INTRODUCTION

Given such competitive business environment, several factors such as political uncertainty,
economic crises, etc. can be critical to drive where companies operate. This paper aims to
analyze strategy that Vinfast applied in expanding its operations overseas and to explain why it
carried on investing in its Vietnam factories.
 TASK RESPONSES

A. BACKGROUND:

“VinFast is a member of Vingroup - one of the leading private conglomerates in the region.
By always putting our customers first, VinFast relentlessly innovates to create high-quality products
and exceptional experiences for everyone” (Vinfast, 2023).

Economic, multinational-firm globalization is of importance (Levitt, 2014) as it creates the connection

that allows goods, services to be traversed borders. Global trade is affected by 4 fundamental
drivers.

1. Cost drivers

Several types of costs such as human and non-human resources are frequently examined
to ensure cost-efficiency, which was defined as “competitive advantage” when it comes to
expanding business globally (Porter, 1985). Cost efficiency could be reached once
manufacturing cost is optimized, or supply chain is managed effectively.
1.1 Labor Costs

Vietnam is one of the countries where workers get the lowest income in the world, which Vinfast
could take advantage of and partly reduce manufacturing costs. Hence, 50%-65% of the Vietnam
population is in the working age annually (Anh, 2018), making the labor force redundant, furtherly
suiting such demand for manufacturing sector. Another advantage of young labor force for Vinfast is
less time and procedure needed for training new employees, optimizing training costs. The available
and cheap labor force really is a critical factor for Vinfast to lower product prices, reaching the global
clients who are price-sensitive, furthermore attempting to become top-notch electrical car
manufacturing companies.

Vinfast can enjoy the cheap and available labor costs, however, many different costs such as for
materials, delivery or operation, etc. are also essentially considered as they drive company
competing equally among global electrical car manufacturers.

1.2 Manufacturing Costs

When it comes to the manufacturing factor, there are many more costs that Vinfast must
consider. In 2019, Vinfast uploaded a table of costs that the company needed to cover, in which
materials costs got the lion’s share of manufacturing costs (50%-64.1%) (Xuyên/BNEWS/TTXVN).
Besides, transport costs and import tax, guaranteed fees, etc. had to be adapted as well. In sum,
manufacturing costs occupied from 62.9% to 80.3% of Vinfast car costs. To better understand why
Vinfast had to pay high car manufacturing costs, the context of Vietnam car industry must be
examined. Mr. Sumito Ishii, General Director of General Motors Vietnam Limited Company argued
that car industry in Vietnam was limited that tiny number of global automotive component suppliers
entered Vietnam market (Xuyên, 2017). Remarkably, approximately 90% of automotive
component suppliers have foreign direct investment, hence, large amount of raw materials
had to be imported, rocketing the car production costs compared to several regional countries
such as Thailand or Indonesia.

Importing raw materials can significantly boost Vinfast’s car production costs. Therefore, car
prices sold to customers can positively increase depending on the extent to which manufacturing
cost increases, making them less competitive in global market. Being aware of this threat, Vinfast
made several attempts to domesticize as many automotive components as possible, besides
optimize production procedure, step by step declining manufacturing costs. Evidently,
 according to My (2023), Vinfast has domesticized 60% of automotive components used for car
assembly line.

1.3 Construction cost of Battery Charging Station (for electrical cars of Vinfast)

Although electrical cars are highly regarded as for the sake of no emission to environment, and
are encouraged in some countries, including United States, the lack of battery charging station
really is a huge problem (dantri.com, 2023). This unavailability can undermine the importance of
electrical cars as people are unable to make long trip. As the number of charging stations in
Vietnam is quadruple to that of US, Vinfast must carefully consider cost to construct charging
stations, as well as fees for maintenance, as sheer number of drivers use a station can cause
failure anytime.

CHALLENGES AND OPPORTUNITIES FACED BY VINFAST IN TERMS OF COST DRIVERS

The above analysis has examined cost drives that impact Vinfast to compete globally,
however did not consider the context that Vinfast open factor overseas (such as United
States). The following table will do so.

