Australia market entry strategy of huu nghi food joint stock company

.BANKING ACADEMY OF VIETNAM FACULTY OF INTERNATIONAL BUSINESS GRADUATION THESIS TOPIC: AUSTRALIA MARKET ENTRY STRATEGY OF HUU NGHI FOOD JOINT STOCK COMPANY STUDENT : BUI NGOC KIM OANH CLASS : K21KDQTA COURSE : 2018 - 2022 STUDENT ID : 21A4050337 INSTRUCTOR : Dr NGUYEN THI THANH TAN Hanoi, May 2022 Tai ngay!!! Ban co the xoa dong chu nay!!! 17014125814901000000 BANKING ACADEMY OF VIETNAM FACULTY OF INTERNATIONAL BUSINESS GRADUATION THESIS TOPIC: AUSTRALIA MARKET ENTRY STRATEGY OF HUU NGHI FOOD JOINT STOCK COMPANY STUDENT : BUI NGOC KIM OANH CLASS : K21KDQTA COURSE : 2018 - 2022 STUDENT ID : 21A4050337 INSTRUCTOR : Dr NGUYEN THI THANH TAN Hanoi, May 2022 ACKNOWLEDGEMENT This graduation research would be impossible without the support of many people To begin with, I would like to express my deep sense of gratitude to my instructor – Dr Nguyen Thi Thanh Tan, due to her detailed guidance and encouragement, which have contributed immensely to the evolution of the research Despite her busy schedule, she spent time giving me valuable ideas to fulfill this project Her knowledge, experience and suggestions have directed me to take the most suitable decisions to make this thesis reliable and focus on the most substantial elements Secondly, my special thanks go to Huu Nghi Food Joint Stock Company’s Board of Directors and my colleagues in Export Business Department for their support during my internship and the collecting data They have supported me with valuable information and opinions that were very interesting and significant to answer my thesis purpose which gave me a good ground to build my research Thirdly, I also take this opportunity to thank all my lecturers of International Business Faculty for assisting me over the last four years of studying at Banking Academy Last but not least, I am grateful to my parents and friends, who helped and encouraged me a lot in finalizing this project within the limited time frame Bui Ngoc Kim Oanh – K21KDQTA i DECLARATION I declare that this graduation thesis is my own research, under the guidance of Dr Nguyen Thi Thanh Tan The contents and results in this research are accurate and have never been published in any study works before The references are properly cited as prescribed in the reference section Hanoi, 23rd May 2022 Signature Bui Ngoc Kim Oanh Bui Ngoc Kim Oanh – K21KDQTA ii TABLE OF CONTENTS ACKNOWLEDGEMENT i DECLARATION ii TABLE OF CONTENTS iii LIST OF ABBREVIATIONS v LIST OF TABLE & FIGURE vi INTRODUCTION .1 CHAPTER 1: AN OVERVIEW OF MARKET ENTRY STRATEGY .7 1.1 Market entry strategy theories 1.2 Market entry modes 1.2.1 Direct export 10 1.2.2 Indirect Export 11 1.2.3 Strategic Alliences 13 1.2.4 Joint Ventures 14 1.3 Entry market strategy decision making process 15 1.4 Factors affecting the entry mode decision 17 1.4.1 External factors .17 1.4.2 Internal factors 20 SUMMARY OF CHAPTER 22 CHAPTER 2: HUU NGHI FOOD'S INTERNATIONAL MARKET .23 ENTRY STRATEGY 23 2.1 General business activities 23 2.2 Past experience penetrating Asian markets and lessons drawn……………………….26 2.2.1 Entry market strategy into Myanmar Error! Bookmark not defined 2.2.2 Entry market strategy into China 28 2.2.3 Experience lesson 31 SUMMARY OF CHAPTER 32 CHAPTER 3: SOLUTIONS AND RECOMMENDATIONS FOR HUU NGHI TO ENTER THE AUSTRALIAN MARKET 33 3.1 Category .33 3.1.1 Australia PESTEL Analysis 33 Bui Ngoc Kim Oanh – K21KDQTA iii 3.1.2 Market size 36 3.1.3 Market growth 39 3.2 Consumers 41 3.3 Competitors 45 3.5 SWOT analysis 47 3.6 Strategic Options & Evaluation 48 3.7 Recommendation 50 SUMMARY OF CHAPTER 51 CONCLUSION 52 REFERENCES 53 Bui Ngoc Kim Oanh – K21KDQTA iv LIST OF ABBREVIATIONS HNF Huu Nghi Food SOE State Owned Enterprises UN United Nations CAGR Compound Annual Growth Rate FMCG Fast Moving Consumer Goods R&D Research & Development ISO International Organization for Standardization HACCP Hazard Analysis and Critical Control Point System FTA Free Trade Agreement AU Australia MT Modern Trade GT General Trade KA Key Account CVS Convenience Store EMC Export Management Company ETC Export Trading Company Bui Ngoc Kim Oanh – K21KDQTA v LIST OF TABLE & FIGURE Table 1: Entry modes categories .10 Table 2: HNF’s financial operation 2020-2021 24 Figure 1: General Framework for Global Strategy (Hutt&Speh, 2010 p.200) Figure 2: Annual revenue and profit of HNF from 2018 to 2021 .23 Figure 3: Sales volume of HNF in Myanmar 2016-2021 28 Figure 4: Number of the retail outlet of HNF in China 30 Figure 5: Sales revenue of HNF in China from 2017 to 2021 31 Figure 6: Confectionery Revenue in