Order 739046: Samsung Micro environment in Vietnam

Introduction

There is an overwhelming importance of small and medium sized firms in Vietnam. 99 per cent of all the businesses that are well-established SMEs and are responsible for providing over 77 per cent of the employment in the market contributing significantly to the economy. Hence, SMEs are the backbone of the Vietnamese economy and its development. In the 20th century, Vietnam has had an open policy providing business opportunities to make local and international firms to enter their market (Wilhelm, M., et al 2015, pp.302). Thus, it resulted in the internationalisation of the country to rise at high acceleration. The rise was boosted when the relations between Vietnam and US normalised and they both agreed on a bilateral form of trade agreement and getting membership in the “Association of Southeast Asian Nations”, the “Asia-Pacific Economic Co-operation Forum” and the World Trade Organization (Tran, H.P., et al 2016, pp.2424).

The enterprises in Vietnam are now able to access much larger markets internationally. Because the country has very low income level, the SMEs in Vietnam can now choose to develop their skillset so that they can accommodate their customer with a much sophisticated demands. Even under the circumstances when the Vietnamese SMEs opt to function domestically they cannot escape from the competition that is faced by them from other international firms (Pham, N., et al 2015, pp. 94). In short, the open international trade policy across the border has increased the level of competition among the firms in Vietnam which compelled them to adapt with the changing trend. Another reason regarding Vietnam being the right host country for internationalisation is because the government realises the importance of SMEs in the country and also made attempts to promote the competitiveness of Vietnamese SMEs in the global market (Gao, T.T., et al 2013, pp.2536).

Internationalisation

Internationalisation is the process where the involvement of enterprises in increased in the global market. There are number of theories that explain internationalisation and its activities clearly, this has been the most common definition among all. The firms that are involved in the process of internationalisation need to be able to think globally and understand different business cultures across the world. This can only take place when the forms understand and appreciate different beliefs, behaviours, values and business strategies of the companies and how they can use that understanding in promoting their own business in other markets. Internationalisation requires innovation, maintain high level of quality, better understanding of the buying and selling behaviour of customer from different markets and must be able understand their corporate responsibility so that they can internationalise in a successful manner (Willman, J., 2015).

Drivers for Internationalisation

Whenever a company attempts to internationalise they are driven by certain motives which drives them towards their ambition. Those motives can come from the pressures from within the organisation or externally such as the competition, resource capacity in excess and the pressure of the home market on the firm to go international. Entering a new market does not merely mean better opportunities but it means that there is an alien environment, new situation and a unique culture which needs to be addressed before entering the market. There are many steps that are involved before entering a new market such as: deciding on how to penetrate that market, which market to penetrate, deciding on the mode of entry, and most importantly, the right time to enter the market (Pathak, T., et al 2016). Some of the known drivers of internationalisation are: Growth motives, how the company sees itself growing in the other market and how does it wishes to achieve those objectives, knowledge related to the motives i.e. having the knowledge of push and pull of the SMEs in the international market, social ties and links of supply chain, driving factors of the domestic and regional market (Willman, J., 2015).

The electronic industry of Vietnam provides market intelligence for companies of all sizes from small to major groups for the management consultancies and government agencies. In 2016 the electronic industry production was estimated around US$40.4 billion which is US$2.6 billion higher than the last decade. This is because of such an extensive growth of computing devices, mobile phones, LCD TVs and semiconductors, allowing companies to get complete advantage of the low cost. Vietnam by many industry experts is considered a competitor of China in the longer run and other location where the manufacturing is at low cost. Vietnam however, faces a number of issues that hinders them to attract their investment: their infrastructure is not modernised and they need to develop an industry where they can support the manufacturing equipment (Tho, N.X., et al 2017, p.8).

Samsung is among the global leader in mobile phone manufacturing and digital technologies. It has the highest brand value among all other mobile phone companies in the world. It has a very different approach compared to its competitors such as: Panasonic, LG, Sony, towards its customers when it comes to making products. Samsung is the highest brand with the medium cost value in Asian countries such as India, Pakistan, China, Philippines and Vietnam (Lee, K. and Jung, M., 2015, pp.461).

Vietnam’s is a highly populated country and has in the last few years has increased it standards of living it is one of the most promising markets in Asia and has received attention from some of the biggest electronic brands in the world. Samsung has always flourished in Vietnam and despite the industry has seen a gloomy performance (Thanh, B.T., 2015, pp.48). Although, the nation’s economy is increasing in terms of average consumer income. Vietnam will be able to function well if certain factors are considered before a firm enters the market which are: increasing the hype – word of mouth branding, this will allow the customer to get the understanding and knowledge of the product that is offered by the company. Second, Working on brand perception – people buy smartphones at an average of 6 months every year which shows that the market is always at peak and people do enjoy new gadgets that offer new and improved features, so before entering the market the behaviour and perception of the consumer needs to be kept in mind. Third, price – Samsung is known for developing reasonable and quality products for their consumers with features that are better than some of the expensive brands in the country (Khanh, N.T.T. and Hau, L.N., 2007, pp.21).

Conclusion

Where several of production sectors of the economy of Vietnam are progressing steadily, electronic is being considered as the most prominent one. As the imports of the electronic industry has approximately three time from the period of 2011 to 2016, however the exports have increased by five times approximately. Such condition of economy appears as quite welcoming for the other international brands to make entry in the market segment. As Samsung has already entered in the electronic market of Vietnam, and got an appreciative response from the consumers, similar to that the stabilised position of Samsung will make a factor of motivation to other famous international electronic brands for contributing their share in the market. The government of Vietnam also offer sound opportunities for the investors, as the execution of major trade contracts, potential “demographic tailwinds”, and the supportive policies or strategies of government are considered to be consistent. Specifically the multinational giants are dominating the electronics sector of Vietnam in quite efficient manner. Just like Samsung, Panasonic was the leading profit generator in year 2015 for the economy of Vietnam. Besides all that, Vietnam is being deliberated by a number of industry analysts as a long-run rival of China, along with the other locations who provided manufacturing at the lower costs.

References

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