VIETNAM NATIONAL UNIVERSITY

INTERNATIONAL SCHOOL

INTERNATIONAL MANAGEMENT
Coca-Cola enters Vietnam market

Lecturer : Hoang Anh Duy

Course code : INS3027.02
Student name : Truong Thi Hieu
Student ID : 17071067

Hanoi, December 2021

 TABLE OF CONTENT

A. ABSTRACT ............................................................................................................ 1
B. MAIN PART ........................................................................................................... 2
I. Introduction .......................................................................................................... 2
1. Overview about Coca Cola Company ............................................................ 2
2. Mission .............................................................................................................. 2
3. Vision ................................................................................................................. 2
4. Core value ......................................................................................................... 2
II. Coca-Cola’s strategy in Vietnam market .......................................................... 3
1. Coca-Cola’s entry strategy .............................................................................. 3
1.1. Joint venture .......................................................................................... 3
1.2. Wholly owned subsidiaries ................................................................... 5
2. Marketing strategy ........................................................................................... 6
3. Competitive strategy ........................................................................................ 9

III. Successes and failures of Coca-Cola company ............................................... 10

1. Successes ......................................................................................................... 10
2. Failures ............................................................................................................ 11

IV. Recommendation and Conclusion ................................................................... 13

V. References ........................................................................................................... 14
A/ ABSTRACT
Currently, the food and beverage industry is very hot and developing strongly in the
Vietnamese market, there are many domestic and foreign beverage companies providing a
full range of products in a variety of categories for consumers. The products have their own
flavor to meet the needs of customers. Here, I choose Coca-Cola for analysis because Coca-
Cola Vietnam beverage is the most well-known international brand. The Coca-Cola brand
is one of the world's leading brands of carbonated soft drinks. Coca-Cola is really
interesting to Vietnamese consumers, especially young people. So, what makes the
products of this brand so attractive? How did the brand penetrate the Vietnamese market?
In this report, by researching, doing market research, and applying the knowledge I have
learned, I will discuss Coca-Cola's business strategies, strategies to penetrate the
Vietnamese market, the success and failure during nearly 30 years of operation in the
Vietnamese market.

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B/ MAIN PART
I. INTRODUCTION
1. Overview about Coca-Cola Company
Coca-Cola first became known in 1886 by Dr. John Pemberton at Jacobs
Pharmacy in Atlanta, Georgia with the aim of becoming a brand name drug. However,
American businessman Asa Griggs Candler later acquired this oral formula which
developed the beverage formula and evolved into a full-fledged beverage company.
With clever marketing tactics, he made Coca-Cola one of the leading products in the
carbonated soft drink market. In 1990 Coca-Cola acquired Minute Maid contributing
to a diversified product portfolio.

Coca-Cola was first introduced in Vietnam in 1960, but it was not until 1994 that
Coca-Cola returned and did business in Vietnam. Coca-Cola Vietnam has 3 bottling
plants nationwide: Ha Tay (now belongs to Hanoi) - Da Nang - Ho Chi Minh with a
total investment capital of over 163 million USD. In 2001, the Government of Vietnam
agreed to allow three bottling plants to merge under a centralized management
structure, in which the Coca-Cola Vietnam bottling plant (CCBV) in Ho Chi Minh City
played the role of management.

2. Mission
Innovating the World and Making a Difference.
3. Vision
Create brands and beverages that people love that inspires both the body and the
mind. At the same time, develop in a sustainable way and towards a better common
future, bringing positive effects to the lives of people, communities and the whole
world.

4. Core value
Leadership, collaboration, responsibility, integrity, customers, passion, diversity
and quality.

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II. Coca-Cola’s strategy in Vietnam market
1. Coca-Cola’s entry strategy
Cooperative Strategies
Coca-Cola has decided to choose a form of joint venture with a domestic company in
Vietnam to penetrate the Vietnamese market more easily. This form will have many
advantages for the company, but there are also many disadvantages.

