1. Executive Summary
The purpose of this report is to conduct a case study on the company, OSIM International Ltd. In
order to have a better understanding on the company, we have looked into the company, as well
as the country, Vietnam. This report will look into various areas such as an internal analysis of
OSIM International Ltd, a country analysis of Vietnam, the advantages and disadvantages of the
market entry strategy adopted, provide recommendations on the overall business strategy that
OSIM International Ltd can adopt and lastly, recommend functional areas such as Marketing and
Human Resource practices that OSIM International Pte Ltd can adopt. The method of
investigation was conducted based on secondary information obtained from various online
resources
such as
OSIM
official
webpage
(www.osim.com), World bank
website
(www.worldbank.org) and annual financial reports.
2. Introduction and Background of report
Background of OSIM
OSIM International Ltd was established in 1980 in Singapore by Ron Sim, founder of OSIM.
OSIM has over 25 years of experience in the trade and is now the global leader in health lifestyle
products, selling mainly massage chairs. The company has three line of businesses, OSIM, ONI
Global (GNC) and TWG tea. As of today, OSIM has expanded over 33 countries across the
globe, with more than 600 outlets. With globalisation, it allows businesses like OSIM to
penetrate into the global market and enabling them to establish their business into several
countries. In 2005, OSIM ventured into Vietnam through franchising, till date it has a total of 3
retail outlets in Vietnam.
3. Internal Analysis (OSIM International Ltd)
a) Tangible resources
Finance(Refer to Appendix A)
OSIM’s financial ratios will be compared to one of their direct competitors which is OTO Body
Care.
Liquidity
In order to access the liquidity of the companies, we need to look at the Current Ratio and Cash
Ratio. The current ratio will show the company’s ability to pay off its current liabilities with its
current asset. The cash ratio will show the company’s ability to pay off its current liability with
cash and cash equivalents.
The current ratio for OSIM is 3.72x while OTO is 4.79x. This means that for every $1 of current
liability, OSIM has $3.72 of current asset to pay off. Similarly for OTO, it has $4.79 of current
asset to pay off for every $1 of current liability. This shows that OSIM had lower ability to pay
back both its short term and long term liabilities as compared to OTO. As an overly high current
ratio could mean that the company has not efficiently make use of their current assets, we will
also need to look at the cash ratio. The cash ratio will better show the company’s ability to pay
off debts as it is solely based on cash itself. The cash ratio for OSIM and OTO is 2.70 and 2.74
respectively. This means that for every $1 of current liability, OSIM has $2.70 of cash to pay off.
On the other hand, OTO would have $2.74 of cash to pay off every $1 of its current liabilities.
From the current ratio and cash ratio, it is evident that OSIM has lesser ability to pay of its
current liability as compared to OTO. Hence, we can conclude that in term of liquidity is one of
OSIM weakness.
Sales Growth Rate
The percentage growth for sales dropped from 7.63% in 2013 to 6.72% in 2014. This could be
largely due to the closing of 14 OSIM outlets and 6 GNC retail stores. It is evident that the sales
growth for OSIM is positive. However, the growth rate has slowed down. This could be due to
economic reasons such as declination in economy wealth or due to cyclical patterns of consumer
demand. As these are external factors that affects sales, it may not be directly attributed to
OSIM’s failure to generate internal funds. Moreover, OSIM is still achieving positive sales
revenue. As such, OSIM’s ability to generate internal funds is considered to be their strength.
Leverage
The debt ratio for OSIM is 42.4% while OTO is 18.95%. This means that for every $1 of asset,
OSIM has $0.42 of debt while OTO has $0.19. OSIM has a greater percentage of debt over
assets as compared to OTO. It is evident that OSIM bear a larger debt compared to OTO. A ratio
above 100% indicates that there is more debt than assets. The debt to equity ratio for OSIM is
0.74x while OTO is 0.23x. This means that for every $1 owned by the shareholders, OSIM owes
$0.74 to its creditors while OTO owes $0.23. From the ratios of the two companies, OSIM bear a
larger debt compared to OTO. It is evident that OTO will be able to better fulfil its obligations to
creditors in an event of liquidation. Thus, as compared to OTO, one of OSIM’s weaknesses is its
weak borrowing capacity
Facilities
OSIM have a total of 14 online sale platform worldwide whereby customers are able to shop
online without having to physically visit the retail store. Online shopping makes it more
convenient for customers as it is highly accessible through Internet. This greatly increases their
reach to target customers and thus, increasing their market potential and reaching out to new
customers as well. Moreover, OSIM have a large scale of point-of-sales network widely
distributed across the world, with 546 OSIM outlets in 22 countries. Furthermore, OSIM also
offered some personalised features with experiential corner such as the Trial Pod, which allow
customers to test their product in a relaxed situation. Besides that, certain retail outlets also
provide private VIP massage chair rooms that enable customers to indulge in soothing massage.
Therefore, since OSIM do provide a wide range of facilities for their customers and with the
effective point of sales retail outlet it can be consider as one of OSIM’s strength.
Human Resource
Training and development and recruitment are some of the key areas that contributed
significantly to the success of OSIM. OSIM provide in house training for their employees in
Singapore, overseas subsidiaries and franchises. These programs are conducted by their personal
in-house trainer to provide consistent training to their sales staffs like product and salesmanship
training. Furthermore, OSIM will also send their senior management staffs overseas to attend
seminars and exhibition. This way, it will aid in the increase of knowledge and skills to a larger
extend like providing quality service and communication skills. In addition, every employee are
given equal chances of being promoted. Thus, we can conclude that Human Resource’s training
program is one of OSIM’s strengths. Moreover, OSIM have a comprehensive orientation
programme involving the CEO and senior management to help newly joined directors to
familiarise with the business and governance policies. This orientation program aim to help
directors in understanding the company’s businesses to allow them to adapt into their new
working environment. Thus, the presence of an effective orientation is one of OSIM’s strengths
Organisation
OSIM adopted an international organisation structure with functional approach. The company
has many departments, such as the finance, accounting and corporate services department,
marketing department and many others. The board of directors in OSIM consists of three
Independent Non-Executive Directors, one Non-Executive Director and four Executive
Directors. They have the ability and knowledge to lead and set directions to increase the longterm value of organisation in the eyes of its shareholders and other stakeholders. Thus, having a
functional approach will create a clear line of command which allow employees to know who
they should report to and certainly increase the efficiency of productivity.
