Strategy for improvement and upgrade of vinfast’s vf8 model suv line

Source by VinFast Trading and Production Joint Stock Company In June 2017, VinFast was established as a startup in the automotive field, with help from VinGroup - a large private enterpr

HO CHI MINH CITY UNIVERSITY

OF FOREIGN LANGUAGES - INFORMATION TECHNOLOGY

FACULTY OF BUSINESS ADMINISTRATION

STRATEGIC MANAGEMENT

Major: International Business

STRATEGY FOR IMPROVEMENT AND UPGRADE

OF VINFAST’S VF8 MODEL SUV LINE

Group 3

Nguyễn Thị Tuyết Nhi - 20DH120953

Lê Thị Ngọc Yến - 20DH120893 Huỳnh Như Ý - 20DH120592

Course: 2020 - 2024

Instructors: Huỳnh Bảo Thạch HCMC, 12/2023

TABLE OF CONTENTS

CHAPTER 1: INTRODUCTION AND COMPANY OVERVIEW re 1

11 OVERVIEW ABOUT VINFAST Sàn n2 HH TH HH HH tê, 1

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CHAPTER 2: BUSINESS SITUA TION ANALYSIS Q.2 He 6 2.1 VINFAST INTERNAL ASSESSMENT nhe 6 2.1.1 Marketing mÌỉx ng ng SH 1121111111111 1 11 111111 11111111111 rrệp 6 PP AM) 10

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CHAPTER 3: STRATEGVY RECOMMENDATION che 15 3.1.1 Reason fo use SWOT mafFiX SSnn Tnhh HH HH 0 11 re 15 TS À0)\¡ 0v) O 15

3.13 QSPM MATRIX SH HH Hài 20 K AM) 222 na ắ-.-.(34 aes 24 CHAPTER 4: STRATEGY IMPLEMENTATION SH re, 25 4.1 Three levels 6ê) 0n e 25

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4.3 The detailed plan for implementing the proposal strafegy ác coi 27 09019 00)9 115 ad AA 33

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LIST OF TABLES:

Figure 04)0 1061108) <‹443 4 2 0020100210040: 040006 )(sskyi 7 Figure 2-2 The distribution form of Vinfas( n 12 HH2 HH HH2 nọ 8 Figure 2-3 David Beckham at the Paris Motor Show QQ Q.02 nhe 8 Table 1-1 The basic information about Vinfas( Q0 2n n2 2H Hs n ng 22 xe l Table 1-2 Workshops of Vinfast Factory 0 0.000000ccccccccccccccccessececetseceeseeecesseeeestseesetseeees 3 Table 2-1 TFE Matrix of Vimfast 000000000000 nằóa 10 Table 2-2 EFE Matrix of Vinfast 000 12H H22 HH HH HT n1 2 01111111 H121 2151 1kg 12 Table 3-1 SWOT MA TRÍX 2 0 2012211211121 1111 11 11221 18111111111111110 11111 16g k ngu 15 IV) CA) `8 na aaaaa 20 I1 10) 08.0.1004 170 “s4 26 Table 4-2 The đetailed pÏan - 2 2201222111121 112211 1151111118111 1 511g 22111 x khen 28 Table 4-3 Potential Obstacles Q0 000220121122 11122 1115121115211 11 1111111111201 111kg 30 Table 4-4 Management Information System (MIS) - Q0 0221112222222 31

CHAPTER 1: INTRODUCTION AND COMPANY OVERVIEW

1.1 OVERVIEW ABOUT VINFAST

Company name VINFAST TRADING AND

PRODUCTION JOINT STOCK COMPANY

Address of headquarter No.7, Bang Lang street, Vinhomes

Riverside Urban Area, Viet Hung ward, Long Bien district, Hanoi City, Vietnam Representation Ms Le Thi Thu Thuy

Field of business The company produces and sells electric

cars and electric motorbikes

(Source by VinFast Trading and Production Joint Stock Company)

In June 2017, VinFast was established as a startup in the automotive field, with help from VinGroup - a large private enterprise and one of the leading Technology - Industry - Goods Service Groups early Vietnam VinFast is an acronym that stands for phrases like

"Vietnam-Style-Safety-Creativity-Pioneer." The company's name indicates that its goal is to become a sophisticated brand that is well-known throughout the world, which will lead to

opportunities in the car and motorcycle markets that are appropriate for the customer's income and target market folks

One of the biggest industrial projects in our nation, VinFast currently occupies 335 hectares and has a representative office in Hanoi The manufacturer has invested a total of 3.5 billion USD in this project Phase | capacity of the factory is 250,000 vehicles per year; phase 2 capacity 1s 500,000 vehicles per hour; and production speed is 38 vehicles per hour The VinFast factory complex consists of a training center, an R&D research and development institute, an operator's house, an electric vehicle production area, a car production area, and a supporting industrial park VinES will combine with the maker of electric cars to be a leader in technology and concentrate resources on boosting research and development of batteries for electric vehicles

