Vinfast Automotive Factory In Usa.pdf

Trang 2 TABLE OF CONTENTS VINFAST AUTOMOTIVE FACTORY IN USA 1 a Introduction about VinFast 1 b Why did VinFast choose North Carolina USA to locate their plant?. 7 Trang 3 VINFAST AUTOM

TRƯỜNG ĐẠI HỊ TAI CHINH - MARKETING

een

TABLE OF CONTENTS

c) Which kind of entry mode VinFast chose when decided to build this EV plant in USA? Explain the pros and cons for this entry mode from the international

d) What kinds of international business strategy which VinFast chose to apply when establish this plant in USA? Explain the reason VinFast chose this strategy

e) Which factors that VinFast should pay attention to when conducting the marketing strategies for this plant’s products in the USA? According to you, the

f) From international business’s point of view, propose the suitable organization structure for this EV plant and explain the reason proposing such structure for this

VINFAST AUTOMOTIVE FACTORY IN USA a) Introduction about VinFast

VinF ast — full name is VinFast Manufacturing and Trading Company Limited —

is a Vietnamese electric car and motorcycle manufacturing company with the desire to become a global smart electric car company VinFast was established in 2017 and is a subsidiary of VinGroup founded by Mr Pham Nhat Vuong The name of the company

is abbreviated from the phrases “Viét Nam — Phong cach — Án toàn — Sang tao — Tién phong" (Vietnam — Style — Safety — Creativity — Pioneering), expressing the aspiration

to bring Vietnamese brands to the international community, promoting the development

of the country's industry and economy Headquartered in Dinh Vu — Cat Hai economic zone (Hai Phong), the current CEO is Ms Le Thi Thu Thuy

About the company’s Vision: “Driving the movement of the global smart electric vehicle revolution.” VinFast's vision expresses the long-term goals, aspirations, and future image that businesses want to aim for Specifically, aspiring to become a leader

in the global field of smart electric vehicles, the company focuses on investing in technology development towards creating environmentally friendly and user-friendly products The company's Mission statement is "To create a more sustainable future for everyone" Demonstrating the reason for the company's establishment with the mission

of bringing electric vehicles to protect the environment to create a green future for everyone With the Brand Philosophy: "Always putting our customers first VinFast relentlessly innovates to create high-quality products and exceptional experiences for everyone" VinFast gives customers three core values: "High-standard products, Competitive pricing, Outstanding after-sales"

Since its launch, VinFast’s projects have always received great attention from the public in Vietnam As recently as the plan to build a manufacturing plant in North Carolina (USA) With an investment capital up to two billion for phase | of the project, VinFast affirms serious investment as well as ensuring production autonomy, meeting the needs of customers not only in the US market but also in the world market

b) Why did VinFast choose North Carolina (USA) to locate their plant?

VinFast chose North Carolina (USA) to locate their plant because of the following reasons:

— Electric cars are the trend of the world, and the US is one of the countries that embrace and use electric cars the most today With electric vehicle development infrastructure that has been completed for a long time and is still being continuously upgraded, VinFast will benefit from this when building a factory here

— InAugust 2022, President Joe Biden signed the Inflation Reduction Act in which the U.S government will subsidize green energy cars with credit incentives worth

up to $7,500, and the Act will officially go into effect in 2023 With the construction of a factory in North Carolina, VinFast's electric vehicle products will enjoy this policy, while also significantly reducing costs after not having to bear import taxes and fees

— North Carolina has consistently been among the leading states in advancing its clean energy economy and local greenhouse gas reduction goals, are on track to become central to America's emerging clean energy economy The location of VinFast's electric vehicle factory here will receive great support and cooperation from local authorities At the same time, in the past 2 years, North Carolina has emerged as one of the new attractions for businesses operating in the field of technology Big tech companies like Apple, Microsoft, and Google have all planned to choose this location to expand their campus VinFast can easily access and cooperate with leading technology companies

— Received major incentives for the North Carolina project, such as significant financial assistance of $1.2 billion from the City of Sanford, Chatham County, and the Golden Leaf Foundation Incentives from North Carolina trade organizations (not part of the government budget) amount to hundreds of millions

of dollars

— The North Carolina state government pledges to actively coordinate to ensure VinFast can recruit a highly skilled workforce to meet the company's development requirements Today, the auto industry is playing a significant role

in creating jobs for the American workforce For that reason, the U.S government

2

is highly active in upskilling workers in the automobile industry VinFast's opening of an electric vehicle factory in the US will take advantage of abundant and high-quality human resources, saving costs in recruiting and training human

resources

c) Which kind of entry mode VinFast chose when decided to build this EV plant in USA? Explain the pros and cons for this entry mode from the international business’s point of view

