INTRODUCTION
Company - Vietjet
Vietjet Aviation Joint Stock Company, widely known as Vietjet, has swiftly risen as a formidable force in the aviation industry, armed with a robust and dynamic international strategy Established in 2007, it became the first private airline in the Vietnam aviation industry.
VietJet own the fleet of 77 aircrafts which focuses on the LCC model with low cost in operation and efficiency.
The 2022 audited financial statements reported that Vietjet’s consolidated revenue reached over VNĐ40.14 trillion, up 212 per cent year-on-year The long-term assets increased by over $200 million in worth The airline’s total assets surpassed VNĐ68 trillion with the debt-to-equity rate at nearly 1.3 which was considered to be good in the aviation industry Its payment of direct and indirect taxes, fees and charges to the State budget totalled VNĐ4.35 trillion
In 2022, Vietjet transported 20.5 million passengers on more than 116,261 flights, up 283 per cent and 186 per cent year-on-year respectively It led the domestic market in terms of passenger volume.
To become a multi-national aviation group with a route network covering the entire region and the world, providing and developing not only aviation services but also consumption products on the e-commerce platform and being a favorite and trusted brand name.
• To operate and develop domestic, regional and international route network
• To bring a breakthrough in aviation services
• To make aviation services to become popular means of transport in Vietnam and in the world.
• To bring joyfulness, customer satisfaction by providing luxurious and exceeding expectation services with friendly smiles.
Core value: Safety - Happiness – Affordable Price - Punctuality
VietJet Air serves 18 domestic destinations and 69 international destinations in 13 countries, as of June 2023 Vietjet's extensive domestic network within Vietnam, connecting major cities like Hanoi, Ho Chi Minh City, Da Nang, and Nha Trang, serves as a strong foundation for its international expansion From there, it has strategically expanded to various countries in the Asia- Pacific region, including Thailand, Singapore, Malaysia, South Korea, Japan, and China, cementing its position as a regional player.
VietJet’s domestic and international routes
Overall, it has had a profound reputation as a non-substitutable: Low-Cost Carrier airline.
SWOT analysis of the company
Vietjet's success in the international arena can also be attributed to its astute customer segmentation and tailored marketing initiatives The airline has effectively identified and targeted specific customer segments, catering to their unique needs and preferences By offering a range of fare options, passengers have the flexibility to choose additional services and amenities according to their preferences, creating a personalized and differentiated travel experience. Vietjet's marketing campaigns have also played a pivotal role in its international visibility The airline has gained attention through creative and sometimes controversial promotions, capturing the interest and curiosity of travelers This marketing prowess has helped Vietjet build a strong brand presence, attracting a loyal customer base while appealing to new and diverse market segments.
Another significant factor fueling Vietjet's international success is its relentless pursuit of route development Recognizing the importance of connectivity and passenger convenience, Vietjet has been proactive in adding new destinations to its network The airline has forged partnerships and secured landing rights in key markets, ensuring a wide array of route options for travelers. Vietjet's extensive domestic network within Vietnam, connecting major cities like Hanoi, Ho Chi Minh City, Da Nang, and Nha Trang, serves as a strong foundation for its international expansion. From there, it has strategically expanded to various countries in the Asia-Pacific region, including Thailand, Singapore, Malaysia, South Korea, Japan, and China, cementing its position as a regional player.
Lack of well-qualified partners to compete internationally: Vietjet has been negotiating with potential joint venture partners about establishing a low-cost airline in other Asian markets. However, some did not materialize, and the only venture formed (in Thailand) encountered many obstacles.
Low price: While that is a competitive advantage, it is also a challenge for the airline Because lower fares mean lower revenue per passenger, there is less money to reinvest in other categories. The company will have to pay more attention in investing in other aspects to bring in cash flow. Besides, due to fierce competition, ticket prices seem to be less likely to be pushed up at any time in order to retain customers Vietnamese airlines also have little interest in pursuing more effective profit management techniques in the domestic market.