¢ The Workshops of the factory complex have the following areas and capacities:

Table 1-2 Workshops of VinFast Factory

Workshops Area Capacity

1 | Stamping workshop 50.000 m’ 16 parts/minute

2 | Vehicle body welding workshop | 100.000m? 38 vehicles/hours

3 | Paint workshop 25.000m? 800 vehicles/day

The VinFast plant, which occupies 800 hectares in the Triangle Innovation Point industrial park in North Carolina, is divided into three main sections: an area for the production and assembly of electric cars and buses; a section for the production of batteries for electric vehicle products; and a supporting industrial park for suppliers Upon its completion in 2025, this plant will serve as VinFast's primary supply source for the North American market, facilitating the optimization of business operations and production

1.1.3 Scale of operations

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By 2024, VinFast intends to expand its operations into at least 50 open markets worldwide In addition, VinFast declared intentions to construct an assembly plant in India, the third-largest global auto market following plans to establish factories in Indonesia and the United States

1.1.4 Vision & mission

- Vision: “Driving the movement of the global smart electric vehicle revolution.”

- Mission: “To create a more sustainable future.”

1.1.5 The organization’s status in Vietnamese market

Financial Situation: VinFast released the following sales data for the first half of 2023: the company's total revenue for the second quarter of 2023 was 334.1 million USD,

up three times from the previous quarter and during this same period During this time, 9,535 electric vehicles were delivered VinFast's net loss to date is 526.7 million USD, down 11.2% from the first quarter of 2023 despite positive revenue

Products: VinFast continues to expand its electric car product line, discontinuing gasoline car production from July 15, 2022, and focusing solely on electric cars VinFast has created a product line of seven electric car models as of July 2023, covering segments

A, B, C, D, and E These models include the VF e34, VF 5 Plus, VF 6, VF 7, VF 8, VF9, and VF 3

Community Response: Through the middle of 2023, the market and community's response to VinFast is still mainly positive While there are disagreements regarding the quality of certain car models, like the VF e34 and VF 8, due to issues with sensors and air conditioning systems, there are worries about automotive technology While ignoring minor software issues, some people commend VinFast's electric cars for their superior quality and technological advantages Despite these obstacles, VinFast's remarkable growth rate in the first half of 2023 is evidence of the effectiveness of its varied business strategy and dedication to ongoing innovation and product enhancement

1.2 The purpose of the report

This report aims to give readers a thorough understanding of VinFast in terms of both internal and external factors, as well as possible strategies that the company may implement

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To put it briefly, the report will concentrate on precisely outlining VinFast's objectives and assessing elements of the business environment to develop a strategy that is in line with those objectives Moreover, assess those variables to determine whether or not VinFast's approach can be impacted by them

1.3 The scope of the report

The report was conducted within the scope of VinFast Production and Trading Company Limited Research and analyze the company's business activities through matrices such as IFE, EFE, SWOT and QSPM to evaluate, select and decide on strategies suitable to the current situation of the business

CHAPTER 2: BUSINESS SITUATION ANALYSIS 2.1 VINFAST INTERNAL ASSESSMENT

2.1.1 Marketing mix

2.1.1.1 Product:

VinFast has benefited from the extensive knowledge and expertise of foreign factories

in the production of its goods This demonstrates VinFast's meticulous approach to product development To effectively compete with foreign brands and help VinFast products gain more recognition, the logo design is typically also painstakingly crafted to create a highlight VinFast specifically joins forces with well-known international kings in the automotive design sector VinFast's design, therefore, consistently radiates European luxury, contemporary beauty, and quality that is comparable to that of venerable brands like Audi, Mercedes-Benz, BMW

VinFast is a company that wants to see Vietnam have a bright, sustainable future VinFast will therefore implement a product diversification strategy, but every product has a distinct personality that combines modernity, tradition, and uniqueness In particular, ground-breaking models like VF e34, VF 8, and VF 9

VF e34

Figure 2-2 VF e34, VF 8, and VF9 Sedan and SUV models are developed based on the most ideal size ratios in the international auto industry It has an impressive design, serves customer needs, integrates many convenient features, and has a powerful engine

2.1.1.2 Price

Consumers are always looking to purchase premium automobiles at reasonable prices VinFast prices its cars lower than European brands but higher than Korean and Japanese brands because it understands the psychology of its customers VinFast has been able to enter the market and increase its market share more readily by using this tactic VinFast has implemented a 3-no pricing strategy including no depreciation, no interest, and no financial costs In addition to the price support plan, which consists of interest-free loans for the first two years and support for interest rates in subsequent years This demonstrates that, despite VinFast's price increases, customers continue to be the primary beneficiaries as they continue to take advantage of price breaks