The entry mode VinFast chose when deciding to build this EV plant in the USA

is Wholly owned subsidiary In wholly owned subsidiary, the firm owns 100% of the stock Establishing a wholly owned subsidiary in a foreign market can be done in two ways: greenfield venture or acquisition And by choosing to build a factory to manufacture and sell its vehicles directly, VinFast has chosen the greenfield venture form This entry mode has the following advantages and disadvantages:

Advantages:

Firstly, when choosing the entry mode as a wholly owned subsidiary, VinFast wants to aim to protect the monopoly of technology, the core of the company High-tech companies, pharmaceutical companies, etc, all prefer this method to expand in foreign markets such as Samsung Electronics or Unilever both have headquarters and factories

in Vietnam VinFast, as a smart electric vehicle company, always puts the protection of proprietary technology first, which is a crucial factor in creating a competitive advantage over competitors The factory built in North Carolina with 100% ownership of VinFast will help the company not have to worry about revealing technological secrets

The second advantage, VinFast will have strict control over the factory in the US This will help standardize workflows, training employees, company culture and procedures with other branches around the world At the same time, decision-making will be faster and easier because the power to make strategic decisions will rest with the parent company A fully owned subsidiary with meticulously organized and tight plans under supervision and quality-maintained products will ensure the company's reputation

And finally, having a wholly owned subsidiary abroad means that VinFast will receive 100% of the profits from the market without having to share with any other party In other entry modes such as licensing, franchising, joint ventures, the company will have to share its profits with the partner At the same time, owning a factory in North Carolina helps VinFast save on expensive taxes and export costs

Disadvantages:

The first disadvantage, the company will need to have a huge investment cost when choosing to establish a greenfield venture in a foreign country because building a branch of the company overseas will require a big investment as can be seen in the case study that VinFast has spent up to $ 2 billion on phase | ofits project to build the factory Secondly, VinFast will bear the risks of setting up overseas operations Like having to learn about cultures in different countries and forms of doing business abroad Risks in differences in the financial system, taxation, politics, government intervention

in the United States At the same time, it will take a lot of time to build a factory as well

as fully penetrate the US market Causing the parent company in Vietnam to incur a large loss in the beginning During the construction of the plant, environmental risks such as unfavorable conditions may cause the project to drag on or competitors may acquire subsidiaries in the United States to shorten the penetration process

d) What kinds of international business strategy which VinFast chose to apply when establish this plant in USA? Explain the reason VinFast chose this strategy VinFast chose the transnational strategy to apply when establishing this EV plant

in the USA The reasons are:

Firstly, because of low costs When implementing the transnational strategy, the first factor VinFast wants to aim for is the achievement of cost reduction The location

of the plant in North Carolina will initially help the company reduce export costs in the

US market, when a cost is reduced, the price will decrease, leading to a decrease in the selling price With a start-up like VinFast, having a competitive price with existing electric vehicle products on the market will attract the attention of customers, increase consumption from people In addition, the state of North Carolina as well as the US government have economic incentives for VinFast when building an electric vehicle

4

factory here such as financial support worth $ 1.2 billion, as part of the program to promote the use of green vehicles in this country The US currently has thousands of trained workers in the field of automobile manufacturing, VinF ast will save a lot of labor training costs as well as take advantage of this large resource The US is currently a country with high demand for electric vehicles with infrastructure as well as production technology for electric cars in this country that has been completed and is still being upgraded Entering the market allows VinFast to learn, absorb the most advanced technologies, and apply them to its products to develop stronger At the same time, access to high technology will help reduce production costs significantly

