BUSM3311 G1 -20Team Worldcup International Business Plan Final 2[1]

8/3/2019 BUSM3311 G1 -20Team Worldcup International Business Plan Final 2[1]

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BUSM3311 INTERNATIONAL MANAGEMENT

INTERNATIONAL BUSINESS PLAN

TEAM WORLD CUP

GROUP 1

LECTURER: PETER TRAN


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RMIT International University Vietnam

Bachelor of Commerce Program

ASSIGNMENT COVER PAGE

Your assessment will not be accepted unless a ll fields below are completed

Subject Code: BUSM3311

Subject Name: INTERNA TIONA L MANA GEMENT

Location where you study: RMIT Vietnam City Campus

Tit le of Assignment: INTERNA TIONA L BUSINESS PLAN

File(s) Submitted BUSM3311_G1_

Team_Worldcup_International_Business_plan.

docStudent name: TRUONG THI THA NH HUONG

PHAM THI QUYNH TRANG

HUYNH HOA CAM

TRAN QUOC HUY

TRAN DA NG TIEN

Student Number: S3183269

S3220656

S3183295

S3184101

S3220690

Student Email Address: [email protected]@RMIT.EDU.VN

[email protected]

[email protected]

[email protected]

Learning Facilitator in charge: PETER TRAN

Assignment due date: 3rd SEP 2010

Date of Submission: 6th SEP 2010

Late Submission Approval NA

Number of pages including this one:

(Please number your pages like this:

page 1 of 7, page 2 of 7, etc)

77

Word Count:

(Main Content)

15,252


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This paper is the business plan for Pho 24 Company considering entering into an international

market, New Zealand. The paper firstly provides an overview of the country in terms of its

Geography, Population, Government and Economic. Overall, New Zealand is a peaceful island

country and is considered as a potential market which is worth an investment from Pho 24. It is

about 1,600 kilometres southeast of Australia, where Pho 24 already successfully expanded their

business. Besides, the climates in New Zealand are pretty pleasant and English is used as their

official language. Moreover, the politics there are very stable and the economic is developed.

Thus, Pho 24 would not find any big difficulty there.

The plan then gives more details about Pho 24 Company. When entering into New Zealand

market, Pho 24 will offer 5 product categories, which are: Pho, Broken Price and Hot Pot, the

rest two are Desserts and Drinks. Pho 24 besides aims to provide high quality service along with

those products to attract customers.

In order to increase Brand Awareness in New Zealand, the paper also comes up with the 4Ps

strategy for Pho 24. To advertise, the Internet and Printed newspapers will be used mainly due toits huge exposure and popularity, but at the same time its affordability and effectiveness. Also, a

number of Sale Promotion and Pricing tools are suggested such as Lucky Draw, Product-bundle

pricing and Discount pricing. The paper also advices Pho 24 to provide VIP Cards for customers

to increase their loyalty and to do some sponsorship and charity works to build its public

relations. In addition, the Place where Pho 24 should open is Auckland, the second biggest city

in New Zealand and is famous for tourism.

The paper next analyses the New Zealand Business Environment by using the Hofstedes

dimensions of culture. It also goes into more details about DOs and DONTs when doing

business in New Zealand. Furthermore, the Social Conditions, which are Labour Force,

Education, Economic Conditions, Finance and Legal Issues, are examined.


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In this new potential market, there are 3 big direct competitors that Pho 24 should pay attention

to. They are McDona lds, KFC and Pizza Hut. In order to compete with them, a SWOT analysis

is created and analysed.

There are 3 different suggested strategies for Pho 24 when entering into New Zealand market:Licensing, Franchising and Strategic Alliance. After considering each of the three strategies

pros and cons and developing a multi-criteria decision matrix, the most appropriate solution for

the company is Franchising. This is the ideal strategy because of its Low risk, Low investment,

High guarantee of quality, High control in managing system, High protection of property right

and Steady experience characteristics.

For Marketing, the paper first segments the Pho 24s potential market in terms of Geographic

(shopping malls in Auckland), Demographic (both genders at all ages with middle income),

Psychographic (low and middle class), and Behavioural (Pho 24 is for non-occasions: lunch,

dinner, and for occasions: New Year, Christmas, with many benefits for high usage rate). For

Targeting, Undifferented (mass) marketing is chosen for Pho 24 to gain customers awareness.

Additionally, the business plan suggests the Differentiation strategy for Positioning. The

company can differentiate with its Product, Service, Channel, Personnel, and Image.

A detailed Financial Plan with budget for each of the activity Pho 24 will be doing in New

Zealand, includes Marketing, Design, Promotion, Training, etc. is also given and attached in the

Appendix part for more consideration.

One of the important aspects of the plan is the Management Team. The paper comes up with five

fresh graduates from RMIT University, who have got working experience and also required

skills and knowledge for the management. Besides, their personalities are also in line with what

the company needs: can-do attitude, independence, leadership, self-motivation and flexibility.

Thus, they are believed to bring success to the company

Lastly, the paper concludes by discussing some international aspects so that the plan can be

reused again when Pho 24 comes to operate in another country after New Zealand.


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I. Introduction................................................................................................................................8

II. Country Overview ............................................... ................................................. .......................8

1. Geography .............................................. .................................................. ..............................8

2. Population .............................................. .................................................. ............................10

3. Government ............................................ ................................................ ..............................11

4. Economic ......................................... ................................................ .....................................12

III. Company and Product Overview................................................................. ............................14

1. Company Profile .............................................. ................................................. .....................14

a. Vision ........................................... ................................................ .....................................14

b. Mission Statement ............................................... ............................................... ...............14

c. Organization Structure ....................................... ................................................. ...............14

d. Core business .............................................. ................................................. .....................15

e. Company Goals and Objectives ............................................ ...............................................15

2. Product Overview ............................................ ............................................... .......................16

a. Product Description ............................................. ............................................... ...............16

b. THE 4 Ps ...........................................................................................................................18

IV. International Business Environment ................................................ .......................................25

1. Business Practices and Cultures ............................................... ...............................................25

a. Hofstedes dimensions of culture........................................................................................25

b. Dos and Donts ..................................................................................................................27

2. Social and Economic Conditions .............................................. ...............................................28

a. Labour force ........................................ ................................................ ..............................28

b. Education ............................................ ................................................ ..............................30


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c. Economic conditions ............................................ ............................................... ...............32

3. Competitors Analysis ............................................... ............................................... ...............35

a. Direct competitors ............................................... ............................................... ...............35

b. Indirect competitors ............................................ ............................................... ...............38

c. SWOT Analysis ............................................. ............................................... .......................39

V. Global Competing Strategy .......................................... ............................................... ...............40

1. Marketing Objectives ............................................... ............................................... ...............40

a. First year ............................................. .................................................. ............................40

b. In 3 years............................................. .................................................. ............................40

2. Entry modes ............................................ ................................................ ..............................40

a. Suggested strategies: ........................................... ............................................... ...............41

b. Decision criteria ........................................... ............................................... .......................43

c. Strategy examination: .......................................... ............................................... ...............44

d. Multi-criteria decision matrix:.............................................. ...............................................45

e. Recommended solution: .............................................. ............................................... .......45

f. Targeted partner: ...................................... ................................................. .......................48

g. Supporting articles: .............................................. ............................................... ...............48

3. Market segmentation: ............................................. ............................................... ...............52

4. Market targeting: ............................................ ............................................... .......................53

5. Market positioning: ......................................... ............................................... .......................54

VI. The Financial Plan ............................................ ............................................... .......................56

1. Financial Marketability:............................................ ............................................... ...............56

2. Marketing activities: ...................................... ................................................. .......................56

3. Dcor and Design:............................................ ............................................... .......................57

4. Public relation (PR): ......................................... ............................................... .......................57


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5. Training:................................................................................................................................57

6. Insurance: ........................................ ................................................ .....................................57

7. Management fee: ............................................ ............................................... .......................58

