Untitled MINISTRY OF EDUCATION AND TRAINING UEH UNIVERSITY BUSINESS SCHOOL o0o ESSAY Global Strategic Management Topic THE GLOBAL STRATEGY OF FPT CORPORATION Course ID Lecturer Full name Trần Student[.]
lOMoARcPSD|22243379 MINISTRY OF EDUCATION AND TRAINING UEH UNIVERSITY BUSINESS SCHOOL -o0o - ESSAY Global Strategic Management Topic THE GLOBAL STRATEGY OF FPT CORPORATION Course ID: Lecturer: Full name : Trần Student ID: 31221021739 Ho Chi Minh City, October 4th, 2022 - lOMoARcPSD|22243379 Final essay | Trần Cẩm Tú - 31211023205 CONTENTS Introduction .3 1.1 1.1.1 History of FPT Corporation 1.1.2 FPT’s development 1.2 About FPT Corporation Objectives of the essay .4 The macro environment in the Japanese market 2.1 Economy 2.2 Business environment 2.3 Attractiveness 2.4 Societies .7 2.5 Culture .8 Competitors in the Japanese market .9 The global strategy and the entry mode of FPT Corporation 10 4.1 The global strategy 10 4.2 The entry mode that FPT chose to enter the Japanese market 12 Conclusion 13 REFERENCES 15 lOMoARcPSD|22243379 Final essay | Trần Cẩm Tú - 31211023205 Introduction 1.1 About FPT Corporation 1.1.1 History of FPT Corporation On September 13, 1988, the Director of the National Institute of Technology Research signed the decision to establish the Food Technology Company (the first name of FPT) and assigned Mr Truong Gia Binh as the Director A new company was born, with no capital, no assets, no cash , with only 13 young, ambitious scientists, trusting in their own hands and minds, daring to face all challenges conscious, determined to make great karma 1.1.2 FPT’s development Now, FPT Corporation is no longer an unfamiliar name in Vietnam, a pioneer in digital transformation as well as a leader in consulting, deploying, and providing technology and telecommunications services and solutions With the orientation to affirm the position of Vietnam in the ICT world map, FPT assists clients in more than 26 countries and regions around the world in realizing technologydriven business development strategies and objectives As a global technology company, FPT has a system of 178 headquarters, offices, and branches in 26 countries and territories around the world and a technology infrastructure covering 59/63 provinces and cities in Vietnam With our extensive global project implementation experience spanning more than three decades, FPT assists its clients in overcoming obstacles and achieving peak performance throughout their digital transformation journey FPT provides cutting-edge technology solutions and services based on the newest technologies of AI, Big Data, Cloud, Automation, IoT, etc to assist customers in operating proactively and being adaptable in any circumstance In the years 2021 to 2023, FPT hopes to earn the trust of companies by pledging to provide top-notch digital management and operation experiences based on platforms with almost real-time data FPT has created an action plan with a framework that balances and integrates the three elements of: Business, Technology, and People in order to accomplish that goal Here are a few numbers in the review about FPT in 2021: Total Revenue Profit Before Tax Market Capitalisation Employees Operation Network FPT Global 35.657 billion VND 6.337 billion VND 84.395 billion VND (As of 31st December 2021) 37.180 - Network Abroad: 46 - Vietnam: 132 lOMoARcPSD|22243379 Final essay | Trần Cẩm Tú - 31211023205 - Countries: 28 (including Vietnam) Subsidiary Company: Technology - FPT Digital Member Companies - FPT Smart Cloud - FPT Software Telecommunications - FPT IS FPT Telecom Education & Others - FPT Online FPT Education - FPT Investment Associate Company: - FPT Retail - Synnex FPT After more than 10 years of establishment and development, in 1999, FPT decided to enter the path of implementing a global strategy with the main direction of exporting software services However, due to the lack of experience, brand and human resources, FPT's road to the big sea was judged as impractical The failure in the first two years is a testament to that statement Not long after that, thanks to unremitting efforts, FPT became Vietnam's largest company in the field of software service export, even reaching the TOP 500 leading software enterprises in the world with multiple targets for global revenue and expected average growth 1.2 Objectives of the essay We live in a world in which national economies are increasingly interdependent It can be said that the formation of the global economy is the result of globalization - the process of integration between countries in the world in terms of economy, culture - society, politics, and other fields, in which economic integration occupies a particularly important position In the