International Business Environment and Operations - Assignment Example

International Business Environment and Operations Name: Institution: Executive Summary: Mobile Telecommunications is a communication system that supports third generation cellular networking system. Through this form of communication system, it has facilitated faster and easy communication within different location at a cheaper price. Apart from faster and cheaper communication, this form of communication also guarantees security of information being passed because it allows encryption of information, making it difficult for un-authorized person to interpret the information. Due to current rapid Information Technological changes in the communication sector, there is need for the emergence of various networking firms in order to meet high demand for the users. One of the countries that have stable development in mobile telecommunication system is Vietnam, which has various networking organization to provide services both locally and internationally. In the region, one of the telecommunication firms that provide mobile network operation to the people of Vietnam is Viettel Group, popularly known as Vietnamese. This organization is of great importance to the region because through it, Vietnam as experience better mobile networking operations, hence easy communication. On the other hand, in the country of Finland, there exists Tele Finland, an up-coming telecommunication firm; also has the potential of providing mobile services to the region. Therefore, in order for this organization to expand its services, there is need for the organization to penetrate into the international market. This can be achieved through having branches to developed countries like Vietnam, which has better telecommunication services. Business Environment of Vietnam (Host Country): Industrial development is important for any country towards its economic development. In order for this development to be realized, there is need for the government to create good business environment that is able to attract many international investors in the local industries. Therefore, the government of any given country should make sure they enforce better business laws and regulations that create good environment for the operation of the available businesses (Plunkett, 2008, pp134). Mobile telecommunication system in Vietnam is stable and able to supply the required services through telecommunication organizations such as Viettel Group, one of the major mobile communication organizations that the country depends on telecommunication services. Consequently, these telecommunication services are able to provide the required services to the country due to good business environment provided by the country’s government. This can be determined through the economic, legal, cultural, political and social environment of the country. Economic Environment of Vietnam: In order for a country to develop, it is a requirement for the country to have stable economic development, mostly realized through agricultural and industrial development. Vietnam being one of the developed countries in telecommunication sector, it has steady development process, which makes it easy for various telecommunication organizations in the region to experience better business environment. For instance, current economic status of Vietnam country has good growth from industrial development (Akhtar et al, 2009, pp124). This is through the gross domestic product growth, sectorial growth, global intervention, ODA commitments, and foreign direct investment flow. According to the current domestic product growth of Vietnam, it has registered a growth to 6.8% in 2008. Through this steady economic growth, it has helped the country to become one of the developed countries in Asia, being the third highest after China and India. The domestic economic product growth of Vietnam country since 2007 to 2001 is illustrated below. 2007 2008 2009 2010 2011 GDP Growth 8.48% 6.18% 5.32% 6.78% 5.89% Fig. 1.0 Figure 1.0 shows the economic growth of Vietnam country from 2007 to 2011 of the domestic economic growth. According to the table, in those five financial years, the country has gown it its economy, making it easy for various organization to be able to attract many international investors in order to trigger their economic growth. Another economic growth of the Vietnam is through the sectorial growth, which is structured into three sections, the agriculture, industry and construction (Deibert et al, 2011, pp.234). These three sections of sections have gone through transformation in the past years. Through the development of some of the sectors such as agriculture sector, it has resulted to attraction of many investors due to increase in their shares as shown in the figure below: 2007 2008 2009 2010 2011 Agriculture & Forestry 3.0% 3.79% 1.82% 2.78% 3.08% Industry & Construction 10.4% 6.33% 5.52% 7.7% 6.49% Services 8.5% 7.2% 6.63% 7.52% 6.12% Fig. 1.1 Figure 1.1 is also an indication of the positive economic business environment of Vietnam, which shows how industrial investment in the country. On the foreign direct investments flow, the country has concentrated on the projects investments, which has registered over US$204.331 billion. Through these investments, the country has maintained its economic development, which is good for the local firms in the telecommunication sector such as Veittel Group. On the other hand, the country economic stability is good for external investment like the Tele Finland of Finland (Cambridge, 2009, pp345). This would help them to maintain their businesses and be able to invest more in the international market. Other economic investment in Vietnam is through ODA commitments and global intervention, which has steady growth as realized in the past few years. Therefore, Vietnam stands the option for developing countries to invest their businesses. Social Business Environment of Vietnam: Social business