On successful completion of this assignment, students should be able to:
The case will focus on issues related to the cultural aspect of international business. Sustainable business practices include CSR issues, foreign investment, and the benefits of regional integration for the countries within, and companies doing business in, that region. The case study analysis will be completed on an individual basis.
Please see the case details in Appendix A.
Read the case study and answer the questions that follow. Each answer must be based on facts from the case and all of the course materials. Each answer should be 1-2 pages long for a total submission length of 10 pages maximum (double spaced, 12 pt font), and must be prepared in APA style format.
1. Cultural understanding is a key element of this situation. Comment on the importance of this aspect of market entry and development, being sure to discuss the key elements of understanding and working effectively in Vietnam.
2. Using the Hofstede Framework, analyze the Vietnamese culture with reference to concepts covered in the course materials.
3. CSR and business practices are another set of critical issues in this case. Describe four CSR issues and explain how these issues can impact a company’s international business activities.
4. The Client, in order to develop its Market Entry Strategy fully, will be required to make an investment in Vietnam. Explain each of the four means of incorporating risk into market entry strategies if The Client wanted to use an Adaptation Strategy.
5. The Client will benefit from trading with other countries in the region. Briefly describe the Association of Southeast Asian Nations (ASEAN) and discuss the benefits and drawbacks of regional integration.
It is important to consider the country’s culture when it comes to investing in another country. Vietnam is a land of breathtaking natural wonders and cultural nuances, vibrant mega-towns and hill-town villages, while Vietnam is both exotic and convincing (Vietnam Travel, 2019). As a potential investor in Vietnam, it is important to have the approval of its people. How’s the business going to do this? It’s by learning about their history and rituals. Every country has different cultures and traditions, and it is important for foreign investors to learn and get acquainted with culture, to learn about culture.
When we speak about cultural literacy, we are talking about the capacity to understand and participate fluently in a given culture. Cultural literacy is the secret to opening the door to acceptance in a country rich in culture and tradition, and it also creates recognition by the people of Vietnam, enabling your company to run a little smoother.
We will now examine the validity of Hofstede’s Theory of Cultural Aspects. The Hofstede Cultural Dimensions Theory is a concept that is used to explain the disparity in culture across countries and to discern how business is preformed across cultures (Hofstede’s
Cultural Dimensions Theory – Description and Categories, 2019). It also distinguishes between different national cultures, the aspects of culture and their effect on the business environment (Hofstede’s Cultural Aspects Theory – Description and Categories, 2019). Hofstede’s Cultural Dimensions explains the effect of a culture that impresses society on the importance of a member of Vietnam when it comes to business: “The dimensions of culture shape a critical level of awareness” (Anastasia, 2019). Information that can be used to understand the process by which various aspects of a company are perceived in different cultures will allow managers to understand and effectively navigate the international business market. (Anastasia, 1919).
The Cultural Dimensions Theory of Hofstede was developed in 1980 by Geert Hosfede, a Dutch researcher in management (Anastasia, 2019). The goal of the analysis was to determine the dimensions in which culture differs by defining six categories that characterize culture that are as follows: Power Distance Index, Collectivism vs. Individualism, Ambiguity Avoidance Index, and Femininity vs. Masculinity, Short-Term vs. Long-Term orientation and, finally, Restraint vs. indulgence (Anastasia, 2019).
Power Distance: The power gap index represents the degree to which disparity and dominance are accepted. In other words, it measures inequality in a country. In Vietnam, the ranking is a high power distance index with a ranking of 70 (Vietnam, 2019). This means that people embrace a hierarchical order in which everyone has a position and in which no further reason is required (Vietnam, 2019).
Individualism vs. Collectivism. Individualism vs. collectivism is a dimension that reflects on the percentage to which populations are organized into groups and their perceived responsibility and dependency on groups (Anastasia, 2019). Vietnam scores 20 in a collectivist society, thus, the members of this society work as a collective, as a team unit, have a close bond and take responsibility for their fellow members (Vietnam, 2019).