Labor Costs Manufacturing Costs

Opportunities As Vinfast aims to open factor in the US, US
workers are going to be utilized. Because US
labor force is much redundant and expertized
compared to Vietnam (Car industry has been
developed over many years) training costs can
be reduced, however still pale in comparison
with challenges mentioned above.
Challenges Vietnam’s cheap labor costs can no longer be a As mentioned above, 60% of Vinfast components
competitive advantage for Vinfast as once they is produced in Vietnam, thus Vinfast factory in the
open factor in the US, workforce in this country US is expected to import components from
must be utilized instead. As US Labor force Vietnam, in which expense for transportation
specializing in car is much excellent than cost rises, leading to car price increase in the
Vietnam, paying considerable financial amount US market, lessening its competitiveness.
for their income is a must, increasing
 production cost. Hence, recently, workers of
Ford, Stellantis and General Company stroke as
their income were not compatible with their
laboring hours, as well as problems associated
with working conditions. Ford estimated that this
strike made them a 1.3 USD Billion deficit
(baomoi, 2023). The strike of US workers is also
a lesson for Vinfast to provide adequate working
conditions and compatible wage for labor force,
unless they will receive revenue deficit (taking
Ford as a prime example), but furtherly the
reputation will be destroyed.

2. Market drivers

Electrical car market in the US is quite potential for Vinfast to advertise products here. According
to Technology market research Counterpoint, the US electrical car revenue this year’s period
significantly rose by 79% compared to the same period of 2022 (Ngo Minh, 2023), which is a key for
the US enlarge electrical car market, edging out the German. Gasoline prices spiked in the summer
due to reduced gasoline reserves and a series of refineries shutting down due to extreme heat.
Research firm Goldman Sachs estimates that record heat in Texas is likely to cause the output of US
oil refineries to decline by 2% in the past few week; while battery charging cost prices less. Evidently,
consumers pay 55 USD to get full for gasoline cars, whereas 20-45 USD is a range that electrical car
users have to pay for fully charged cars (at station), and they can even save up to 30 USD if they
charge at home (including charging accessory expense). Therefore, shifting to electrical cars can
reduce operating cost. Besides, electrical cars manufactured by several brands such as Ford and
Chevrolet have been more affordable recently (Back then, expensiveness prevented customers to
approach electrical cars).
 OPPORTUNITIES: Currently, Vinfast has built 6 showrooms in California, which is a state where
many Vietnamese people live here, thus customers might have already been well-aware of the
brand and are more likely to purchase Vinfast cars. Therefore, Vinfast has targeted righ potential
customers, step by step making opportunity to profit here. Once Vinfast cars are more and more
commuted, local people are likely to be aware of the brand, which is critical foundation to aim for
reputation and customer trust building, furtherly reaching sustainable business in the US. Another
factor to consider is the future launch of Vinfast manufacturing factor in the US. At present, it can
be time-consuming and cost-ineffective to deliver cars from Vietnam to the US to adapt those
who demand on buying Vinfast products, however the presence of its factory here makes it much
more convenient to serve such large orders from local customers, hence partly reduces
delivering costs.

3. Competitiveness drivers

US electrical cars are potential but are highly risked to invest in if the company does not have
effective tactics and strategy. When it comes to one of the largest electrical car markets in the world
such as China, USA or Germany, rivalry among brands is extremely fierce. Not only Vinfast has to
face rivalry against local brands such as Tesla, Ford or Chevrolet but also big global rivals investing in
US such as Porsche, BMW, Toyota or Hyundai, etc. Toyota’s investment in US was 1957, those
figures for Hyundai and Porsche were 1986 and 1950 respectively, giving them much time to build
strong reputation and customer loyalty.

CHALLENGES: Vinfast only started to invest the US in recent years, and even very strange to the
American car users here. This means that they did not even reach high brand awareness rate, not to
mention customer loyalty, which needs long time to create. The following table give detailed analysis
of Vinfast rivalry against some 2 brands investing in the United States.
 VINFAST VS.
TESLA When it comes to electrical cars, it can be a crime if we do not mention
Tesla, which has enormous influence on the US markets.
- Brand awareness: According to a survey in the US (Hailes,
2019), 81% of the surveyed admitted that they have awareness
of the Tesla electrical cars, obviously Tesla topped in terms brand
awareness rate. This partly means that Tesla has greatest
influence on the US car users, therefore they have broader
potential customer zone in the US territory and definitely take
huge advantage over Vinfast in this aspect.
- Brand loyalty: Brand awareness is a key factors to reach potential
customers, however brand loyalty is a key to increase profit as only
trusting on brands push customers to purchase their products.
According to S&P global, Tesla continued to topped the brand loyalty
rate with 68%, making it much reliable to customers and probably
lifting the brand to the top-priority choice of customers. In this aspect,
Tesla absolutely outplays Vinfast
- Sales share: Tesla also dominates the US Automotive, according to
the 2023 second quarter survey of Counterpoint with 59% of sales
share. This can be an obvious effect of high brand loyalty mentioned
above.
TOYOTA Toyota is also a huge brand challenging Vinfast’s success at the US. Having
invested in the US in the mid-20th century, Toyota has been constructing
reputation and coming up to customer’s mind as a prestigious brand.
- Brand awareness: Based on the above-mentioned survey, Toyota
even ranked 2nd in the brand awareness rate of electric cars (52%),
partly implying Toyota is likely to reach more targeted customers
than Vinfast.
- Brand Loyalty: Depending on the S&P Global (2023), Toyota’s
brand loyalty rate was 52.3% (in top 10), therefore its reliability is
already affirmed over years, and it will be long way for Vinfast to
 reach this loyalty.

