2 Page Paper (Strengths/Weaknesses) of business with vietnam vs another country

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Hmv727

Business Finance

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https://globaledge.msu.edu/countries/vietnam

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Doing Business in Vietnam The Political Climate, Business Opportunities, Currency Volatility, and Culture By: Duong At a glance Climate • Tropical °F Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 63 84 63 70 75 82 84 84 82 77 72 64 Natural Disasters POLITICAL CLIMATE • Full name: The Socialist Republic of Viet Nam • A Communist state • • • • One party The National Assembly: the highest-level representative body of the people Head of State: the president Head of Government: the prime minister Political Structure Political Issues • Vietnam's Anti-Corruption Law 2005: One of the best anti-corruption legal frameworks in Asia (World Bank) • Very problematic to implement. • Example: All Government officials have to declare their assets and income annually. • Vietnam ranked 113 (out of 176) on the 2016 Corruption Perceptions Index (by Transparency International) Political challenges to doing business • Corruption and bureaucracy hinders foreign business • Project timelines often exceed initial projections. • Ineffective protection of intellectual property • Piracy rates for software were estimated to be 78 percent in 2015, signaling a steady decline. • High tariffs • Agricultural products, processed foods and nutritional supplements • State-owned enterprises make up 35 percent of GDP Business Opportunities • U.S.-Vietnamese commercial relationship has grown dynamically since the renewed diplomatic ties in 1995 • The U.S. is now Vietnam’s largest export market • Conversely, over the last two years, Vietnam has become the United States’ fastest growing export market (up over 23% from 2014) (World Bank) Business Opportunities (Cont’d) • Strong GDP growth expected to continue for medium term – PwC: • 1) Strongest average GDP growth till 2050, exceeding 5.1 percent a year • 2) Move from the 32nd largest economy to the 20th by 2050 • A large population of 93 million • Half of which are under the age of 30 • Fastest-growing middle and affluent classes in the region Opportunities for U.S. Companies • Transportation infrastructure construction • Aviation • Education • Information technology • Health care • Oil and gas exploration • Telecommunications • Power generation • Agriculture • Environmental project management and technology Currency Volatility • US $1 = VND22,726 • Vietnam Dong’s official rate has been pegged by the State Bank against the U.S dollar since 1989 First McDonnald’s Store in Vietnam - 2014 • A Big Mac hamburger in Vietnam is sold at VND60,000, or $2.84 with the current exchange rate. Meanwhile, a similar hamburger is priced at $4.62 in the US. • Referring to the purchasing power parity (PPP) theory, the Vietnam Dong is undervalued by 39% if compared with the US dollar. USD/VND Exchange Rate Business Implications of Undervalued Currency • Makes Vietnamese exports cheaper in the U.S. • Makes imported goods in Vietnam more expensive in the local market Culture: Vietnamese Festivals Vietnamese New Year: Tet Transportation Vietnamese Food Assignment • What are the primary strengths and weaknesses with doing business in Vietnam? THANK YOU! Bibliography • Trading Economics – Vietnam Currency, Retrieved 27 Sep 2017 from https://tradingeconomics.com/vietnam/currency • Vietnam - Market Overview, Retrieved 27 Sep 2017 from https://www.export.gov/apex/article2?id=Vietnam-Market-Overview • R.L.W, (2014) Beefed up, The Economist, Retrieved 27 Sep 2017 from https://www.economist.com/blogs/graphicdetail/2014/02/big-mac-index Emerging Market Rubric (45points possible) Assignment - Review content from the presentation provided by Duong Nguyen and using global EDGE (globaledge.msu.edu) devise answers to the following questions. What are the primary strengths and weaknesses with doing business in Vietnam? Why? Discuss 3 reasons using information from globalEDGE. Examine and compare the risk for doing business with Vietnam vs another emerging market country. 1 -1 ½ pages typed/ double spaced. Please include graphs or visuals from globalEDGE to support your analysis. (30 points) Content – Well analyzed. Evaluate depth of analysis. Students need to explain why a strength is a strength and a weakness is a weakness. ➢ Too simplistic or vague – not well expressed – minus 1 to 10 points ➢ Points missed under each category based on quantity - mention 3 strengths and weaknesses making connections with GlobalEdge data on Vietnam or Duong’s presentation. (Refer to example for possible answers) ➢ Examine and compare the risk for doing business in Vietnam vs. another emerging market - (Brazil, Chile, China, Colombia, Czech Republic, Greece, Hungary, India, Indonesia, Latvia, Malaysia, Mexico, Morocco, Peru, Philippines, Poland, Russia, South Africa, South Korea, Taiwan, Thailand, Turkey, United Arad Emirates) Should be about 1 paragraph length or more comparison. Must include some graph/ graphics Written expression – Proper language and grammar observed – minus 1 to 10 points ➢ Misspelled words ➢ Improper grammar Emerging Market Rubric (sample) The following are some examples of strengths and weaknesses. I am sharing these with you as phrases but I would hope that students would write out and explanation and provide proof or evidence since the assignment asks why? 1) What are the primary strengths and weaknesses with doing business in Vietnam? Why? Strength Weakness Example – State the strength and connect it to why this is an opportunity. Example – State the strength and connect it to why this is a business threat. According to Duong’s presentation, US and Vietnamese commercial relationship has grown dynamically since the renewed diplomatic ties in 1995. This improvement in governmental relationships and the supporting infrastructure offers opportunities for businesses in the U.S. because the strengthen governmental relationships lessens the risks associated with international businesses. The current political climate within Vietnam is communism and State-owned enterprises make up 35% of Vietnam’s GDP. This is a weakness because communistic governments are less supportive of free trade. There is an innate political risk in doing business with communist nations because of the strength of the governmental control which can unexpectedly affect the country’s business environment, company profits and other goals of the multinational firms. Strength 2 Weakness 2 Strength 3 Weakness 3 ➢ Examine and compare the risk for doing business in Vietnam vs. another emerging market - (Students should choose from one of the following countries - Brazil, Chile, China, Colombia, Czech Republic, Greece, Hungary, India, Indonesia, Latvia, Malaysia, Mexico, Morocco, Peru, Philippines, Poland, Russia, South Africa, South Korea, Taiwan, Thailand, Turkey, United Arad Emirates) A paragraph comparing the general risks in doing business in Vietnam vs. another emerging markets. These are some global edge graphics
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Explanation & Answer

Attached.

Running head: TRANSACTING WITH VIETNAM

1

Advantages and Disadvantages of Transacting with Vietnam
Name
Institutional Affiliation

TRANSACTING WITH VIETNAM

2

Advantages and Disadvantages of Transacting with Vietnam
Did you know that Vietnam is also known as The Socialist Republic of Viet Nam? It has
a high potential for business growth given its more than 92 million citizens. However, the
country operates under one party that contributes to political instability. Organizations
transacting with the state are likely to face problems with the high rate of corruption and
undervalued currency. On the other side, benefits of doing business with Vietnam include cheap
labor and a diversified market.
Q1. Strengths and weaknesses of doing business with Vietnam
Strength

Weakness

Increased economic relations.

High rate of corruption

Over the last few decades, Vietnam has built

Vietnam has been ranked position 113 out of

commercial relationships with other countries

the 156 countries in the world according to a

with the United States one of...


Anonymous
Awesome! Perfect study aid.

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