and a new manufacturing process which significantly reduces operational costs. At an overall level however, the product is already existent within the market in other forms. Nevertheless, for the purposes of strategy identification, the product would be perceived as a new addition to the market. Then, similar to the product, the market onto which the company would sell the item is also new in the meaning that the firm has to not yet sold any items in Vietnam. Given this context of a new product sold within a new market, the adequate strategy is that of diversification.

At a basic level however, in which the firm is now only interested in manufacturing and the sale of the products in Vietnam remains yet undecided, the entry strategy would the localization strategy. This virtually means that the company would make intense efforts to customize its products as well as its operations to the specific requirements of the Vietnamese market.

"A localization strategy focuses on increasing the profitability by customizing the company's goods or services so that they provide a good match to tastes and preferences in different national markets. Localization is most appropriate when there are substantial differences across nations with regard to consumer tastes and preferences and where cost pressures are too intense. By customizing the product offering to the local demands, the company increases the value of that product in the local market" (Hill and Jones, 2009).

As the company decides to implement a localization strategy in Vietnam, it finds itself in a situation in which it strives to increase its revenues through the manufacturing and potential sale of new products within a new market. The approach to this endeavor is however characterized by a series of elements, some of the most important of them being presented below:

It requires the commitment of the firm in efforts related to both products as well as adaptation to the foreign markets as well as legislation and labor force operations

It might imply that the company product efforts are outside the organization's core competence areas and also that the firm is unprepared to operate under the pressures of cultural differences.

Due to the need for a dual focus and the globalizing features, the localization strategy is extremely risky

In spite of the risks, the localization strategy stands increased chances of gains when it has the ability to generate high returns, particularly due to the cost efficiencies Vietnam reveals in turns of labor force costs.

The localization strategy into Vietnam is also characterized by the fact that it ensures higher levels of business diversification for the company, which in fact serves the number one rule of investments -- portfolio diversification. This in essence means that, through the penetration of the Vietnamese market, the company would increase its sources of revenues and it would decrease its dependency on the more traditional manufacturing plants.

Finally, the localization strategy also allows Win-win to gain potential marketing advantages by creating customer awareness and generating demand for the company's products, even when the company only produces them in the Southeast Asian country (Quick MBA).

The need for the localization strategy is give by the fact that Win-win, as well as any other economic agent, cannot simply adopt a strategic model as it arises within the specialized literature. It as such has to customize it in order to meet its unique situation, such as organizational size, resource capabilities or features of the market onto which the strategy would be employed (Grant, 2008). To increase its success rates, Win-win would customize its strategic approach in order to ensure that it responds to the needs and wants of the local market. In this line of thoughts, the following elements would be considered:

1. The offering of employment opportunities to support the development of the community

2. The operation of the business activities in full accordance with the local legislations and traditions

3. The introduction of a highly successful business model in Vietnam

4. The training of the Vietnamese managers to operate under new standards of quality and efficiency