Planning and Control
OSIM strives to be the global leader in developing innovative and reliable healthy lifestyle
products to satisfy the needs of their customers. To achieve that, OSIM plans and controls the
production process from research and development to marketing, sales and after sales support of
the production. In this way, they will be able to exercise full total quality control over its
products and ensure that its products meet the required standards. Thus, effective planning and
substantial control is one of OSIM’s strengths.
Intangible Resources
Technology
OSIM has continuously created and innovated new massage technologies to provide humanised
massage feelings to cater to the needs and demand of their customers. According to World
Intellectual Property Organization (WIPO), it stated that OSIM currently have 28 patents which
consists of the Pneumatic massaging device, head massaging device, eye massaging device and
etc. By registering their patents, it would prevent third parties from utilizing the commercial
benefits of OSIM new (registered) inventions. (Refer to Appendix B)
Moreover, according to World Intellectual Property Organization (WIPO), OSIM also has 243
active trademarks registered internationally. By registering Trademarks, it would allow OSIM to
protect its name and logo. At the same time, it would allow OSIM to distinguish itself from their
competitors’
goods
and
services.
OSIM’s technology is a strength as it has demonstrated a strong ownership of its technology by
protecting it with trademarks and patents . (Refer to Appendix C)
OSIM International has made use of digital branding and communication to increase the
efficiency of their marketing. This includes the use of digital media and platforms such as mobile
and social networking mediums in order to extend their brand influence and presence in the
market. Besides the use of technology, OSIM has also engaged in traditional methods of
marketing such as celebrity endorsement which they use frequently. The use of digital media
helps to significantly broaden OSIM’s reach to a wider group of potential customers. With
technology, OSIM will be able to better extend their market potential beyond traditional
retailing. In this way, they will be able to continue increasing their brand awareness in the current
market and at the same time, reach out to new and untapped markets. Hence, their marketing
know-how has become a strength of OSIM.
Innovation
The OSIM Group is innovation-driven and is an Intellectual Property developer. OSIM continues
to strengthen its research and development capabilities in order to come up with products with
outstanding designs, technologies and quality.
OSIM has a team of Research & Development professionals and engineers and they have
innovated more than 1,000 products. This includes one of the world’s first massage innovation,
mechanism, rollers, motors and electrical controls. All these contributed to developing new
massage capabilities to meet the needs and demands of customers. One of the key personnel in
the team is MR Tan Kia Tong who has steered OSIM’s R&D department to greater heights. He
was in collaboration with several internationals and led the team to become the world’s first in
design and technologies. Thus, having quality of technical employees is one of OSIM’s
strengths. (Refer to Appendix D)
Reputation
According to reviews on www.Amazon.com, there were numerous customers who mentioned
that they were satisfied with the quality of the massage equipment, specifically, OSIM uPhoria
Foot & Calf Massager. They felt that it was comparable to an actual human massage and they felt
addicted towards it. There was another review from www.Brookstone.com, whereby a customer
mentioned that the uDivine massage chair offers a good quality massage. The customer was
experiencing muscle knots and was feeling unwell and after ten minutes of massage using
uDivine, she felt more relieved as compared to before. This has clearly shown that the quality of
the product is considered to be good. Moreover, it also serves its function, which is to relieve
muscle stress for its users. Thus, customer’s perception of product quality, durability and
reliability is one of OSIM’s strengths. (Refer to Appendix E)
On the other hand, many feel that OSIM customer service are not up to standard. It was stated
that once OSIM sells its product, it does not care about their customers. Based on two reviews on
www.Amazon.com and www.trustpilot.com, the customers did not receive the customer support
that they expected. Both requested for refunds as the products were causing them discomfort.
However, they were either ignored or refused by the customer care officers from OSIM. This
shows that there was lack of support received from OSIM. Ultimately, the customers’ perception
on the product quality, durability and reliability is considered to be a strength for OSIM as they
are managing it well. However, their customer support is a weakness as customers were not
given the support they ought to receive. ( Refer to Appendix F)
Brand Name
With more than 30 years of experience in the business of health and well-being, OSIM has
managed to build its brand from the ground up and established a group of loyal customers.
Based on an interview conducted by a group name ‘weareosim’. It was mentioned that when a
consumer wishes to purchase a massage chair, some respondents did not even consider
purchasing from OSIM’s Competitors OGAWA and OTO. Given that the materials for massage
chairs are mostly similar, however consumers perceive OSIM to have a differentiated positioning
is high. Furthermore, according to http://www.sharesinv.com, it was stated that when the OSIM
brand name is mentioned, 80% of the people will think of massage chairs. Thus, the brand name
of OSIM is a strength. (Refer to Appendix G)
4. External Analysis - PEST Analysis (Vietnam)
Background of Vietnam
Vietnam’s economic is growing rapidly and thus it has attracted many foreign investment and
their exports had also increased compared with the performance of other neighbouring countries.
According to the Prime Minister of Vietnam, the GDP growth for 2015 is anticipated to reach
6.5%, one of its highest since 2007. The estimated growth rate for 2016 – 2020 is expected to be
an average of 6.5% to 7.0%. These are attributed to the consolidation of institutions and laws,
investment in education and the training and improvement of the country’s infrastructure.
Recently, the Vietnamese government has approved a bond issuance plan, worth USD 3 billion,
for the first half of 2016. The purpose of the bond is to counter the possible rise in high fiscal
deficit and public debt in the first semester of 2016.
a) Political factors (Refer to Appendix H)
1. Government and political stability
Firstly, for government stability, corruption is mainly due to a low level of transparency,
accountability, media freedom, as well as low pay for government officials and
inadequate systems for holding officials accountable for their actions. The private sector
is also affected by cumbersome legislation, which provides opportunities for corruption.
The government has tasked various agencies to deal with corruption, including the
Central Steering Committee for Anti-Corruption which is led by the Prime Minister.
Despite of the efforts made to tackle corruption, the issue of corruption is still considered
widespread throughout the country and Vietnam still lags behind other Asian countries in
terms of control for corruption. Hence, this does pose as a threat for foreign companies to
set up businesses or made investments in Vietnam as corruption is something that could
potentially affect business operations due to the lack of transparency.
Secondly, political stability and absence of violence in Vietnam measures perceptions of
the likelihood that the government of Vietnam will be destabilized or overthrown by
unconstitutional means, including politically-motivated violence and terrorism.
In terms of political stability, Vietnam is a very peaceful and safe country. According to
World Bank's political stability and absence of violence index, Vietnam ranks
considerably better than most Southeast Asian countries, taking second place after
Singapore. Moreover, Vietnam faces very little ethnic or religious tensions. The crime
rate is among the lowest in Southeast Asia, and violent crimes are extremely rare.
