topic analyze vinfasts international business strategy with their ev plant in the us

At the end of March this year, VinFast signed a memorandum of understanding with the government of North Carolina, the US, to establish its first electric vehicle and battery manufacturi

UNIVERSITY OF FINANCE — MARKETING FACULTY OF BUSINESS ADMINISTRATION

TRƯỜNG ĐẠI HỌC

TÀI CHÍNH - MARKETING

INTERNATIONAL BUSINESS ADMINISTRATION

Class ID: 2311702052905 Instructor: Mr Nguyen Phi Hoang

TOPIC: ANALYZE VINFAST'S INTERNATIONAL BUSINESS STRATEGY WITH THEIR EV PLANT

IN THE US Student: Dao Doan Ngoc Minh Student ID: 2121003047

Ho Chi Minh City, April 2023

UNIVERSITY OF FINANCE — MARKETING FACULTY OF BUSINESS ADMINISTRATION

TRUONG BAI HOC V9 00700120014

INTERNATIONAL BUSINESS ADMINISTRATION

Class ID: 2311702052905 Instructor: Mr Nguyen Phi Hoang

TOPIC: ANALYZE VINFAST'S INTERNATIONAL BUSINESS STRATEGY WITH THEIR EV PLANT

IN THE US

Dao Doan Ngoc Minh-2121003047

INSTRUCTOR’S COMMENTS:

Ho Chi Minh City, April 2023 INSTRUCTOR (Sign,write full name)

Mr Nguyen Phi Hoang

THANK YOU Dear Faculty of Business Administration and University of Finance-Marketing teachers,

I want to express my heartfelt gratitude for providing me the opportunity to write this essay, explore new subjects, and learn without any restrictions Your guidance has been invaluable in shaping my understanding of various topics

Talso want to extend my sincere appreciation to Mr Nguyen Phi Hoang, my direct lecturer, who taught with enthusiasm and helped me comprehend this subject in the most effective manner possible

Lastly, I wish you all good health and success in your personal and professional lives

Best regards Dao Doan Ngoc Minh

Mục lục:

INSTRUCTOR’S COMMENTS: 3

CHAPTER 1: INTRODUCTION ABOUƯT VINFAST <« 6 CHAPTER 2: REASONS WHY VINFAST CHOOSE NORTH CAROLINA TO LOCATE THEIR PLANT ? 7 CHAPTER 3: VINFAST’S ENTRY MODE WHEN DECIDE TO BUILD THE EV PLANT IN USA AND ITS PROS AND CONS FROM THE INTERNATIONAL BUSINESS’S POINT OF VIEW .sscssssscsssssssssssssonssnssnscesons 9

IT VINFAST’S ENTRY MODE: ooo c cece eee e tees neeeeeeaeseenan 9

II PROS 000199) 9 CHAPTER 4: INTERNA TIONAL BUSINESS STRATEGY 11

L VINFAST?5 GLOBAL STRATEOY Sài 11

Il WHY VINEAST CHOOSE THIS STRATEGY: 12 CHAPTER 5: MARKETING STRATEGY 13

I FACTORS THAT AFFECT CONDUCTING MARKETING STRATEGIES FOR VINFAST’S EV PLANT uo eee cece cece ete eeeeteees 13

Il THE STANDARDIZING ADVERTISING STRATEGY IS SUITABLE FOR VINFAST IN THIS CASE? ooo cece eee ce te teeeenees 14 CHAPTER 6: SUITABLE ORGANIZA TION STRUCTURE 15

I THE SUITABLE ORGANIZATION STRUCTURE FOR EV PLANT:

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Il WHY VINFAST SHOULD APPLY MATRIX STRUCTURE 16

CHAPTER 1: INTRODUCTION ABOUT VINFAST

VinFast is a Vietnamese automotive company that was established in 2017 under the umbrella of Vingroup, a leading conglomerate in Vietnam The company’s vision

is to become a prominent player in the global automotive industry by manufacturing high-end luxurious vehicles embedded with advanced technology