The purpose of comparing Vinfast with reputable brands is to highlight massive barriers
preventing Vinfast from reaching success in the US, though it was considered as a potential market
for Vinfast before. The more potential the markets, the more fierce the competitiveness among
brands can be. All brands will get as much optimized profits as possible at such potential market like
United States. Tesla-representing local brands in the US, they gain deep insights into their markets
and are much more experienced compared to young Vinfast that barely understands characteristics
of US market, not to mention that Vinfast has to compete with many local competitors including Ford,
Chevrolet, etc. Toyota-reprensting foreign brands investing in the US, has long been competing
against local competitors and proving why they still exist and profit from this “fertile market”, even
surpassing Tesla’s brand awareness of electric cars. This proves that Toyota is experienced enough
to set barriers to new entrant like Vinfast. Besides Toyota, Hyundai, Volkswagen, Mercedes, etc are
also big challenges for Vinfast. Local and foreign companies mentioned above also got advantaged
even in terms of high-quality labor force serving for their manufacturing process as based on
reputation, those companies can easily attract redundant source of labor (even including high quality
workers).
 4. Government drivers

The US government is encouraging its citizen to use electric cars by offering tax credits up $7500
for purchasing new electric cars. This can be remarkable policy that push citizen to purchase electric
vehicles as apart from contributing to environmental protection, they are financially supported.
Another key takeaways from the US Government move is that they invest in the construction of
charging stations, also provide discounts for those making use of them. Regarding the European
market (also Vinfast’s targeted market), to help customers cover high prices of electric cars, many
countries offer financial incentives (theguardian.com, 2023). According to the European Automobile
Manufacturers’ Association, 21 of 27 EU members allow tax breaks for the purchases for clean cars,
whereas 20 countries offer money for easy purchases.
OPPORTUNITIES: Vinfast enjoys the support of Government, for instance, installing charging station
might no longer be their concern in the US as well as European countries thanks to the
Government’s support. Another golden chance for Vinfast to invest here is that their car prices can
remarkably reduce as a result of Government’s tax credits offer, thus customers can easily be
convinced to purchase Vinfast products with less cost consideration.

 CONCLUSION: Each driver has certain impact on the welfare of Vinfast while operating in
global environment, they also have direct impact on each other. A market that is considered
as potential based on high demand for products obviously leads to fierce competition among
brands. Once competition among car brands becomes fierce, cost can partly be a driver
affecting customer’s buying intention. Besides, government can also affect cost driver. For
example, US and European policy’s tax breaking offer when buying low-carbon cars lessens
financial inflict on customers, therefore it is easier for car companies to approach them. In this
situation, it comes back to the point that brands offering cheaper cars can hold competitive
advantage over others.

B. REPORT

1. Complexity of strategic opportunities and challenges in global business environment

How global business environment will have strategic opportunities and challenges on Vinfast
depends on what Vinfast has (its capabilities) and external environment impacting on Vinfast
(political, economic factors, etc.)