1.1. Joint venture

Coca-Cola started entering Vietnam by entering into joint ventures with

Vietnamese companies. Coca-Cola began to be known in the Vietnamese market in
1960, but 30 years later, in 1994, it officially started its business because during that
time Vietnamese law did not allow the company to invest 100% of its capital foreign
investors operating in the market. In 1995, to penetrate the Vietnamese market, Coca-
Cola started joint ventures with domestic companies to operate in the market.

In August 1995, the first joint venture between Coca-Cola Dong Duong and
Vinafimex Food and Agriculture Company was established, headquartered in the
North.

September 1995: A subsequent joint venture in the South named Chuong Duong
Coca-Cola Beverage Company was also born due to the association between Coca-
Cola and Chuong Duong Company of Vietnam.

Only 3 years later, in January 1998, another joint venture appeared in the Central
region - Coca-Cola Non Nuoc. That is the final joint venture decision of Coca-Cola
Indochina in Vietnam, made in cooperation with Da Nang Beverage Company.

After just over 3 years, Coca-Cola has quickly penetrated into the Vietnamese
market when entering into a joint venture with 3 companies in the North, Central and
South of Vietnam.

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 The form of joint venture with domestic enterprises will create many advantages
for Coca-Cola company, but it also faces many disadvantages.

Advantages:

- Cost savings: The joint venture helps Coca-Cola and Vietnamese businesses make
the most of the relationships of both parties. This will help businesses save costs for
their products or services, such as marketing, packaging, or PR costs...

- Limiting risks: Joint ventures help businesses limit risks rather than owning the
whole thing, because each partner only bears the risk for its own capital
contribution.

- Easy to penetrate new markets: In the first time of opening, foreign partners often
rely on domestic enterprises to help solve administrative procedures and paperwork.
Moreover, when Coca-Cola exploits the Vietnamese market, a joint venture with a
local company will help businesses understand the nature of the new market as well
as develop an appropriate business strategy.

- Combining resources: When entering into a joint venture, the parties can combine
the resources of both parties to create favorable conditions for business: human
resources, capital, relationships..., helping to quickly implement projects fast and
convenient.

- Professionalization of expertise: Each business will have its own way of operating
and different professional strengths. When joint ventures, these expertise elements
will converge together selectively, creating strength for the business.

Disadvantages:

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- Barriers: barriers in language, thinking and culture between the two parties will be
a big disadvantage for both joint venture enterprises. Sometimes there will be
conflicts and inconsistencies in work leading to failure.

- Disagreement: In the early days of operation, despite a lot of losses, Coca-Cola

Vietnam continued to sponsor Vietnamese sports activities with billions of dong
despite strong objections from Vietnamese partners.

1.2. Wholly owned subsidiaries

From the journey of joint ventures with Vietnamese companies, Coca-Cola has
acquired all to become a company with 100% foreign investment.

During many years of operation in Vietnam, Coca-Cola reported losses, which

forced joint venture companies to give power to foreign parties. Coca-Cola gradually
eliminated each Vietnamese partner to become a 100% foreign owned company.

In October 1998, the Government of Vietnam allowed joint venture companies to

become 100% foreign invested companies. Coca-Cola's joint ventures in Vietnam in
turn belong to the full ownership of Coca-Cola Indochina, and this change was made
first by Coca-Cola Chuong Duong Company - the South. From March to August 1999,
joint ventures in Da Nang and Hanoi also changed to a similar form of ownership.

The first partner to withdraw was Vinafimex. Many information shows that
Vinafimex has sold 30% of its shares in Coca-Cola to Coca-Cola for $ 2 million.

Advantages and disadvantages when a Coca-Cola subsidiary is wholly owned:

Advantages:

- Complete equity and Operational control: complete 100% of the company's

investment capital and increase the control, flexibility of the company, make
independent decisions without being hindered or delayed by the partners.

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- Protection of know-how: Coca-Cola can keep its formula secret to help compete
with other companies in the market. In the Vietnamese market, the beverage
industry is developing and the competition is fierce, so keeping the recipe is very
important to be able to compete with rival companies.

