Question

Objective
The Case will focus on issues related to the cultural aspect of international business. Sustainable business practices include CSR issues, foreign investment, and the benefits of regional integration for the countries within, and companies doing business in, that region. The case study analysis will be completed on an individual basis.
Instructions
Read the case study and answer the questions that follow. Each answer must be based on facts from the case and all of the course materials. Each answer should be 1-2 pages long for a total submission length of 10 pages maximum (double spaced, 12 pt font), and must be prepared in APA style format.

THE CASE: Kaizer Consulting

Kaizer Consulting is an international management consulting firm that specializes in business strategy and serves as a key advisor to the world’s leading companies. It provides its clients with the unique insight to drive critical decision-making and solve their most pressing problems.
Every year, the majority of Kaizer’s business comes from clients with whom they have worked in the previous year – an indicator of Kaizer’s ability to achieve lasting results for its clients. Kaizer’s client relationships are enduring as many clients have remained customers for more than a decade and have become project partners.
The Client has a Problem
The manager of a product category at a Fortune 50 technology company (The Client) approached Kaizer to analyze the complete range of supply chain challenges his company would face when they entered Vietnam-- a new market in South-East Asia that was presently dominated by a large single competitor. Initially, it was agreed that The Client would benefit most from a set of detailed analyses of the market which would focus on a providing a deep understanding of the

market’s culture and business practices and

manufacturing, distribution, and retail operations required to execute their market development plans.

The Client was aware of some cultural differences in the new market, but was under the impression that it would be able to proceed as it normally did when entering a new market. Further, The Client believed that the competitor’s primary advantage was based on optimized management of the distribution network and aggressive retailing. The Client thought it could proceed on that basis with its usual market entry strategy, but wanted to obtain Kaizer’s opinions on this before proceeding.
Kaizer’s Approach
Based on extensive research about the market generally, but specifically with individuals, focus groups, cultural experts, CSR and legal experts, suppliers, industry experts, vendors, and employees of companies in similar situations, Kaizer realized that:

The Client’s competitor had committed a number of culturally-based mistakes, primarily with respect to age and gender issues and local social taboos. Although these were not disastrous, the mistakes were covered in the media and had created the general impression that the competitor didn’t really care about the target market’s traditional cultural values, beliefs, customs, and norms.

The Client’s competitor had selected the target market in part because of lax enforcement of environmental protection laws and government corruption. Social media and the mass media soon discovered how the competitor was conducting business in the target market. Subsequently, the competitor had to perform substantial damage control to protect its international reputation of being socially-responsible. The competitor is currently facing legal action in Canada and the US for its alleged corrupt business practices.

The Client’s competitor’s key business advantage was actually based on long-term production contracts; in effect, the competitor had become partners with its suppliers. By doing so, the competitor had leveraged its foreign investment in a number of ways: it had created a supply chain that achieved a number of cost savings on commodities, equipment, machines, and technologies; helped improve the local economy by providing relatively high-paying jobs to local people; and contributed to social and political stability in the country.

Kaizer’s Findings
With the new knowledge provided by Kaizer, The Client:

Refocused its market entry and distribution strategies from enhancing warehousing and retail systems to more innovative production plans that incorporated local benefits and added a plan to use Vietnam as a base for expansion into other countries in the region particularly India, and the Philippines.

Challenged its managers and employees to develop highly ethical Codes of Conduct and CSR strategies that supported its long-term operations in the target market.

Most importantly, was able to develop an overall approach that was culturally sensitive and appropriate, even humorous. This approach was reflected in all the client’s negotiation and partnership development activities and clearly demonstrated its respect for the target market’s culture.

Next Steps
Kaizer has recognized that this work could become a model for future work with this client and others in similar situations. They’ve asked you to provide comments and a framework to analyze these situations more efficiently.
Questions
1.       Cultural understanding is a key element of this situation. Comment on the importance of this aspect of market entry and development, being sure to discuss the key elements of understanding and working effectively in Vietnam.
2.       Using the Hofstede Framework, analyze the Vietnamese culture with reference to concepts covered in the course materials.
3.       CSR and business practices are another set of critical issues in this case. Describe four CSR issues and explain how these issues can impact a company's international business activities.
4.       The Client, in order to develop its Market Entry Strategy fully, will be required to make an investment in Vietnam. Explain each of the four means of incorporating risk into market entry strategies if The Client wanted to use an Adaptation Strategy.
5.       The Client will benefit from trading with other countries in the region. Briefly describe the Association of Southeast Asian Nations (ASEAN) and discuss the benefits and drawbacks of regional integration.