8. Projected PNL Statement for year 1 (monthly) and year 1 to year 3 (yearly): ........... ..................58

VII. MANAGEMENT TEAM .............................................. ............................................... ...............58

1. Pham Thi Quynh Trang Marketing Manager......................................... .................................59

2. Tran Dang Tien Financial Manager ................................................ .......................................59

3. Huynh Hoa Cam Operational Manager ........................................ .........................................59

4. Truong Thi Thanh Huong Store manager ................................ ........................................... ...60

5. Tran Quoc Huy Store manager .............................................. ...............................................60

6. Organizational chart ...................................... ................................................. .......................60

VIII. International Aspect ...................................... ................................................. .......................64

1. Investment:...........................................................................................................................64

2. Market analysis: .............................................. ................................................. .....................65

a. Product: .............................................. .................................................. ............................65

b. Place: ........................................... ................................................ .....................................65

c. Price:.................................................................................................................................66

d. Promotion: .......................................... ................................................ ..............................66

3. Management team: ......................................... ............................................... .......................67

4. ENTRY MODE: ......................................... ................................................ ..............................67

a. Asian countries: ........................................... ............................................... .......................68

b. Western countries: .............................................. ............................................... ...............68

IX. APPENDIX ........................................ ................................................ .....................................68

X. References ........................................... ................................................ .....................................69


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I. INTRODUCTION

Pho 24 was established in 2003 by An Nam Group, After 7 years of running business

successfully both domestically and internationally, Pho 24 decides to enter into New Zealandmarket.

In this business plan, we first look at the Overview of New Zealand and the Overview of the

Company and Product. Next, the International Business Environment is examined. After that, a

Global Competing Strategy is introduced along with a detailed Financial Plan. Also, an

introduction and analysis of the Management Team is shown next. And finally, the paper ends up

with the International Aspects part.

II. COUNTRY OVERVIEW

1. Geography

New Zealand is located about 1,600 kilometers southeast of Australia, in the South Pacific

Ocean. It takes about 14-15 hours to flight there from Vietnam. (Geographic coordinates: 41 00

S, 174 00 E). It is an island country that consists of many islands: Antipodes Islands, Auckland

Islands, Bounty Islands, Campbell Island, Chatham Islands, Kermadec Islands, and the two main

biggest ones : the North and the South Islands. (CIAThe World Factbook, 2010)

Monetary unit: New Zealand dollar (1 NZD = 13,555 VND = 0.6964 USD)

The countrys area is 267,710 square kilometers with 15,134 kilometer coastlines. Its area is

about the same to Vietnam but population is less than.

New Zealands flag


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The climates in New Zealand are different across islands. Mostly, it has mild temperatures with

high rainfalls and its mountains are very cold. However, in general, its climate is quite pleasant

and suitable with Vietnamese people. (N.S. 2008)

The capital of New Zealand is Wellington, which is located at the bottom point of the North

Island. Nevertheless, it is the second biggest city in the country, behind Auckland. Auckland is

the best place for tourism in New Zealand with many famous sights and developed economy. As

a result, opening Pho 24 is ideal since it can attract tourists and local people at the same time.

(Geography About 2005)


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2. Population

The countrys population is estimated to reach 4,252,277 in July 2010, makes it the 125 th

crowded country in the world. New Zealanders use both English and Maori as their official

languages (CIA The World Factbook, 2010). Thus, they should not be an obstacle for Pho 24

when operating there.

The European is the biggest ethnic group in New Zealand, called Pakeha. Most of the Pakehas

ancestries are British and Irish. Still, there are small portions of Dutch, South Slav and Italian.

The second biggest ethnic group is the country is the Maori and the Asian follows next (Asia

Rooms 2010). The pie chart following will illustrate more:

74.5%

9.7%

4.6%

3.8%

7.4%

New Zealand Ethnic Group

New Zealand European

Maori

Other European

Pacific Islander

Asian and others

Adapted from: Nations Encyclopedia 2010

New Zealand is a young country with the majority of people in 15-64 years old group (median

age: 36.8 years). Thus, introducing Pho 24 here is reasonably suitable, which would be discussed

more in the later parts. (CIAThe World Factbook, 2010)


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Adapted from: CIAThe World Factbook 2010

3. Government

According to the CIA - World Factbook (2010), New

Zealands government type is parliamentary

democracy and a Commonwealth realm. In fact, New

Zealand is one of the Commonwealth realms, which

consist of sixteen sovereign states. The head of the

Commonwealth realm as well as the head of the estate

is Queen Elizabeth II. She was born in 1926 under the

name Elizabeth Alexandra Mary.

Practically, all the official business in the country is run

in the name of Elizabeth II. Nevertheless, the power

does not rest with her. The Prime Minister is the dominant party in the legislature of the country.

The current Prime Minister of New Zealand is John Key, who is the leader of National party.

Key became the 38th Prime Minister in 2008 through the general election of the citizens. It at the

same time put a stop to the Labor- led Government under Helen Clark. (Asia Rooms 2010)


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John Key Helen Clark

In general, New Zealand is a safe country with stable politics. It is actually considered as one of

the most peaceful and safest place in the world (N.S. 2008). Thus, Pho 24 will surely not find

any difficulties in politics here

4. Economic

In the past, New Zealand was dominated by the UK which made its economy a dependent one.

Over the past twenty years, its government has transformed the economy to be more

industrialized and made it a free market which can compete with other countries in the world

(CIAThe World Factbook 2010).

The Purchasing Power Parity (GDP) has been going down in the last three years but not much,

from $117.5 billion in 2007 to $115.3 billion in 2009, which ranks New Zealand the 61 st in

comparison to the rest of the world. The GDP per Capita has also been going down from $28,400

in 2007 to $28,100 in 2008 and $27,400 in 2009. Although those numbers are going down, they

are still high and ranked at position 51st in the world.


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1,14E-07

1,145E-0

1,15E-07

1,155E-0

1,16E-071,165E-0

1,17E-07

1,175E-0

1,18E-07

2007 Est 2008 Est 2009 Est

Billions

New Zealand's GDP

New Zealand's GDP

Adapted from: CIA - The World Factbook 2010

New Zealands GDP is mainly contributed by Services sector, which takes 71.7% in the GDP

composition. The rest of it is Industry 23.7% and Agriculture 4.6% (The World Factbook 2010)

Agriculture

4%

Services

72%

Industry

24%

New Zealand's GDP Composition

Adapted from: CIA - The World Factbook 2010

In Agriculture, vegetables and beef are two of their main products. Additionally, Australia is the

biggest import partner. Hence, Pho 24 can easily find the way to get the raw materials, either

within New Zealand or importing from Australia since the company already had their stores

opening there.


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Director of

Human

Resources

Director of

Accounting

Director of

Marketing

Director of

Restaurant

Director of

Logistics

Manager

of HCMC

stores

Manager of

HN stores

Manager of

Da Nang

stores

Manager of

Vung Tau,Binh

Duong Nha

Chief Executive Officer

Board of

III. COMPANY AND PRODUCT OVERVIEW

1. Company Profile

Pho24 was established in 2003 by An Nam group which is the biggest Food and Beverages

Corporation in the country. Over 7 years, Pho24 is quite successful by bringing one of

Vietnamese traditional foods into many countries in the world. With the business philosophy, the

company does the business based on food quality, customer service and integrity. They always

provide the bowl of Pho which does not only satisfy different tastes of consumers but it also

improves the customers health. At the moment, Pho24 are not only well known in Vietnam with

73 outlets in different cities and provinces but it also famous in many other countries such as

Hong Kong, Australia, Indones ia and Singapore.

a.

Vision

To be the number one brand of Vietnamese quick-service restaurant in the world (Pho24,

2009)

b. Mission Statement

Deliver operational excellent in our restaurants and achieve enduring profitable growth through

world - class management, innovation and technology (Pho24, 2009)

c.

