Select a country and a product or service you feel as an investor will be a wise financial...

Individual Assignment Subject: International Business Management

INDIVIDUAL ASSIGNMENT

Subject: INTERNATIONAL BUSINESS MANAGEMENT

EMBA IEI04

Students name : Phan Thi Ngoc

ID : VN1001651

Date of completion : 08/11/2014

Topic"Select a country and a product or service you feel as an investor will be a wise financial

investment and has long tern potential and benefits."

CONTENT

I. Introduction

II. Country Selection- Why? With Supporting documentation

III. Product/ Service Selection- Why? With Supporting documentation

IV. Strengths/ weaknesses of country with documentation

V. Strengths/ weaknesses of product/ service with documentation

VI. Expected or estimate of competition

VII. Entry mode?

VIII. Ease to do business- World Bank ranking?

IX. Country corruption status- TI ranking? Potential impact on investment?

X. Summary

XI. Bibliography


I. Introduction

With the advantage of the tropical fruit is abundance and fresh, Vietnamese fruit has exported to

many countries markets. Over the years gardeners tend to choose good fruit, establish growing

garden, increase productivity and focus on improving the quality meets export standards. Many

countries allow the import of fruits from Vietnam.

As reported by the Ministry of Agriculture and Rural Development, in August of 2014, there are

40 kinds of fresh fruit exports to 40 countries and regions such as China (the Mainland and

Hong Kong ); ASEAN countries (Thailand, Malaysia, Indonesia, Laos, Myanmar, the EU

countries (UK, France, Belgium, Netherlands, Spain, Italy) countries in the Middle East (UAE,

Qatar, Lebanon, Arabie Seoudite ...), Eastern Europe (Russia, Ukraine ...) and Canada reached

1.3 million tons, of which more than 697 000 tones of dragon fruit, nearly 300,000 tons of

watermelon , more 100,000 tons of longan , more than 70,000 tons of litchi, 600,000 tons of

rambutan, etc

Meanwhile, European countries have demand more increase for organic products, especially

fresh fruits and vegetables. As reported by the Swedish Chambers of Commerce on June 2010,

Denmark is one of the top countries in the world when it comes to organic food consumption

and consumption of organic food products per capita is highest in Europe.

Base on Danish Import Promotion Office, the traditional supply current as the EU cannot meet a

growing demand for more sophisticated products such as tropical fruits, fresh fruit. New market

opened, investors Vietnam should do to seize this opportunity?


II. Denmark is a selected country for export to

Criteria are used to make this selection is:

Within top 20 countries is ranked in Global competitiveness index

Political Systems & Political strategies is individualism; freedom in economic and social with less government control.

Legal Environment is healthy

Economic system is privately owned - opened

1. Denmark is ranked 15th out of 148 countries as report by the World Economic Forum in

2013-2014. Have very good environment for investment.


2. Political Systems & Political strategies is convenient for internal business:

- Denmark is country circled by the Baltic and North Sea. The country consists of a large

peninsula and many islands. Germany, Norway, and Sweden are neighboring countries of

Denmark. Denmark has an importance position controlling the Danish Straits that

connect to the Baltic and North Seas.

- The government system is a convention monarchy and multi-party political system. The

Queen is chief of state and the Prime Minister is the head of government.

- Denmark is a member of the European Union since 1973. But, Denmark has chosen to

not take part in the European Union's Maastricht Treaty, including the European

Economic and Monetary Union (EMU), European defense cooperation, and issues related

to certain justice and internal affairs. However, in fact, krone is inextricably linked to

euro via the exchange rate of mechanism II Europe (European Exchange Rate

Mechanism II), part of the European Monetary System (European Monetary System).

Exchange rate between the euro and krone is always approximately 1 euro = 7.45 NOK.

- Denmark is a founding member of NATO and the OECD.

3. Legal Environment is healthy :

- Scandinavia law system, it is a mixture between common law and civil law. But it is

considered is civil law because almost all issues of Danish legislation and regulations

meet to EU standards.

- Base on 2014 Index of Economic Freedom, Denmark remains regulatory environment the

most efficient in the world. It takes only four procedures to start business, and

government has reduced the minimum capital requirements.

- Hiring and dismissal regulations are flexible and efficient for the labor market.

- Monetary system is stability.

- Property rights and Intellectual property rights are strongly protected


- Denmark has levels of corruption is low. The Transparency Internationals Corruption

Perceptions Index is highest marks.

- The financial sector is diversified and competitive. The banking sector is stable now.

Bank has been reduced dependence on state.