Uncertainty Avoidance: The confusion management index focuses on understanding how to cope with unpredictable circumstances and unforeseen incidents (Anastasia, 2019). Vietnam scores 30 in this group, which means that it has a low preference for reducing confusion (Vietnam, 2019).
Masculinity VS. Femininity. The masculinity vs. the femininity factor refers to the desire of society for achievement, attitude towards equality in sexuality, actions, etc. (Anastasia, 2019) In this category, Vietnam scores masculine, which means that society is motivated by competitiveness, achievement and performance, with performance being determined by the winner / best in the field – a value system that starts at school and continues.
Long-Term vs. short term orientation, which depends on the degree to which culture, defines the time span (Anastasia, 2019). Vietnam scores 57, which makes it a realistic society. In societies of pragmatic orientation, people assume that the reality depends very much on the situation, the meaning and the time (Vietnam, 2019).
Indulgence vs. Restrain: The indulgence vs. constraint “dimension revolves around how societies should regulate their urges and desires (Anastasia, 2019).” Vietnam scores 35 on this dimension, suggesting that culture is restriction, which means that society is susceptible to skepticism and pessimism (Vietnam, 2019).
Corporate Social Responsibility or CSR is a self-regulating business model that allows an organization to be socially responsible, that is, policies and initiatives that companies adopt to support society (Garcia, M., 2019). These Regulations are divided into four categories:
Environmental mitigation programs are strategies used by companies that focus on two main areas: emissions limitation and greenhouse gas reduction (Garcia, M., 2019). As awareness of environmental concerns emerges, companies are taking action to reduce air, land and water pollution, In order to improve their status as a good corporate citizens while still benefiting society as a whole (Garcia, M., 2019). In this case, our client rival is already in breach of this Law and is also facing legal action in Canada and the United States for its alleged unethical business practices. This form of infringement is harmful to the credibility and creditworthiness of the company. Now, a few days, people are more aware of the world and want to invest in companies that have the same experience.
Direct philanthropic donation is a donation of time, money or services to charities and organizations at local, national or international level (Garcia, M., 2019). In our report, we didn’t find any contributions to charity or charitable organizations because we’re thinking our client’s competitor doesn’t make any contributions.
Ethical Business Practices focuses on fairness by introducing a fair working standard for all workers. That means fair pay for equal work and equal pay programs the use of approved goods that follow fair trade requirements (Garcia, M., 2019). There are three reasons why fair trade has a positive effect on a market. The Client’s rival has become a collaborator with its suppliers. Through doing so, the client’s competitor strengthened the local economy through offering relatively high-paying employment to local citizens and added to the country’s social and political stability.
Focus on Economic Responsibility focuses on a mechanism that promotes long-term business development while also upholding the standards set for legal, environmental and philanthropic activities (Garcia, M., 2019). Our Client’s competitor could be breaching this legislation by not caring about conventional cultural values, principles, traditions and norms. These are the impact of a non-compliance with traditional cultural values, beliefs, customs, and norms which pose serious problems for a foreign investor. If people are not valued in their own country, their societies will overreact to a company.
Adaptation Strategy is the technique for adapting an existing product to suit various consumers or markets (Linton, I., 2017). If our client chooses to use this approach, they will ensure that their product meets local cultural and regulatory standards, which is one of the criteria of our client. Also, the Adaptation Approach can be used by a company who wants to launch a new product but does not have the funds to create a new one, which will give our client a break and a sense of how Vietnam ‘s market is. There are four factors underpinning the Adaptation Strategy:
Customer Research Our client would base its adaptation plan on the findings of customer needs (Linton, I., 2017). Through doing so, we will determine what consumers consider relevant and compare them to our product requirements, which will help us identify deficiencies and increase the appeal of the product. Copy rights can be a concern for this aspect, if our product is too close to our competition, we can be sued for this. It is therefore important to come up with a creative alternative product in order to avoid any legal action. Another danger that our client can face is injuries, vandalism or sabotage by competitors (D’Alimonte, D., 2019). Other A major risk that our client may face is a failure to complete the project due to failure in infrastructure, design, financing (bankruptcy of one of the parties) or planning (D’Alimonte, D., 2019).