global economy, geographical distances and national borders are becoming increasingly blurred, and goods, services, currencies, people, skills, information, and ideas moving across borders of the country are becoming more and more liberal In today's global economy, international trade and investment grow faster than international production Businesses are increasingly present in foreign markets, employing more and more workers and resources in those markets An enterprise can raise investment capital in one country, use that capital to buy raw materials in a second country, purchase machinery and equipment in a third country, organize production in a fourth country, and sell products made in the fifth country lOMoARcPSD|22243379 Final essay | Trần Cẩm Tú - 31211023205 FPT Corporation is no exception when entering the path of becoming a global enterprise To achieve remarkable achievements today, this group has also researched, evaluated, and tried a lot in the international market Therefore, in this essay, I will focus on analyzing the global strategy of FPT Corporation and surrounding things about the Japanese market - the target market that FPT has targeted during the past 15 years The macro environment in the Japanese market 2.1 Economy Japan has a developed economy, ranked 3rd in the world in GDP rankings after the US and China, with advanced technology and productivity Japan is a market with a large consumption capacity, which is a driving force for economic development, and at the same time beneficial for businesses exporting to this market Since the beginning of 2020, the Covid-19 pandemic has had a profound and multifaceted impact on the economic and social life of Japan Japan's economy fell into recession for the first time in four and a half years, GDP in the first quarter decreased by 2.3%, and the second quarter decreased by 28.1% over the same period in 2019 In the new situation, Japan has adjusted its foreign policy in a more proactive direction: promoting economic linkages, free trade and maritime security through successful advocacy to bring the CPTPP Agreement into effect, pioneering RCEP negotiations… Vietnam and Japan are currently members of three bilateral and multilateral free trade agreements (FTAs): the Vietnam-Japan Economic Partnership Agreement (VJFTA); the Agreement on ASEAN-Japan Comprehensive Economic Partnership (AJCEP); the Agreement on Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) Therefore, FPT’s investment in the Japanese market opens a lot of opportunities and favorable conditions for the development of business activities and trade between the two countries 2.2 Business environment Japan is one of the top economic powers in the world, with GDP at real prices of the Japanese economy about 4.937 trillion USD in 2021 In 2017, the workforce in Japan amounted to 65.01 million people, ranked 8th in the world, along with an unemployment rate of about 2.9% On May 20, the Japanese government's statistics showed that the country's consumer price index (CPI) in April increased by 2.1%, exceeding the 2% target set by the central bank (BoJ) and is the highest increase in the past years In particular, according to statistics of the General Department of Vietnam Customs, in December 2018, the total import lOMoARcPSD|22243379 Final essay | Trần Cẩm Tú - 31211023205 and export value between Vietnam and Japan reached 37.860 billion USD, up 11.9% over the same period in 2017 Japan has an industrialized and free market economy among the top countries in the world It is a very efficient and competitive economy in areas related to international trade, but less competitive in protected sectors such as agriculture, distribution, and services With an estimated population of 125,418,982 as of October 29, 2022, Japan ranks as the 10th most populous country in the world However, the problem of Japan's aging population is also alarming, causing many consequences for both the economy and society The unprecedented transformations and demographic challenges that Japan is facing continue to provide important opportunities for foreign businesses With the world's longest life expectancy society and billions of dollars in the world's greatest savings, Japan offers potential in the areas of healthcare, entertainment/lifestyle, education/ personal growth, and unprecedented wealth management Japan is in the Pacific Ring of Fire, which is a territory with more than 80 active volcanoes, and thousands of earthquakes every year Besides, Japan is also a poor country in minerals, besides coal and copper (reserves are not much) This has caused many difficulties in the lives of the people here However, it has a favorable geographical position for economic exchanges