- Ability to coordinate globally: Once Coca-Cola has become independent, it can

easily coordinate the activities of the company, operating the company according to
its chain of systems.

- Fast entry speed: previous acquisitions of Vietnamese joint venture companies

helped Coca-Cola quickly penetrate the Vietnamese market.

Disadvantages:

- Potential political problems and risks: Although when entering the Vietnamese
market, joint ventures with Coca-Cola have solved political problems, but now
Coca-Cola no longer has that support when Vietnamese businesses withdrew capital
from Coca-Cola. Coca-Cola can be politically risky at any time, when it takes a lot
of money to hire a lawyer.

- High development cost: Becoming a 100% foreign-invested company, Coca-Cola

must be solely responsible for expenses, risks, company development costs,...

2. Marketing strategy

4Ps strategy analysis:

Product:

The product portfolio of Coca-Cola is very diverse, the main products are drinking
water, alcoholic drinks, and carbonated drinks. There are many types of water with
different flavors, different designs to meet the needs and stimulation of customers.
Some outstanding products are mentioned such as: Low-gas Coke, Sprite, Fanta,

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Vanilla-flavored Coke, Coke, fruit juice,.... These products are very popular in the
Vietnamese market on holidays, Tet, birthdays, events or even daily meals. Coca-Cola
has constantly researched and developed more products to serve customers'
preferences.

In terms of packaging design and product design, each type of water has a different
design and style that catches the eye of buyers, the logo is creative and flexible. Coca-
Cola has constantly improved product packaging, regularly changing packaging
designs on holidays and holidays of the year. There are many sizes for customers to
choose from such as: 330ml can, 1.5 liter bottle,...

With an innovative, eye-catching, easy-to-use design, Coca-Cola has left an

impression in the hearts of customers and gained a large number of customers,
increasing brand recognition.

Price:

With a wide range of products, the prices of the products will also vary. Coca-Cola
sets product prices and adjusts prices for each segment and market. In Vietnam market,
Coca-Cola's product pricing strategy is market penetration pricing strategy. According
to research, Coca-Cola has learned about 80% of customers in low-income rural areas,
so Coca-Cola's pricing strategy is also relatively low in order to penetrate the market
and attract more customers.

In addition, Coca-Cola regularly offers promotions and large percentage discounts

to attract customers. According to the assessment, the price of Coca-Cola's products is
quite reasonable, in line with the income of Vietnamese consumers, which has helped
Coca-Cola convince customers to use their products more.

Place:

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 Coca-Cola is distributed from rural to urban areas, from small convenience stores
to large supermarkets. With 3 factories in 3 North, Central and South, Coca-Cola can
easily distribute products widely throughout the country. Coca-Cola continues to
expand through agents such as cafes, eateries, restaurants, beverage shops,...

Coca-Cola's distribution system is widely distributed and located in extremely

convenient locations, so Coca-Cola can easily attract customers and meet the needs of
customers everywhere.

Promotion:

Coca-Cola invested in advertising an amount equivalent to the production cost to

polish its name right from the start.

At convenience stores or supermarkets, Coca-Cola always spends some money so

that its products can be sold at eye level and attract customers as much as possible.

Advertising activities through social networks, newspapers, TV, etc. are also
heavily paid by Coca-Cola restaurant. According to the TNS Vietnam Media and
Market Research Company, Coca-Cola in Vietnam spent about $1.5 million on product
advertisements on television and newspapers in 2008. An amount not It's not a small
thing, but Coca-Cola Vietnam is ready to pay for its advertising activities.

Many advertising campaigns of Coca-Cola are attracted by a large number of

customers, especially young people such as the advertising campaign "Turn on the lid
- win your life", the campaign to print the user's name on the can,...

Capturing user psychology in Vietnam, Coca-Cola knows that promotion is the

most effective tool to promote the brand's product image.