Generally, the citizens of Vietnam are law-abiding. With Vietnam having high political
stability, it is an opportunity for foreign business investors to venture into Vietnam, as
they can operate their business in a safe and sound environment without having to worry
much of social unrest that will affect their business operations. Henceforth, Vietnam
being politically stable with the existence of corrupted government, it can serve as an
opportunity yet a threat at the same time.
2. Attitude towards foreign businesses and investments
Vietnam government place great importance in attracting foreign investment, especially
in sectors that will bring advanced technology and improve Vietnam’s labour
productivity. Vietnam’s attractiveness as a Foreign Direct Investment destination (FDI)
has grown as the country has made key legal reforms related to the business climate.
Foreign invested companies continue to play an important role in the economy. The FDI
sector contributed 62 percent of total exports in 2014, up from 47 percent in 2000, and
foreign invested enterprises’ contribution to GDP increased to 18 percent from 13 percent
over the same period. Vietnam has maintained registered FDI levels of around USD 17
billion per year over the last five years. The government also aimed that by the end of
2015 to fully integrate into the ASEAN Economic Community (AEC), which likely will
increase foreign investment from their ASEAN neighbours. Hence, this shows that the
government is putting in effort in moving towards a stronger economic growth by
attracting more foreign investments and business. Thus, maintaining this attitude means
giving foreign business a greater opportunity to do business in Vietnam.
3. Red Tape
Red tape is an idiom that refers to the excessive regulation or conformity of rules that are
considered as redundant and hinders or prevents action or decision-making. This would
mean a threat to Vietnam as it may deter foreign investors or businesses to invest on the
country due to the complicated but redundant process. An example would be, investors
have to spend as many as 160 days just to complete the required procedures for their
realty investment application. Even after 160 days, investors still do not know whether or
not they are allowed to implement the project. Another example is the application of work
passes, it could take as long as 4 months for a foreigner to get a work permit, while some
foreign experts only need that pass to go for a short business trips for a day or two. With
the existence of red tape in Vietnam, it poses as a threat for foreign investors or
companies who wants to venture their business into Vietnam.
4. Intellectual Property Law
Intellectual property law refers to the law that deals with the rules for securing and
enforcing legal rights to inventions, designs and artistic works. As seen in the Copyright
Office of Vietnam, the laws stated in it protects anyone’s property rights, regardless of
one being a Vietnamese or not. The laws from various articles of The National Assembly
of The Socialist Republic of Vietnam Legislature XI, Session 8 - Intellectual Property
Law, it interpretes terminologies, explains application, its restrictions, the protected
works and many more. As such, the existence of such law in Vietnam can be seen as an
opportunity for foreign businesses when they enter the Vietnam market.
Economic
1. GDP & Trends
The Gross Domestic Product (GDP) in Vietnam was worth 186.20 billion US dollars in
2014, which is a 6% growth in GDP. The GDP value of Vietnam represents 0.30 percent
of the world economy. Vietnam constantly enjoys a stable economic growth of over 5%
over the last 5 years. Vietnam's economy is growing solidly and consistently with 5 - 6
percent per year and even during the Asian crisis (1997) as well as the global recession in
recent years the increasing trend has not changed. The average GDP per capita in Ho Chi
Minh City lies at around 4500-5100 US Dollar per annum. The young population – 65
percent of Vietnamese are under the age of 40 - asks in particular for foreign brands. This
shows that it is an opportunity for OSIM to venture their business into Vietnam since the
country is doing well economically with constant annual growth in their GDP. It means
that more people are earning a higher income and therefore have a higher purchasing
power. Moreover, more than half of the young population under the age of 40 demands
for foreign brands, this shows that it is a good opportunity for foreign business and
investment to enter into the Vietnam market.
Agriculture's share of economic output has shrunk from about 25% in 2000 to 18% in
2014, while industry's share increased from 36% to 38% in the same period. State-owned
enterprises now account for only about 40% of GDP. This shows that Vietnam has move
towards a modernization country as well as economy as it can be seen that more people in
Vietnam has shifted from agricultural activities to manufacturing sector. State – owned
enterprise has also decreased over the years which means that more overseas business
entity are venturing into Vietnam, hence it is a good opportunity for foreign business and
investment to enter the Vietnam market.
3. Inflation
In addition, to its extremely strong economic growth, Vietnam is considered a stable
macro-economy despite a slightly volatile inflation rate. According to Victoria Kwakwa,
World Bank Country Director of Vietnam reported that Vietnam has done well in
ensuring macroeconomic stability over the past year, which has been underpinned by
moderating inflation. Inflation has seen a strong downwards trend over the last year,
falling to its lowest level since 2001 in January 2015. It averaged at 4.1 percent in 2014.
Since Vietnam has a slightly high inflation rate it possess as a threat for foreign business
to venture into the Vietnam market as the high inflation means each unit of dong can buy
fewer goods and services,. Business are forced to raise their prices on products and
services. High inflation rate will also encourage people to spend more money before it
loses value, which will be an opportunity for businesses. With a stabilised inflation
trends, it will be an opportunity for foreign business as the chances of changes in the
purchasing power is minimised.
4. Stability of currency and exchange rate
Between 2008 and 2011, Vietnam's currency, the dong, was devalued in excess of 20%,
but its value has remained relatively stable since then. The central bank devalued the Viet
Nam dong against the US dollar three times in the first 8 months, in 2015, by 1% each
time, to support the competitiveness of exports.
The government has pushed to lower the value of the Dong in the hopes of pushing up
exports and fostering export oriented economic growth. This is a threat to foreign
business because the unstable currency and exchange rate in Vietnam may lead to
inconsistent changes in cost and profit margins. Also, a weaker dong would magnify
export earnings and a weaker currency would decrease demand for costlier foreign goods,
boosting net exports, which is a threat for doing business in Vietnam.
4. Remittance and repatriation rules
In order to repatriate profits, a company must ensure that it has completed the declaration
of corporate income tax of the relevant financial year and issued audited financial
statements. The company must then report its intention to repatriate its profits to the tax
bureau. If, within 7 days, there is no notice from the tax bureau, the profits may be
remitted out. Companies can expect it to be between the middle to the end of April before
they are able to remit their profits out of the country. However, profit repatriation will not
be allowed if the financial statements of the company show an accumulated loss. Upon
terminating their investment activities in Vietnam, foreign investors can remit both
capital and profits abroad after fulfilling financial obligations to the State of Vietnam and
submitting tax settlement reports to the tax offices. Despite ongoing reform efforts, the
regulatory framework lacks efficiency. No minimum capital is required to start a
business, but the process still takes over a month, and licensing requirements remain
time-consuming. Thus this can be a threat to foreign business in venturing the business
into Vietnam market as the procedure of repatriating and remitting profits can be
troublesome and slow.