1.1 Internal capabilities of VINFAST

1.1.1 Human resources

Vinfast has had and still has a strategic board of directors. According to Vinfast, they used to have
CEO James Deluca-former Vice president of largest US auto company. Within over 40 years of
experience, he has elevated Vinfast from the beginning to a much more solid position in Vietnam.
Although he stopped working for Vinfast, his profound impact on Vinfast was worthily respected. Mr
Vo Quang Hue is one of strategic consultants of Vinfast, as his advice to integrate Italian design and
German technology into Vinfast cars is the key to determining Vinfast’s position in Vietnam from the
beginning, as well as for the sake of lifting Vinfast to high-quality auto brand in the world. Mr Hue is
also appointed to closely supervise Vinfast projects, which is highly essential, as with over 40 years
working in manufacturing industry, his knowledge and experience is expected to help Vinfast fly in
global business. Finally, regarding current CEO of Vinfast, Ms Le Thi Thu Thuy, has been recognized
as one of Young Global Leaders by the World Economic Forum, hence, she was also pioneer in
building good relationship with some top-notch car manufacturers in the world such as BMW or
General Motors (in US). As a CEO of Vinfast, she directly manages Vinfast operation in current
targeted market such as USA, Canada or Germany, etc., her great talent along with good leadership
is expected to help Vinfast succeed in such competitive industry in the world (Strength).

 The above analysis provides details about human resources of Vinfast (specifically board of
directors, consultants), who have direct impact on the Vinfast’ welfare in global environment.

1.1.2 Financial resources

According to Duc Hoang (2023), Vinfast is allocated great amount of capital from Vingroup (its
parent company). In 1 year, Mr Pham Nhat Vuong-Chairman of Vingroup will spend 1 BILLION USD
for Vinfast, extracted from personal asset, plus, Vingroup provides a non-refundable grant of 500
million USD, and also lends VinFast 1 billion USD with a maximum term of 5 years. In total, Vinfast
enjoyed 2.5 billions dollars from Vingroup, which is quite a critical factor to increase competitiveness
ability in global environment. This is one of the most competitive advantages of Vinfast compared to
other global car manufacturers, as capital generation is never their concern with great support from
its parent corporation (Vingroup). Evidently in 2019, Vingroup even abandoned Vinmart and VinEco
and sold it to Masan to generate capital for Vinfast (kinhtemoitruong.vn, 2019), showing how
Vingroup significantly valued the important role of Vinfast in corporation development (Strength)

1.1.3 Quality management

Quality management is always a top priority of Vinfast since its establishment. A system of test
applied to Vinfast is also applied to top car manufacturers in the world, with testing equipment
meeting the highest global standards (moit.gov.vn, 2019). Having passed the above test, Vinfast has
adapted to high and strict standards of the Europe. Vinfast products were also tested in some global
prestigious testing centers of Magna Steyr (Graz, Austria) and Bosch factories at Australia. Quality
management is a key step in reputation maintaining process in global environment (Strength).
 1.1.4 Brand awareness

As mentioned above, Vinfast image was quite new and even strange to the world, simply
because they only started global operation recently. Therefore, objective to determine position in the
world must be set, as it is a critical factor to be successful, which is what Hyundai, Toyota, Tesla, etc.
who have long been joining and affirming their position at global environment. Tesla is a tech-savvy
car company which greatly integrated technology with cars and always surprises customers by
features that can not be found in other brands (businessinsider.com, 2023). For example, autopilot is
quite a remarkable driver assistance system that almost controls the steering, acceleration, braking
process of the car within its lane. With a model consisting of 8 cameras and 12 sensors that provide
a 360 degree view of surrounding vehicles, customers can have good experience with Tesla
products, though it did not mean to substitute drivers. There are numerous technological inventions
that Elon Musk has applied in Tesla, which is how Tesla built its image (through technology) and
maintained solid position in the world. Vinfast, unfortunately, has not yet any breakthrough
invention/innovation, or extremely unique features left in customer’s mind (Weakness).

1.1.5 Car manufacturing competence

This is a big shortage of Vinfast. Manufacturing Vinfast cars requires technology, components,
or production line were from abroad. For example, the company is strategically partnering with BMW
(Munich) with the hope to get support in terms of invention/innovation. Besides, the company tightly
corporates with Porche (get support in design), and uses Schuler production line, applies assembly
line of Eisenmann firm and painting line of Durr, etc. Furthermore, VinFast also acquires the entire
production line and authorized dealer system of GM (General Motors Corporation). Excessive
dependence on imported technology is a true obstacle to Vinfast’s attempts to bringing Vietnamese
brand to the world in the future.