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3. Competitive strategy

As I mentioned above, the beverage industry in Vietnam market is currently

developing strongly, Coca-Cola has to face many other famous competitors such as
Pepsico, Tan Hiep Phat,... Especially is Pepsico, a famous international brand ahead of
Coca-Cola in Vietnam market.

Despite the fierce competition in the industry in the market, Coca-Cola still retains
a certain influence of a big brand. Over the years of operation, Coca-Cola has had an
important position in the hearts of consumers.

Behind these resounding successes of Coca-Cola, it is impossible not to mention

the persistent efforts to implement business strategies, continuously innovate and create
new brands to prevent overwhelming competitors. Given the growing number of online
retailers, launching new products, new brands and building customer loyalty is key to
success. Aware of the expansion of online sales sites, Coca-Cola is constantly changing
to survive, creating new products and new flavors to serve customer needs.

To ensure new trends in the market as well as the daily changing needs of
customers, Coca-Cola is always responsive and proactive to changes. Coca-Cola is
always ready to try new things that stimulate the curiosity of customers. These
differentiated products will lead to a brand with a great competitive advantage.

Coca-Cola always changes its marketing strategy to suit each brand. With such a
diverse product portfolio, Coca-Cola must also have different advertisements to inspire
customers not to be bored.

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III. Successes and failure of Coca-Cola Company

After nearly 30 years of operation in the beverage industry in the Vietnamese market,
and also one of the first US enterprises to invest in the Vietnamese market after the two
countries normalized their relations, Coca -Cola has achieved a lot of success but also
faced many failures since entering the Vietnamese market.

1. Successes

In February 1994, nearly 100 years after its establishment, Coca Cola entered
Vietnam with the position of a leading international brand. Entering a new market and
facing few competitors, Coca Cola quickly became the boss in the beverage industry.

In 1998, the Vietnamese government allowed joint venture companies to become

100% foreign owned companies. Coca Cola quickly acquired 3 companies in Vietnam,
firmly positioning itself in the leading developed market in Southeast Asia.

Sales grow steadily each year about 24%, this is a dream number of many
businesses.

In 2017, Coca-Cola Vietnam Beverage Co., Ltd was in the Top 100 enterprises
paying the highest corporate income tax, the Top 4 most sustainable development
enterprises, and the Top 1 enterprises loved by employees best.

In 2019, marketing campaigns brought Coca-Cola 5 important victories at the

MMA Smarties Awards organized by the Vietnam Mobile Marketing Association. This
is the only award globally to honor outstanding innovations, creativity and
achievements in the field of mobile advertising. Coca-Cola was recognized as the Best
Brand of the Year in Vietnam, featured in the nominations list of seven categories and
won four major wins, including three gold medals.

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 Coca-Cola is the most famous international brand in Vietnam. Coca-Cola's product
portfolio is very diverse to suit each consumer's preferences such as: Coca-Cola, Coca-
Cola Light, Coke Zero, Sprite, Fanta, Minute Maid Nutriboost, Minute Maid Teppy,
Schweppes, Dasani and Aquarius. In order to meet the needs and tastes of customers,
in 2017, Coca-Cola continued to research and launch fruit juices and bottled tea
products.

Currently, factories in 3 areas Ho Chi Minh City, Da Nang and Hanoi have about
2500 employees, of which about 99% are Vietnamese workers. Coca-Cola Vietnam
considers sustainable development as the core of its business activities. Coca-Cola has
invested and improved the canteen and toilet for workers, improving the daily meals
for workers. In addition, Coca-Cola also invests in sales staff with Ipads with 3G
connection to serve their work instead of a pile of junk paper. In addition to the change
for employees, Coca-Cola also has tens of thousands of refrigerators located at retail
locations across the country so that customers can clearly feel the delicious taste of the
products. Since 2010, Coca-Cola has invested millions of USD in community projects
in Vietnam, including projects to build EKOCENTER, provide clean water, encourage
support for women, small and medium enterprises, as well as families in need.