Sale and leasebacks: Sale and leaseback are often attractive to low-cost airlines because they can generate short-term profits In the long-term, however, this could become a weakness, according to CAPA, because airlines that do this hire-and-resell will stop paying higher-than- average rents as their age increases airplanes are getting higher and higher, and there is a high cost to return the plane.
Tourism and international development: Vietnam are being considered as a popular tourist destination, which increases the influx of international visitors to the country Currently, the airline has regular flights to Korea, Taiwan, Malaysia, Thailand and Cambodia China is the largest source of tourists and the fastest growing.
Airway network: VietJet until now has relied entirely on direct flights, typical of a new low-cost airline in its early stages of development However, Vietjet is determined to pursue the 6th commercial air transport right (the right to take passengers, cargo, mail from a second country to a third country through the territory of the operator's country)
Codeshare flights: Vietnam is a developing country, so low-cost airlines are chosen by many people and are more willing to pay According to the Civil Aviation Authority of Vietnam, in the first half of 2022, the VietJet improved its market share by 4 percent to reach 36 percent, just behind Vietnam Airline
Fierce competition from both domestic and international carriers necessitates constant innovation and adaptation Vietjet operates in a highly competitive landscape where pricing,service quality, and customer satisfaction are critical differentiators The airline must continuously evaluate its market positioning, pricing strategies, and service offerings to stay ahead of the competition Moreover, navigating complex regulatory frameworks, complying with international safety standards, and addressing geopolitical considerations pose ongoing challenges for Vietjet's international operations
Airport overload makes it difficult to open more routes as well as flight frequency In Vietnam, several airport reported to experience overloading as there are increasing number of flight but the capacity is limited Vietnam government are trying to build larger-in-scale airport like LongThanh but these are still in progress.
ANALYSIS OF THE MACRO ENVIRONMENT
Economy
Thailand has a diverse and dynamic economy It is considered one of the largest economies in Southeast Asia, with a strong focus on tourism, manufacturing, agriculture, and services The country has experienced steady economic growth, attracting both domestic and foreign investments A robust economy provides opportunities for Vietjet to tap into the growing middle class and rising disposable incomes, leading to increased demand for air travel.
Thailand GNI per capita from 2010 to 2015 (USD)
Thailand GDP per capita from 2010 to 2015 (USD)
In the early years of the period (2010-2012), Thailand's economy demonstrated robust growth. The country rebounded strongly from the global financial crisis of 2008-2009 and experienced a GDP growth rate of 7.8% in 2010 However, growth moderated in the later years, primarily due to domestic political instability and external factors such as the global economic slowdown.
Business environment
The business environment in Thailand is generally favorable, with supportive policies and infrastructure for businesses The government has implemented initiatives to promote foreign investments and facilitate ease of doing business However, it is important to note that there may be specific regulations and requirements in the aviation sector that VietJet needs to adhere to,such as safety standards and licensing procedures.
Attractiveness
Thailand's market attractiveness lies in its large population, strong tourism industry, and strategic geographical location The country serves as a gateway to Southeast Asia and attracts a significant number of international tourists This presents an opportunity for VietJet to cater to both domestic and international travelers Thailand also offers access to resources such as skilled labor, aviation infrastructure, and strategic partnerships with local businesses.
Ease of doing business can vary depending on factors such as regulations, bureaucracy, and legal frameworks While Thailand has made efforts to improve its ease of doing business rankings, challenges may still exist, and VietJet would need to navigate the regulatory landscape and comply with relevant laws and regulations.
Ease of doing business in Thailand in 2014 - 2015
Due to the World Bank statistics, Thailand’s ease of doing business index remained quite constant in the vicinity of 26, making it the 3rd highest in SouthEast Asia after Singapore and Malaysia.