with developed and dynamic economies such as China, Korea, East Asia, and Southeast Asia Since 2001, the Japanese government has always been looking for ways to recover and develop the economy, including attracting FDI from abroad Understanding the benefits of increasing FDI, the government sought to double FDI and did so in 2006 On October 1, 2009, the Vietnam - Japan Economic Partnership Agreement ( VJEPA) officially took effect According to the commitment, the items will be reduced tax according to the schedule In which, Japan committed to removing 7,220 tariff lines as soon as the agreement came into effect, and Vietnam also immediately cut 2,586 tariff lines ASEAN - Japan (AJCEP) has come into effect (from December 1, 2008), so many Vietnamese goods exported to Japan have enjoyed preferential tax rates before the effective date When VJEPA officially takes effect, businesses can compare and choose the tax schedule between AJCEP, VJEPA, and MFN (ordinary tax) to apply for the lowest tax rate The information technology industry in Japan is also well-developed and heavily invested According to statistics: The value of the information technology industry in the land of the Sun is about 340 billion USD Contributing >8% to the GDP of the country and accounting for 9% of the global ICT market value Especially the development of the ICT lOMoARcPSD|22243379 Final essay | Trần Cẩm Tú - 31211023205 industry: Electronic components - Industrial IT equipment - Civil electronics It is not only the most advanced and largest industry, but it is also the most developed since World War II Moreover, Japanese companies all have the common advantage of being very good at technical applications, especially in the field of producing high-quality electrical and electronic products 2.3 Attractiveness In the Japanese market, the market scale of the IT industry was about 24 trillion yen, up 2% year-on-year Despite the period of revenue decreasing because of the Lehman shock, etc., the market scale continues to grow annually Besides, a large number of businesses are trying to solve social problems using ICT whether urban or local In addition, the Japanese market also has a lot of resources that attract FPT’s investment At first, Japan, a powerhouse of technology, is a world leader in science, in the fields of machinery research and medical research Japan has nearly 700,000 researchers, accounting for 130 billion USD of research budget, third in the world Furthermore, Japan contributes many important inventions in the fields of electronics, automobiles, machines, industrial robots, optics, chemicals, etc as well as becoming the largest supplier of robots and the largest global manufacturer and distributor of robotic components When the Trans-Pacific Partnership (TPP) comes into effect, tariffs on a wide range of goods will be significantly reduced, the domestic market will be open to outside participants, and FDI will be appropriate protection in the participating countries Medium-sized enterprises and small and medium-sized enterprises (SMEs) will have more opportunities to conduct business abroad, including through exports The Japanese government adopted the “Comprehensive Policy Framework related to TPP” in November 2015, so Japan becomes a global center for trade and investment Japan is an island country, a key link in the Asia-Pacific belt, creating favorable conditions for economic and cultural exchanges with many other large and potential regions 2.4 Societies Today's Japanese society has a number of significant problems as follows: Firstly, Japan has become the leading country in the world in terms of the proportion of elderly people in the total population with 29.1%, causing many consequences such as lOMoARcPSD|22243379 Final essay | Trần Cẩm Tú - 31211023205 labor shortage, increasing generation gap… PERCENTAGE OF PEOPLE OVER 65 YEARS OLD AND OVER 70 YEARS OLD IN THE POPULATION IN JAPAN OVER THE YEARS 40 35 30 25 20 15 10 1990 2000 2010 2015 2017 2018 > 65 years old > 70 years old Figure Percentage of people over 65 years old and over 70 years old in the population in japan over the years Secondly, a new social trend – women can balance family and social work This is a very positive trend in the current Japanese social situation, contributing to reducing the phenomenon of getting married late or not getting married, not wanting to have children Therefore, if women are given the option of "bringing children while working", perhaps getting married and having children will not become a burden anymore From there, the phenomenon of few children in Japan will be overcome Thirdly, the trend of globalization, the trend of internationalizing Japanese culture will profoundly