Australia 2018-2021 .37 Figure 7: Confectionery avarage revenue per capita in Australia 2018-2021 38 Figure 8: Revenue growth of confectionery market in Australia 2018-2021 40 Bui Ngoc Kim Oanh – K21KDQTA vi INTRODUCTION As a result of economic globalization, today's market environment is getting increasingly complex; with foreign trade, financial transfers, and foreign direct investments, the economy is becoming increasingly interconnected The combination of advances in communication and transportation technology with free-market ideology has resulted in unprecedented product and service mobility Global companies are focusing on opening global markets to their goods these days, particularly in the emerging markets, in order to capitalize on these markets' prospects and become a part of their rapidly expanding infrastructure The significance of the ruling on foreign market entry mode has been thoroughly established (Tallman and Shenkar, 1994) The manner of entrance chosen has a significant impact on the level of control the corporations have over the endeavor (Root, 1994) Some entrance modalities, such as exporting and licensing, are associated with low levels of operational and marketing control, but they are also associated with reduced levels of risk Other entrance modes, such as joint partnerships and complete ownership of facilities, offer more control but also more risk To enter foreign markets, international companies must consider a number of factors while developing a strategic plan for reaching new consumers and distinguish their goods and services from domestic and international industry rivals within the chosen market In Vietnam, HNF has a strong brand in the production - commerce industry In terms of market size (distributor, distribution region, product range, output scale, number of strong brands), it is one of Vietnam's three largest corporations.The Vietnamese confectionery industry's growth has been flat, and the domestic market share has been clearly divided, with Kinh Do leading the pack, followed by Huu Nghi, Pham Nguyen, and Hai Ha brands The domestic market's limited expansion space necessitates the search for additional business spaces and growth prospects for those looking to expand This is not only a difficulty for Huu Nghi, but also for other enterprises in the industry Australia is a new and prospective market due to Bui Ngoc Kim Oanh – K21KDQTA its high average yearly growth rate After success in other Asian countries, HNF’s foreign business segment is expanding slower Therefore, reaching a new market is a way to keep the business growing Australia is a new and potential market, which has Australia is a prospective market due to its high average yearly growth rate and the variety of consumers HNF's entry into the Australian market will pave the way for it to expand into other nations outside of Asia As a result, it is vital to expand business into the Australian market, and in order to so effectively, a suitable penetration plan is required As a result, it is imperative to research this subject This issue not only benefits HNF but also serves as a reference source for the Australian market strategy in particular and the foundation for developing foreign market penetration plans for confectionery firms in general Literature reviews Foreign market entry strategy is a familiar topic that has attracted significant scholarly attention It's divided into three categories: level of control, resource commitment, and risk exposure (Anderson and Gatignon, 1986; Erramilli and Rao, 1993; Hill, Hwang and Kim, 1990) For example, Erramilli and Rao (1993) classify market entry strategy into two groups depending on their level of control—fullcontrol (i.e completely owned operation) and shared-control mode—in a study of service organizations' worldwide operations in the United States (i.e contractual transfer or joint venture) Kim and Hwang (1992) used a three-part classification system: licensing, joint ventures, and wholly owned subsidiaries These strategies, according to Kim and Hwang, give three various levels of control and necessitate different amounts of resource commitment According to Kwon and Konopa (1993), each foreign market entry strategy has benefits and drawbacks in terms of risk, cost, control, and return Their research looked at the effects of a number of factors on 228 U.S manufacturing companies' decisions to outsource production and export According to Agarwal and Ramaswami (1992), the most common entry strategies are exporting, licensing, joint venture, and sole venture These methods necessitate Bui Ngoc Kim Oanh – K21KDQTA