Worldbox Business Intelligence Country Risk Rating in 2014
According to the data, Thailand was stable at the time despite the fact that political instability emerged as a significant challenge during the period from 2010 to 2015 Thailand experienced several changes in government, protests, and disruptions, which negatively impacted investor confidence and business activities The political situation contributed to economic uncertainty and affected both domestic and foreign investment.
Resources
Thailand's geographical location offers strategic advantages for the airline industry The country is positioned as a regional hub in Southeast Asia, making it a convenient transit point for air travel within the region Thailand has a well-established network of airports, including major international airports in Bangkok, Phuket, and Chiang Mai, which serve as key gateways for domestic and international flights.
Additionally, Thailand's natural beauty and diverse landscapes make it an attractive tourist destination From stunning beaches and tropical islands to lush mountains and cultural heritage sites, these natural attractions drive tourism and increase demand for air travel The abundance of tourist destinations contributes to the growth of both domestic and international air traffic.
Thailand boasts a skilled workforce that supports various aspects of the airline industry Trained pilots, cabin crew, ground staff, and maintenance personnel play vital roles in ensuring the safe and efficient operation of airlines The country has well-established aviation training centers and academies that provide comprehensive education and training programs to produce qualified aviation professionals.
The combination of natural resources, such as strategic geographical location and diverse tourist attractions, along with a skilled workforce and a culture of hospitality, provides a strong foundation for the airline industry in Thailand These resources contribute to the growth of air travel, tourism, and economic development in the country.
Societies
Thailand's society is deeply intertwined with the airline industry, playing a crucial role in the country's connectivity, tourism, and economic development Thailand's culture of hospitality and service-oriented mindset aligns well with the needs of the airline industry Thai society values graciousness and warmth, which translates into exceptional customer service and the renowned Thai hospitality provided by airline staff This human resource advantage contributes to the overall positive passenger experience and enhances Thailand's reputation as a welcoming destination.
As a result, millions of domestic and international travelers visiting Thailand each year, the society places a strong emphasis on tourism and travel, relying on airlines to facilitate convenient and accessible transportation options.
Culture
Being one of Thailand’s strength, Thai culture is rich and diverse, with influences from Buddhism, monarchy, and traditional customs Cultural sensitivity and adapting to local preferences are essential for VietJet’s marketing and customer engagement strategies. Incorporating elements of Thai culture in branding, customer service, and inflight experiences can enhance the airline's appeal to Thai customers
ANALYSIS OF COMPETITORS IN THE TARGET MARKET
Analysis of competitors in the target markets
The airline industry in Thailand before 2014 experienced significant growth and competition. Thailand's aviation sector saw the emergence of several domestic and international airlines operating in the country Thai Airways International, the national carrier, played a prominent role, offering both domestic and international flights Other major airlines in the market included Bangkok Airways, AirAsia, Nok Air, and Thai AirAsia.
Competition intensified in the domestic market as low-cost carriers gained popularity.
AirAsia and Nok Air, with their affordable fares, introduced more options for budget-conscious travelers This led to a more competitive landscape and price wars among airlines.
Thai airline market share in 2014
As the flag carrier and largest airline of Thailand, Thai Airways International is a significant competitor for Vietjet It offers a comprehensive network of domestic and international routes, catering to both leisure and business travelers Thai Airways has a strong reputation for service quality and has built a loyal customer base over the years Additionally, Thai Airways has an extensive network of code-sharing partnerships with other international airlines, providing passengers with seamless travel options.
Bangkok Airways is a regional airline based in Thailand that operates both domestic and international flights It primarily focuses on serving popular tourist destinations within Thailand and neighboring countries The airline has positioned itself as a boutique airline, offering enhanced services and a premium experience Bangkok Airways operates from its hub in Bangkok and has a strong presence in popular tourist areas such as Phuket and Koh Samui.