1.2 Impact from External environment

In order to examine how complex global environment are, PEST model was used to analyze
external factors affecting Vinfast business. The PEST model will be applied in 2 different countries for
the objectification purpose of examining Vinfast well-being in different market. As mentioned in the
brief, Vinfast also aims to invest in some Middle Eastern Countries, so I would take Saudi Arabia as
an example.
1.2.1 PEST in USA
- Political/Legal: As the USA is the second largest democracy in the world, president must be
elected in four year term, and election process is always considered as fair and transparent.
The US Citizens here are considered to have high rate of freedom, and currently have no
massive conflict with the government that have to protest. Generally, the United States is
politically stable and suit many corporation operating business here. However, regulations will
be applied differently in each state, therefore, in which State that Vinfast is aiming to operate
business here, they must adapt all requirements of that state for effective business, unless
they might get penalized. This is completely differently to what they have experienced in
Vietnam, as Vietnam is one-party state that regulations, laws will be applied across the
country. A prime example for this is that electric car tax credit will be different depending on
states, Alaska and Delaware states offer a $1000 tax credit for those purchasing cars, while
California and Connecticut offer $7500 tax credit for electric vehicle purchasers. As Vinfast
aims at California first (6 showrooms launched here), their customers can get remarkable
reduction on car purchase, and might be more willing to buy Vinfast cars (Opportunity).
However, to expand market in the USA, they must deeply research business laws and
obligate them depending on each state, this can be quite time-consuming and challenging for
Vinfast at the beginning because of the law complexity of over 50 states (Challenge).
- Economic: The first factors to consider is GDP per capita of the US as it profoundly affects
on customers’ decisions to buy Vinfast cars. According to the World Bank (2022), the US
GDP per capita (nominal) stood at $75,269, ranked at the 8th spot in the World, thus the US
living standard is high and buying cars is affordable to those who have average income here.
Vinfast can enjoy this advantage. Interest rate is another aspect that should be examined
as the higher country’s interest rate, the lower possibility that customers spend expenditure
on purchasing cars. According to the World Bank (2022), the US interest rate was 5.5%,
clinching top 10 in the World, therefore interest rate will not be Vinfast concern in the US.
Another critical factor is exchange rate. The USD/VND exchange rate currently is 24,580
VND, and is anticipated to rise to 26,000 (Vietnam Economy, 2023), Vinfast could take
advantage of this growth, simply because their cars sold in the US can be much lower
compared to local company products, and can attract price-sensitive customers. However,
the USD/DEM (Germany) exchange rate is currently decreasing by about 5%, if this trend
continues until Vinfast launched its factory in the US, the production cost can be much more
higher, as 40% of Vinfast components is imported from foreign countries, including BMW
(German car brand) (Challenges).
- Social: Demand on electric cars is a must to consider. According to the Reuters, electric
vehicle sales in the US jumped to 300,000 for the first time in the third quarter 2023, which
grew 50% compared to the last year. This is quite a positive rise as it partly implies that the
US people interest more and demand on electric cars, Vinfast can take advantage of to
increase sales. Car ownership rate in the US is also noteworthy, as according to Forbes
(2023), the US rate stands at 91.7%, meaning that most of US household have at least a car.
This is simply because of complicated US road network system, with many highways,
interstate highways, implying that cars are indispensable in US households, which can be
counted as Vinfast chances. Age distribution is also essential to analyze. According to the
Statistista (2022), most of new car and used car purchasers are Gen X (those born from
1965-1981) and those born in 1946-1964, who might be unaware of Vinfast (as it is new to
the market and they might not update market information), some of them might be
conservative and do not trust quality of new entrant’s products. This is quite challenging for
Vinfast as majority of the US car buyers are from the older generation.
- Technology: Internet access is also key to developing global business. 92% of the USA’s
population (according to Statistista) is aware of the use of Internet, which means that
developing e-commerce is potential. Developing website with lots of car image and
information left on it can fully equip potential customers with prices, pros and cons of Vinfast
products, therefore easily make decisions. Obviously, car e-commerce is not yet popular as
people still want to have actual sense of cars (directly seeing shape, designs of cars),
however, e-commerce should not be excluded as a part of a company rise. Cybersecurity is
also worthily cared. As website plays an important role in e-commerce, Vinfast must be
careful as hackers are more delicate and can make confidential information of the company
leaked, decreasing the company’s competitiveness. IT training must be emphasized to cope
with such high-level hackers to avoid unprecedented consequences.