Social-cultural
1. Business Practices
The business practices of Vietnam is more of a social relationship than a formal business
relationship. Business meetings may result more in building relationship with others,
sharing their political views etc. By having good friendship with vietnamese is a
reassurance on closing the deal. This could be an opportunity for OSIM as they make use
of this business practices to strengthen positive relationship with the local companies in
Vietnam. Thus, this would aid in OSIM in getting more deals.
2. Consumerism
The consumerism in Vietnam will be an opportunity for OSIM as there is a growing
middle class who demands and prefers foreign goods and services and also an increase in
consumer brand awareness. There is also a growing young workforce, 60% of the
population are under the age of 35 years old. Vietnam key cities are seeing a rapid growth
in disposable incomes and greater connectivity. This shows that they have a high
purchasing power and they are able to afford foreign goods and services of better quality
and expensive goods and services. Since most of their population are youngsters, they
may show more interest in foreign goods and services as they are literate and also
technological, they may research online for better products. This may be an opportunity
for OSIM.
3. Shift in preferences regarding product and service characteristics
Young and increasingly sophisticated consumers prefer foreign brands goods and
services, this show that there is a shift in preferences regarding product and service
characteristics. This may be due to their parents not being able to afford such goods and
services in the past. This may be an opportunity for OSIM.
4. Level of education
The literacy rate of 93.4% is also an opportunity for OSIM. This also shows that they
may demand for better quality things, as the higher the literacy rate. They generally are
more educated and hence, are employed at higher paying jobs. As such, they have higher
disposable income and spending power. This may be an opportunity for OSIM.
Technology
1. Technological advances
It refers to the improvement in technology overtime. Vietnam has improved its technology
through the years and this is evident from the advancement in Information Communication
Technology (ICT) and also an increase in the number of e-commerce in Vietnam. ICT refers to
any communication device or application, covering radio, television, cellular phones, computer
and network hardware and software as well as various services and applications associated with
them. Research also states that Vietnam e-commerce showed rapid growth in 2015 in all business
sectors, supported greatly by information technology and telecommunication. With the
advancement of ICT in Vietnam, it encourages the growth of e-commerce within the country as
there is a direct relationship between them. Thus, it is an opportunity for OSIM.
2. Product innovations
As defined by Wikipedia, product innovation refers to the creation and subsequent introduction
of a good or service that is either new, or an improved version of previous goods or services. As
such, in order for a country to have new product innovations, we will look into the area of
innovations of the country. In terms of innovations, Vietnam have achieved the Innovation
Efficacy Index of 39.5 per 100 inhabitants in 2011, which is much higher than in thailand (26.5)
and Indonesia (15.4) - both having significantly higher GDP per capita than Vietnam. On top of
that, WorldBank also states that in terms of Entrepreneurship and industrial development, there
are about 540,000 private firms that have registered for such developments in 2012.
However, due to the mismatch between education and labor market, which eventually led to the
lack of skilled labor in Vietnam. Hence, this proves that despite Vietnam having the upper hand
of having continuous innovations within the country, the lack of advanced factor endowment (i.e.
the skilled labor), to carry out and bring the innovations further. Thus it is a threat to OSIM.
Hence, with the PEST analysis conducted.
5. Market Entry Strategy / Mode Adopted by OSIM International Ltd
The market entry strategy adopted by OSIM International Ltd to gain entry into the Vietnam
market is franchising. Franchising is a specialized form of licensing in which the franchisor not
only sells intangible property to the franchisee, but also insists that the franchisee agree to
abide by strict rules as to how it does business. With OSIM being the franchisor, they will take
control of the type and quality of promotion and marketing that the franchisees will take.
Franchisees of OSIM are usually required to set aside at least 4% of their sales for advertising
and promotion activities every year. There are three ways in which OSIM earns from their
franchisees. The first way is a franchise fee whereby franchise fees will start from USD
100,000 and depending on the country's’ market conditions and ease or difficulty of market
penetration, OSIM may waive or suspend the franchisee’s fee. The second way is royalties,
OSIM may take 3% to 5% of the sales depending on the size of the potential market in which
the franchisee is operating in. The last way is through the sale of products in which OSIM sells
their products to the franchisees at the original cost with a markup, payment is then usually
pre-paid or received upon delivery of the products. As seen in Appendix (Print Appendix),
according to the news release published on 20 October 2005, OSIM International Ltd
announced the signing of Master Franchise Agreements for two new countries, Vietnam and
Pakistan. For OSIM Vietnam, the Master Franchise Agreement were signed between OSIM and
Representations International Pte. Ltd (RIPL) so as to allow RIPL to operate OSIM franchise
business in Vietnam. OSIM Vietnam and OSIM Pakistan are OSIM International Ltd.’s 25 th
and 26th markets among the other franchise markets such as Australia, Canada, India and many
more.
Advantages
There are several advantages to the use of franchising for OSIM. The first advantage is that
OSIM does not have to bear the development costs and risks associated with entering a foreign
market, in this case, RIPL has to bear the development costs and risk as they are a franchisee
that is representing OSIM in Vietnam. The second advantage is that with RIPL being a
franchisee of OSIM, OSIM is able to build up a global presence and penetrate the Vietnamese
market at a relatively low cost and risk. Thus, through franchising, OSIM is able to expand at a
faster rate which allows them to build up their global presence and increase their brand
recognition around the world. The third advantage is that with franchising, OSIM would not
have to be involved in the recruitment process for the franchisee, hence OSIM would not have
to spend time and effort of continually recruiting and re-recruiting managers for its overseas
outlets as the responsibility of recruitment would lie with the franchisee and not the franchisor
– OSIM International Ltd. Hence, OSIM would be able to put their focus and improve on more
important areas such as compensation and training for their own employees. The fourth
advantage is that franchising is attractive and beneficial to a firm if the firm is unwilling to
commit substantial financial resources to an unfamiliar or politically volatile foreign market. In
this case, OSIM International Ltd would not have to invest money in operating the outlets in
Vietnam as with RIPL being their franchisee, they will pay a percentage of their revenue to
OSIM, thus the cost of setting up the franchise, training and developing the employees and the
launching of the outlets would be covered by RIPL. In addition, once the outlets are operating,
the franchisee would be paying OSIM a monthly income, hence OSIM would not have to
commit financial resources to penetrate into the Vietnamese market. As a result, OSIM is able
to use the income to continue advertising and marketing their brand, and improve and produce
more products.