Secondly, respond to local demands The use of a transnational strategy in the US market as well as the international market helps VinFast can learn about the needs and insights of customers, thereby finding methods to design customizing products, and services such as battery size production, charging location to match the charging station system in the US as well as planning marketing campaigns to suit customers’ tastes At the same time, the company will react more quickly to market changes, such as changing electric car rental prices in the US to compete with Tesla when it announced a reduction

in electric car prices in January By having a factory in North Carolina, VinFast will be able to deliver cars to customers quickly At the same time, after-sales policies such as free rescue 24/7 during the warranty period or 24/7 battery rescue at the requested location will be made easier VinFast has participated in car show events in the US as well as organized a series of test drive events to create conditions for customers to directly experience and evaluate products Through a series of test drive events, VinFast has received positive reviews for its comfortable interior as well as smart, responsive, and easy-to-use technology from customers, and other useful contributions to help the automaker provide a better product

VinFast uses the transnational strategy to be able to achieve both low costs and localization, helping the company gain an advantage and succeed in the US market, because this is a potential and difficult market, being able to succeed here will be an affirmation and a premise for the company to move into other markets and the world market At the same time promote highly autonomous business units as well as close coordination with each other

e) Which factors that VinFast should pay attention to when conducting the marketing strategies for this plant’s products in the USA? According to you, the standardizing advertising strategy is suitable for VinFast in this case?

When implementing marketing strategies for this plant's products in the USA, I think VinFast should pay attention to these factors:

The difference in language is the first factor that can be seen VinFast needs to be careful with the language it is not familiar with, especially when using metaphors or special words to avoid leading to unnecessary controversy It is best to hire more local marketing staff

Leading to the next factor 1s cultural differences Eastern and Western cultures have huge differences And the US is also a country with a mixture of ethnicities, religions, and parties, so it is even more important to pay attention to culture in marketing VinFast should also pay attention to shopping habits as well as the festive seasons of the year in this country Americans will celebrate holidays like Thanksgiving, Christmas, etc, so big that the company can rely on this to launch appropriate promotion strategies, boosting revenue during the festive season

Marketing communication in the US is remarkably diverse in addition to advertising on TV, and social networking platforms like in Vietnam The US is very fond

of outdoor advertising, which can be seen by large corporations such as CK, Apple, etc, spending a lot of money on large outdoor billboards, especially in busy urban areas, not only attracts the attention of passers-by but also helps the company spread brand recognition And not to mention Times Square, where thousands of people commute every day with prices ranging from a few thousand to millions of dollars for an advertising screen here Radio ads and podcasts are also a viable choice, as Americans use cars a lot, so they often listen to them on the road

I do not think the standardizing advertising strategy is suitable for VinFast in this case Because of the great cultural differences not only between Vietnam and the US but also between the states in this country There are certain differences between states here

in terms of customer insights, or advertising regulations VinFast should divide into certain areas and run appropriate ads in those

f) From international business’s point of view, propose the suitable organization structure for this EV plant and explain the reason proposing such structure for this plant

For VinFast, I think the company should choose the global matrix structure, like

I mentioned before they chose the transnational strategy to apply when establishing the

EV plant in the US So, matrix structure suits the most, because it allows the company

to control both worldwide area and product division

I propose the Functional Structure for the EV plant in the USA I chose functional structure because as can be seen above the case study mentioned that the EV plant will have three fundamental areas: electric cars and buses production and assembly, EV batteries production, and ancillary industries for suppliers In addition to the three primary areas, I suggest the company also needs additional departments such as human resources (HR), marketing, accounting, research & development (R&D), customer care, etc And here is the recommended structural model for the EV plant:

Top Management

EV plants should be organized according to the functional structure, the first reason is that departments will have highly specialized personnel who are experts in their field Employees know what they must do, and creative thinking, planning, and monitoring are done effectively And because they are highly specialized, departments will achieve the highest performance when working When planning to innovate products, the R&D department will work together and produce the most feasible solutions, creating novelties for products, and attracting customers The marketing

7

department will know which platform the product should be advertised on, and which KOLs, KOCs, etc, are suitable for the company's orientation, and product image From there, the products and plans are given to ensure the best

The second reason is that management becomes easier Top managers will make strategic decisions and relegate them to departments Department heads will make more in-depth decisions and clear instructions for employees in their departments At the same time, when there are mistakes, accountability will become easier because departments have their functions All employees also know their responsibilities and will do the best they can When there is a bad reflection on the consulting, or answering questions, the customer service department will be responsible When errors occur in the business report, the finance department will work together to review and find mistakes as soon

as possible

At the same time, specialization also leads to mass production with standardization This is a perfect fit for EV plants as they produce smart electric vehicles Standardization will produce the best products, develop the company's reputation, and avoid errors