Organization Structure


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d. Core business

Pho24 focus on serving the traditional food of Vietnam (Pho) with unique flavor to many people

who have different ages, social classes and nationalities.

Pho is considered as Pho24s core business beyond other foods such as broken rice and hot -pot

in the menu because of four reasons.

Pho contributes more than 80% sales revenue of the companys total revenue.

Most of the employees (about 80%) including cook and servants are currently working in

the process of making and serving pho.

Other departments in Pho24 like marketing aims to analyze about the demand of pho and

popularize Vietnamese food within and outside Vietnam.

Finally, pho is the image of Pho24 representing for Pho24 business.

e. Company Goals and Objectives

In short term: (at the end of 2010)

Open new outlets in China, New Zealand and Japan.

Increase 10% in sales all outlets in Vietnam.

Reduce 2% of inventory cost.

Provide 100% training program for any new employees.

Increase net profit by 10% compared with the last year, 2009.

In long term : (at the end of 2013)

To be the first in the top 3 Vietnamese pho noodle providers in Vietnam and all over the

world.

Expand the market to Euro, particularly in United Kingdom and France.

Open 200 outlets in total by the end of 2013. Establish five Vietnamese restaurants in Vietnam with other brand names.

Publish stock in Vietnam stock market.


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2. Product Overview

a. Product Description

Pho (Fillet, Well-done flank, Fat brisket, Soft

tendon, tripe, muscle and well-done brisket)

Price: 12$ USD

Broken rice with shredded pork, pork chop,

pork pie or sunny-side up

Price: 12$USD

Beef Hot Pot

Price: 34$ US
http://pho24.com.vn/htmls/index.php?f=menu_a_details.php&cur=2&pho=1&pho_id=6&pid=48http://pho24.com.vn/htmls/index.php?f=menu_a_details.php&cur=2&pho=1&pho_id=6&pid=48


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Desserts (Cream caramel cake, Iced Yoghurt,

Agar jelly, Vietnamese sweet dessert)

Price: 5$ USD

Drinks (Fresh Fruit Juices, Blended Fruit Juices, soft drinks, tea,

coffee)

Price: 6$

The quality of products is one of the key points that help Pho24 become popular in the local and

international market in recent years. Their task is providing the best quality and service to their

customers with a statement customers come with great expectation and leave with full

satisfaction. Pho24 has a unique flavor for Pho which includes 24 top quality ingredients and

spices such as shallots, clove, star Anise, green onions and peppers. The flavor is not only liked

by Vietnamese who may come from different areas but it also is famous for foreigners. This is

because all ingredients get from popular brand name in both local and foreign supplier such asbeefs from Australia, New Zealand and fresh vegetables from DaLat. With these ingredients,

Pho24 does not only provide good taste to their customer but they also serve energy and heath

for them. Therefore, the products of Pho24 always have a great quality and make it to stay in a

different level with their competitors.
http://pho24.com.vn/htmls/index.php?f=menu_a_details.php&cur=2&pho=1&pho_id=5&pid=66http://pho24.com.vn/htmls/index.php?f=menu_a_details.php&cur=2&pho=1&pho_id=5&pid=73http://pho24.com.vn/htmls/index.php?f=menu_a_details.php&cur=2&pho=1&pho_id=5&pid=68http://pho24.com.vn/htmls/index.php?f=menu_a_details.php&cur=2&pho=1&pho_id=5&pid=67http://pho24.com.vn/htmls/index.php?f=menu_a_details.php&cur=2&pho=1&pho_id=5&pid=67http://pho24.com.vn/htmls/index.php?f=menu_a_details.php&cur=2&pho=1&pho_id=5&pid=68http://pho24.com.vn/htmls/index.php?f=menu_a_details.php&cur=2&pho=1&pho_id=5&pid=73http://pho24.com.vn/htmls/index.php?f=menu_a_details.php&cur=2&pho=1&pho_id=5&pid=66


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b. THE 4 Ps

PRODUCT

Core Benefit: Satisfy the physiological needs of people when they hungry.

Actual Product:

Brand name: in the industry, Pho24 is one of strong brand name which is voted by

both consumers and many popular magazines such as Vietnam Economics Times,

Tu Van Tieu Dung magazine and FLA Singapore (Pho24, 2010)

Quality level: Pho24 meet the standard of safety from Pasteur medical institution

(Vietnam) and New Zealand Food Safety Authority. The customers could have

the similar and great quality of Pho in different outlets because they are using the

same ingredients and process of cooking. Furthermore, all ingredients, such as

spices and meat products, will be imported follow the standards of Food Standards

Australia New Zealand (FSANZ) suchas Food Safety Programmes, Safe Quality

Food certification. By doing this, the bottle of Pho may not only satisfy different

tastes ofconsumers but it also improves the customers health such as Anise in

Pho can use to prevent flu.

Features: Pho24 does not only have their own logo on bowls, dishes and

glasses but it also provides friendly and traditional area which is similar in

Vietnam by using pictures, tables or staffs uniform. Therefore, the customers

may feel and enjoy their meals as same as in Vietnam.

Augmented product:

Delivery: Pho24 always

provides the best service to

their customers by free

delivery product to customershouse with the bill over 20$

USD. All ordering will be

delivered in 30 minutes. Also,

in order to ensure the taste and


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quality of Pho, there is a special design of the box and packaging for delivery. The

box will help the food to be hot and similar taste as eating at the restaurant.

After sales service: there is a hot line and email to receive and resolve

customers feedback and problems. All feedback of customers will be collected

and recorded seriously. The company does not only answer their customers

questions or problems but they also try the best to improve their service by having

discussion and meeting. During the meeting, every member will join to find the

best solution to solve the problem and improve the customer service in the future.

If there is a mistake or shortcoming, the company will send an apology letter and

free voucher to customers for the understanding.

PROMOTION

Advertising

Internet: According to New Zealand Internet Usage Stats and Telecom

Reports (2009), there are more than 83% of New Zealands population

(3,500,000) who are using internet so it is a great opportunity for Pho24 to

advertise their brand and products. Also, the internet is speedy and much cheaper

communication channel compare to TV advertisement method which cost about

$3000 NZD for each minute (tvnz.co.nz, 2010). Therefore, in order to save cost

and attract customers in New Zealand, the internet advertising will be applied in

the first year when Pho24 entry to this market. Pho24 will focus on two ways to

introduce their products to customer in New Zealand.


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appear to customers on many print advertisements. In order to have a mere exposure and

save cost, Pho24 will choose to advertise on some popular newspapers and magazines.

For example, the advertisement might on New Zealand Herald which has more than

211,000 daily circulation ( Newspaper sources,2004) or Sunday Star time and New

Zealand womans weekly which have 35% of total magazines readers (magazine

readership, 2009). By doing this, the company could be read by many people and

increase the popularity of Pho24 in a new market.

Also, outdoor advertising will be applied which use Pho24 effigies to appear a round the

store and give the leaflets to customers. It will attract more customers especially children

and teenagers. In the first three months, the effigies will be used on the weekend when

many people usually go to the shopping centers and have lunch (dinner) in the

restaurants.

Sale promotion: In different seasons, Pho24 will provide different events and promotion

campaigns to attract more consumers and non users. For example, the consumer could

join to guess the champion and win value reward during the World cup events or on the

Christmas, consumers may get a free dinner for their family by playing lucky draws.

Also, in order to build a good relationship and customers loyalty, the company will

provide VIP card for customers who have eaten many times in the restaurant. For each

bill over 15$ USD the customer will may have one point which can change to a Green

card by having 10points. Then Green card can change to a Gold card for the next 10

points. By get a VIP card, the customer may have a discount or gift for different events

such as Christmas, New Year or Birthday.


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Charity and sponsor: Doing charity or sponsor for different events in New Zealand is a

good way to get customers awareness. In order to do that, Pho24 will donate money to

New Zealand Run or UNICEF NZ Children's Charity which is helping children to

survive and thrive.