Disadvantages
There are several disadvantages to the use of franchising for OSIM. Firstly, with OSIM
International Ltd franchising out to RIPL, it inhibits OSIM’s ability to take profits out of one
country to support competitive attacks in another. The second disadvantage is the lack of
quality control. The foundation of franchising arrangements is that the firm’s brand name
(OSIM International Ltd) conveys a message to their customers about the quality of their
products and service. This serves as a problem for many foreign franchisees as they may not be
as concerned about quality as they are supposed to be and the result of poor quality can
actually result in a decrease in sales or a loss in the firm’s worldwide reputation. For OSIM
International Ltd, as their products are manufactured and then shipped to the various outlets,
they do not have to worry about the product quality being inconsistent. However, OSIM
International Ltd would not be able to keep track of the quality of service that the employees of
the franchise outlets provide to their customers. Hence, if the quality of service is poor, it may
negatively impact their sales and reputation of their brand name. Thus, the geographic distance
of the firm from franchisees pose a difficulty for OSIM to detect poor quality as OSIM will
lack control of the franchisee's’ outlet and would have to depend on the franchisee’s
commitment and performance to maintain the quality of service to their customers. The third
disadvantage is that OSIM would have to put in considerable time and effort in order to
develop an appropriate training and development manual for the franchisees local employees,
which must be altered and adapted according to the cultural differences of each country.
6. An Overall Business Strategy
The overall business strategy that we will be recommending for OSIM International Ltd to
adopt is the Global Standardization Strategy. The reason why we recommend Global
Standardization Strategy is because OSIM International Ltd faces strong pressures for cost
reductions and minimal demands for local responsiveness.
Many international businesses faces pressure for cost reduction, hence in order to respond to
pressures for cost reduction, firms are attempting to lower the costs of value creation by massproducing a standardized product at the optimal location in the world so as to realize
economies of scale, learning effects and location economies. Another way a firm could attempt
to reduce cost is to outsource certain functions to low-cost foreign suppliers. According to an
initiation report on OSIM International Ltd, majority of OSIM products are contracted out to
their contract manufacturers for production while OSIM places their attention on their product
development, brand marketing and retailing. OSIM has always wanted to lower their overall
purchasing costs, hence OSIM shifted their supplier base from Japan to its 30% associate, DTOSIM Healthcare Appliances Co Ltd. In addition, with the quality of production improving in
China, OSIM had shifted their manufacturing of its high-end massage chairs from Japan to
China in 2010 to improve its margins. Hence, it can be seen that OSIM International Ltd is
trying to find and attempt different ways in order to help reduce their overall production costs
and increase their profit margin. OSIM had successfully manage to reduce their overall
production costs by realizing location economies which are the economies that arise from
performing a value creation activity in the optimal location for that activity. By doing so, it can
lower the costs of value creation and help OSIM achieve a low-cost position. In the case for
OSIM International Ltd, they realize location economies by choosing to shift their
manufacturing process to countries that have a comparative advantage in the production of
certain products, thus helping them to reduce the cost of value creation. Furthermore, OSIM
International Ltd produce products that tend to serve universal needs – taste and preference of
the customers in different nations are similar if not identical. For OSIM, their products are
considered to serve the universal needs as the customers who purchased and utilize their
products are all seeking the same purpose. Hence, there is pressure for cost reduction as OSIM
International Ltd produces products that caters to the universal needs. One of the reason why
OSIM International Ltd would want to reduce costs could be due to the unstable currency of
Vietnam as it was mentioned earlier that the Dong was devalued so as to push up exports,
hence the exchange rates in Vietnam may lead to inconsistent changes in cost and profit
margin. Hence, in order for OSIM to maximize their profit margin, they would have to reduce
costs in the manufacturing of their products. As a result, there is a strong pressure for cost
reductions.
Pressures to be locally responsive refers to the firm requiring to adapt its product to meet local
demands in each market which is a strategy that raises costs. Pressures for local responsiveness
arises from national differences in consumer tastes and preferences, infrastructure, accepted
business practices, distribution channels and host government demands.
In this case we identify that OSIM International Ltd faces minimal demand for local
responsiveness due to little differences in customer taste and preferences. Since OSIM offers a
wide range of health products mainly massagers ranging from eye massagers, massage chair,
foot massage, handheld massagers, shoulder and neck massagers and back massagers etc. This
wide range of product lines are first established in the domestic country, which is Singapore
before being introduced in other countries. With a wide range of products being offered, OSIM
do not have to specially customize their product to appeal to the local customers in Vietnam as
it already has a wide range of products offering for the customers to choose from. This is
because health product is considered as a universal need and consumer’s taste and preferences
does not differ much from countries to countries.
OSIM’s target market are those people that are in the age group of 25-35 and 50yrs old
onwards with mid to high income earners. Based on the research on economic factors of
Vietnam, the Gross Domestic Product (GDP) in Vietnam was worth 186.20 billion US dollars
in 2014, which is a 6% growth in GDP. With the strong GDP growth, it means that people will
be able to afford to buy OSIM’s products due to the higher purchasing power.
Next, differences in traditional practices and infrastructure between Singapore and Vietnam is
also low as there is not much key differences that will require OSIM to specially customize
their products. Based on the research on social factors such as consumerism in Vietnam, it
shows that there is a growing middle class who demands and prefers foreign goods and
services and also an increase in consumer brand awareness. There is also a growing young
workforce, 60% of the population are under the age of 35 years old. Since OSIM is a foreign
product and with it being the number one most preferred Massage chair brand in Asia, it will
be likely welcomed by the people in Vietnam. In addition, with the growing young workforce,
it means that there will be more target market in Vietnam since OSIM’s are targeting at people
in the age group of 25-35 years old. Their products focus on providing a relaxing experience as
well as a stress remover which young working adults are facing in the fast paced lifestyle
which is in line with the needs of these group of target market.