Answer 1

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Cultural understanding is a key element of this situation. Comment on the importance of this aspect of market entry and development being sure to discuss the key elements of understanding and working effectively in Vietnem?

The situation involves Kaizer Consulting Company offering critical pieces of advice to the client who faces competition in a new market located in Vietnam; the competitor firm has since ignored the cultural differences in terms of age, gender and social taboos. Cultural understanding is definitely necessary for various reasons.

As part of the market entry strategy, understanding cultural practices of the target group can be discussed under the following elements. To begin with, age is an element of culture that should be understood. A target group can be divided into three different age groups. The young population (1-18 years), the youthful population (18-35 years) and finally the ageing population (35 years and above). This is a very important element of culture since the products offered heavily depend on the age bracket.

For instance, the youth tend to follow current trends and are very sensitive to changes in prices of commodities offered. In this respect, Kaizer Company can advice the client to concentrate on producing products with the age bracket put into consideration. Secondly, gender is an element in the culture of Vietnam, a target market. In order to carry out an effective market penetration in Vietnam, Fortune 50 Technology Company should analyze whether their products are   more likely to be used by males or females. For instance, if the technology products are used more by males, the company can focus in producing such products that are male-like in terms of color and model. This would not only give the Fortune 50 technology company a competitive advantage but also allow the company to increase returns.

Using the Hofstede Framework analyze the Vietnamese culture with reference to concepts covered in the course materials.

According to Professor Geert Hofstede, culture is the collective programming of the mind distinguishing the members of one group or category of people from others. The Hofstede framework has six different dimensions that critically explain how culture affects the value of a firm. These dimensions can be incorporated into the culture of Vietnam as discussed. These dimensions are power distance, individualism, masculinity, uncertainty avoidance, long term orientation and indulgence.

Power Distance.

Vietnamese culture is sensitive to inequalities and how the society is ready to allow the less fortunate in the society get in equilibrium with the fortunate in the society. It is for this reason that the local Vietnamese clients realized that the competitors had ignored their culture and didn’t really care about the target market’s traditional cultural values, beliefs, customs and norms. In this dimension, people in societies which exhibit a large degree of power distance accept a hierarchical order in which everybody has a place and which need no more justification.

Masculinity versus Feminity

Since Vietnamese society is competitive, the Technology Company must understand the dimension of masculinity versus feminity. Masculinity is the preference in society for achievement, assertiveness and heroism.Vietnamese is a more masculine society than a feminine society.

Individualism versus collectiveness dimension.

Any company interested in performing well in terms of research should and must fathom this dimension. Individualism is the dimension that a culture is a preference of a culture to take a self-image perspective and individuals are expected to take care of themselves. Vietnamese being one of the Asian countries which is a capitalist nation, the culture takes he individualism approach rather than a collectiveness approach.

Uncertainty avoidance Index.

This dimension expresses the degree to which the members of a society feel uncomfortable with uncertainty and ambiguity.Vietnamese holds a high uncertainty avoidance index hence tends to have strict codes of belief and behavior and are not tolerant to the unorthodox behavior and ideas.

Long orientation versus short orientation

Vietnamese scores high in this dimension and consequently take a more pragmatic approach as the country encourages thrift and efforts in the modern education as a way of preparing for the future.

Indulgence versus restraint

Indulgence refers to a society which allows a relatively free gratification of the natural and basic human drives related to enjoying the life and having fun, the society of East Asian country- Vietnamese- is a one that accommodates the use of technology and allows for indulgence.