1.2.2 PEST in Saudi Arabia

- Political/Legal: Unlike the US, Saudi Arabia is a monarchy-based country, meaning that
power belongs to the Government, however, they adopted a free market economic model.
Saudi Arabia has been marked high business freedom points, therefore Vinfast do not have
to worry about this. Political stability in Saudi Arabia is unstable, totally different from Vietnam
and the US, as the result of religion conflict, mostly from Shia and Sunni Islam. Though
currently, the conflict between Shia and Sunny Islam is settled down and is less likely to
 negatively impact on business, future tensions between these Islams can happen anytime
and unstable politics is never ideal to operate business. Tax should also be regarded in this
factor. Currently, Saudi Arabia do not have tax credit for electric car purchasers, therefore car
prices sold in Saudi Arabia can be little higher compared to that in US (5% of car import tax in
Saudi Arabia).
- Economic: Regarding GDP per capita (nominal), figure for Saudi Arabia was $30,436
(standing at 20th place) though this country is considered as developing because of lower
economic performance. Saudi Arabia still has high GDP per capita, this is partly because they
make revenue from petroleum section, which accounts for 42% of this country’s GDP
(Statistista, 2022). Vinfast can expect to enjoy from such high-GDP per capita country. Saudi
Arabian auto market registered 12-month consecutive growth with 54,335 new sales (up to
7.9% compared to the last year), Toyota and Hyundai are enjoying Saudi Arabian’s
customers interest in car purchase as their sales are increasing 24.1% and 23.6%
respectively. Obviously, with careful plan set to invest in Saudi Arabia, Vinfast can expect to
succeed here, though electric vehicles in Saudi Arabia are not as popular they are in Vietnam
or US. Hence, the interest rate of Saudi Arabia only hovers around 6%, quite critically low and
potential for Vinfast to utilize.
- Social: First factor to consider is demand for electric cars. According to Alarabiya news
(2023), the demand for electric vehicles in Saudi Arabia boomed as a result of citizens aiming
for green mobility. According to a survey commissioned by General Motors and conducted by
Morning Consult, 93% of respondents have awareness of electric-vehicles, and 63% of them
strongly considers purchasing EV In the future. EV revenue is projected to rise
approximately $10 billion this year and about $90 billion yearly by 2030. Saudi Arabi is such a
potential market that Vinfast can aim for, although there is already Chinese EV Company that
signed a $5.6 billion with this country, plus other global leaders such as Hyundai, Tesla, BMW
introduced electric models suited with Arabian customers. This is not only an opportunity for
Vinfast as Saudi Arabian customers are eager for EV, but also a huge challenge when global
manufacturing leaders started and geared up for competition here.
- Technology: According to the Arab News, Saudi Arabia ranked second for societal artificial
intelligence (Artificial Intelligence Index Reported by Standford University), implying that
Saudi citizens are dealing well with AI products and services, in which this preparation is
critical as in the future, many automotive car brands have intentions to integrate AI with cars.
 1.3 SWOT Summarization of VINFAST

This section will summarize strengths, weaknesses, opportunities and threats of Vinfast when
operating global environment (based on PEST analysis, internal capabilities).

O1: Living standards of both T1: Saudi Arabia is politically

S1: Strategic leaders
S2: Strong financial resources
(capital allocated by parent
company-Vingroup)
S3: Strict quality management
W1: Low brand awareness in
global environment
W2: Over dependence on
imported technology
USA and Saudi Arabia are
good
O2: Awareness and demand
for Electric cars is increasing
(in both analyzed countries)
O3: USA is politically stable
O4: US governments
encourage citizens to use
electric cars, offer tax credits.
S1+O2+O3+O4: High-
competence leaders of Vinfast
are expected to lift Vinfast to
higher position in such fertile
but competitive US market,
along with good financial
resource, which is enough for
unstable
T2: Vinfast faces big
competition with top global
companies in both USA and
Saudi Arabia
S1+S2+S3+T2: Vinfast’s
strong financial resource and
good leaders can be critical
factor maintaining long
competition in US. High-quality
products strictly managed can
partly be a key to building
image and reputation
W2+T2: Vinfast has no unique
technology that can impress
customers, given that they are
competing against leading
manufacturers, which can be
hard for them to determine
position.
 2. Strategic risks and Proposed strategies
2.1 Political risks

Reaching success in global market expansion can be very difficult and needs long time because
each country has different characteristics. As analyzed above, Saudi Arabia and United States are
opposite in terms of political stability. While the US politics is more stable, allowing corporations
operating smooth business, Saudi Arabia is politically unstable with the religious conflict, posing
threats to the safety of business operation there. Religious conflict at the Middle East has long been
appeared, and so got tensed many times, so Vinfast has to bear in mind this. Once religious conflict
is negatively elevation, people only think of being survived, not to mention they will be willing to
purchase cars. Saudi Arabia is only representative to analyze how unstable political situation in the
Middle East is, other countries such as Israel and Palestine are immersed in war under elevating
relations between these countries. Besides, relations between Vietnam and other targeted countries
must also be carefully examined by Vinfast, unless they will get deficit. For example, the trade
tension between China and USA in 2019 has caused Tesla a 70% revenue deficit, simply because
their cars sold in this market are forcedly increased as a consequence of tariff barriers, posing threat
that Chinese consumers can turn around with Tesla. Although Vietnam suddenly having unstable
relations with other countries is unavoidable, before entering new market, political consideration is a
must.

