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MBA 2009 Tang, J..Pdf A STRATEGIC ANALYSIS OF THE FUTURE EXPANSION OPTIONS FOR AN ESTABLISHED GAS COOKING APPLIANCES MANUFACTURER IN VIETNAM by Yuen San Tang B. Sc. (Hons), Universiti Putra Malaysia, 1999 PROJECT SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF MASTER OF BUSINESS ADMINISTRATION In the Faculty of Business Administration © Yuen San Tang 2009 SIMON FRASER UNIVERSITY Summer 2009 All rights reserved. However, in accordance with the Copyright Act of Canada , this work may be reproduced, without authorization, under the conditions for Fair Dealing . Therefore, limited reproduction of this work for the purposes of private study, research, criticism, review and news reporting is likely to be in accordance with the law, particularly if cited appropriately. Approval Name: Yuen San Tang Degree: Master of Business Administration Title of Project: A Strategic Analysis of Future Expansion Options for an Established Gas Cooking Appliances Manufacturer in Vietnam Supervisory Committee: ________________________________________ Dr. Neil R. Abramson Senior Supervisor Associate Professor of Strategy Faculty of Business Administration ________________________________________ Dr. Pek-Hooi Soh Second Reader Assistant Professor Faculty of Business Administration Date Approved: ________________________________________ ii Abstract This paper speaks to the prevailing business environment presently encountered at Kein Hing Industry Sendirian Berhad (KHI), a leading gas stove manufacturer based in Selangor, Malaysia. KHI manufacturers gas stoves under the brand name “Zenne”. KHI aims to expand into Vietnam. The scope of this paper covers topics such as company overview, external industry analysis, and internal company analysis using strategic tools such as Michael Porter’s five forces framework. This paper will evaluate each of the entry strategies for KHI to penetrate the Vietnamese market and conclude with recommendations for KHI’s expansion plan and suggest a sequence of implementation order and timeframe. iii Dedication ~ To Mr. Toon Choy Yap, the Managing Director of KHI ~ Thank you for your support, advise, encouragement, and generosity that guided me throughout my one year MBA course. I truly appreciate that you have taken an interest to challenge me to be at best and mould me to become a better leader. I am looking forward to developing further as a leader and business person with your continuous guidance. ~ To My Parents, Mr. & Mrs. Kum Meng Tang ~ Thank you for your unending love and support throughout my lifetime. Both of you have given me so many opportunities to see the world from different perspectives. I love you both very much. iv Acknowledgements Thank you to Dr. Neil Abramson, whose patience and encouragement motivated me to be my best. I have learned how to do a proper industry analysis for a company and an international market entry strategy through this paper and BUS 710 Emerging Market course. I am looking forward to apply what you had taught me in the real business world. I would like to thanks Dr. Ed Bukszar for choosing me to study this MBA course. I have gained in-depth knowledge about business administration, Canada and have seen my life from a different angle. Thank you to Dr. Pek-Hooi Soh for giving her valuable comments on this paper. Also special thanks to Lisa Siew, the fantastic MBA program coordinator for her smiling face and encouragement. Thank you Karen Moratz and Mark Bodnar, SFU Librarians, for teaching me how to find sources correctly. Special thanks to Vinay Nand for proof reading and friendship. I would also like to thanks my colleagues, Teik Cheng Lim and Thiem Sui Wong in KHI for their data and information on the latest KHI developments. Professionally, I would like to extend my sincere appreciation to my direct superior, the Managing Director of KHI, for his unwavering support and encouragement. Last, but not least, I would like to acknowledge all my family members back in Malaysia. v Table of Contents Approval ..................................................................................................................................... ii Abstract ..................................................................................................................................... iii Dedication.................................................................................................................................. iv Acknowledgements ..................................................................................................................... v Table of Contents ....................................................................................................................... vi List of Exhibits......................................................................................................................... viii List of Tables ............................................................................................................................. ix 1: Introduction .......................................................................................................................... 1 1.1 Purpose .............................................................................................................................. 1 1.2 Overview of the Industry .................................................................................................... 2 1.3 Overview of the Company .................................................................................................. 6 1.4 Overview Current Strategy in Vietnam ............................................................................. 11 1.5 Scope, Methodology and Assumptions ............................................................................. 15 1.6 Structure........................................................................................................................... 16 2: Industry Analysis – The Five Forces of Competition ......................................................... 17 2.1 Industry Analysis - Porter’s Five Forces ........................................................................... 17 2.1.1 Threat of Entry (High Threat) .............................................................................. 18 2.1.2 Powerful Buyers (High Threat) ............................................................................ 31 2.1.3 Powerful Suppliers (Low Threat) ......................................................................... 36 2.1.4 Substitutes Products (High Threat) ....................................................................... 42 2.1.5 Intensity of Rivalry (Low Threat) ......................................................................... 47 2.2 Industry Attractiveness ..................................................................................................... 54 2.3 Key Success Factor (KSF) ................................................................................................ 55 2.3.1 Competitive Analysis ........................................................................................... 59 2.4 Entry Strategy for International Markets ........................................................................... 63 2.4.1 Export / distributor ............................................................................................... 64 2.4.2 Licensing / franchising ......................................................................................... 65 2.4.3 Joint Venture ....................................................................................................... 66 2.4.4 Wholly owned ..................................................................................................... 67 3: Internal Analysis - Implementation .................................................................................... 69 3.1 Management Preference (Preference, Experience, Team) .................................................. 69 3.1.1 Preference ............................................................................................................ 69 3.1.2 Experience ........................................................................................................... 72 3.1.3 Team ................................................................................................................... 72 3.1.4 Gap in Management Preference and Gap-Closing Actions .................................... 74 3.2 Organization (structure, system, organization culture) ....................................................... 74 3.2.1 Structure .............................................................................................................. 74 vi 3.2.2 System ................................................................................................................. 76 3.2.3 Organization Culture ............................................................................................ 77 3.3 Resources (operational, human, financial) ......................................................................... 77 3.3.1 Operational .......................................................................................................... 77 3.3.2 Human resources ................................................................................................. 78 3.3.3 Financial .............................................................................................................. 79 3.3.4 Gap in Resources and Gap-Closing Actions ........................................................
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