2.1.1.3 Place

Regarding the sales and distribution strategy, VinFast has opted for a single-tier distribution channel as follows:

Figure 2-3 The distribution form of Vinfast The single-tier distribution channel does not rely on authorized dealers but sells directly through company-owned stores VinFast has numerous support policies for dealers

In addition, in the process of selecting dealers, VinFast has applied strict criteria such

as requirements for geographical location and showroom space, as well as business experience Despite the rigorous selection criteria, VinFast has many support policies for its dealers

VinFast also collaborates with GM to minimize the time and resources needed for independent design and management of a distribution system This collaboration helps expedite the commercialization of VinFast car models in the Vietnamese market

VinFast consistently chooses to collaborate and establish connections with the most prestigious companies and people worldwide VinFast's international cooperation strategy begins with AUTOBEST, which connects VinFast's global intelligence They make large technological investments, foster confidence in VinFast, and instill pride in the Vietnamese brand But customers don't really realize these benefits until they get a chance to try and confirm them for themselves Furthermore, VinFast also applies flexible and creative sales policies along with high-end promotional services such as a 3-zero price policy, interest exemption when purchasing installment loans for the first 2 years, 10% discount when paid straight,

2.1.2 TFE Matrix

Table 2-3 IFE Matrix of Vinfast

Weighted Strengths Weight Rating

Score

1 [Highly qualified human resources 0.10 4 0.40

2 \Great value assets 0.06 3 0.18

3 [The reputation of Vingroup 0.07 4 0.28

4 Product images have bold Vietnamese 0.04 3 0.12

5 |The distribution system now covers the whole

0.06 4 0.24 country

6 [Effective marketing strategy Enhancing brand

" 0.05 4 0.20 recognition

7 |VinFast has good incentives for customers and

0.06 4 0.24 agents

8 |VinFast masters its battery production

0.03 3 0.09 technology

9 |VinFast has a variety of products to meet

0.04 3 0.12 customer needs

10/VinFast is the first car company to successfully

integrate advanced positioning technology into 0.05 3 0.15

electric cars

10

Weiehted Weaknesses Weight Rating

2 |VinFast repair components are not popular 0.04 2 0.08

3 IR&D expense ratio has a difference compared to

0.06 2 0.12 revenue

4 Sales costs are higher than production costs 0.05 2 0.10

5 |Vehicle sensor technology is not perfect 0.04 2 0.08

6 |There is no car line that stands out more than its

competitors because it focuses on producing 0.06 1 0.06

many car lines

7 \Over — reliance on international partners can

0.05 1 0.05 increase supply risks

8 |Lack of experience in researching and

0.04 2 0.08 implementing new automotive technology

9 |The overall quality of electric car products is not

0.03 2 0.06 highly appreciated

10|Difficult to maintain competitive prices with

0.02 1 0.02 competitors in the same segment

Total IFE Score 1.00 2.72

(Source by the Author) Comment: IFE matrix is used to summarize and evaluate the important internal strengths and weaknesses of a business Table 2.1, with a total score of 2.72, it shows that VinFast is currently managing internal factors well In addition, thanks to the help from parent company Vingroup, VinFast has highly qualified human resources and abundant production resources With domestic production processes that are of the same quality as foreign countries as well as taking advantage of effective marketing strategies, strengthening brand recognition and a distribution system that now covers the whole country These are the strengths need to develop more in the future In addition to its

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strengths, VinFast also faces challenges including prolonged losses, limited repair parts, technical problems with vehicle sensors, sales costs and overall product quality Addressing these weaknesses 1s critical for long-term sustainability

2.2, VINFAST EXTERNAL ASSESSMENT

2.2.1 EFE Matrix

Table 2-4 EFE Matrix of VinFast

Weighted Opportunities Weight Rating

Score

1 |Vietnam’s GDP in 2022 increases by 7.72%

0.10 3 0.3 compared to 2021

2 |Political stability, supported by the government 0.07 4 0.28

3 JYoung generation tend to consume green 0.04 4 0.16

4 |The demand of using car in Vietnam in 2022

0.06 3 0.18 increased by 29.1% compared to 2021

of “Vietnamese people use Vietnamese products’

9 |Develop and expand car rental services 0.04 2 0.08

10 Take advantage and develop the trend of product

a 0.05 2 0.1 personalization

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1 |Domestic support industries are weak 0.06 4 0.24

2 |Pressure from competitors in both the electric car’