2.2 Cultural risks

Differences among countries’ cultures are also risk, in which carefully researching some factors
such as Saudi Arabia’s car preferences are important. According to Globenewswire.com (2023),
Saudi Arabians prefers SUV (high demand for this), customers just simply want satisfying and
luxurious experience to the passengers. Currently, Vinfast though had 6 types of SUV, which
temporarily suits the demand here. Saudi Arabian also interests in light automotive components,
which Vinfast temporarily is unable to adapt to and is expected to gradually use lightweight materials
to serve customer demand, increasing preferences in the future. Besides, hopefully Vinfast is able to
integrate Internet of things technology, voice command control, etc. into their cars, though it will be a
long way to get it, to soon determine its position in one of the most potential market in the Middle
East. Unless Vinfast cannot catch up with technology as demanded in Saudi Arabia, the Vietnamese
company gets fell out, and also receives huge deficit (R&D cost, materials-importing cost, etc.)
 2.3 Supply chain risks
2.3.1 Exchange Rates

As mentioned above, Vinfast imported several automotive components and car frame from foreign
suppliers, it is highly important to consider exchange rates, because its constant fluctuation can be a
critical risk to Vinfast development. Regarding automotive components, Vinfast has signed strategic
partnership with Renesas Electronics Corporations-a premier supplier of advanced semiconductor
solutions for the sake of automotive technology advancement (Renesas.com, 2022). Agreement
reached by both companies include: delivery of system components such as microcontrollers, analog
and power semiconductors. Given that Vinfast delivers a system of components from a Japan
company, considering the VND/JPY exchange rate is a must. If the value of JPY increases compared
to VND, this means the cost of imported components respectively rises, growing manufacturing cost,
mightily leading to revenue fall. Similarly, currently, Vinfast partnered with AAPICO-a Thai leader in
manufacturing automotive components. AAPICO mainly provides Vinfast with car frames, therefore
the fluctuation of VND/BAHT exchange rate should also be emphasized.

Furthermore, as Vinfast wants to distribute their products to global business, exchange rates of
VND compared to other currencies is essential to be examined. Exchange rates between VND and
targeted markets’ currencies growing up can lead to higher prices of Vinfast cars, which can affect
customers’ buying intention, lowering customer demand.

 Exchange rate risk is an enormous problem for any company as it is extremely difficult to
predict its fluctuation.
 2.3.2 Demand Volatility

Demand Volatility is also a huge issue to deal with. As customer demands can show extremely
rapid change, as a result of various factors such as market trends, environmental concern, etc.
Vinfast aims to develop their business in the USA, some European countries, or Middle East
countries, as the awareness of, the demand for electric cars, which currently are their main focus
products, is rising. However, Vinfast must prepare for the circumstance that there could be a sudden
flop in demand for their products, even when its operation is going well and smoothly. Sudden
flopped demand can waste large investment (costs, time for importing components, manufacturing
cars) (inventory) of Vinfast, giving rise to revenue deficit, possibly threatening existence of company.

2.4 Diversification strategy risks

Recently, Mr Pham Nhat Vuong stated that Vinfast is going to manufacture such type of small and
cheap car (Vnexpress, 2023), which is considered to be similar to sub-compact car in other car
brand, such as Morning or i10 of KIA. This shows that Vinfast is inclined to horizontal
diversification strategy. Horizontal diversification refers to new products or services added to core
business with the aim of appealing customers. Vinfast is providing SUV cars and they also want to
introduce new electric cars that are small and cheap, which is an example of horizontal
diversification. Horizontal diversification has some critical merits such as rising market share, or
customer base, or being effective when the world experience economic downturn. However, the
challenge associated with this type of diversification strategy is higher expenditure spent for
researching and developing, manufacturing and marketing targeted products (small and cheap cars).
Another challenge of this strategy is that customers who do not have good experience with new
products might not want to buy core products (Vinfast’s core product (best seller) is VF E34).
Additionally, when developing subcompact electric cars, Vinfast also faced huge competition, with
Peugeot e-208, or Honda E, etc. Low competitiveness can cause company’s huge deficit for above-
mentioned costs.