- Base on report of Global EDGE, although there is the common approach bearing the

advantages of written contracts, there is no requirement of written contracts in Denmark.

A freedom of contract is the governing principle, business partner a wide opportunity for

to enter into whatever form of contract.

4. Economic system: Denmarks economic is strongly and dynamism. Global trade and

investment become the most openness, competitive and flexible in the world economy.

- High income. The living standard is high. Distribution of income is equitability.

- Foreign trade plays a key role in the Danish economy;

- All most of private companies are small and medium size.

- In spite of the deficits in 2009, Denmark's fiscal position remains among the strongest

in the EU with public debt at about 46% of GDP in 2013.

- Base on Global Edge, Gross Domestic Product (GDP) is continuing increase in last 5

years.


- Inflation is very low, 0.8% in 2013 (ranked 1st out of 148 countries as reported by the

World Economic Forum in 2013-2014)

- Denmark is among of the countries with the highest capitalist values

- Import goods & Services is continue increase in the last 5 years


- Denmark has a modern market economy, the prices of goods and services are determined

in a free price system.

- English is a dominant second language.

Denmark is on the list of best country in the world. Though Copenhagen, capital of Denmark

had been occupied by the Nazis during World War II, the war has not yet happened. The reason

is the Danes likes to focus on economic issues rather than a military conflict. Danish people are

the friendliness, openness and enthusiasm. Denmark leads the world leader in index about

culture, health, social security, export pharmaceuticals, food and aid activities, and also

voluntary donations to WHO and humanitarian aid. So, Denmark is a small area but it is highly

influential in the world. Social welfare systems are developed, a good infrastructure, the

government pays special attention to the field of health and education

Recently, Denmark became one of the potential export markets of Vietnam in Europe. Export

turnover of Vietnam to Denmark has been increasing steadily.


III. Export tropical fruit to Denmark is a good selection.

Criteria are used to make this selection is Vietnam has absolute and nature advantages for tropical fruit, so export it to country has opposite natural advantages with Vietnam is favor trade.

1. Advantages come from Vietnam

- Advantages of climate and soil in tropical countries, provinces in Vietnam have formed the

area quite concentrated fruit serving for industrial processing and consumption. Especially,

the Mekong Delta with an area of the largest fruit-growing reaches about 36.5% of its total

area. The total amount of fruit in Mekong Delta provinces average at around 26 to 27 million

trees / year in recent years. A Large number of fruits were trade throughout the country,

including to some of its neighbors.

- Base on information of the Center for Trade Information 2006, the area of fruit trees

throughout the country in recent years has increased rapidly, reaching 766.9 thousand

hectares in 2005 (compared to 1999 increased by a thousands of hectares, the average growth

rate of 8.5% / year), for the volume of 6.5 million tons (of which the largest banana

production to 1.4 million tons, citrus: 800 thousand tons, longan: 590 thousand tons).

Mekong Delta region is largest fruit tree area (262.1 thousand ha), production reached 2.93

million tons (accounting for 35.1% and 46.1% of the area of production).

- Vietnam has many fruits that few countries have. Recently, more fruits are exported such as

longan , litchi, and continue to offer every kind of specialty, such as breast milk, dragon


fruit, rambutan and mango penetrate into difficult markets such as the US, Japan, Australia,

New Zealand, Taiwan ... . Fruit export turnover in recent years ranged between 150 and 180

USD million / year.

- According to the Agriculture Organization - salaries (FAO), the demand for vegetables in the

world market is increased by 3.6% annually, while the ability to grow production is only 2.6

%. To world markets, fruit and vegetables are always in poor availability status; it is easy to

consume and prices always rises. There are more and more developed industrial countries

demand for imported vegetable growing again. The life has been improved, the demand for

fresh fruit and vegetables growing.

It can be affirmed that the world market for fruit and vegetables is very promising. Fruit is an

opportunity for Vietnam to conquer the world market.

2. Advantages come from Denmark Besides that, base on Market Report-Organic food June 2010, although Denmark is a relatively

small country; the organic food market is quite interesting. In general, Danes are highly

interested in environmentally friendly products; the market for organic products is the highest in

Europe.

- Base on Organic.dk website, Dairy products are the most important organic products on the

Danish market. It covers around 40 percent of the total turnover. The consumers are

interested in organic vegetable and fruit is increasing. For satisfy the market for organic

vegetable and fruits, a high import is needed.


- The turnover of organic foods in Denmark has increased with 77 percent in the period of

2004 - 2009. Just in 2009 the turnover increased with 35 percent compared with the year

before.