0.05 4 0.20 and gasoline car industries

3 |In Vietnam, EURO 5 emission standards will be

0.04 3 0.12 applied from 2022

4 |Consumers like to use foreign products 0.05 2 0.10

5 |Automobile production costs increase about 15%

0.04 3 0.12

in 2023

6 |Electricity prices increase 0.06 4 0.24

7 |Pressure to expand foreign markets 0.05 3 0.15

8 |There is no policy to support the electric vehicle

oe 0.04 2 0.08 manufacturing industry

9 |Facing the challenge of global economic

0.03 1 0.03 fluctuations

10 |Infrastructure for electric vehicles in Vietnam

0.02 3 0.06 still has many difficulties

Total EFE Score 1.00 2.94

(Source by the Author) Comment: EFE matrix is a matrix that helps analyze and evaluate economic, social, cultural, environmental, political, legal, technological, and competitive information Through table 2.2, with a total score of 2.94, it shows that VinFast is at a fairly average level in the Vietnamese auto industry as well as the response ability of the Vinfast auto industry is at a pretty average level VinFast needs to take advantage of opportunities from external environments such as political stability and government support In addition, the growth of the economy as well as the need to pay attention to green consumer products leads to improvements and development of environmentally friendly vehicles Furthermore, the support of Vietnamese people also creates opportunities for VinFast's development However, VinFast needs to pay attention to external threats to minimize risks to help VinFast maintain and expand its market For example, due to competitive pressure from

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competitors, VinFast needs to focus on improvement and research to create high-quality products and services Next, the weak domestic supporting industry can affect the business's supply capacity, so VinFast must be proactive in finding reliable partners from abroad to invest in building a stable supply From there, creating a product that suits the needs of consumers who like to use foreign products

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CHAPTER 3: STRATEGY RECOMMENDATION 3.1 Strategy generation

3.1.1 Reason to use SWOT matrix

Matrix SWOT is a matrix that provides a thorough perspective of the enterprise's internal and external issues SWOT analysis, which focuses on strengths, weaknesses, opportunities, and challenges, assists in defining the overall strategy based on essential elements SWOT is more thorough than other matrices like as SPACE, GRAND, and BCG, focusing not only on certain issues but also looking at the environment from many different viewpoints Furthermore, SWOT analysis can be applied to a wide range of enterprises Most importantly, it is simple to learn and use, allowing to make decisions and establish strategies rapidly

Weaknesses

Bear losses for 3-5 years, allowable loss is 18.000 billion VND/year (W1)

Vinfast repair components are not popular (W2)

R&D expense ratio has a difference compared to revenue

(W3)

Sales costs are higher than production costs (W4) Vehicle sensor technology is not perfect (W5)

There is no car line that stands out more than its competitors because it focuses on producing many car lines (W6)

Young generation tend to

consume green (O3)

The demand of using car

to meet customer needs (S9) Vinfast is the first car company

in Vietnam to successfully integrate advanced positioning technology into electric cars

This is atmed at expanding international markets and taking advantage of high GDP growth opportunities

S1-03: R&D Strategy to Enhance Product Technology Establish international partnerships with research institutions and specialized partners in the automotive sector

Over — reliance on international partners can increase supply risks (W7)

Lack of experience in researching and implementing new automotive, technology

(W8)

The overall quality of electric car products is not highly appreciated (W9)

Difficult to maintain competitive prices with competitors in the same segment (W10)

W2 —- O9: Expansion Strategy for Repair Component Network and Car Rental Service Development VinFast can expand the service

by providing repair parts to customers, while developing the rental services This helps optimize the source of income for VinFast

W4 - 04- W2: R&D Strategy for Improvement and Product Upgrade

Take advantage of the R&D strategy to improve and upgrade environmentally friendly electric car products, while addressing and upgrading the

imported products (O6)

Technology changes (O7)

Support from Vietnamese

users, leading the trend of

“Vietnamese people use

Infrastructure for electric

vehicles in Vietnam still

has many difficulties

competitors in both the

electric car and gasoline

SS — O4: Expansion of Distribution System in Vietnam

Expand the existing distribution system to meet the growing

1n the Vietnamese automotive market

demand for vehicles

S10 — O7: Investment Strategy

in Positioning Technology and Sensors

Positioning and Sensing Technology

Investment m upgrading positioning and sensor technology to maintain competitiveness in the electric car industry, seizing market opportunities in technology

S3 - T2: Domestic Collaboration Enhancement Strategy

skilled

Utilize a highly workforce to expand close collaboration with colleagues in the

strategic

establish This

industry and partnerships

helps relieve the pressure from

sensor technology of previous models This reduces environmental impacts and reduces the risk of errors in vehicle technology, meeting customers’ demands for safe and convenient vehicles

W4-T2: Diversification of Supply Sources Strategy This involves seeking new supply partners, connecting with high-quality component manufacturers from international markets to reduce any reliance on a weak domestic supply source, and increasing