affect the current Japanese social situation, especially Japanese culture Although the Japanese have always had a sense of preserving their traditional culture, preserving the "pure race" of the nation However, the trend of internationalization is still an inevitable trend for the development of Japan 2.5 Culture lOMoARcPSD|22243379 Final essay | Trần Cẩm Tú - 31211023205 Currently, Japan is tending to export culture to the world Thanks to the policies to support the introduction of Japanese culture abroad, it has created a Japanese fever in Asia, America, and Europe during the past time with the appearance of Japanese dishes, books Japanese books attract fans Saving and working hard are two extremely prominent and characteristic virtues in Japanese people It is perhaps thanks to these characteristics that the Japanese have turned their resource-poor country, harsh climate into a leading power in the world In Japan, from the second half of the twentieth century to the present, many cultural industries have played a pivotal role in the Japanese economy, such as music, television, movies, games, publishing, goods, and more craft, design… Moreover, Japanese people are always mentioned with many good qualities such as discipline and efficiency, a high spirit of progress, respect for national identity, and upholding education In addition, Japanese people always uphold the common, even though the collective has fierce competition, they can still link together to achieve common goals Competitors in the Japanese market Japan is known as “a country with a concentration of global businesses from around the world” Thus, Japan witnessed a strong wave of information technology businesses expanding their investment and business into the country's market In the Japanese market, there are many companies that succeeded in the global market Competitors of FPT Software Japan are almost from China, India, the Philippines, and some Japanese small and medium SI companies When asked about competition in Japan, Mr Binh – President of FPT Corporation – said IT consulting company Tata Consultancy Services and Infosys of India are the two main competitors of FPT in terms of cost Compared with companies from India, FPT Software is still inferior to companies with technology level as well as project management level and experience in doing large-scale projects About China enterprises, FPT Software still loses in Japanese ability, leading to poor ability to work directly on projects in Japanese In the "arena" of Japan, China is a formidable opponent thanks to its ability to learn Japanese quickly, a large number of programmers and experience in working with Japan, which is also 12 years ahead of Vietnam In addition, FPT Software Japan is facing great competition due to large and wellknown Japanese companies (System Integrator) such as Fujitsu, NE Soft, Unisys Solution, Panasonic, Toshiba… lOMoARcPSD|22243379 Final essay | Trần Cẩm Tú - 31211023205 Competitive pressure increased, forcing FPT to have activities to increase costs to promote the brand, and expand distribution channels, relationships and partners At the same time, this also increases the cost pressure in the training of soft skills and foreign languages of human resources Thus, FPT needs to have the right business strategy when there is high pressure to reduce costs in this market Talking to Investment Newspaper on the sidelines of the Private Economic Forum (VPSF), Mr Truong Gia Binh, Chairman of FPT Corporation, Head of the Advisory Board of VPSF Forum, said that FPT like today because it dares to compete with competitors such as Indian and Chinese enterprises The global strategy and the entry mode of FPT Corporation 4.1 The global strategy As mentioned in section 1.1, FPT implemented the policy of globalization in 1999 Despite the setbacks in the early years, this corporation remained steadfast in its chosen path and achieved certain achievements Specifically, FPT entered the TOP 500 of the world’s leading software companies, the TOP 100 global BPO and ITO service providers, etc The success in the international market has motivated FPT to implement its globalization strategy more and more extensively To achieve this ambition, FPT has focused on executing the strategy in two main directions which are implemented by more than 6500 programmers and IT engineers working in 17 different countries Firstly, FPT provided technology services for developed markets such as Japan, the US, Europe, Singapore, Malaysia… In those countries, taking advantage of the budget for outsourcing IT services is still enormous, totaling about 299 billion USD per year, FPT has focused on providing this service with the strength of providing solution