- The sales of organic fruit and vegetables reached more than 140 million Euro in 2009 - or

around 20 percent of the total turnover of organic products.

- And base on Market Report-Organic food Dec. 2009, the volume of Fruit imported from

Vietnam is very small just around 0.006&% of total fruit quantity of Denmark in 2008.

Fresh Fruits Quantity in tones

2005 2006 2007 2008 Mangos 2 1 3 1 Grapefruit 1 5 Lemon 1 Citrus fruit 1 Passion fruit 10 8 14 17 Bananas 1 Pineapples 5 Total of fruit is imported from Vietnam 12 9 25 24 Total Fruit was imported by Denmark 353,941 372,530 382,371 416,019 Fruit is imported from Vietnam vs Fruit was imported by Denmark (%) 0.003% 0.002% 0.007% 0.006%

Since many of fruits on market are imported to Denmark, this is good opportunities for

exporters from developing countries such as Vietnam.


IV. Strengths/Weaknesses of Denmark

- Strengths:

Inflation is lowest in the world Ranked 1st /148 in Global Competitiveness Index Tariff barriers to trade are few - Ranked 4th /148 in Global Competitiveness Index Trade freedom provides an advantage environment for competition. Nature of

competitive advantage ranked 5th /148 in Global Competitiveness Index

- Weaknesses:

The overall tax remains burdensome and complex. Effect of taxation on incentives to invest ranked 112th /148 in Global Competitiveness Index. Effect of taxation on

incentives to work ranked 128th /148 in Global Competitiveness Index

V. Strengths/Weaknesses of Vietnam fruit

- Strengths:

Due to the ecological diversity, fruit in our country is very diverse, there are over 30 different types of fruit trees, belonging to 3 groups are: tropical fruit (banana,

pineapple, mango ...), Asia tropical (orange, mandarin, lychee, longan ...) and

temperate (plum, pear ...). One of the largest groups of fruit trees and the fastest

growing is longan, litchi and rambutan. The area of this crop accounted for 26% of

the total area of fruit trees. Followed by bananas, accounting for about 19%.

There is some types of fruit have a competitive advantage, Ministry of Agriculture and Rural Development identified 11 kinds of fruits have competitive advantages,

including: dragon, Breast Milk, Mangosteen, Citrus (grapefruit, orange) , mango,

durian, pineapple, litchi, coconut and papaya.

Base on information posted on Ministry of Agriculture and Rural Development, in the first 4 months of 2011, exports of dragon fruit to the US reached 600 tones, equivalent

to 70% of total exports in 2010. US also allowed importing rambutan. Dragon fruit

exports to Japan in the first 4 months of this year reached 200 tons and 40 tons of

Korea. Late last April a delegation of experts from New Zealand to Vietnam to

examine the preparation of fresh mango exports to this market. Expected until early


2012, Vietnam's mangoes can be exported to New Zealand after treatment standards.

Thus, we can say Vietnam fruit exports are expanding rather large. They are a good

reference to be allowed to import to Denmark.

- Weaknesses: Base on information was posted in Saigondautu.com.vn

Vietnam fruit characteristics which are tropical, so the shelf life is very short, without the use of biological preservatives, or preserved by the quality standards that allow

time just to keep fresh fruit from 4-5 days, and the use of technology, the maximum

time are almost two weeks. This is one of the reasons that affect to the quality of fruit

exported to foreign as well as domestic consumption.

Of course, to be able to export fruit in this difficult market, the challenge now is to change farming practices of farmers in our country (non-standard). Meanwhile, the

exporters also face many challenges in terms of quality and price to compete with

similar fruits of other countries.

The value of exports to the US market, Europe is 1.5 times compared to the Chinese market, but it is very high risk. There have been many lessons as fruit exported to

some European countries is returned due to not meet standards.

The price of fruits is rather high, not enough to compete with other countries, especially compared to Thailand and China. So far Vietnam fruit (except dragon) has

yet to make the brand on the world market.

Transport cost is high. Aviation Charges of fruits from HCMC to US is about US $ 3 / kg. While in Thailand, the government has programs to support charges for exporters

should now pay only about 0,5USD / kg.

The system's policies in Vietnam in general and agriculture in particular is inadequate, the promulgation of policies lack consistency and have not strategy. Many policies

really have not specified, the effective level of promotion is very limited due to

insufficient financial resources and management skills, cumbersome procedures,

difficult to apply.


VI. Competition.

Also base on this Market Report-Organic food Dec. 2009 report, it is can see competition is

huge. The leading exporter for tropical fruit is China, Thailand, Pakistan, India, Indonesia and

Latin America.