Export Research is crucial to the expansion of our company. It offers an opportunity to raise sales by entering a new market for an existing product (Linton, I., 2017). In order to succeed in this, we must prepare a thorough analysis of the markets that our client is considering joining, and also evaluate the possible effect that this may have on our clients’ business in terms of time and expense of making adjustments. Other factors to be considered are cultural attitudes, price, quality standards, measurement systems, service and support (Linton, I., 2017). Some of the threats that our client may face are market risks (availability of products, volatility in prices, competition, compliance with agreements) and currency fluctuations, inflation, tax adjustments (D’Alimonte, D., 2019).
The product characteristics of Markets must be evaluated in order to avoid rivals from taking part in the market share of our customer (Linton, I., 2017). This will enable us to recognize areas of improvement for our goods. This also gives us the benefit of responding quickly to competitive challenges, rather than taking the time to create new products. We need to align consumer and business needs with the costs of growth and return on investment (Linton, I., 2017).
The Association of Southeast Asian Nations (ASEAN) is a community of counties that endorses economic, political and security cooperation among its ten members: Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam (ASEAN: Association of Southeast Asian Nations, 2019). The total population is almost 640 million people and the cumulative GDP is $2.57 trillion (ASEAN: Association of Southeast Asian Nations, 2019). ASEAN has facilitated economic convergence and the signing of six free trade agreements with other regional economies (ASEAN: Alliance of Southeast Asian Nations, 2019).
ASEAN was founded in 1967 by the merger of Indonesia, Malaysia, the Philippines, Singapore and Thailand into five countries. This integration came about because these countries wanted to minimize regional tensions and tackle the possible danger of communist-led rebellions at the height of the U.S. war in Vietnam (ASEAN: Southeast Asian Nations Association, 2019). “The five founding members formed a coalition to foster political and social stability in the face of the tensions among post-colonial states in the Asia-Pacific region (ASEAN: Association of Southeast Asian Nations, 2019).
Some advantages that came with this partnership in fostering unity, friendship, and co-operation to create solidarity signed in 1976. Another ASEAN advantage was the Chiang Mai Initiative, which was an agreement between ASEAN and China, Japan , and South Korea to provide financial support through currency swaps. Other benefits include bringing neighbors with diverse economic, political , and social structures together.
ASEAN has faced criticism for not defending small and medium-sized enterprises and for being hesitant to support human rights and democracy in countries like Myanmar (What Are ASEAN’s Advantages and Disadvantages, 2019).
Linton, I. (2017, November 21). Product Adaptation Strategy. Retrieved December 12, 2019, from https://smallbusiness.chron.com/product-adaptation-strategy-62189.html.
Vietnam. (n.d.). Retrieved December 11, 2019, from https://www.hofstede-insights.com/country/vietnam/.
ASEAN: The Association of Southeast Asian Nations. (n.d.). Retrieved December 12, 2019, from https://www.cfr.org/backgrounder/asean-association-southeast-asian-nations.
D’Alimonte, D. (2019, December 3). Identifying Key Risks to Market Entry. Retrieved December 12, 2019, from http://www.tradeready.ca/2012/fittskills-refresher/identifying-key-risks-to-market-entry/.
Garcia, M. (2019, February 11). What Are the Functions of Corporate Social Responsibility? Retrieved December 11, 2019, from https://bizfluent.com/info-8459857-functions-corporate-social-responsibility.html.
Anastasia. (2019, September 20). Understanding Cultures & People with Hofstede Dimensions. Retrieved December 11, 2019, from https://www.cleverism.com/understanding-cultures-people-hofstede-dimensions/.
Hofstede’s Cultural Dimensions Theory – Overview and Categories. (n.d.). Retrieved December 11, 2019, from https://corporatefinanceinstitute.com/resources/knowledge/other/hofstedes-cultural-dimensions-theory/.
Vietnam travel. (2019, September 8). Retrieved December 11, 2019, from https://www.lonelyplanet.com/vietnam.
What Are the Advantages and Disadvantages of ASEAN? (n.d.). Retrieved December 12, 2019, from https://www.reference.com/world-view/advantages-disadvantages-asean-2f1988e3253dd6a1.
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