2.5 Relationship with customers.

Managing to maintain good relationship with customers is quite difficult and time-consuming. It
demands all sectors of Vinfast company to unify same solutions to specific problems damaging
customer’s experience. Vinfast needs to avoid how Tesla has treated its customers. In case
customers have problems with their cars, and they give feedback to Tesla, some employees called
those customers to receive appeal, however, if the customers are busy and cannot pick up,
employees will wait about 5 minutes to see whether their customers call back, if not, they will
automatically cancel customer’s appeal. If customers pick up at the time they called, they will say
there will be maintenance team run remote car-checking program, but actually there is no program
run, and finally they convince customers to cancel appointments. As a result, Tesla can save up to
$1000 for each appointment cancellation, remarkably increasing profit. Customer’s experience with
Tesla is obviously destroyed once they knew this. Vinfast has to avoid treating like this to customers,
especially as young and small brands recently entering global markets. Once relationship with
customers is deteriorated, customer distrust brands, thus it is hard to build customer loyalty.

2.6 Proposed Strategies

2.6.1 External risk mitigation

As mentioned above, sudden political instability is hardly ever controlled by business, thus
business is considered as passive against this situation. Cultural Risks, on the other hand, can be
controlled with effective strategies implemented by Vinfast. Critical risk management proposal is
needed. R&D department of Vinfast should be highly invested for the sake of seeking characteristics
tailoring to the company development. Hence, those working in this department is on a mission of
evaluating renovation process of the company, and receiving innovation model that competitors are
applying, and can suggest a similar plan that consider all factors (cost, trial timeline, errors incurred
from a innovation plan). For example, Saudi Arabia market will demand on car brands to integrate
technology into cars in the future, as Vietnam technology is paled in comparison with USA, Germany,
etc., Vinfast can take advantage of corporation with brands of those countries to partly learn
techniques and apply to their products. Training procedure must be guaranteed and supervised to
ensure timing of plan, to avoid time-consuming and cost ineffective. Expectations are also needed to
be set. With meticulous plan proposed to serve the market demand in a specific global environment
(Saudi Arabia), Vinfast can expect to eliminate Cultural Risks.

2.6.2 Supply chain risk management

2.6.2.1 Exchange Rate

There are some solutions to risks mentioned above. For exchange rate risks, Vinfast can
aim for hedging some of foreign exchange risks, buying currency forwards or options on the
currency markets. The main purpose of these hedges is mitigating risk of fluctuating price in
currency market would have adverse impact on Vinfast’s revenue. Several exporters or importers
frequently use currency forwards to cope with fluctuating exchange rate. This legally enforceable
over-the-counter (OTC) contract secures the exchange rate for the future purchase or sale of a
certain currency.

2.6.2.2 Demand Volatility

To avoid negative effect of demand volatility (such as high inventory), JUST IN TIME is a
good approach to effectively manage inventory, and was a key to success of one of biggest car
company in the world-Toyota. Just In Time approach is a management strategy that allows
corporations to receive goods close to the point of time that they provide to customers. It means
that the Vinfast only imports certain amount of components tailored to number of total purchases.
The biggest benefit of JIT system is that company can reduce massive amount of inventory,
saving manufacturing cost, mitigating enormous deficit. Besides, changes in customer demand
are consistent, therefore, Vinfast’s quick changes to suit customer demand is also essential, JIT
system can help the company to resolve this problem.

3. For customers:
 Vinfast must gear up and equip employees with enough skills to handle customer’s
problematic experience with their products, hence assure customers. Quick fixation to the
problems, along with high-quality service (customer assurance) are critical to reaching customer
loyalty. As mentioned before, given that Tesla is treating its customers unwell, this is a huge
opportunity for its competitors, but also for Vinfast to increase brand credibility in public’s eye.
Additionally, a set of principles must be applied to set employees in line of company’s direction.
Those who involve in a customer’s bad experience should get penalized, even sacked to ensure
good reputation of company. Certain compensation to customer experiencing bad would also be
considered. Risk in the relationship with customers must be mitigated to keep brand image, thus
customers will always have positive feelings with brand, keying to customer loyalty, and furtherly
optimizing profit.
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