international business management final exam topic building vinfasts international business strategy in indonesia

CONTRIBUTION LEVEL EVALUATION TABLE Join the group to make Pestel Join the group to make Plan for Vinfast Analyze social and cultural influences in Market Audit 100% Do the Summary sec

TOPIC: BUILDING VINFAST'S INTERNATIONAL BUSINESS

STRATEGY IN INDONESIA

Lecturer: Huynh Thi Thu Suong Students perform:

Nguyễn Vũ Thùy Dung - MSSV: 2121000228

Phan Thị Thanh Thanh - MSSV 2121003292

Nguyễn Ngọc Mai Thảo - MSSV: 2121000216

Ho Chi Minh City, 2024

CONTRIBUTION LEVEL EVALUATION TABLE

Join the group to make Pestel

Join the group to make Plan for Vinfast Analyze social and cultural influences in Market Audit

100%

Do the Summary section Plan together with the group

Join the group to make Pestel

Join the group to make Plan for Vinfast Analyze market potential in Market Audit

100%

Nguyễn Ngọc Mai

Plan together with the group

Join the group to make Pestel

Join the group to make Plan for Vinfast Analyze the level of competition and the political and legal environment in Market

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PLAN FOR BUILDING INTERNATIONAL BUSINESS STRATEGY IN

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2 Strategic alternatives for balancing pressures for global integration and local 0 I99)-)0 P.4 14

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FIGURE CONTENT

Figure 2: Car consumption level in Southeast Asian countries ccicsse 4 Figure 3: Average income per capita (GDP) Indonesia in 2018-2022 -‹- 5 Figure 4: Average income per capita (GDP) Indonesia In 2023 - 5

Figure 6: Survey of car usage needs of lIndonesian people -cisssse 7 Figure 7: Survey on why consumers choose to buy electric vehicles ‹‹c‹ - 9 Figure 8: Strategic Alternatives for Balancing Pressures for Global Integration and

EXECUTIVE SUMMARY

Building an international business strategy is of great importance for a business This is not only an opportunity to expand the scope of operations and increase sales, but also the key to opening up new opportunities and helping to strengthen the competitive position of the business in the global market In addition, developing an international business strategy also helps diversify income sources, minimize risks from dependence

on a specific market, and create opportunities for innovation and creativity in business activities So building an effective international business strategy is the key to achieving sustainable development and success of a business in the global market

From the above important roles, the implementation team decided to choose the topic "Building VinFast's international business strategy in Indonesia" With the goal of establishing a strong position in the automotive market in Indonesia and affirming its presence in Southeast Asia At the same time, Vinfast also wants to take advantage of the potential of the Indonesian market to expand its global business activities

INTRODUCTION

1 Introduction of Vinfast

VinFast, a member of VinGroup - Vietnam's largest private corporation, established a modern auto mobile manufacturing complex in 2017 and launched the first 3 car models in 2019 In 2021, they expanded their product portfolio with electric motorbikes and electric buses, aiming to become a global force in electric vehicles From

2023, VinFast is determined to focus entirely on electric vehicles, stopping production of gasoline cars by the end of 2022 This opens up opportunities for VinFast to expand its global presence and position itself in the automobile market international

The struggle for power within the government and the emergence of radical Muslim groups have created challenges, but Indonesia has been successful in fighting terrorist groups and maintaining a peaceful Islamic model

Independent foreign policy helps Indonesia position itself in the international arena, attract investment and create favorable conditions for economic development (Qatar, 2018)

1.2 Political relationship with Vietnam

The relationship between Vietnam and Indonesia is increasingly consolidated and strengthened, with the maintenance of bilateral visits and contacts at international and regional forums In addition, Vietnam is Indonesia's fourth largest trading partner in ASEAN, which reflects the strong economic cooperation relationship between the two countries (QDND, 2024)

Some agreements signed between Vietnam and Indonesia:

- Agreement on Investment Promotion and Protection

- Trade agreement

- Agreement to avoid double taxation (VCCI, 2010)