services according to new technology trends (S.M.A.C) and price advantages Secondly, they take advantage of the existing infrastructure with rapidly growing products and services in the domestic market to expand business activities in markets with the same level of development as Vietnam In developing countries such as Bangladesh, Cambodia, Myanmar… FPT is speeding its aim because these countries have a great need for IT applications to serve national economic development However, there is almost no domestic IT company is large enough to develop large-scale IT systems Meanwhile, compared to many other foreign contractors, FPT really has a huge advantage with its experience in deploying large-scale IT infrastructure for most key economic sectors including e-government, tax management, treasury management system… 10 Downloaded by tr?n hi?n (vuchinhhp21@gmail.com) lOMoARcPSD|22243379 Final essay | Trần Cẩm Tú - 31211023205 The primary growth driver for FPT’s globalization strategy is the software export segment, which is similar to the original orientation when pursuing this path With the ability to establish a reputation in a number of sizable markets like Japan and the US, FPT currently leads the Vietnamese software export enterprises in terms of human resources and revenue – an advantage that other businesses lack In addition, the system integration segment has also become a bright spot in the globalization picture of the group when continuously winning lucrative contracts such as winning a contract for a tax project of $6.6 million and a $1.4-million contract by the Philippine government in October and November 2014 only Currently, the system integration segment is reforming strongly to reach a revenue of USD 200 million from the foreign market in 2018; through promoting the provision of partial solutions in specialized fields such as: Government, Banking, Telecommunications, Health to foreign markets, especially markets of developing countries such as: Laos, Cambodia, Myanmar, Bangladesh, Ghana, Bhutan, Senegal Beside that, the group continues to expand its telecommunications market share in regional countries and continues to seek opportunities in new markets; while the education sector also tries to build FPT University towards the Global Mega University model In 2015, FPT Corporation officially became the first foreign enterprise licensed by the Ministry of Communications and Information Technology of Myanmar to deploy infrastructure and provide telecommunications services NFS(I) (Network Facilities Service- Individual) This means that FPT will be able to deploy the national backbone infrastructure in Myanmar, creating a solid foundation for the development of Internet services here within 15 years In the retail distribution segment, after entering a number of regional markets such as Cambodia and Myanmar, FPT is also actively seeking new opportunities to expand its coverage beyond the borders of Vietnam Thanks to the right development policy, FPT has gained remarkable achievements from the war globalization strategy In 2019, total foreign revenue reached VND 11452 billion, accounting for 41% of the company's total revenue, accounting for an increasing proportion In which, Japan is still the leading market, accounting for 48%, in addition to the US, Asia-Pacific, Europe 11 Downloaded by tr?n hi?n (vuchinhhp21@gmail.com) lOMoARcPSD|22243379 Final essay | Trần Cẩm Tú - 31211023205 FPT'S SHARE OF REVENUE FROM OVERSEAS MARKETS IN 2019 5.00% Japan 23.00% Europe Asia Pacific 48.00% The U.S Others 15.00% 9.00% Figure FPT’s share of the revenue from overseas markets in 2019 FPT's REVENUE GROWTH FROM GLOBALIZATION IN THE FIRST MONTHS OF 2016 120.00% 100.00% 80.00% 60.00% 40.00% 20.00% 0.00% Asia Pacific Japan USA Europe Others Figure FPT’s revenue growth from globalization in the first months of 2016 In the first months of 2016, revenue growth significantly increased in the global market, in detail, the Asia Pacific has the fastest growth rate, increasing by 1.03 times, followed by Japan, Europe, and the US at 53.7%, 13.7%, and 2.1%, respectively 4.2 The entry mode that FPT chose to enter the Japanese market Mr Truong Gia Binh, Chairman of the Board of Directors of FPT Corporation, divided the process of conquering the Japanese IT market into three stages In 2000, FPT started to have the first contract in Japan and the following years were the period when businesses of the two countries understood, jointly implemented pilot projects, and learned 12 Downloaded by tr?n hi?n (vuchinhhp21@gmail.com) lOMoARcPSD|22243379 Final essay | Trần Cẩm Tú - 31211023205 how to work together From 2007 to 2012 was a period of market expansion From 2012 to now, Vietnam has become