Due to the strong pressures for cost reductions and minimal demands for local responsiveness
as mentioned above, we recommend OSIM International Ltd to adopt the global
standardization strategy. Firms that pursue a global standardization strategy put their attention
on increasing profitability and profit growth by reaping the cost reductions that come from
economies of scale, learning effects and location economies which as described above, is what
OSIM had done. In addition, firms that pursue a global standardization strategy would choose
not to modify their product offering and marketing strategy to local conditions as it would
involve shorter production runs and the repetition of functions, which would increase the
overall expenses. In the case of OSIM International Ltd, they did not customize their product
offering, instead they offer the same product range for all their outlets. Hence, with the
standard product offering, they are able to obtain the maximum benefits from economies of
scale and learning effects. Thus, we recommend OSIM International Ltd to adopt the global
standardization strategy.
7. Two Functional Areas
i) Human Resource
Human Resource Management (HRM) refers to the activities an organization carries out to
utilize its human resources effectively. When planning for managing human resource
internationally, OSIM will have to look at the staffing, performance evaluation, management
development, compensation and even labor relations.
Staffing policy
Staffing refers to the policies for the selection of employees who have the skills required to
perform a particular job. It can be a tool for developing and promoting the firm’s corporate
culture (i.e. an organization’s norms and value system). With a strong corporate culture, it
enables the firm to implement its business strategy, and in this case it will be the Global
Standardization Strategy.
In order to apply to OSIM, a suitable approach to use will be the geocentric staffing policy
approach. Such policy seeks the best people for key jobs throughout the organization,
regardless of nationality. For example, when venturing into Vietnam with the Global
Standardization Strategy, using the geocentric approach, OSIM will have to select/hire the
most suitable employee, to work in Vietnam as an expatriate manager, regardless of nationality,
as long as one is able to fulfil the key role.
This approach brings along various advantages such as 1) enables the firm to make the best use
of its human resources; 2) helps the firm to build strong culture and informal management
networks; 3) create value from the pursuit of experience curve and location economies from
the multi-directional transfer of core competencies than firm pursuing other staffing policies.
[shift appendix]
● Expatriate- A citizen of the company’s home country working in foreign country
● host-country national (i.e. inpatriate)- an employee hired by a foreign company to work
in her own country
● third-country national - an employee that is a citizen of one country, but is working in
another country for a company that is headquartered in a third country.
Training and Management Development
When looking into the training and management development of the organisation, there will be
two forms of training OSIM can adopt, namely company-wide training, and individual
trainings. Company-wide training refers to trainings that are suitable for all employees, across
the organisation, while individual trainings will look into individual needs, and cater specially
for them. With that being said, OSIM should launch series of training that will be able to suit
all employees, and at the same time some of which will be catered to suit their individual
needs. Firstly, the company-wide training we recommend OSIM to implement a more practical
technical training (i.e. product knowledge training), as well as Customer Relations Training for
their sales staffs and customer relations staffs across the firm for all employees. (i.e. to help
combat the issue identified in Appendix F). These will be beneficial to all staff from having the
knowledge on providing better service to the customers, aligning with OSIM’s goal and
training direction. These trainings can be done via in-house, where the trainers and training
materials will come from and prepared within the company, as OSIM themselves will have a
better knowledge on the products, as well as the kind of service principles they wish to uphold
for their business. Secondly, as for the individual trainings, OSIM should look into specific
trainings (i.e. cultural and language training) for the international employees. In order to
combat the issue of expatriate failures, OSIM should implement trainings to tackle any
possible failure by providing the managers a skill set and reinforces organizational culture.
Cultural training fosters an appreciation for the host country’s culture. The understanding of a
host country’s culture will help the employees empathise with the culture, which will enhance
one’s effectiveness in dealing with host-country nationals. Language training allows one to
build rapport with his or her local employees, improving the manager’s effectiveness, even if
one is far from fluent.
Hence we will recommend OSIM to offer training to international employees via outsourcing
to Inlingua - Cross language barriers. OSIM can sign up for the corporate training
programmes which can accommodate 4 to 12 participants and courses can be fully customize
the training to the needs of the company. We recommend Business Language Training, Crosscultural Awareness Training and also the Global Leadership Training for OSIM. This training
can be conducted in the convenience of OSIM’s employees (i.e. within the office compound).
For example, these trainings can be held beforehand in the local headquarters (i.e. in
Singapore), before they are being sent to Vietnam as an international employee.
Performance Appraisal
Performance appraisal systems are used to evaluate the performance of managers against some
criteria that the firm judges to be important for the implementation strategy and the attainment
of a competitive advantage.
We recommend OSIM to adopt semi-annual performance appraisal exercise (in the month of
June and December) and also an open appraisal for the employees. For general employees, the
appraisal should be conducted by both the manager and also a self-appraisal for the employee
himself. A self-appraisal allows employees to evaluate themselves, so that the result is not
solely based on the appraiser’s evaluation, making the exercise more fair for employees, also
while doing the exercise, employees will know what they are being appraised for and also
reflect on their performance. An open appraisal allows feedback to be communicated to the
employee, allowing necessary corrective actions to be taken.
For an expatriate, inpatriate and also a third-country national, an additional step is to involve a
former employee (from the same national) who has served in the same location in the process,
also whenever possible, involve the home country manager in for this process. This is so, to
reduce biasness, home and host country’s managers should consult each other before
completing the appraisal. Home country manager should receive input from the host country’s
manager, while host country manager should consult the home country manager about the
actions of the employee. This gives the home country manager an opportunity to balance what
could be a very hostile evaluation based on cultural misunderstanding.
Compensation
Compensation is the total of all rewards provided to employee in return for their services. It
can exist in the form of financial and non-financial compensation. Financial compensation
consist of direct and indirect financial compensation. Direct financial compensation
recommended includes merit pay, piecework plan and sales commission.
Firstly merit pay, employees who show merit can have a sum of money added to the base
salary and this is given based on their deserving performance. For instance, those who perform
better would naturally be given more merit pay. Secondly, for employees working in the
manufacturing department, under the piecework plan, they are typically guaranteed a minimal
hourly rate for meeting some re-established standard output. Thirdly, employees who are
working in the service line can also be given sales commission where they get an amount that
represents a percentage of the sales price added to their lower base wages.
The balance sheet approach would be recommended for international employees to allow them
to have the same standard of living in the host country as they have at home. A compensation
package with five main components is recommended; base salary, foreign service premium,
various allowances, tax differentials and benefits. Firstly, a based salary can be given to the
employee for a similar position in the home country. Secondly, foreign service premium is an
extra pay the employee receives for working outside his country and/or region, it is an
incentive offered to the employee to accept the foreign assignments. Thirdly, various
allowances such as hardship allowance, housing allowance, cost-of living allowance and
education allowance. Fourthly taxation, the employee may have to pay income tax for both the
home and host country government, unless the host country has a reciprocal tax treaty with the
employee’s home country. OSIM can help the employee to pay the necessary income taxes in
the host country. Lastly benefit, OSIM can provide the same level of medical and pension
benefits abroad that employees receive at home.