— Indonesia's stable politics along with its strong relationship with Vietnam could be important factors that help VinFast effectively enter the market

Indonesia ThaiLan Malaysia Philippines Viét Nam Singapore Myanmar

Figure 2: Car consumption level in Southeast Asian countries

Indonesia is the leading country in terms of motorcycle consumption in Southeast Asia with 344,311 units Specifically, according to data announced by the Indonesian Motorcycle Industry Association (AISI), in 2023 the total number of motorbikes consumed in Indonesia will reach 5.221 million vehicles, an increase of nearly 3.3% compared to 2022 (reaching 5.06 million vehicles) This result helps Indonesia continue

to become the largest motorbike market in Southeast Asia and in the Top 5 countries consuming the most motorbikes in the world (Hoang, 2023)

Currently, Indonesia is promoting the consumption of electric vehicles, converting from gasoline cars to electric vehicles In addition, electric car sales in Indonesia skyrocketed in April 2023 after the government introduced tax incentives to reach 10,000 electric vehicles, demonstrating the transition to electric vehicles is happening rapidly and vibrantly

— This is a signal that the car market in Indonesia is very active and is a country with quite high product consumption This is a potential market for car businesses around the world

2.2 The average income

Indonesia GDP Per Capita Data

2018 2019 2020 2021 2022 GDP per capita 3,946 4,195 3,930 4,362 4,798

Figure 4: Average income per capita (GDP) Indonesia in 2023

Based on the above data, we can see that in 2023, Indonesia's per capita income (GDP) will reach 4,944 USD, an increase of 3.04% compared to 2022 (reaching 4,798 USD) Although this figure is lower than the average of countries in ASEAN (5,633

USD), compared to Vietnam, Indonesia's GDP is still higher (Vietnam's GDP in 2023 is 4,284 USD) This will create more favorable conditions for the consumption of Indonesian products when Vietnamese businesses enter the market and sell products (Economics, 2024)

2.3 Economic relationship with Vietnam

Since the establishment of diplomatic relations in 1955, Vietnam-Indonesia relations have always developed strongly in all fields Economic and trade relations between Vietnam and Indonesia are developing strongly In the first 11 months of 2023, bilateral trade turnover has reached 12.6 billion USD, of which Vietnam's exports to Indonesia reached 4.68 billion USD and imports from other countries reached 7.95 billion

USD

Indonesia encourages Vietnamese companies to increase investment in the country, especially to develop a green economy, and a typical example is the electric vehicle industry Indonesia and Vietnam are the only two countries in the region participating in the Fair Energy Transition Partnership (JETP) with developed countries (Linh, 2024)

Indonesia has a large and diverse population, with nearly 280 million people, ranking fourth in the list of countries (and dependencies) by population 59.1% of the population is urban (163,963,233 people in 2023) The increase in urban population also creates demand for personal transportation, creating opportunities for VinFast to reach the urban market The average age in Indonesia is quite young, only 29.9 years old, which may create a demand for convenient and modern personal transportation vehicles 3.2 Culture and Religion

Religion in Indonesia is extremely diverse and rich, especially Islam, which affects people's way of life and views, which can affect the choice of means of transportation Religion is also an important factor in Indonesian society that VinFast needs to ensure that its products and business strategies align with consumer values and beliefs

3.3 People’s attitude with products

Question:

Which vehicle do you plan to buy within the next one, three, and five

years? Which vehicle do you wish to buy in the long term future?