one of the countries to replace Japan's China+1 program, and this is also a period of renewal when Vietnam and Japan cooperate in S.M.A.C projects, Iodine Cultural similarities in addition to trade protection barriers as well as the facilitation of cooperation between Vietnam and Japan also make FPT shift to gradually penetrate into Japan by signing contracts copper This helps FPT reduce capital and other investment resources, spread out risks, have large recovery potential, and have more control Accessibility to experience and skill levels also increases This penetration method helps FPT have contacts with local businesses as well as coordinate the skills and resources of partners FPT officially entered the country of Phu Tang on November 13, 2005, by establishing FPT Software Japan Co., Ltd This company took its headquarters in Tokyo and established more representative offices in Osaka, Nagoya soon after FPT Software Japan is both the first Vietnamese company with legal status in Japan and a technology company with 100% Vietnamese capital in Japan FPT’s choosing the presentation office to enter the Japanese market gives FPT Software the flexibility to control business operations and helps to create products that are more suitable for the market.In addition, this form of investment is strongly encouraged by Japan, in order to receive a large, long-term, stable investment and protect domestic enterprises from mergers, so it has received favorable conditions from Japan, which is evident in trade agreements In 2012, Vietnam is Japan's second-largest software outsourcing cooperation partner and embarking on the development of S.M.AC and IoT projects in the fields of agriculture, transportation, and healthcare is a major concern of businesses between the two countries FPT in Japan has just signed a non-dominant investment agreement, becoming a strategic shareholder of LTS, Inc., a company in the Top 20 consulting, business administration, and digital transformation companies in Japan, with more than 20 years of experience LTS, Inc will help FPT increase its consulting capacity for comprehensive digital transformation services to international customers, focusing on the Japanese and Asia-Pacific markets At the same time, FPT helps LTS, Inc increase digital transformation technology capacity for leading enterprises in manufacturing, retailing, construction, and expanding new customer base Conclusion 13 Downloaded by tr?n hi?n (vuchinhhp21@gmail.com) lOMoARcPSD|22243379 Final essay | Trần Cẩm Tú - 31211023205 When choosing the path to the big sea, businesses have to accept challenges, FPT is no exception as they have had failures from the Americas to Asia Pacific However, as mentioned, the overseas market is a vast ocean and has many opportunities FPT has exploited this opportunity to take off and elevate Vietnamese intelligence on the global playing field FPT enterprise really makes Vietnam to be seen as a country with potential in information technology when bringing about many remarkable achievements in the international arena FPT always operates with the spirit of bringing the most benefits and convenience to the people and social security services, and at the same time contributing to increase the surplus value for the activities of businesses and partners, contributing to contribute to the overall economic development of the country Therefore, when competing with large enterprises in the global market, FPT has gained many experiences not only for itself but also for Vietnamese enterprises that have been entering the internation market 14 Downloaded by tr?n hi?n (vuchinhhp21@gmail.com) lOMoARcPSD|22243379 Final essay | Trần Cẩm Tú - 31211023205 REFERENCES About FPT Group Truy cập 26/10/2022, từ https://frt.vn/en/about-fpt-group/ Báo cáo thường niên FPT 2021 Truy cập 26/10/2022, từ https://fpt.com.vn/vi/nha- dau-tu/bao-cao-thuong-nien JETRO, WHY JAPAN?“5 Reasons to Invest in Japan” ( 2018) Mẫn, T (20/5/2013), Nhật Bản - thị trường trọng yếu FPT, Chungta – Trang tin nội tập đoàn FPT, Vietnam Truy cập 26/10/2022, từ https://chungta.vn/kinhdoanh/nhat-ban-thi-truong-trong-yeu-cua-fpt-1083553.html PV (14/10/2022), FPT đầu tư vào công ty tư vấn dịch vụ công nghệ Nhật Bản, Thông tin truyền thông Truy cập 26/10/2022, từ https://ictvietnam.vn/fpt-dau-tuvao-cong-ty-tu-van-va-dich-vu-cong-nghe-tai-nhat-ban-20221014120017027.htm P Lassere (2012), Global Strategic Management, 4th edition by PALGRAVE, UK Quyền Phạm (2022), Chính sách thúc đẩy đầu tư trực tiếp nước vào Nhật Bản, Theo Tạp chí Tri thức Xanh số 158 Truy cập 26/10/2022, từ https://trithucxanh.vn/post/chinh-sach-thuc-day-dau-tu-truc-tiep-nuoc-ngoai-vao-nhatban 15 Downloaded by tr?n hi?n (vuchinhhp21@gmail.com)