(ii) Marketing
The current target market of OSIM is primarily the older generation. OSIM has developed and
introduced products that are significantly more appealing to the older generation as compared to
the younger generation. Example of such product is the uSoffa family set whereby users can
carry out various household activities such as watching television, working on the computer and
even doing makeup while using the product. The younger generation will not find any use of
such products. OSIM can probably develop products that would appeal to the younger
generation. In this way, they will be able to target the younger generation as well. The younger
generation are probably the Generation Y, aging from 18 to 34 years old. They occupy the largest
proportion of the population. They generally are more educated and hence, are employed at
higher paying jobs. As such, they have higher disposable income and spending power. As the
baby boomer are getting older, the spending power of economy will face a huge shift to the next
generation. Hence, OSIM may choose to shift its target to the Generation Y which is the next
potential pool of customers.
Product Attributes **
The products OSIM offer are mainly full and partial body massager relaxation seekers,
slimming belts for fitness enthusiast, blood pressure monitor machines for the healthconscious, and even air humidifier for those who look out for “cleanliness”. With that being
said, the main attributes of OSIM’s products are quality, the up close personal selling service
the retail outlet provides, as well as the innovation in products that are able to satisfy the
various needs of the customers (i.e. relaxation seekers, fitness enthusiast, health-conscious and
“cleanliness” seekers).
Culture refers to the tradition, social structure, religion and education, varying from country to
country, where the tradition and social values may differ. Thus, OSIM will need to include
products with different attributes to cater to the differences in culture when marketing. For
instance, say when OSIM ventures into the Vietnam market, with a large population of the
young adults, with the increasing trend of being health-conscious, OSIM will have to market
their product attributes differently from how they do it in other countries (i.e. Hong Kong),
whereby the market strategy will be focusing on the “shape + tone” products, with different
celebrity endorsement, that could reflect a healthier and younger look (i.e. famous Vietnamese
celebrity, Le Quyen).
Distribution Strategy
OSIM mainly uses a concentrated retail system, where there are only a few retailers supplying to
the market. With Singapore being a developed country, it results in the main retail concentration
being located in various shopping malls for convenience. Hence, when venturing into the global
market, OSIM continues using the concentrated retail system, by acquiring retailers in different
countries, thus increasing OSIM’s retail concentration.
To add on to the adoption of a concentrated retail strategy, OSIM can consider to revamp retail
concept of their outlets (i.e. globally), to enhance the shopping experience of its customers. To
add-on from the point mentioned above, of attracting the younger generation, OSIM has to
ensure that they are able to provide a distinctive and enjoyable shopping experience to them.
This can be done by making their retail store cozy and comfortable, in which customers can try
the massage chairs in a relaxed atmosphere. In this way, the younger generation will be more
compelled into entering the store.
Communication Strategy
● Push or Pull strategy
OSIM currently is adopting a combination of both strategies. OSIM push customer’s demand
through constantly developing new products and offering them in stores; and pull customers
towards these products through advertising and promotion. We would recommend OSIM to
focus its resources more to the Pull factors. This is so as, OSIM has already created numerous
product targeting at different types of customers. However, without the consumer realising that
there is a need for OSIM product, the communication strategy will still not be as successful. We
will recommend Customer Relationship Management, which refers to the practices, principles,
and guidelines that an organization follows when interacting with customer. With that being said,
when OSIM’s customers have any queries, whether is it pre or post-service, OSIM can have
prompt answers to all of their queries on various social media platforms (i.e. Facebook,
Instagram and Twitter), so as to combat the issue identified in Appendix F (i.e. unresponsive
service). [Refer to Appendix _ for detailed explanation]
Since OSIM’s goal is to improve business relationships with customers, yet assisting in customer
retention and driving sales growth, OSIM can first start by improving their customer services on
their social media sites. For instance, when a visitor visits OSIM Instagram or Facebook page
and leaves a comment on a post, regardless of negative or positive, OSIM should deliver a
thoughtful response in a timely manner. If OSIM does not respond, the relationship between
OSIM and the customer is lost and the customer may turn to OSIM’s competitor to seek for
answers instead. With a thoughtful response, customer will feel that their views and opinions are
taken seriously, providing a platform to make customers feel welcomed, and have the opinion
that “if I have any enquiries about a product, I can just communicate with the customer service
online”, it also brings OSIM closer to customers. With better customer relationships, OSIM can
pull customers’ demand, as the customer service is able to communicate with the customers,
making them realising the need for this product.
● Promotion mix
We recommend OSIM to use public relations to target the young adults. Public relation activities
enable an organization to influence a target audience. OSIM can engage bloggers to help in
promoting OSIM’s brand. For example, engaging bloggers like Naomi Neo and Tan Jian Hao to
promote the young adults product such as the Slim Belt and the Innovative Fitness (uShape
Music). These young bloggers would be able to influence the young adults. This also help
change OSIM image that many people may have of “brand that appeals to the older generation
only”.
OSIM can also improve its advertising via social media sites like Instagram and Facebook, by
focusing on the country’s social media sites preferences. For example, in Singapore if OSIM
wants to target the young adults and teenagers, advertising can be done through Twitter and
Instagram. For adults to middle age group, Facebook would be suitable. In China, Weibo and
WeChat could be used. In order for advertising to remain competitive and retain the attention of
who OSIM aims to attract, advertising should be done in a platform where most of the target
market are present, helping us to reach out to the right people. However, a product for our
primary target market example a massage chair, can also be advertise in all social media but
OSIM can use a different approach in each social media platform. For example on special
occasions like Mother’s Day or Father’s Day, in Instagram and Twitter, OSIM can advertise it
and have a marketing campaign that will target the “filial piety”. While on Facebook, OSIM can
just be advertising the massage chair with the celebrity endorsement. Thus, this shows how
OSIM can fully utilize social media as an effective platform.