VII. Entry mode: Exporting

Base on 6, the Center for Trade Information report, there are some risks

of exporting:

- There are not enough yields to export, so revenue cannot cover company expense.

- It is not easy to change habits and farming practices in order to change the quality of fruit

according to the requirements of foreign consumers.

- Price escalation cause by high transport cost, tariff wall, importers cost

- It is difficult to develop a marketing plan

- It is difficult to select the effective distributors

- Macro level, the activities of the State management agencies in building and market

development, trade promotion, develop bilateral relations and multilateral, to facilitate the

export of vegetables is very limited institutions, lack of initiative.


VIII. Easy to do business- World Bank ranking

In World Bank Report-2014 - Easy to do Business, Denmark stands at 4 in the ranking of 189 economies on the ease of doing business.

Almost indicators except cost indicators show that Denmark is easier country to do business in

compared with OECD countries (Organization for Economic Cooperation and Development).

Especially in related to starting a business, trading across borders (import/ export), Denmark

shows more advantage. On other hand, protecting minority investors is not so good.

IX. Corruption in Denmark Denmark ranks in 1st out of 177 countries on the Transparency International Corruption

Perception Index

The lowest level of corruption makes Denmark an attractive country for business activities.

Business environment in Denmark is very healthy and strong because it is supported by basic

principle of International Code of Ethics. It provides values rules & guidelines to guide behavior

in the world of business. It is fair at all.

X. Summary Fruit exports to the Danish are an opportunity and a challenge, too. If the export is success in

Denmark, it will open up opportunities for export to other countries in the Nordic region. Under

high pressure of high demands of this difficult market, the industry of fruit will be developed.

Profit at first may be not high due to the limited production, but in the long term, this is a right

way. It will be pushed the economy of Vietnam forward.


XI. Bibliography:

1. Report of the Ministry of Agriculture and Rural Development : http://xttm.mard.gov.vn/Site/vi-vn/73/81/204/86262/Default.aspx

2. Report of the Swedish Chambers of Commerce on June 2010: http://www.virke.no/omvirke/aboutvirke/International-trade/Documents/MarketReportOrganicFood.pdf

3. Report of Danish Import Promotion Office: http://cendoc.esan.edu.pe/paginas/infoalerta/Agroexportacion/textocompleto/fruit.pdf

4. Report of the World Economic Forum in 2013-2014: http://www3.weforum.org/docs/WEF_GlobalCompetitivenessReport_2013-14.pdf

5. Wikipedia website: http://en.wikipedia.org/wiki/Denmark_and_the_European_Union 6. Scandinavia law system of Stockholm Institute for Scandinavian Law 1957-2010:

http://www.scandinavianlaw.se/pdf/50-1.pdf 7. Report of 2014 Index of Economic Freedom:

http://www.heritage.org/index/country/denmark#rule-of-law 8. Report of Global EDGE: http://globaledge.msu.edu/content/trade-law/denmark.pdf 9. Report of the Center for Trade Information 2006:

http://www.google.com.vn/url?url=http://mrivn.com/images/2007/01/Thuc%2520trang%

2520va%2520phuong%2520huong%2520phat%2520trien%2520san%2520xuat%2520ca

c%2520loai%2520cay%2520an%2520trai31122.doc&rct=j&frm=1&q=&esrc=s&sa=U&

ei=RTtcVIzZHYHuPPHXgYgB&ved=0CCwQFjAE&usg=AFQjCNENG21Usp2YMT4i

JljBtMeTCmQI2g

10. Market Report-Organic food June 2010:

http://www.virke.no/omvirke/aboutvirke/International-

trade/Documents/MarketReportOrganicFood.pdf

11. Organic.dk website: http://organic.dk/market/import/index.htm

12. Market Report-Organic food Dec. 2009,:

http://www.virke.no/omvirke/aboutvirke/International-

trade/Documents/MarketReportOrganicFood.pdf

13. Report of Ministry of Agriculture and Rural Development:

http://www.mard.gov.vn/en/Pages/news.aspx?CategoryId=10

14. Base on information was posted in Saigondautu.com.vn:

http://www.saigondautu.com.vn/Pages/20110623/Thach-thuc-thi-truong-kho.aspx


15. World Bank Report-2014 - Easy to do Business :

http://www.doingbusiness.org/data/exploreeconomies/denmark/#protecting-minority-

investors

16. Transparency International Corruption Perception Index:

http://www.transparency.org/cpi2013/results#myAnchor1

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