PRICE:

Product-line pricing: is setting price for various products in a product line base on cost

differences between products and customer evaluation of different features (Kotler et al.

2005). This strategy widens consumers choices and facilitates for their decisions so the

company could sell and gain more profit base on the different demand of customers. By

applying this strategy, Pho24 provides variable products with different ingredients, tastes

and sizes. The customers may eat Pho with many ingredients base on their favors such as

Soft tendon, tripe, muscle and well-done brisket which have different price. Also there is

a small size for children and hotpot for family. Therefore, the strategy will help to meet

the customers needs and maximize profit of the company.

Product-Bundle pricing: is a way that sellers combine several of their products and offer

the bundle at a reduce price (Kotler et al. 2005). The strategy can promote the sales of

products that customer might not buy so it can encourage consumption and increase

profit for the company. In order to apply this strategy, Pho24 will provide many sets ofmeal for lunches or dinners which combine Pho and Drinks or deserts with lower price.

For example, the customers may save 2$ when they buy a bottle Pho and a drink.

Discount pricing: According to Li (2009) that discount pricing is a good way to boost

sales, decrease the inventory and attract customers to your other products. On other

words, the company will not only save the inventory cost but they also can get more

customers and expand their market share by using this strategy. This is very important for

Pho24, new entry of the market, to attract and encourage more consumption for their

business.

Discount Pricing: Pho24 will have many reducing prices. It does not only encourage

customer to buy more products but it also use to build the relationship with customers. It

can be 10% discount for people who have VIP card, or discount 20% for VIPs birthday
http://www.google.com.vn/url?sa=t&source=web&cd=2&ved=0CCIQFjAB&url=http%3A%2F%2Fwww.unicef.org.nz%2F&ei=-_NyTOD4KYy6sQOc6syJDQ&usg=AFQjCNEBsEy4pb7nhULcJcpCPOBmGAlbJAhttp://www.google.com.vn/url?sa=t&source=web&cd=2&ved=0CCIQFjAB&url=http%3A%2F%2Fwww.unicef.org.nz%2F&ei=-_NyTOD4KYy6sQOc6syJDQ&usg=AFQjCNEBsEy4pb7nhULcJcpCPOBmGAlbJAhttp://www.google.com.vn/url?sa=t&source=web&cd=2&ved=0CCIQFjAB&url=http%3A%2F%2Fwww.unicef.org.nz%2F&ei=-_NyTOD4KYy6sQOc6syJDQ&usg=AFQjCNEBsEy4pb7nhULcJcpCPOBmGAlbJAhttp://www.google.com.vn/url?sa=t&source=web&cd=2&ved=0CCIQFjAB&url=http%3A%2F%2Fwww.unicef.org.nz%2F&ei=-_NyTOD4KYy6sQOc6syJDQ&usg=AFQjCNEBsEy4pb7nhULcJcpCPOBmGAlbJAhttp://www.google.com.vn/url?sa=t&source=web&cd=2&ved=0CCIQFjAB&url=http%3A%2F%2Fwww.unicef.org.nz%2F&ei=-_NyTOD4KYy6sQOc6syJDQ&usg=AFQjCNEBsEy4pb7nhULcJcpCPOBmGAlbJAhttp://www.google.com.vn/url?sa=t&source=web&cd=2&ved=0CCIQFjAB&url=http%3A%2F%2Fwww.unicef.org.nz%2F&ei=-_NyTOD4KYy6sQOc6syJDQ&usg=AFQjCNEBsEy4pb7nhULcJcpCPOBmGAlbJA


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or giving 10% off for everyone in New Year. It also is a good way to improve loyalty of

the customers in the future.

Promotional pricing: In order to get more customers, Pho24 will offer many promotion

prices for group of people who are family members, friends or colleagues. For example,

on weekdays, every for 4people have lunch or dinner in Pho24 will have 1 free lunch or

on the weekend, there is 1 free dinner for the bill more than 100$.

PLACE

Location

According to Mr Trung (CEO of Pho24), one of the key points of the success of Pho24 is the

location of their outlets. Also, in food industry, the demand of product will depend on the

population. Therefore, Pho24 will choose to open 4 outlets in Auckland which is biggest city in

New Zealand with a population of 444,100. In Auckland, the average of earning is $1002 per

week which is higher 5.4% compare to nation average (economic statistic, 2009). This is a good

opportunities for Pho24 to get more customers because people can spend more for their food and

entertainment. Also, there are Waitemata Harbour, Manukau Harbour and Auckland Airport

which can be great places to import the ingredients for Pho24.

The city is one of the most famous cities which has 70% share of New Zealand's internationaltravelers so in order to attract customers and be successful, Pho24s outlets will be inside

shopping centers such as Queen Street Auckland, Sylvia Park, Westfield St Lukes,Westfield

Manukau City, Westfield Albany. By doing this, Pho24 is not only easy to introduce their brand

name to customers but it also can maximize their profit by attracting both of local and travelers.

Distribution map
http://en.wikipedia.org/wiki/Waitemata_Harbourhttp://en.wikipedia.org/wiki/Sylvia_Parkhttp://en.wikipedia.org/wiki/Westfield_St_Lukeshttp://en.wikipedia.org/wiki/Westfield_Manukau_Cityhttp://en.wikipedia.org/wiki/Westfield_Manukau_Cityhttp://en.wikipedia.org/wiki/Westfield_Albanyhttp://en.wikipedia.org/wiki/Westfield_Albanyhttp://en.wikipedia.org/wiki/Westfield_Manukau_Cityhttp://en.wikipedia.org/wiki/Westfield_Manukau_Cityhttp://en.wikipedia.org/wiki/Westfield_Manukau_Cityhttp://en.wikipedia.org/wiki/Westfield_St_Lukeshttp://en.wikipedia.org/wiki/Sylvia_Parkhttp://en.wikipedia.org/wiki/Waitemata_Harbour


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In order to ensure unique flavor for Pho, Pho24 need to have many quality ingredients such as

beefs, shallots, clove and star Anise. However, New Zealand does not have all ingredients so the

company will import many ingredients from Vietnam such as star Anise and other spices. Also,

Australia and New Zealand are famous for beefs so it is an advantage for the company to use

local beefs. This is because Pho24 will save cost of import and transportation but the beefs still

have high quality and standard for the meal.

The ingredients are from many suppliers and places so it will be better for Pho24 to use the

Distribution center. According to Coyle et al (2008) that distribution center is one of the best

strategies to delivery products (raw material) quickly and to avoid the warehouse cost. By using

the center, the ingredients could be delivery to four outlets and consumers in 24 hours when they

are still fresh and good. Also, with the short delivery time, the company can reduce the inventory

cost and warehouse cost for these ingredients.

Ingredients imported

from Vietnam

(Vegetables, spices)

Ingredients from local

suppliers

(Other vegetables, beef)

DISTRIBUTION CENTER

Outlet in Queen

Street Auckland

Outlet in

WestfieldManukau City

Outlet in

Westfield StLukes

Outlet in Sylvia

Park

End Users


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IV. INTERNATIONAL BUSINESS ENVIRONMENT

1. Business Practices and Cultures

a. Hofstedes dimensions of culture

Source: KwinessentialHofstedes cultural dimensions

Power distance (PD)

According to Hofstede (1988), power distance relates to how a society deals with the fact that

people are not equal in physical and intellectual capabilities. Higher PD means the culture lets

inequalities to grow overtime and beome inequalities of power and wealth. On the other hand,

low PD societies try to minimize inequalities as much as possible. As shown in the graph above,

New Zealands PD is 22 which is relatively low compared to Vietnams PD (70). In a low PD

culture, such behaviors are observered:

Superiors often treat their subordinates with respect and do not pull rank.

Subordinates are entrusted with important assignments.

Blame is either shared or very often accepted by the superior due to it being their

responsibility to manage.

Managers may often socialize with subordinates.