As a major low-cost carrier in the region, AirAsia poses significant competition to Vietjet in Thailand AirAsia operates from its Thai subsidiary, Thai AirAsia, offering competitive fares and a vast network of domestic and international destinations The airline has a strong brand presence and marketing campaigns that appeal to budget-conscious travelers AirAsia's extensive route network and frequent promotions have helped it capture a significant market share in the low-cost carrier segment.
Nok Air is another domestic low-cost carrier in Thailand that competes directly with Vietjet It operates flights to various domestic destinations, including popular tourist spots Nok Air positions itself as a fun and friendly airline, targeting both leisure and business travelers The airline has a strong focus on customer service and offers additional services such as Nok Xpress, which allows passengers to check-in quickly and conveniently.
Although based in Indonesia, Lion Air operates flights to and from Thailand, providing competition for Vietjet Lion Air is a prominent low-cost carrier in Southeast Asia, known for its extensive network and competitive fares The airline offers a variety of services, including LionParcel for cargo transportation and Batik Air for full-service flights Lion Air's presence inThailand adds to the competitive landscape for Vietjet, particularly on international routes.
DESCRIPTION OF THE GLOBAL STRATEGY AND ENTRY MODE 17 1 Global strategy
Global ambition
VietJet, has set its sights on expanding its business ambitions in the global market as regional player With a strong track record of success in Southeast Asia, the airline aims to leverage its expertise and innovative approach to capture new markets and establish a global presence. Through strategic initiatives and a customer-centric approach, VietJet is well-positioned to make a significant impact in the international aviation industry.
VietJet’s global business ambition is centered on expanding its route network and connectivity to key destinations worldwide The airline has been actively exploring partnerships and alliances with international carriers, allowing for code-share agreements and seamless travel experiences for passengers By leveraging these collaborations, VietJet can offer a wider range of destinations to its customers, attracting both leisure and business travelers who seek affordable and convenient travel options.
To achieve its global ambitions in Thailand, VietJet aims to penetrate the local market by leveraging its competitive advantages and available resources Thailand, renowned for its rich culinary offerings and cultural attractions, is an attractive destination on the tourism map VietJet plans to tap into various customer segments including local residents, expatriates, and tourists to capture a larger market share and expand its customer base The company also intends to diversify its revenue streams by forming partnerships with local distributors and retailers and expanding its network of routes.
VietJet’s global ambition in Thailand is driven by its long-term strategic vision of establishing itself as a well-recognized brand on the global stage The company envisions a future where
Vietjet is synonymous with a multinational airline that offers affordable prices, integrates advanced consumer-oriented digital technology, and operates an efficient logistic system By expanding its presence in Thailand and gaining prominence in the international market, VietJet aims to strengthen its position as a trusted and preferred choice for air travelers worldwide.
By leveraging strategic partnerships, investing in fleet modernization, embracing technological advancements, and prioritizing sustainability, VietJet has attract a global customer base, and established itself as a leading low-cost airline in Thailand With its commitment to affordable fares, excellent service, and innovation, VietJet is well-positioned to make a significant impact and reshape the international aviation industry.
Global positioning
Vietjet considers Thailand as one of the key countries in the ASEAN, in which Vietjet endeavors to become a leading player to capture market share and establish a strong presence Therefore, The airline has strategically targeted Thailand as a first key market for expansion and growth. The company also positions itself as a global cost leader according to value attributes in the country.
In Thailand specifically, Vietjet aims to penetrate the local market by capitalizing on the country's reputation as a popular tourist destination and its vibrant food and culture scene By tapping into the focused customer segments, such as local residents, expatriates, and tourists, Vietjet aims to increase its market share and expand its customer base The airline offers affordable fares and convenient flight schedules, catering to the needs of both leisure and business travelers within Thailand.
In the broader ASEAN region, Vietjet positions itself as a leading low-cost carrier offering extensive connectivity across Southeast Asia The airline has focused on expanding its route network to key destinations within ASEAN countries, facilitating convenient travel options for
18 passengers Vietjet's commitment to affordability, operational efficiency, and customer satisfaction has helped it capture a significant market share in the region.
