But until 2011, Starbucks still have not come to VN. Our group think that Starbucks should come to VN through franchising method Why choose Viet Nam 1/ A suitable model of development: In recent years, Vietnam has favorable conditions for business activity * GDP growth averaging over 8% * The economic situation is stable * The purchasing power is rated highly in the world VietNam became officially the 150th member of WTO. It opens up a lot of opportunities for not only VNs entrepreneurs but also other countries ones 2/ Policies from VN government.
VN government encourage investments VN Laws allowed foreign enterprise operate comfortably in VN which it didnt occur in the past 3/ Others Vietnam population is 82 million, among whom 2/3 are young people In Viet Nam, people spend 70% their income for consuming, especially in food ( Follow the data from The General Statistics Office) Why choose franchising What is franchising? -> Starbucks chooses Franchising as its international entry strategy.
A franchise is a business arrangement where the developer/owner (the franchiser) of a business concept grants others (the franchisees) the licensed right to own and operate a businesses based on the franchisers business concept, using its trademark. For complete franchising model, the franchisor share and transfer of at least four types of products include: * Systems ( Strategies, model, management process, marketing support ¦ )
* Trade or business secrets * Right to operate under the Starbucks brand * Products and services Franchising in Viet Nam With Vietnams entry into the WTO, it is expected that franchising activity in the country will increase markedly over the next few years. There are presently a handful of major franchises operating in the country, including Kentucky Fried Chicken, Lotteria, Jollibee, Pho 24, Gloria Jeans Coffees, Buntamita and Cartridge World. In the past, Vietnamese law did not provide a clear basis for franchising arrangements, groundwork for franchising to develop in Vietnam.
Reasons which Starbucks should choose franchisng In fact, with the economy situation in VN, franchising brings a lot of advantages to both franchisor and franchisees Franchisor * Franchising reduces the risk of investment into a new market for Starbucks. * Starbucks dont need to have a huge capital. Capital is always one of the biggest problems of any company. But with franchising system, the franchisors dont need to worry about it because franchisees have to use the capital of them to expand business, not franchiser. * Franchising help Starbucks access the new market quickly and make rapid expansion over broad area.
In Vietnam market, especially coffee market, you have to find the way to develop and grow continuously to compete with others. No development means that going back. Its lucky that franchising system can help you expand, develop your business quickly. * Promote the brand promotion strongly. With the expansion quickly of franchising system, it also helps Starbucks to advertise Starbuckss image widely when hundreds of Starbuckss stores appear everywhere.
Beside that, the advertising cost will be shared for all stores, so Starbucks dont have to spend much money to launch their huge advertising campaigns * Maximize income. In franchising system, franchisor can earn a lot of money from franchisees; from copyright cost, the cost for the right to operate under Starbuckss brand, the profit of franchisees to raw materials which franchisees have to buy directly from Starbucks * Most importantly, franchisees are motivated operators to do a good job.
Franchisees have to use the capital of them to operate business. So, it will be a great motivation for them to work well Franchisees * Franchising primary benefit is risk minimization.
Starting a new business is risky. Most studies show that over 90 percent fail within three years. The primary reason that the failure rate is so high is because the owners have to do many things. They have to have a plan to introduce their new products or service, beside that they have to do operating plan, marketing plan ¦ to achieve their goal. All of them contain many risks. And the retailer often dont have a lot of experiences when they start a new business, they have to spend a lot of time to learn characteristic elements of each industry.
Franchising reduces risk for these things. When you join a franchising system, franchisee will be trained, taught from experiences to successful secrets which franchisor has to spend a lot of time to know. * Another benefits of franchising is the franchisee dont have to go through beginning step when you have to do a lot of things, and spend a lot of money to survive, to build an image in consumer mind. * The next benefit, the well known brand names of franchisers are another reason of franchising to franchisees. Nowadays, therere a lot of same products in different brands in market.
Therefore, building a famous brand which everyone know and trust is a key to survive and success with any business. With franchising system, franchisee is allowed to succeed a brand which have a stable position in market, it is really a big advantage for retailer * Maximize manpower: the franchisee only have to focus on business operations. The rest like strategies, marketing process¦ will be built and transferred to franchisee by franchisor * Easy to borrow money from banks: Because franchise system was proven to be the safest business system.
Therefore, it is easier for franchisees to ask money from banks Objectives Short-term: Assert brand of Starbucks coffee in HCM city area. Try to lead Starbucks to become a familiar brand in customer mind Long-term: Create a unique coffee culture of Starbucks in VN. Lead Starbuck brand become a standard for coffee in Vietnam Target market and location Target market Based on our franchising strategy, our objectives in long term and short term, Starbucks will target consumers between the age of 18-50, with a specific concentration on officers and businessman. Demographic Age: 18-50.
Gender: Male and Female Income: Average to high income Occupation: Businessman, officers, students, intelligentsia Psychographic: Life Style: For those who have deep experience about coffee People who want to choose for themselves some products that have brand name that show their levels. For people who value quality and service above money People who want to enjoy Starbucks coffees culture Location Follow our objectives in short term and long term. Starbuckss stores have to occur densely in Ho Chi Minh City, especially in: Main streets and main districts where have high living.
Plazas and buildings Big universities, especially international universities through Starbuckss stalls (Most of them serve take-away coffee only) Analyze Environment in VietNam Social and Cultural Environment General View On the basis of study and observation of the rapid development of Vietnamese societal life in recent decades, this text tries to suggest a global view on the cultural environment in Vietnam the country which is still poor, but which nonetheless has got rather high indexes of life expectancy and education.
Cultural environment in Vietnam nowadays is fine, fair, and healthy. However, the cultural environment in Vietnam is now unprecedentedly rich, complicated, and fraught with plenty of implicit problems. Vietnam has three main advantages: Firstly, a suitable model of development; secondly, political and social stability; and thirdly, a nationwide strong will for progress, with 82 million inhabitants, among whom 2/3 are young people. 3. Business Environment in Vietnam a. Macro Environment in Vietnam Economic Factors.
Ho Chi Minh Citys per capita income has doubled the figure of the whole country; a recent survey by the HCMC Institute for Development Studies has showed. The first-ever survey on the income and living standards of HCMC households was conducted in 12 districts, with 720 questionnaires released. The survey revealed Ho Chi Minh Citys per capita income has increased over the past years to US$2,500, compared to the whole countrys $1,200. However, the average income of the rich is seven times higher than that of the poor in Ho Chi Minh City, according to the survey.
HCMC is now home to 80,000 poor households, a Wednesday conference co-hosted by the HCMC Institute for Development Studies and the United Nations Development Program (UNDP) was told. A poor household is defined as having the per capita income of VND12 million ($650). Only 24. 3 percent of Ho Chi Minh City residents feel satisfied with their income, according to the survey. Ho Chi Minh City dwellers spend half of their income on food, and 20 percent of their income on education, the survey says. There an average 4.
6 members in a household in HCMC; the number of people of working age makes up around 70 percent of the total population, the survey says. Vietnam defines a person of working age as aged between 18 and 60 for males and 18 to 55 for females. The southern hubs unemployment rate is 4. 5 percent, according to the survey. It also says only around half of HCMC households have been living in the city for less than 25 years; meanwhile, the number of migrants within the past 10 years is increasing.