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In general, New Zealand residents tend to be friendly and close to. There are often no boundaries

between the top and bottom in the company and managers take responsibility to manage their

staffs. Therefore, Pho24 need to treat employee equally based on their positions in the company.

There should be time to hang out with employees to build trustworthiness and develop

sustainable relationship. For instance, manager can hold short vacations on weekend or on

holidays for employees to have fun together. It could be at someones home or outdoor and it

should be a feast. This behavior is recommended to repeat at least once a month to build up the

relationship between manager and employee. In case Pho24 bring Vietnamese workers to NZ, it

is suggested to have drinks at bar after work. According to Portal Oceania (2009), New

Zealanders love to drink and they drink very well. Though it may be hard for non-alcohol

Vietnamese drinker, it is still encouraged to have drinks or meals and during the tine, telling

stories about homeland is a great idea to set up close relationship with the indigenous people.

Individualism (IDV)

This dimension focuses on the relationship between a person and his/her fellows. The graph

indicates that New Zealands IDV score is 79 which is higher than Vietnams IDV (only 20). It is

clear that New Zealand residents aim for their personal goals and they also encourage

individualism in every manners whether it is about personality, food tastes or clothes. As a

result, each employees viewpoints should be considered respectively in order to maintain the

relationship between bosses and employees. For instance, in the meeting, opinions from

employees should be recorded and the final decision is declared later by voting or opening

discussion.

Uncertainty avoidance (UA)

Uncertainty avoidance refers to the feeling that people have regarding ambiguity and uncertain

situations (Hofstede, 1988) In this dimension, New Zealand scored 49 while Vietnam scored

only 30. It means that New Zealand people tend to follow clear instructions and demand high

security from the government or business enterprises. Thus, it is recommended that Pho24

should provide a secured working environment by giving formal regulat ions, clear directions and

safety.


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Masculinity

This dimension looks at the relationship between gender and work roles. New Zealands score is

58 which higher than Vietnams (40). This comparison indicates there is a gap between gender in

New Zealand. Men and women have different roles in the society and conflicts solved by

agreesive means is accepted. As a result, for a Vietnamese company to open business in New

Zealand, it is recommended that they should pay attention to how to treat and provide

appropriate workplace environment for male and female. Men will not do female work and vice

versa. Therefore, Pho24 managers need to classify and assign different jobs to different groups of

employees to attain the objectives successfully. For example, for work requires strength or

leadership such as cooking, managing, delivering, men are appropriate. On the contrary, women

should be doing more internal jobs such as cashier, cleaning, decorating, food preparing. This is

because providing interior work makes men feel they are more important and they are people

who have the most power in the store. Therefore, it can motivate each gender to perform their

jobs more effective.

Time orientation

Time orientation is the extent to which members of a culture adopt a long-term versus short-term

outlook on work, life and other aspects of society (Hofstede, 1988). In this dimension, Vietnam

scored almost thrice New Zealand, 80 to 30 comparatively. This signifies while Vietnamese

values perseverance and slow progress, New Zealand people try to complete one task as soon as

possiblie and then move to the new one. This result gives Vietnamese companies a warning to

change their way of doing business in New Zealand in order to be successful. For instance,

Pho24 should assign different jobs at the same time to make the employees not bored. In

addition, they will feel that they just do one specific job in a short time and then can try another.

This will be an appropriate way motivate employees to contribute much effort in completing

assignments.

b. Dos and Donts

In order to do business in New Zealand, there are some Dos and Dons that Pho24 need to

consider carefully


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DOs DONTs

In the restaurant, dress casually but neatly

Business dress should be formal

Maintain the mauri of the environment and

ecosystem resilience

Shake hand and give a smile at meeting the

other people.

Gift giving is accepted but not lavish

Serve meals as family style

If invited to Maori dinning, visitors eat

after an acknowledgement by an elder of

the host

Sing a song from homeland will show

respect and thanks

Be honest, direct and hilarious.

Appointments should be made at least one

week in advance by phone, mail or fax

Arrive at meeting few minutes early

Present facts and figures, not feeling in

business presentation

Lied or make people distrust because the

breach will be difficult to fix.

Have appointment in December and

January as this time is for summer vacation

Be hyped or make exaggerated claims,

hyperbole, bells and whistles in the

presentation

Attemp high pressure sales tactics

Make promises that cannot keep or offer

unrea listic proposals

2. Social and Economic Conditions

a. Labour force

According to Statistics New Zealand (2010), the labour force in March 2010 quarter consumes

approximately 51,2% the population which means there are 2,177,000 employed people. Also in

March 2010 quarter, the unemployed rate dropped by 15.1% which give the rate now is 6.3% for

male and 5.8% for female. In general, the current unemployed rate is 6% which approximately

equals 140,000 people.


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In the restaurant sector, according to NZ Department of Labour (2008), the employment rate is

very favourable from the past five years to March 2009, the growth rate is approximately 3.95%

which is the third largest increase in all industries (see Firgue below)

In addition, the table below summarizes the skill profile of employees in the restaurant sector.

It is clear to see that the number of qualified employee is quite high. Most of them have school

qualification for appropriate skills required for a store like Pho24 such as servicing, managing,

cleaning, client information. Some even hold a Bachelor degree or higher which is a good signfor the manager position in Pho24. For a new entry like Pho24, understanding local culture and

communicating well with local people are the two barriers that prevent the operation to run

effectively. Therefore, having New Zealand managers can help Pho24 overcome those issues

Another factor that has influence on how Pho24 is going to do business is the age of working.

The graph below indicates how old the labour force in New Zealand. Overall, the population of


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employed people is old. Until 60 years old, there are still more than 60% participating in the

workplace. This given the career life of New Zealander is long.

Source: Statistics New Zealand - Household Labour Force Survey Estimated

Working-age Population: March 2010 quarter

b. Education

Overall, education is considered greatly by the New Zealand government. According to Ministry

of Education (2009), from 2008 2009, 17,9% of government expenditure was on education.Due to this special concern, New Zealander has very impressive figures below.

Literacy and ECE: 99% of the population from age 15 and over can read and write.

Education in New Zealand is compulsory for all students aged from 6 to 16. Regularly,

children go to school from 5, therefore 95,1% complete ECE (Early Childhood

Education) program before attending school (Ministry of Education, 2009).

Tertiary: Tertiary in New Zealand refers to post-school education and training. This

includes technical or vocational education, higher or degree level education, teacher

education and industry training. Mainly, students from 15 to 29 take these programs and

72% hold a bachelor degree within 8 years of full time study (Ministry of Education,

2009).


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Source: Ministry of EducationEducation Statistics o f New Zealand 2009

As shown in the graph above, mainly New Zealander stops at Bachelor degree while only less

than 2% pursue higher degrees. The next graph below indicates which field students choose to

study for their degree or higher degree.

Source: Ministry of Education Profile and Trends 2009: New Zealands Tertiary Education

Sector


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Most students choose to study about society, culture, management and commerce. These fields

offer student a wide range of jobs after graduating such as managers, social researcher, staffs,

etc. This is also a good human resource for Pho24 to recruit indigenous employees in the future.

In sum, Pho24 have some advantages when open business in New Zealand in term of hiringemployees. Firstly, there is a great labor force with young and educated people. More important,

these potential employees have knowledge and skills in management and servicing sectors.

Therefore, Pho24 can utilize this intellectual labor force for the management position. Secondly,

the participation rate is also very high. This can give Pho24 chances to keep the staff longer if

they are suitable for the company. Thirdly, there still is a portion of unemployment as a result of

global financial crisis. This can be a good source for Pho24 to hire cheaper labor for lower

positions in the company.

c. Economic conditions

The open economy of New Zealand operates on free market principles. It has sizeable service

and manufacturing sectors which complement the agriculture. According to CIA (2009), the

export had a total of $24.99 billion consisting of dairy products, meat, fish, machinery, wood and

wood products. Import consumed $23.45 b illion including commodities such as textiles, plastics,

machinery and equipment, vehicles and aircraft, petroleum, electronics. According to Statistics

New Zealand (2010), with the current exchange rate is 1.7048 NZD/USD, the average income in

a year per household is approximately 49,358 USD. Compared to average income of Australia

(Australia Bureaucratic of Statistics, 2010) which is nearly 55, 602 USD, New Zealands income

is quite lower than but still very favorable. Pho24 already opened few stores in Australia and the

venture is doing very well. Therefore, it is expected that the success can be repeated in New

Zealand market.