Vietjet's global positioning in Thailand and the ASEAN region is also strengthened by its partnerships and collaborations with local distributors, retailers, and tourism authorities By forging strategic alliances, Vietjet enhances its market presence and increases its visibility among potential customers The airline actively participates in marketing campaigns and initiatives to promote tourism within Thailand and the ASEAN region, further establishing its brand and attracting more travelers.
Furthermore, Vietjet emphasizes the use of advanced digital technologies and innovative solutions to enhance the customer experience The airline's investments in technology and digital platforms enable seamless online booking, personalized services, and efficient operations, contributing to its global positioning as a modern and customer-centric airline.
Overall, Thailand is the first and foremost important country for Thailand in its global expansion strategy to ASEAN By leveraging its competitive advantages, targeting key markets, and offering affordable and convenient travel options Through strategic partnerships, marketing initiatives, and technological advancements, Vietjet aims to solidify its presence, capture market share, and position itself as a preferred choice for travelers in Thailand and across ASEAN.
Global business system
The primary activities in Porter’s Value Chain are as follows:
Inbound logistics includes different categories in the aviation industry Regarding route selection, VietJet Air has point-to-point routes that have high traffic The brand can optimize the number of flights and reduce the cost via this point-to-point routes.
Customers who use VietJet Air can have a satisfying experience from the check-in process to the process of boarding thanks to the advanced technology Moreover, for flight connection, VietJet Air takes advantage of the non-stop short-haul flights in order to save time and costs, including human resources cost, facilities cost, airport cost, etc Additionally, VietJet Air uses small and
20 fuel-efficient aircraft; they also have a close relationship with Airbus in order to have a discounted price Besides, VietJet Air mainly conducts short flights with scheduling capability and does a good job in aircrafts utilization.
Nowadays, VietJet Air mostly operates online: the online ticketing process where customers can have their tickets booked online via Vietjet Air website or application to self-printing boarding cards and online check-in process VietJet Air also uses the general electric engine to ensure customer safety.
VietJet Air has a strong brand awareness among domestic customers thanks to a continuous marketing campaign For example, during important sports events, Vietjet held several special events to celebrate the winning of the Vietnam National Football team These creative marketing campaigns help Vietjet build the brand image as a fun, young, and vibrant company Moreover, VietJet Air also utilizes internet marketing platforms to reach out to people with low budgets. These marking methods help drive millions of buyers to its website and achieves 85% of the ticket sales on the website VietJet Air has a thorough understanding of the aviation market and has the ability to influence customer behaviors They always find a way to maximize profits by providing affordable ticket prices and add-on services For example, customers can buy more check-in luggage for a lower rate if they pre-book the tickets and they can also book hotels, hostels, rent a car and medical services at a good price if they buy the travel package provided by Vietjet Air.
Retaining customers has always been a big problem for the organization, and there is no exception to Vietjet Air In order to keep brand loyalty, VietJet provides different types of services to customers: if the flight is delayed by more than three hours, they will make compensation for the customer Moreover, VietJet launched a program for frequent-flyers called Skyclub This program was conducted to tighten the relationship between Vietjet Air with frequent flyers.Behind Skyclub lies a digital system - the customers will assess Vietjet’s customer service via this application Besides, if the customer has any problems with booking, check-in process, or carry- on, check-in luggage, VietJet’s customer care service is always available They also provide a special service for passengers with disabilities, pregnant women,
Vietjet Air has effectively expanded international routes; they are also considering investment opportunities in infrastructure Vietjet aims to maintain its leading position in the domestic transport field.
Vietjet Air’s strategies with human resources are to develop and focus on training and reward policy Vietjet also comes up with new strategies regarding management to encourage and reward employees that contribute greatly to the corporation Over the past few years, Vietjet sets an aim to recruit and retain professional employees They also continuously improve the quality of the training programs at Vietjet Training Center and are planning to establish the Vietjet Aviation Academy as a profit center.
