Macro-Environmental Factors in Vietnam

Macro-Environmental Factors Vietnam is a peninsula, which located in the Southeast Asia monsoon zone. Its long narrow territory stretches 1700km from north to south and in the center a mere 50km from east to west, the territory looks like a dragon stand at east of the Indo-Chinese peninsula. The coastline, which extends for 3260km, has fine beaches and archipelagos. It not only has beautiful landscape attracts countless tourists and also can get rich seafood, provided favorable conditions for raw materials of the food.

Because Vietnam is located between the tropic of Cancer and the Equator, which giver rises to a humid climate, ice cream will be popular for the whole year. The country covers an area of 327500km2. And population is one of large resource for Vietnam. Recent census estimates the population of Vietnam at beyond 84 million. The population is also one of potential opportunities of business. Vietnam is young, the average age of Vietnamese is 23. 1, and young people are the main producers and consumers for Vietnam. Not only the average age is young, the development is also a young man.

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After 1986, it opens the mark; begin to do business and more and more foreign company entry to the Vietnam market after join the WTO in 2006. In history, Vietnam is part of French Indochina. “The French administration imposed significant political and cultural changes on Vietnamese society. A Western-style system of education has developed,” at that time. (http://en. wikipedia. org/wiki/Vietnam#First_Indochina_War) · Political/Legal: The major legal roadblocks that La Porchetta will have to overcome upon entering the Vietnam’s market regard food regulations.

Currently, they do not have unified food law. As Russin and Vecchi said “Understanding Vietnamese laws and regulations concerning food can be a challenge. The government relies primarily on laws, which regulate the quality of goods in general. But there are also specific regulations that apply these laws to food products. This means that there are two sets of regulations. ”( Russin and Vecchi, Food law in Vietnam, 2007) Also it didn’t have unified law, it still requires the announcement of standards of foods, and also has some safety and hygiene rules. “All individuals and entities that want to produce nd to trade in foods must satisfy certain conditions on health and safety in order to be licensed”(Decree 03/2000/ND-CP, dated 3 February 2000, art 4. 1(b) ) “ all conditions on hygiene and safety must be maintained throughout the lifetime of the business. ” ( Decree 03/2000/ND-CP. art4. 3; Law on Enterprises, art 17. 2). And those regulations on Goods Labelling apply to all goods produced in Vietnam for distribution within the country or for export. ( Regulations on Goods Labelling, art1. 1) Imported mainland vegetables, meat and other food must be from registered farms/purchasing stations.

So La Porchetta must follow their rules and regulations or else suffer the legal implications (AgrifoodAsia, 2005). As a nation, Vietnam is expanding economically, and as such, it is pertinent that La Porchetta remains closely involved with politics and/or changing legal matters. This will prevent any mishaps with food, as sanitation has become a large issue in Vietnam as of late. * Economic: Over the past decades, Vietnam has become a market-oriented economy. With it Real growth rate (2008) is 6. 23%. It becomes one of the fastest growing in the world, with its GDP of US$ $84. 8 billion during 2007 (DFAT 2008). Vietnam has also joined the WTO, which represents its extended market both domestically and globally. Because Vietnam is consistently improving economically, it is the perfect time for a restaurant chain such as La Porchetta to invest its business. Vietnam’s current per capita annual income ranges from All Cities now earns an average salary of VND 312,713,065. Half of those in this position would earn between VND276, 195,725 and VND470, 994,183 (http://www. salaryexpert. com), which is relatively low when compared to Australia.

Despite this, products will be priced relative to Vietnamese disposable income in order to ensure competitive pricing. Research shows 40% of Vietnamese income is spent on food (AgrifoodAsia, 2005). This is a promising statistic for a restaurant like La Porchetta. In the future, Vietnam currency could fluctuate more flexibly against US Dollar. This is a promising statistic for prospective foreign investors such as La Porchetta. * Cultural/Social: Vietnam is a communist country. Religion, speech, press and other aspects of society remain under central control. Since Vietnam’s “doi moi” renovation) in 1986, Vietnam’s economy and, to some extent, policies have become increasingly modernized and less restrictive. The cultural of Vietnam is mix the traditional Asian cultural and French cultural. Long time relationship with China resulted Vietnam have such deep “China figure”. And during French colonial period, European influences Vietnamese culture, nowadays, there are still have so many Western architecture and restaurants left here. Throughout its development, Vietnam culture has become one of the most historically diverse and complex in the world.

Because of this complexity, many cultural factors exist that can potentially threaten the global marketing strategy of La Porchetta. Firstly are the business traditions. Vietnam lives in a high-context culture, so they are not likely to express their opinions as openly as Westerners do. Also, Vietnam people encourage collectivism, in that they emphasize group goals and needs and strive to maintain harmonic relations in business. Vietnam people favor organizational hierarchy and centralized decision-making. All these beliefs and values will affect how La Porchetta carries out business in Vietnam.

It also has two important elements that will contribute to La Porchetta’s market entry into Vietnam. First is the factor of ‘Face’. Giving ‘Face’ during a business negotiation can be understood as giving one’s respect to negotiators on the other side of the table. This involves showing approval of their personality, attributes, accomplishments, appearance, as well as to show that they are considered likeable and worthy to be a friend and companion. The second element is relationship marketing. A high-level official in Vietnam bureaucracy can smooth negotiation and generate good business.

However, this is not about immediately returning one favor with another. It may involve the constant giving without obtaining a favor in return or vice versa for an extended period of time (Zhu and McKenna 2007). Food culture will also have a significant impact on La Porchetta’s market entry. Furthermore, Vietnam has many traditional holidays and festivals, which are celebrated with some typical traditional food. La Porchetta will need to consider Holidays and festivals when hiring employees and developing their individual work schedules (Yuan 2006) , and also doing some new food to suit the need of festivals. 25

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