CSR and business practices are another set of critical issues in this case. Describe four CSR issues and explain how these issues can impact a company's international business activities

Corporate Social Responsibility ( CSR) is simply the initiatives that the business takes to benefit the society. There are several tools that can be used to measure the CSR of an organization. These tools depend on factors such as the nature of the business activities, the nature of stakeholders concerned, the interest of the business, the environmental factors and the nature of management and leadership. The tools used for analysis range from social responsibility curve to the ethical / legal matrix.

The four issues include the legal issues, the ethical issues, the business objectives and the philanthropic objectives of the business. The 50 Technology Company’s international business activities are affected by these pertinent issues. For instance, the legal issues involve the laws that regulate the business activities internationally. Legal issues can include quotas and taxation laws that directly affect the manner in which a company can sell its products. The ethical issues on the other hand involves the objectives that the firm has towards the codes of conduct as outlined by the management.

For international business activities to prosper, the company must not only rely on the ethical issues in the domestic industry but also the ethical issues in the international countries. Third, the business objectives of the company directly influence how it trades in the international market. For instance, if the technology company puts its business objectives ahead, then it would mean that it can only carry out business transactions with such countries that do not restrict them on CSR and that they are able to get high returns in the company. Finally, the philanthropic objectives of a company affect the international business activities. In this case, the business has the main goal of satisfying the external business stakeholders and can carry out business with the international countries which have restrictions on the CSR.

The Client, in order to develop its Market Entry Strategy fully will be required to make an investment in Vietnem. Explain each of the four means of incorporating risk into market entry strategies if The Client wanted to use an ‘Adaptation Strategy’

Market entry is significant for the success of a company. If the Technology Company chooses to enter Vietnam through the adaptation strategy, there are four means of incorporating risk. The most prevalent risk when it comes to international business activities is the political risk exposure. According to McWilliams, A. (2000), these four means are using SWOT analysis, PESTEL analysis, QUEST analysis and ETOP analysis. QUEST analysis refers to the Quick, Environmental , and Scanning Technique. It is a systematic and intensive research process which helps the executives to identify and share their views concerning future business trends and environmental events which are critical to the formulation, choice, and implementation and monitoring of strategies. This method can be used within the organization where different managers meet and discuss their views either formally of informally. Can also be used externally where managers from different businesses may come together either formally and discuss business and environmental trend.

ETOP (Environmental Threats and Opportunities Profile) is an analysis n which the client looks into the threats that exist in both the internal and external environment and tries to compare the threats or risks with the available opportunities. These threats and opportunities can be compared only if there is a similar environmental factor. For instance, competition as a factor can be used to know if the company has a competitive advantage or not.

SWOT analysis on the other hand involves the analysis of the strengths, weaknesses, opportunities and threats of the business. By so doing, the company (client) is able to ascertain the level of risks a business faces and use that to measure the extent to which the company has to work on the opportunities to cover up the risks.

Finally, PESTEL analysis is a means used by a company in scanning all the external environmental factors in order to adapt to the environment. The factors captured in the analysis include political factors, economic factors, social factors, technological factors and the economic factors.

The Client will benefit from trading with other countries in the region. Briefly describe the Association of Southeast Asian Nations (ASEAN); and discuss the benefits and drawbacks of regional integration.

ASEAN is an association of the South East Asian Nations established in 1967 in Thailand when the Asian Declaration was signed. ASEAN has several objectives. These objectives are but not limited to: promotion of regional peace and stability, promotion of active collaboration and mutual assistance on matters of common interest, provision of assistance to each other in form of training, effective collaboration for greater utilization of resources and finally promotion of studies in the region

ASEAN is moderated by principles such as effective cooperation among themselves, renunciation of the threat, settlement of differences and disputes among members, non-interference in the internal affairs of one another and mutual respect of independence.

According to Feldstein, M. (2000), regional integration has both merits and demerits. The merits of regional integration are: allowing invest in assets that are highly specialized, allows for more control over businesses, allows for positive differentiation, requires lower cost of transaction and offers more cost control. The demerits of integration include: capacity –balancing problems, decreased flexibility of businesses and creation of barriers to market entry.

References.

Feldstein, M. (2000). Aspects of Global Economic Integration: Outlook for the Future (No. w7899). National Bureau of Economic Research.

McWilliams, A. (2000). Corporate social responsibility. Wiley Encyclopedia of Manage

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