VietJet Air uses various types of technology to minimize the cost and to run the business efficiently Vietjet uses the Intranet system to upgrade technology infrastructure, they also make improvements to Internet connection and server system to ensure that the management system is working stably They also pay great attention to the process of developing distribution channels via websites and the Global Distribution System (GDS).
The airline establishes close and tight business relationships with two leading aircraft manufacturers that are Airbus and Boeing Thanks to being on good terms with these two manufacturers, Vietjet is able to purchase not only new but also modern and efficient aircraft with discounted prices They also follow the SFCO2 program, which optimizes engine performance, reduces the use of fuel and greenhouse gas emissions, to save nearly 5.4 million kilograms of fuel and protect the environment This is a great move to show Vietjet’s Corporate social responsibility
Global organization
Vietjet, as a global business, can be categorized in the phase of large export and early multinational subsidiaries Let's explore how this phase reflects the structure, process, and culture of Vietjet.
In terms of structure, VietJet has evolved from a domestic airline in Vietnam to an international player with subsidiaries and operations in multiple countries The company has established a centralized organizational structure, with a head office in Vietnam overseeing the operations of its subsidiaries and affiliates in various countries In the Thai market, international division is distinct from domestic activities This structure allows for efficient coordination, resource allocation, and decision-making across the global network The structure also includes departments and teams dedicated to specific functions such as operations, marketing, sales, finance, and human resources, ensuring smooth functioning of the business.
Vietjet follows specific planning and control processes for international operations This includes standardized procedures for route planning, aircraft maintenance, safety protocols, customer service, and financial management The company has implemented robust IT systems and technologies to support these processes, ensuring efficient communication, data management, and performance tracking Vietjet also emphasizes continuous improvement and innovation in its processes, regularly evaluating and implementing best practices to enhance operational efficiency, customer experience, and cost optimization However, there will be some minimal variance between international and domestic ones.
Even though VietJet’s culture remains ethnocentric at the beginning, it plays a crucial role in shaping its global business The company fosters an entrepreneurial spirit, encouraging innovation, agility, and risk-taking The culture promotes a customer-centric approach,emphasizing the importance of providing affordable and quality services to passengers VietJet’s culture also reflects its vibrant and youthful brand image, characterized by a fun and energetic atmosphere The company values teamwork, open communication, and collaboration, fostering a positive and inclusive work environment across its global workforce This also means, subsidiaries are granted with more autonomy to its control of operation Moreover, Vietjet embraces diversity and cultural sensitivity, recognizing the importance of adapting to local customs and preferences in the countries where it operates
Overall, as VietJet expands its global footprint, it is transitioning from a domestic airline to a multinational player in the aviation industry The structure facilitates effective coordination and management of its subsidiaries and affiliates, while streamlined processes and a customer-centric culture enable efficient operations and service delivery VietJet’s entrepreneurial and innovative culture further supports its growth and success in the global market.
Entry mode – Joint Venture
Before discussing the entry mode, it is important to consider the characteristics of the Thai market Thailand is renowned for its vibrant economy, growing number of middle class, rich cultural diversity, and discerning consumer preferences In the airline industry, Thailand's airline market for low-cost is highly competitive Thai consumers prioritize high-quality products, authenticity, and convenience when making their purchasing decisions.
2.1 Joint venture - Suitable Entry Mode
In addition to its remarkable growth and success as a domestic and international airline, Vietjet has also engaged in strategic partnerships and joint ventures to further strengthen its position in the aviation industry
One notable collaboration is the joint venture with Thai investors, which has played a significant role in expanding Vietjet's reach and influence beyond Vietnam.
The joint venture between Vietjet and Thai investors was established in 2014 under the name
"Thai Vietjet Air" The partnership brought together Vietjet, a leading Vietnamese airline, and a group of Thai investors, including Kan Air Company Limited and individual Thai shareholders. This collaboration aimed to capitalize on the growing demand for air travel in Thailand and the wider Southeast Asian region.