VinFast has made significant progress since its inception and has rapidly emerged

as a major player in the Southeast Asian automotive market Its two primary car models, the Lux A2.0 sedan and the Lux SA2.0 SUV, were unveiled at the Paris Motor Show in 2018 The Lux A2.0 and Lux SA2.0 have received critical acclaim for their efficient design, cutting-edge features, and impressive performance Both cars incorporate state-of-the-art technology, such as artificial intelligence (AI) systems that can recognize the driver's face and voice, as well as advanced safety features like lane departure warning and automatic emergency braking

Figure 1: VinFast - Paris Motor Show 2018 Apart from manufacturing luxury vehicles, VinFast is also committed to environmental sustainability The company aims to use environmentally friendly materials and manufacture electric vehicles in the near future VinFast has invested

heavily in research and development to create innovative vehicle technologies that will contribute to a cleaner, more sustainable future On March 24th, 2021, VinFast opened sales for its first electric car model - VF e34 After only 12 hours, VinFast received 3,692 orders for VF e34, setting a new record in the Vietnamese auto market Additionally, VinFast has entered into strategic partnerships with several international automakers to leverage their expertise and expand its own capabilities In

2020, the company signed agreements with German auto companies BMW and Daimler to develop electric vehicles and production lines On July 12, last year, VinFast officially established branches in the US, Canada, France, Germany, and the Netherlands, in preparation for its launch into the international market At the end of March this year, VinFast signed a memorandum of understanding with the government

of North Carolina, the US, to establish its first electric vehicle and battery manufacturing facility in North America

In conclusion, VinFast is a rapidly growing automotive company that is deeply committed to quality, innovation, and sustainability With its cutting-edge technology and strategic partnerships, the company is poised to become a major global player in the automotive industry

CHAPTER 2: REASONS WHY VINFAST CHOOSE NORTH

CAROLINA TO LOCATE THEIR PLANT ?

VinFast, a Vietnamese automaker, has announced its plans to invest billions in an electric vehicle (EV) production facility in North Carolina, challenging the traditional approach of American, Japanese, and Korean companies offshoring manufacturing to Vietnam This move reflects VinFast's strategic calculation that establishing a domestic

EV manufacturing base in Southeast Asia is not yet feasible due to the competition from more established regional incumbents and the demand for EVs does not yet exist

in most of Southeast Asia, and even if it did, the charging infrastructure is not in place for domestic markets to absorb EVs at the suitable scale

1.Demand: Europe, the United States, and China are currently driving global demand for EVs, with the U.S forecasted to have 670,000 EV sales in 2022, a 37% increase from the previous year

2.Infrastructure: The government's Bipartisan Infrastructure Law provides $7.5

billion to construct the USA’s EV-charging infrastructure with a goal to install 500,000

public chargers nationwide by 2030 underpinning the increasing adoption of EVs by consumers Also, The federal government offers a tax credit of up to $7,500 for the purchase of an electric car VinFast recognized the potential of the U.S market and made the strategic decision to offshoring manufacturing to North Carolina is the right play rather than basing production in Vietnam and shipping units across the Pacific

3 Incentives: Furthermore, VinFast received a $1.2 billion incentive package from the State of North Carolina, the largest economic incentive package in state history, which makes the investment economically feasible

4.Local resources: North Carolina has a well-established network of automotive suppliers and a strong tradition of manufacturing and engineering, enabling VinFast to source parts locally and access skilled workers easily Several universities and technical colleges offer specialized training programs in automotive technology, further supporting VinFast's efforts to establish its presence in the U.S market

In conclusion, VinFast's decision to invest in an EV production facility in North Carolina is an innovative way to challenge the traditional model of offshoring manufacturing to Vietnam It demonstrates the company's strategic foresight and recognizes the potential of the U.S market, which is experiencing growing demand for EVs and government support for EV-charging infrastructure This move underlines the importance of considering demand profiles, infrastructure, and competition when deciding where to establish a manufacturing base

Figure 2: The first batch of VinFast cars docked in California, USA

CHAPTER 3: VINFAST’S ENTRY MODE WHEN DECIDE TO BUILD THE EV PLANT IN USA AND ITS PROS AND CONS FROM THE INTERNATIONAL BUSINESS’S POINT OF

VIEW

I VINFAST’S ENTRY MODE:

VinFast, a Vietnamese automaker, has planned to expand its electric car production to the USA utilizing FDI, specially is Greenfield investment This move could bring many advantages and disadvantages to both Vietnam and America In this chapter, we'll examine the pros of VinFast's FDI strategy in the electric car industry and also consider the potential disadvantages

II PROS AND CONS

- Increased capital infusion: One of the most significant advantages of VinFast's entry into the US market using FDI is the increased capital

infusion into the American economy Investing in the US market can help drive economic growth and finance the development of new electric car technologies By investing in the US market, VinFast can get access to source

of skilled workers, enhance economic growth and create new opportunities for American companies and entrepreneurs The FDI can provide a boost to the US economy by providing a source of new capital that can be used to fund research and development efforts

Job opportunities: the entry of VinFast into the US market through FDI can also create job opportunities for Americans This can lead to the creation of high-skilled jobs such as engineers and technicians, promoting innovation and productivity within the American workforce Additionally, knowledge sharing between Vietnamese and American companies can improve the production process and reduce costs, leading to further economic growth Promote trade between the two the USA and Vietnam: The expansion of VinFast's electric car production in the US would increase Vietnamese- American trade, creating a mutually beneficial economic relationship This could also lead to partnerships and collaborations between American and Vietnamese companies, facilitating a deeper economic tie between the two nations

However, there are potential disadvantages to VinFast's use of FDI in expanding into the US market

Job loss: One of the main drawbacks is the possibility of job loss in the Vietnamese automotive industry if VinFast shifts its focus and resources to the US market This may result in reduced investment and fewer employment opportunities in Vietnam

Dependency on foreign investors: FDI can lead to a dependency on foreign investors, limiting VinFast's decision-making power and control over its operations in the US market This could be detrimental to the long-term growth and success of the company

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- Increased competition: Expanding into the US market can lead to increased competition for VinFast's products With established players such as VinFast, Ford, and General Motors in the electric car industry, VinFast will face challenges such as brand recognition, distribution channels, and marketing expenses

In conclusion, VinFast's plan to expand its electric car production into the United States through FDI can bring many advantages, including increased capital infusion, job creation, knowledge sharing, and promotion of trade between the two countries However, there are also potential disadvantages, such as job loss in Vietnam, dependency on foreign investors, and increased competition in the US market It is essential to consider these factors and develop strategies to mitigate any negative impacts to ensure that the benefits outweigh the costs VinFast must evaluate the risks and opportunities associated with FDI carefully and plan accordingly to achieve success in the US market

Figure 3: Vietnamese EV brand Vinfast announces North American manufacturing site will be built in North Carolina

CHAPTER 4: INTERNATIONAL BUSINESS STRATEGY

I VINFAST’S GLOBAL STRATEGY VinFast implemented the Global Strategy approach when they set up their manufacturing plant in the United States This strategy involves viewing the global

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market as a single entity and producing standardized products that are consistent across different regions This approach is commonly used by companies producing items such

as electronics, steel, paper, pens, parcel delivery services, and other similar goods By producing uniform products on a global scale at a limited number of factories, these companies achieve high efficiency and streamline their marketing efforts through centralized distribution channels

H WHY VINFAST CHOOSE THIS STRATEGY:

VinFast has chosen the global strategy when establish their plant in USA for these

reasons:

Expanding potential markets: The US is one of the largest markets for electric cars, accounting for over 17% of the global sales volume By building

a factory in the US, Honda can tap into this huge market and increase its sales Furthermore, the US government has set a target of having 50% of all new cars sold in the country to be electric vehicles by 2030 This ambitious goal presents a great opportunity for VinFast to boost its sales in the future Reducing transportation costs: Shipping electric cars from overseas can be costly, especially when it comes to shipping bulky items like car batteries, which require special handling By manufacturing electric cars locally, Honda can reduce its transportation expenses and save money, ultimately adding to its bottom line

Lowering its production costs: The US has a highly skilled workforce and advanced manufacturing facilities, which are crucial factors in keeping production costs low Additionally, the US government offers incentives and subsidies to companies that invest in green technology, including electric cars These incentives can significantly lower VinFast's production costs, making its electric cars more competitive in terms of pricing

Increasing brand value: Building an electric car factory in the US can also improve VinFast's brand image and establish a stronger presence in the US market The US consumers are increasingly environmentally conscious, and

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