Finance

From 2000 to 2007, the economy expanded by an average of 3.5% each year because of private

consumption and residential investment. The annual inflation rate was about 2.6% at this

moment. However, in the early of 2008, like any other countries, New Zealand entered the world

financial crisis. As a result, domestic consumption decelerated because of high fuel and food

prices. In addition, high interest rates and falling house prices were also reasons to slow down


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the residential investment. In December 2008, the GDP was affected by a reduction in

manufacturing, construction, wholesale and retail trade which led to 0.9% of economic activity

downturn.

In order to change the current situation, the Government took in to action by passing morepolicies to support the economy. An accelerated package of $500 million for infrastructure

projects to expand housing, transportation, energy and education was launched. In term of

business, a large proportion of New Zealand businesses is small and medium-sized. Therefore, a

temporary relief package was also designed in order to reduce compliance costs and improve the

business environment. Additionally, the Reserve Bank lowered the Official Cash Rate (OCR) for

the seventh time consecutively, reducing the official rate to 2.5%, even lower than the peak in

June 2008 by 575 basic points. This led to the decrease of borrowing rates. On the other hand,

the long-term migration increased sharply leading to the increase in housing price. Combining

those two factors plus such continuous actions from the Government, in September 2009 quarter,

the GDP finally grew 0.2% after five-quarter recession.

So far, a large portion of risks and uncertainties of New Zealand comes from the global cris is. If

the world continues to grow inconsistently, businesses and households will be adversely affected.

However, the Government has already proven that they can manage to overcome crisis. During

the recession, although GDP fell greatly from peak to trough, there are no banking failures.

Moreover, the economy has brought optimistic signals to businesses since June 2009 quarter till

now and it is expected to grow more in the future

Regulations/Legal issues

According to the statistics from the World Bank (2009), New Zealand ranks number 2 in term of

ease of doing business. This term includes the number of steps entrepreneurs need to go through,

the time it takes on average, and the cost and minimum capital required.


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Source: The World Bank (2009)

Compared to other economies, New Zealand offers favorable business environment for new

ventures. Usually, it only takes one day to complete a procedure and some can even be taken

simultaneously. According to the World Bank (2009), the longest procedure which can take up to

30 days to complete is building warehouse. Other procedures such as water, electricity, internet

connections or land hiring can be done within one day. Therefore, it is expected that Pho24 can

finish all the registration procedures within one month.

Although the Government creates an open entry for business, they require high standards in food

transportation and storage. This is the main legal issue that Pho24 should consider seriously.

According to NZFSA (New Zealand Food Safety Authority), there are certain food products that

they pay high attention to. In the case of Pho24, spices such as pepper, cinnamon, soya bean

sauce and meat products for Pho such as beef, meatball and tendons need to be transported from

Vietnam. Therefore, it is necessary to follow the standards of New Zealand.

All imported food products need to be tested to meet relevant food safety

certifications.

Details of suppliers need to be recorded

Appropriate packaging

Inventory records need to be reported regularly.


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Those are compulsory standards that Pho24 need to follow when importing spices or other

ingredients from Vietnam.

Environment protection also needs great consideration. New Zealanders have very strong

consciousness in protecting their living surroundings. Therefore, every behavior needs to beprocessed carefully not to damage the environment. For Pho24, it is necessary to have specific

ways to treat refuses during the cooking process. Materials for decoration should be friendly to

the environment. For instance, using bamboo chopsticks instead of plastic, paper bag instead of

plastic in Vietnam are recommended actions.

Another factor is franchising. Pho24 is doing franchising very well in other foreign countries

beside Vietnam. Thus, it is reasonable that Pho24 does franchising in New Zealand. Overall, the

franchising market in New Zealand is quite open. Many brands are doing very well such as KFC,

Starbuck, Burger King, Pizza Hut, etc. According to Lord (2009), there is no specific legislation

relates to franchising because the business practices are protected under normal commercial

laws. The only issue that Pho24 should look at is finding suitable sites. There are only a number

of retail centers, malls and good sites can be expensive and hard to reach. Moreover, there are

few major players which mainly are New Zealand business captured most of good places in the

malls. Though it is easier now due to the economic recession Pho24 might still need to research

carefully to get a good site.

3. Competitors Analysis

a. Direct competitors

As the new barriers of entry are quite open and easy, New Zealand is the dream land of many

successful international businesses. For a bow of Pho, customer only needs to wait 3 minutes.

Therefore Pho24 is classified as fast-food typed business and in this sector, there are already fewbig and competitive brand names. KFC, Pizza Hut, Starbucks are the three brands that are

managed by Restaurant Brands. This is a corporate franchisee and specializes in managing multi-

site branded food retail chains throughout New Zealand. Apart from those three big brands,

Pho24 also needs to face another large corporation: McDonalds. As they are all fast -food typed

businesses, they become main direct competitors of Pho24.


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The table below summarizes few key points about those companies except Starbucks as they are

not direct competitor to Pho24 in term of fast-food.

COUNTRY BRAND NAME COMPETITIVE ADVANTAGES

USA

Kentucky Fried

Chicken (a.k.a KFC)

First opened in NZ since 1971 in Auckland city

Already established good reputation to NZ

customers

The chains are managed by a NZ company

Chickens are supplied directly from NZs leading

producers

USA

Pizza Hut First opened in 1974 in Auckland city

Until now, there are more than 100 storesthroughout NZ

Specialty in pizzas especially for indigenous New

Zealanders

Have a wide distribution network to deliver pizza in

the shortest time through online orders.

USA

McDonalds First opened in 1976 in Porirua, near Wellington

Main ingredients such as beef, fish, chicken are

sourced from NZ

Established good relationship with NZ government

by sponsoring many social events.

Having particular actions toward environmental

issues which is considered seriously in NZ


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The table below compares few points between Pho24 and its direct competitors

Pho24 KFC Pizza Hut McDonald

Price (average) 13$ 2.5$/p 12$ $2/p

Product differentiation High Low Low Low

Place (number of stores in Auckland) 4 24 22 23

Promotion X

Distribution x

Customer feedback x

Customer awareness Low High High High

Social events sponsorship x x x

Price: Compared to other brands, Pho24 offer the highest price but this is not a

disadvantage. There is one factor that can help Pho24 compete with other brands but still

keep higher price. Other food such as fried chicken, pizza and hamburger contain a lot of fat

and when people eat too much, it can lead to heartburn. However, people will not face that

issue when eating Pho because in a bow of Pho, there is almost no fat. Moreover, people can

have many types of vegetable to eat along with such as basil, cilantro (ngo gai), sprout and

onion. The soup is also cooked from beef bones and no seasonings. Therefore, children,

adult or old people will enjoy a clean bow of Pho with no harmful factors. This is the biggest

advantage that Pho24 have over those three brands.

Product: Pho24 offer a wide range of Vietnamese food to customer, not only Pho but also

hot pot and broken rice. While KFC, Pizza Hut or McDonald just focus on their main

products and people can be discouraged to come back to the restaurant to repeat the same

product every time.

Place: Compared to brands which have been operating for more than 20 years, it is easy todetect the advantage they are having in term of location. However, Pho24 is jus t a new entry

and having 4 locations is the initial plan. The location will be expanded as the business is

going well in the future.


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Promotion: During the very first period opening, Pho24 may not apply many promotions

compared to those direct competitors. However, in the future, in order to increase sales,

Pho24 will have more promotions such as discount, free gifts for children, free combo, etc.