Through the joint venture, Vietjet Air has been able to tap into the Thai market and establish itself as a prominent low-cost carrier in Thailand for following reasons:
Local Market Knowledge: Partnering with a local company through a joint venture allows
Vietjet to leverage the partner's in-depth understanding of the Thai market, including consumer preferences, cultural nuances, and regulatory requirements This local expertise can help Vietjet navigate the market more effectively and make informed business decisions.
Resource Sharing: By forming a joint venture, Vietjet can share resources with its local partner, such as infrastructure, networks, distribution channels, and local connections This collaboration can help accelerate market entry, reduce costs, and mitigate risks associated with entering a new market.
Risk Mitigation: Venturing into a new market like Thailand involves inherent risks and uncertainties By entering into a joint venture, Vietjet can share these risks with its local partner, thus reducing the burden and increasing the likelihood of success It allows Vietjet to tap into the local partner's established relationships, reputation, and market presence.
Legal and Regulatory Compliance: Thailand has specific regulations and legal requirements for foreign companies entering the market Through a joint venture, Vietjet can navigate these regulations more smoothly by leveraging the knowledge and experience of its local partner, ensuring compliance and avoiding potential pitfalls.
Market Penetration and Expansion: A joint venture provides Vietjet with a platform to penetrate the Thai market more effectively By combining resources and expertise, Vietjet can offer tailored products and services that cater to the preferences and needs of Thai consumers. Moreover, if the joint venture is successful, it can serve as a foundation for further expansion and growth in the region.
However, it is essential for Vietjet to carefully select its joint venture partner, considering factors such as alignment of goals, shared values, and complementary strengths A thorough due diligence process is crucial to ensure a mutually beneficial partnership that can contribute to Vietjet's success in the Thailand market.
2.2 Advantage of this entry mode
Market Access: The joint venture with Thai investors has provided Vietjet with direct access to the Thai market, which is known for its robust tourism industry and growing air travel demand.
By partnering with local investors, Vietjet has gained valuable insights into the Thai market, including consumer preferences, regulatory requirements, and business practices, enabling the airline to tailor its offerings to better cater to the needs of Thai passengers.
Brand Expansion: The joint venture has allowed Vietjet to expand its brand presence beyond
Vietnam Through Thai Vietjet Air, the airline has been able to establish a recognizable brand in Thailand, leveraging its reputation as a low-cost carrier and attracting a broader customer base. This brand expansion enhances Vietjet's overall visibility and strengthens its position as a leading airline in Southeast Asia.
Synergy of Resources: The joint venture brings together the expertise, resources, and networks of both Vietjet and the Thai investors By pooling their resources, the partners can leverage each other's strengths and capabilities, leading to cost efficiencies, operational synergies, and improved competitiveness This collaborative approach allows for the sharing of best practices and the optimization of resources to drive the joint venture's success.
2.3 Disadvantage of this entry mode
Sharing of Profits: As a joint venture, Vietjet shares the profits and decision-making authority with its Thai partners This can potentially limit Vietjet's control over key strategic decisions, including route expansion, fleet acquisition, and pricing strategies Disagreements or differences in priorities between the partners may hinder the ability to respond quickly to market changes or pursue growth opportunities.
Cultural and Operational Differences: When entering a joint venture, companies from different cultural backgrounds may face challenges related to differences in work culture, management
26 styles, and operational practices These differences can lead to miscommunications, delays in decision-making, or conflicts, which may impact the overall effectiveness and efficiency of the joint venture.
Dependence on Partner's Performance: The success of the joint venture is reliant on the performance and commitment of the Thai investors If the partners face financial or operational challenges, it could affect the stability and growth potential of the joint venture Vietjet's ability to mitigate risks associated with its partner's performance becomes crucial for sustaining long-term success.