2. Failure

At the end of the first decade of the 21st century, Coca Cola VN's revenue was up
to 2,500 billion VND, but it reported expenses up to nearly 2,700 billion VND – a loss
of nearly 200 billion VND. Many people could not help but be surprised when Coca-
Cola reported a loss when Coca-Cola's growth rate was over 20% and the purchasing
power of Vietnamese people was not bad. Then, at the end of 2011, Coca Cola reported
a loss of nearly 3,800 billion VND, exceeding the initial investment capital (2600
billion VND) they invested in Vietnam market. Since then, the suspicion of tax evasion
began to arise when Coca-Cola reported a loss and would not have to pay corporate
income tax to the Government of Vietnam.

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 Not stopping there, Coca-Cola was constantly accused of cheating on weight. The
standard weight of a can of Coca Cola is about 350 grams, while according to many
people, its canned products are only about 100 grams. In addition, many customers
complained about the quality of Coca Cola canning process when there were many
cases of encountering foreign bodies while enjoying the world's number one beverage.
This information is always met with a simple response from Coca Cola: "the fault is
due to the product, not the factory".

These things have greatly affected the company's reputation, its reputation has
been reduced and customers' trust has been lost, leading to a decrease in the company's
revenue.

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IV. Recommendation and Conclusion

Coca-Cola's market entry strategy is very smart, from a foreign company entering
into a joint venture with a domestic company in Vietnam, it has gradually acquired all
of them to become a 100% foreign invested company.

Coca-Cola is quite successful in its marketing and advertising strategy, and I

believe that the company will continue to implement more effective strategies in the
future. However, Coca-Cola also encountered many scandals causing public opinion,
Coca-Cola needed to know how to control negative public opinion through social
networking sites.

Coca-Cola has always developed at a high level, but with that comes concerns
about the environment and social activities. Although there are forms of recycling cans,
recycling many times will affect human health. Therefore, my opinion is that Coca-
Cola needs to have more effective solutions in using cans that have less impact on the
environment.

Coca-Cola's global reach is so good, it has covered many countries outside the
US, which further confirms the strong brand of the company. In the Vietnamese
market, Coca-Cola has a certain position in the beverage industry. Customers are really
attracted by colorful advertisements and vibrant sounds. Therefore, Coca-Cola needs
to launch more advertising products to meet the needs of customers and attract more
customers.

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V. References
The Coca-Cola Company. (n.d.). The Coca-Cola Company - More than a Beverage Company.
[online] Available at: https://www.cocacolavietnam.com/coca-cola-vietnam.

Rnet.vn (n.d.). Coca Cola thị trường đồ uống hàng đầu tại Việt Nam. [online]
tuyenbanhang.com. Available at: https://tuyenbanhang.com/coca-cola-thi-truong-do-uong-
hang-dau-tai-viet-nam-dn25.html [Accessed 30 Dec. 2021].

VnExpress (n.d.). Hành trình Coca Cola thâu tóm đối tác Việt. [online] vnexpress.net.
Available at: https://vnexpress.net/hanh-trinh-coca-cola-thau-tom-doi-tac-viet-2740612.html
[Accessed 30 Dec. 2021].

News, V. (n.d.). Coca-cola từ liên doanh thành 100% vốn nước ngoài. [online] VietNamNet.
Available at: https://vietnamnet.vn/vn/kinh-doanh/coca-cola-tu-lien-doanh-thanh-100-von-
nuoc-ngoai-103553.html [Accessed 30 Dec. 2021].

www.cocacolavietnam.com. (n.d.). Coca-Cola khoác lên mình sứ mệnh mới, hướng về một
tương lai tươi sáng. [online] Available at: https://www.cocacolavietnam.com/news/coca-cola-
khoac-len-minh-su-menh-moi-huong-ve-mot-tuong-lai-tuoi-sang.

a280004 (2021). Phần mềm quản trị doanh nghiệp. [online] MISA AMIS. Available at:
https://amis.misa.vn/28361/chien-luoc-marketing-cua-coca-cola/.

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