According to the research article "Indonesia Electric Vehicle Consumer Survey 2023", it shows a gradual decrease in the desire to use fossil fuel-powered motorbikes and increasing interest in sustainable means of transport such as electric motorbikes and hybrid cars With these signs, VinFast can see opportunities in developing and marketing electric and hybrid car products in Indonesia, while meeting the needs of a market increasingly concerned about environmental issues (PwC, 2023)

4 Technological issue

4.1 E-commerce

Data from "Indonesia E-Commerce Consumer Behavior Report 2023" Shows E- Commerce Popularity, Shopping Trends, and Post-Pandemic Economic Recovery” (Kredivo, Arkadata Insight Center, 2022), among all the number of e-commerce transactions, consumers with the highest number of e-commerce transactions will come from married consumers at a rate of 58.2% The proportion of e-commerce transactions from single consumers is 38.7% and the remaining 3.1% is from other groups

However, Indonesian Minister Zulkifli Hasan's new regulation banning the sale of goods on social media platforms could create challenges for businesses, including VinFast So when entering, businesses will follow the trend of selling products in traditional formats (Administration, 2024)

4.2 Intellectual property right

During the ASEAN working group meeting on intellectual property on November

7, 2023, Indonesian Intellectual Property Director Min Shihen affirmed that Indonesia, as

an ASEAN member, will support all established programs agreed within the framework

of the ASEAN Intellectual Property Rights (IPR) action plan for the period 2016-2025 Furthermore, the Patent Law in Indonesia not only offers legal protection for national patents, but also for international nationals whose registration is carried out on Indonesian territory

5 Ethics issue

5.1 The rate of corruption

Indonesia has long been famous for corruption from small to large levels However, since the ethical leadership of Mr Joko Widodo since 2014, there has been strong power to fight corruption More than that, the establishment of the KPK (Committee for Continuing Corruption) has helped strengthen the anti-corruption campaign and raise Indonesia's position in Transparency International's corruption perception index (CPI) (Anh, 2020)

5.2 The view of people with environmental protection

Accessibility and availability of charging

Longer service life

Not many people use it

No need t queve while charging

Liked the model

Figure 7: Survey on why consumers choose to buy electric vehicles

According to the research article "Indonesia Electric Vehicle Consumer Survey 2023", a large majority of Indonesians pay attention to environmental protection, with 80% of respondents agreeing that the environment is an important aspect of their lives

buy electric car This trend shows increased social responsibility and environmental awareness among consumers, and could create a potential market for electric vehicle products and clean transportation solutions (PwC, 2023)

6 Legal issue

6.1 The current legal system

Indonesia's legal system combines many elements such as custo ms, religious law (especially Islamic law), and civil law of continental Europe, creating diversity and difference compared to other countries in the world Southeast Asia region VinFast needs

to master three elements of Indonesian law, especially Islamic law, to avoid trading in restricted products

6.2 Legal policy for the electric vehicle industry

6.2.1 Import and export support policies

Indonesia has introduced support policies for the electric vehicle industry, with the goal of electric vehicle sales accounting for 20% of the total number of vehicles sold in the country by 2025

New regulations eliminate special consumption tax for electric vehicles in fiscal year 2024 and import taxes until the end of 2025, as well as reduce value added tax for electric vehicle buyers (BNews, 2024)

6.2.2 Electric vehicle industry standards in Indonesia

The government sets a minimum local content (Tingkat Komponen Dalam Negeri) from 35% to 40% from 2019, which is periodically raised to reach a maximum local content of 80% by 2026 or 2030

Every BEV imported, manufactured or assembled in Indonesia must be registered and tested These vehicles must comply with the requirements according to the customs registration number and periodically inspected by the relevant working unit in the local government

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BEV battery waste must be recycled and/or managed by companies licensed to recycle or manage battery waste according to current regulations ( Marshall Situmorang, Audria Putri, 2023)

6.3 Principles of cooperation with Vietnam

Vietnam and Indonesia are developing a strong cooperative relationship, especially

in the fields of economics and trade

The President of Indonesia welcomes Vietnamese businesses, including VinFast,

to invest in Indonesia and promote cooperation in developing the renewable energy and electric vehicle ecosystem

The two sides (Indonesia - Vietnam) agreed to increase cooperation in energy transition, digital transformation, innovation and developing the electric vehicle and battery ecosystem They will also open more direct flights and enhance connectivity between their localities, businesses and residents (Forum, 2024)

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