Distribution: This criterion relates back to the number of stores of Pho24. The distributionnetwork or channels cannot be compared to those three brand names at the moment. They

have distributions by phone and internet which delivery products to customers directly in the

shorted time. Nevertheless, as the number of restaurants grows, the distribution network of

Pho24 will also be expanded simultaneously to facilitate customers orders.

Customer feedback: Currently, those three competitors have websites for customer to write

their reviews directly to the companies. Pho24 have just established, thus the company

website can be developed later and customers will have chances to submit their feedbacks

through that.

Customer awareness: Although Pho24 have been opening in many countries, compared to

KFC, Pizza Hut or McDonald, the name is still not global. Moreover, New Zealanders are

not familiar with Vietnamese cuisine. Therefore, the customer awareness of Pho24 is quite

low at the moment. However, as the business develops well in the future, it is expected that

more customers will be aware of Pho24.

Social events sponsorship: New Zealanders love outdoor activities. Sponsoring social events

can help improve the image of the company. So far, McDonald is the only one who cares

about these activities. They have been sponsoring many events such as Auckland University

of Technology scholarships, Clean Up New Zealand Week, Childrens Charity, Junior sport:

soccer and touch rugby, etc. In the future, Pho24 also need to do the same by choosing some

social events such as charity or sponsoring competitions to help raise the image of the

company.

b. Indirect competitors

Apart from those three direct competitors, Pho24 also need to pay attention to indirect

competitors. They can be coffee shops or other restaurants. For instance, there are some

restaurants in Auckland that Pho24 should consider:


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Vinnies: serving mainly modern new New Zealand cuisine

Habourside: specialty in seafood

Sawadee: Thai cuisine

The Java Room: Malaysian cuisine

Da Ciccio: Italian cuisine

Those restaurants serve their own cuisine to customers which differentiate them with other

competitors. At the moment, Pho24 belong to fast-food sector but as the business expands later,

more and more Vietnamese cuisine will be served; these names will be direct competitors.

c. SWOT Analysis

STRENGTHS WEAKNESSES

Strong brand name with high reputation in

domestic and foreign markets.

Have experiences doing international business

(Australia, Hong Kong, Indonesia, etc).

Have specialty in cooking Pho to suit

Vietnamese and foreign tastes.

Produce noodles by self to meet the standards

of food safety.

Main ingredients are unique and they have to

be imported from Vietnam.

Difficult to train NZ employees to understand

and provide services but still keeping the

meaning of Vietnamese spirit in Pho.

Cooks need to be hired from Vietnam to keep

the traditional taste of Pho.

OPPORTUNITIES THREATS

NZ is an open market for new business

enterprises and especially franchising.

There are no competitors in the same category.

The economy is recovering after the global

financial crisis.

The Government is having financial supporting

l packages for small and medium businesses.

Easy to get license to open business.

Unknown to New Zealanders as Pho is still a

new dish to this country.

Many strong brand names existed for long time

ago.

Strict laws about food safety and

environmental issues.

Customers may still be cautious after the global

financial crisis.


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V. GLOBAL COMPETING STRATEGY

1. Marketing Objectives

a. First year :

Entry new market New Zealand and get customers awareness by applying different

advertisements such as sponsor, internet and prints.

Get 5% of market share in the first year.

Open 4 outlets in Auckland with many sale promotions.

b. In 3 years

Attract more customers by using PR campaign and TVC on different channels of NZ.

Improve the popularity of Pho24 by 20% at the end of 2012 by doing different surveys

and getting customers opinions.

Improve and maximize the sales by strengthen promotion and growth of sales at 5%

every quarter.

2. Entry modes

According to Kos (2010), entering a new market will give the firm a chance for development but

also contains risk tolerance to challenge the business. However, any firm in the road of growing

has the ambition to reach this attractive opportunity and Pho24 is not an exception. In the

investors perspective, New Zealand can be considered as a hardship for Pho24 to enter because

of not only its environments characteristics but also the completely inexperienced field. By

analyzing, there are several options for Pho24 to choose from mainly based on three categories

including exporting, contractual and investment entry modes. Choosing the most suitable

strategy for the company will help to maximize the success and prevent possible r isk. Going into

depth, the measurement has to be stood against the own strengths and weaknesses of the business

to decide whether exporting, franchising, licensing and turnkey in contractual modes or strategic

alliance, joint venture and wholly owned subsidiaries in investment one.


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To begin with, exporting cannot be Pho24s choice. The reason is because Pho24 is not an

absolute manufacturing firm with final product can be packed easily. The core business of the

company is both producing and serving services at the same time. Therefore, it must be really

hard to do export this Vietnamese noodle along with keeping the delicious taste. Secondly,

Pho24 will also eliminate turnkey from the scale of decision. Lockshin (2004) stated that turnkey

is the application of setting up an operation plant and handing all the keys at the end of the

project. For Pho24, it is only practical at the first time of opening the restaurants for the jobs of

renting and decorating. However, during the history of operation, Pho24 already has its own

specialist team to work on this area. To illustrate, selling pho is not similar to other Western fast

food like fried chicken, hamburger or hotdog. Eating pho in Vietnamese point of view implies

the culture and even the national spirit (Dung, 2009). Thus, if Pho24 hires a New Zealand firm to

establish the location for them, they may be failed in bring in the specialism of the Vietnamese

national food because the Western people will definitely understand about its meaning clearly.

Moreover, in investment entry modes, joint venture is also not suitable for Pho24 to enter the

New Zealand market. The main purpose of joint venture is to establish a new company based one

several existing firm (Hwang and Gaur, 2009). Even though it is a valuable way to reduce the

risk and get to share the knowledge with a partner, especially in the case of Pho24 can become

joint venture with a New Zealand firm, it is more appropriate with the high investment project.

For the aim of serving only Auckland first, Pho24 will not use this strategy to prevent later

disadvantages like conflict or losing control of technology. Finally, as stated in the overview

part, Pho24 is one of the parts of An Nam Group. Currently, the corporation already has several

restaurants located in other Asia countries. Nevertheless, they still do not think about open Pho24

as a host company in Vietnam. If Pho24 uses wholly owned subsidiary form, it is the maximized

option of increasing risk and putting measure on the company by spend a huge amount of

investment. In general, they are the eliminated reason why Pho24 focus more on examining the

rest decisions: licensing, franchising and strategic alliance.

a. Suggested strategies:

Licensing

Licensing is putting in practice when a company cedes the legally intellectual property to another

to allow them to do business. The license granted can be trademarks, copyrights or brand names

via as via the monopoly right of goods and services provided (Phillips, 2009).


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Pros Cons

Save cost of investment in establishing a

business

Easy to make customer awareness based on the

existing brand names

Reduce the risk of building new business in

expanding overseas

The potential of becoming competitor of the

licensee (theft of property)

No clear conditions about products and

services standard in licens ing agreement

Difficult to control the quality of product

Franchising

According to Colomb (2010), franchising is a business strategy for the company to grant the idea

to the franchisee in a specific geographic location but follow the certain strict rule how to

conduct the business process.

Pros Cons

Low cost to open the business internationally

Low risk of investment

Save time in launching new business

Better control of product quality based on the

agreement compared with licensing

Barrier in business management

Disadvantages in protecting the reputation

brand

Strategic alliance

It is the form of relationship between two or more parties to come in corporation in other to

achieve the common goals while remaining individual organization (Joia and Molheiros, 2009).


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Pros Cons

Save cost of achieving goals such as building

new product or entering new market

Get access to the partners resources such as

distribution channel, knowledge or

manufacturing capability

Transfer technology and economic strengths

between the partners

Create prospective competitors

Conflict in corporation

Hard to find a compatible partner

b. Decision criteria

In making decision, studying about the pros and cons of all the option is always an effective

process. After researching about both Pho24 itself and the potential country which is New

Zealand, some factors which must be investigated before giving any conclusion are low risk, low

investment, high control in managing system, high protected property right and high guaranty of

quality.