● Global Advertising
We recommend OSIM to use the dealing with country differences approach. OSIM can use the
same marketing message to include in all advertising campaigns and localize other features. This
approach enables OSIM to advertise marketing in each country differently to reach out to the
locals and capture their interests. OSIM currently have differently celebrity endorsements for
different country, such as Andy Lau for Hong Kong, Lee Min Ho for Korea and Xu Bin for
Singapore. OSIM can localise the advertisement by featuring the different culture, lifestyles and
needs of the individual from the use of different celebrities. For example, instead of using the
current celebrities like Andy Lau as their spokesperson, they can choose a celebrity that appeals
to each country they expand into. For example for their Vietnam expansion, they can use a
Vietnamese celebrity like Ho Ngoc Ha who is a famous Vietnamese model, pop singer, actress
and entertainer. She will be a suitable spokesperson for OSIM as she has a fit figure and also
won the supermodel contest in Vietnam, who will be able to attract the attention of the public
customers. She can portray the lifestyle in Vietnam, and in the advertisement associate the need
of using OSIM products. Thus, when the audience view the advertisement, they are more able to
relate as it depicts the environment that they are in.
Pricing Strategy
We recommend that OSIM can use Multi-point pricing strategy so as to compete with its global
competitors, namely OTO Bodycare and OGAWA in two or more national markets. Multi point
pricing refers to the impact a firm’s pricing strategy in one market may have on its rival’s pricing
strategy in another market. OSIM should maintain competitive prices with its competitors in
order to maintain their market share. If competitors decide to compete aggressively on prices of a
particular product line in one market, for example selling Foot massager that OGAWA sells in
Hong Kong is cheaper than foot massager sold by OSIM in Hong Kong, then OSIM should
aggressively cut prices OGAWA’s largest market, Malaysia so as to retain their market share in
all other markets, as their OGAWA have strong global presence as well. If OSIM does not
respond to the aggressive pricing, profits and revenue will decline as more customers will choose
to buy from the competitors due to the lower prices.
On the other hand, a second aspect of multipoint pricing arises when two or more global
companies focus on particular national markets and launch vigorous price wars in those markets
in an attempt to gain market dominance. Even though multipoint pricing may lead to a price war,
OSIM will be able afford to engage in such behaviour, even though it reduces their profitability
in that particular national market, as they have profitable operations in other national markets,
moreover with OSIM being the number one most preferred healthy lifestyle brand in Asia give it
greater stand as compared to its competitors eg. OGAWA and OTO Bodycare.
Conclusion
In conclusion, the internal analysis that we have conducted on OSIM International Ltd on their
tangible and intangible resources shows the various strengths and weakness of the company, in
this case, OSIM International Ltd has more strengths compared to weakness in areas such as
their facilities, Human Resource, Organisation, Technology, Innovation, Reputation and Brand
name. Thus, showing that OSIM International Ltd has the necessary resources to succeed. The
external analysis that we have conducted on Vietnam on the various PEST (Political, Economic,
Socio-cultural and Technological) factors shows that Vietnam does have the required
opportunities for OSIM International Ltd to conduct their business in Vietnam. Next, we have
identified that the market entry strategy that OSIM International Ltd had utilize to penetrate
Vietnam is Franchising, and there are various advantages and disadvantages to the use of
franchising. Following that, the overall business strategy that we have recommended for OSIM
International Ltd is Global Standardization as the group faces strong pressures for cost
reductions and minimal demands for local responsiveness. Lastly, with Human Resource
Management and Marketing as the two functional areas, we have come up with the various
practices that OSIM International Ltd can adopt to further improve on their various functional
areas.
Political
Political Stability
Rank
2nd
behind
Opportunity
Singapore, in terms of
political stability
Existence
of
corruption despites of
effort
put
in
Threat
by
government to reduce
corruption
Attitude
towards
foreign business and
Government
is
looking at ways to
Opportunity
investment
attract
foreign
business and FDI
Plan to fully integrate
into
ASEAN
Economic Community
Red tape
Excessive
regulation
Threat
or conformity of rules
Intellectual
property
laws
Law
states
that
protects
anyone’s
property
rights,
regardless
of
Opportunity
one
being a Vietnamese or
not
Economic
Size of GNP & Trends
The Gross Domestic
Product
(GDP)
Opportunity
in
Vietnam was worth
186.20
billion
US
dollars in 2014. GDP
value
of
vietnam
represents 0.3% of the
world’s
economy.
Average GDP growth
rate is 6.15% yearly.
Inflation
HIgh inflation
4.1% (2014); Falling
interest rate
Opportunity
Stability of currency
& exchange rates
Overall stable Dong
Opportunity
value
Devaluation of Dong
Remittance
&
repatriation rules
in 2015
Threat
Process takes over a
Threat
month, and licensing
requirements
remain
time-consuming
Social
Business practices
More of social r/s
Threat
instead of business.
The more you share
your personal life, the
better the business r/s
will be. The better
your social r/s is with
the party, the more
likely you will get the
business deal.
Seniority is important
in vietnam
Consumerism
Growing middle class
with
preference
Opportunity
for
luxury goods;
Products & services
Preference of foreign
characteristics
goods and services is
Opportunity
concentrated
in
the
city
Education
Literacy rate 93.4%
Opportunity
Technology
Application of knowledge
Product innovation
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Appendix A: Financial Ratios
OSIM
OTO BodyCare
$ ‘ 000
HK $’ 000
Current Ratio =
588,455 / 158,101
302,245 / 63,106
Current Asset /
= 3.72 times
= 4.79 times
Debt to Equity Ratio =
362,089 / 491,940
63,269 / 270,574
Total Liabilities /
= 0.74
= 0.23
(362,089 / 854,029) X100%
63,269 / 333,843
Current Liability
Total Equity
Debt Ratio =
Total Liabilities /
= 42.40%
= 18.95%
427,566 / 158,101 = 2.70
172,675 / 63,106
Total Assets
Cash Ratio =
(Cash + Cash Equivalents) /
= 2.74
(Total Current Liabilities)
Sales Growth Rate =
2014 and 2013:
[(Current year’s revenue – (691,130 - 647,616)
/
Previous year’s revenue)]/ (647,616) X 100%
Previous year’s revenue) x = 6.72
100
2013 and 2012:
(647,616
-
601,684)
/
601,684 x 100
= 7.63
Appendix H: PEST Table Analysis (Political)
Political
Description
Opportunity/Threat
Political Stability
Rank 2nd behind Singapore, in terms of Opportunity
political stability
Existence of corruption despites of effort put in Threat
by government to reduce corruption
Attitude towards foreign Government is looking at ways to attract Opportunity
business and investment
foreign business and FDI
Plan to fully integrate into ASEAN Economic
Community
Red tape
Excessive regulation or conformity of rules
Threat
Intellectual property laws
Law states that protects anyone’s property Opportunity
rights, regardless of one being a Vietnamese or
not
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