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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
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=488/3/2019 BUSM3311 G1 -20Team Worldcup International Business Plan Final 2[1]
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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=668/3/2019 BUSM3311 G1 -20Team Worldcup International Business Plan Final 2[1]
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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=AFQjCNEBsEy4pb7nhULcJcpCPOBmGAlbJA8/3/2019 BUSM3311 G1 -20Team Worldcup International Business Plan Final 2[1]
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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_Harbour8/3/2019 BUSM3311 G1 -20Team Worldcup International Business Plan Final 2[1]
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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
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