Criteria Weight Explanation

Low risk 25% When going overseas, any firm wants to minimize the risk as much

as possible. It is because the more risk is, the more chance for the

shareholder to lose their investment and the more potential for the

company to fail. Risk can be contained many aspects such as

suffering to compete with the other rivals or difficulty to generate net

profit.

Low

investment

25% Along with the risk, this factor must also be unforgettable. Low

investment reflect the easiness of the project to happen since the

investors are more willing to accept low requirement one. Capital


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investment and risky seeking seem to have negative relationship in

business.

High control

in managing

system

15% Gaining profit depends on how the firm is managed in the foreign

country. If the company is confidence about the management in

Vietnam, it does not mean they can do the same in another situation.

The control in the system in both production and other departments

of finance or marketing can affect how Pho24 works in New Zealand.

High

protected

property

right

10% In this portion, the main property is the intangible trade name: Pho24.

It represents for all the relevant things encompassing from physical

restaurant to visible brand name. If the protection is high, it ensures

the existing of the company and avoiding of imitation.

High

guaranty of

quality

25% The quality of pho is what makes Pho24 different from the other.

When people think about Pho24, they can have the image in their

mind and feeling about its taste. Losing it will result in losing the

company.

c. Strategy examination:

Based on the fact that at the beginning, Pho24 only aims to open 4 restaurants in Auckland, it

must be impossible for the company to apply different entry modes for different location. Using

one strategy will help to reduce the complexity of business and create better opportunity to grant

for the governments permission.

In the first time of entering new market which is New Zealand, licensing and franchising has the

best condition of risk and investment. The risk and investment is a couple with positive

relationship: low investment will result in low risk. However, this consequence can produce

future barrier for Pho24 to take full advantages of launching in New Zealand later because the

benefit could not be large. For example, if Pho24 open their restaurant by themselves, it could


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cost the budget first but the profit will come only to the company when the project is success

rather than sharing with another parties.

On the other hand, the differences between licensing and franchising are about the agreement.

Franchising has stricter rules and legislations which ensure the management and quality of the

product.

Finally, strategic alliance is also a promised option. In the case of Pho24 finding a compatible

partner to coordinate with, all the factors which influence the decision can balance the outcomes.

With medium risk, average investment or acceptable quality, Pho24 receives the chance to

access into the partner resources. Nonetheless, the most important tradeoff happening is that it

create the probability of further competitors.

d.

Multi-criteria decision matrix:

Strategy Low risk

(0.25)

Low

investment

(0.25)

High control

in managing

system

(0.15)

High protected

property right

(0.10)

High

guaranty of

quality

(0.25)

Total

Licensing 8 (2.00) 8 (2.00) 3 (0.45) 3 (0.30) 3 (0.75) 25 (5.50)

Franchising 8 (2.00) 8 (2.00) 5 (0.75) 5 (0.50) 6 (1.50) 32 (6.75)

Strategic

alliance

5 (1.25) 6 (1.50) 5 (0.75) 5 (0.50) 5 (1.25) 26 (5.25)

e. Recommended solution:

Taking all the strategies and decision criteria into account, franchising is the most appropriate

solution of entry modes for Pho24 to apply when entering New Zealand.


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Low investment: In term of investment, when Pho24 signs a franchising agreement with

another firm in New Zealand, instead of paying for the investment of everything from

restaurant to ingredients, this amount can be shared between two parties. For example, the

initial cost of setting the restaurant which is approximately $400,000 involves many items

like renting and decorating. Thus, this could rises up the capital requirement and increase

Pho24s budget. However, by defining clearly in the agreement with the franchisee, Pho24

can take advantages of sharing the investment based on the percentage in the franchising

condition. It is an ideal selection for the company to join an inexperienced market.

Low risk: Doing business means people have to deal with the risks. Risks can come in

various forms such as risk in getting customer, applying license from the government or

even risk of protecting the intangible property. Within Vietnam, Pho24 still has to face with

the risk in their day-to-day operation and it will increase more when the company plans to

expand in another geographic location. However, franchising is a low remarkable strategy of

risk prevention. Firstly, when the establishment does not demand a large amount of

investment, the risk of losing funds will be reduced subsequently. Secondly, working with a

local firm will create the access for Pho24 to have the contact with the internal suppliers in

New Zealand for daily ingredients of making pho. Hence, instead of exporting all the

materials from Vietnam which will lead to the cost of transportation and risk in carrying,

Pho24 can form their own channel map within New Zealand, particularly in Auckland.

Finally, doing marketing with a native business who understands about the consumer

behavior in New Zealand more results in more accurate campaign to getting customers

awareness.

In contrast, Pho24 still needs to concentrate on avoiding the other possible risk of

franchising, especially risk of imbalanced benefits. Since the model begins to gain profit,

there will be more conflicts happening among the partners. For this reason, the play of the

previous agreement before signing contract is very essential. Specifically, Pho24 must point

out what they want and what they need clearly in negotiating the contract such as how many

percentages of net profit each member can earn.

High guarantee of quality: Franchising has the advantage that the franchisor does not have

to involve in every step of production but they still can control the quality of product


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represented for their brand name. In the process of making pho, not only in New Zealand,

Pho24 has their own qualified standards of the system. To be more detail, for one bowl of

pho, there must be 24 ingredients and spices contributing in the taste of bouillon. Pho24

comprehends that quality is the vital factor for any food company and the key element to

distinguish between several competitors. As a result, as long as the qualitative terms are met,

then the contract of franchising will be made. Moreover, in daily activities, Pho24 provides a

tester which is the main cook in the kitchen to work on ensuring and controlling the quality

of every single bowl of pho.

High control in managing system: Despite the dependency that Pho24 leans on the partner,

franchising stays in the middle of directing power. Both Pho24 and their cooperator have the

right to take responsible for managing the venture together. Meanwhile, the success will

stand against how they distribute the authority in decision making process. For example,

Pho24 is an expert in making pho because they are the one who bring Vietnamese pho

noodle to New Zealand so they can hold the role of managing the production system while

the local firm has more experience and knowledge about the internal market to take action in

marketing or logistic. Also, franchising results in a challenge for Pho24 when the number of

franchisee organization gets bigger. This complicated situation is a barrier for Pho24 to

manage all the restaurants they have closely. To illustrate, in case of Pho24 open more

restaurants in other cities besides Auckland, it must be difficult for the company to control

all the channels because they do not found their own sub-branch in there.

High protection of property right: One of the weaknesses of franchising strategy is not solid

in protecting the intangible right of the franchisor. Obviously, the property will be put in

high protection within the contracting period but after the expiration date, there is no reliable

evidence to make sure that it will not produce risk. One of serious danger is once the

franchisee learns clearly about the production process; they can become the potential

competitor for Pho24 in the future. In other to prevent this problem, before entering the

market, Pho24 must work with New Zealand government to apply for brand name protection

to prepare for possible imitation later.

Steady experience: According to Pho24 (2010), at present, Pho24 already has 17 restaurants

in many foreign countries from Oceania to Asia such as Australia, Korean, Cambodia or


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Philippines. Even though they open numerous restaurants in different countries, they use

only one strategy which is franchising. Based on this success, Pho24 can be considered as a

specialist with high experience and knowledge in doing franchising overseas. They have the

ability to penetrate all the strengths, weaknesses and even the risk they have met. Also,

Pho24 also hires a particular team in negotiating franchising agreement who already reached

a lot of achievement in signing contracts. Especially, New Zealand and Australia are two

neighboring countries which have some similarities in economy, regulation or society.

Through the foundation of establishment in Australia, it will be easier for Pho24 to come to

New Zealand.

f. Targeted partner:

APPRESSOFRESH CATERING COMPANY

Introduction: AppressoFresh Catering Company was established in October 2008. The core

business of this

BUSM3311 G1 -20Team Worldcup International Business Plan Final 2[1]

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