environment is another important aspect in the development of any country. According to social information of Vietnam, the population of the country makes it a better place for investment because it has high number of clients in the region. Due to high population growth, it has led to the development of telecommunication services (Plunkett, 2009, pp131). Through high population, organizations such as Viettel has high demand for mobile technology services as most of the people use mobile technology in communication and other services such as money transfer. Mobile technologies is used for various purposes in the region, for instance, through the technology, businesspersons in the area are able to conduct their businesses online as transaction can be done through mobile services. Another demand for mobile technology is that it is used in communication because the technology provides faster and cost effective process of communication. Through mobile technology, information from one location to another can be transferred easily and faster, therefore, well for instance decision making. Through better social business environment, Vietnam is capable of attracting other business investors from other countries and act as the best hosts for the developing countries who are interested in mobile technology services such as Tele Finland services from Finland. By introducing their services to countries like Vietnam, these countries stand the best chance of expanding their business financially and through sales. One of the factors that will increases sales for the Tele Finland by investing in Vietnam, is the high demand for mobile services like communication due to high population of the Vietnam people who mostly depend on such services (Nakamura, 2009, pp.256). According to information, around 90% of the Vietnam population use mobile phones on daily basis, making the available mobile networking organizations in the area find it difficult to meet the demands of the people. In addition, most of the mobile organizations in the region provide better rates in providing their services, which help them to attract most of their customers because they can be able to afford the services provided by the organizations. Consequently, through such investments in Vietnam, Tele Finland would be able to penetrate easily in the international market. In Vietnam, Tele Finland would have easy time to operate without many restrictions because the country has better rules and regulations that allow other organizations from other countries to develop in Vietnam. Moreover, various financial institutions in Vietnam help in provision of funds to business organization through lower rates. The availability of such institutions in a country is important because they help in providing financial assistance to the people and businesses in order to maintain and expand their businesses (Marshals, 2006, pp356). Apart from expanding their businesses, these organizations are capable of investing in the country because these institutions are able to work in hand with mobile technologies through cooperation with these institutions. These cooperation’s such as mobile transaction through the banks, which helps the organizations to have high chances of developing their businesses as these services favors most of the clients because the services makes clients to operate through cheap services. Legal and Political Environment of Vietnam: In order for any country to develop, there is need for a good political will and legal operations of the country. For instance, Vietnam country has better rules and regulations that give businesses and investors to operate freely. Mobile technology in the region provides security on the information and transactions done through mobile technology. Therefore, it gives the mobile users the opportunity to pass information and conduct transaction form one location to another without losing the funds (Partierra, 2007, pp345). One of the areas that provide security using mobile technology is that it discourages theft that is realized with cash money. Therefore, this form of transaction helps the mobile users’ easy time to carry their money from one location to another without losing the money through theft. Consequently, by investing in Vietnam, these business organizations as the Tele Finland will conduct their business in a safer environment, hence, help in safekeeping of money. Another fundamental factor that is of advantage for the investor in Vietnam is the presence of good political stability. In the region, the current government encourages many both local and international investors. This gives them the opportunity to develop their industrial development. Therefore, the demand for technological development in the modern, make the country to attract many of mobile technology investors. These friendly rules are important to these investors in various ways (Nakamura, 2009, pp.258). For instance, the business rules provide cheap registration funds for new investors in the region. This is good for upcoming organizations such Tele Finland to invest in Vietnam. Moreover, the government, through their good governance has maintained good security in the country. Through this peaceful environment, free from violence and war, investing organizations find it easy to maintain their businesses as they operate in good environment. Therefore, good business environment is important for the growth of any business, making Vietnam to stand a better chance in developing up-coming businesses. Technological and International Trend of Vietnam: Technological and international trends of Vietnam country is important for any country to develop industrially and economically. Vietnam being one of the developed countries in the sector of technological advancement, the region stands in a better position in facilitating better development for the local and international countries. In the region, the country has developed technologically, especially in the mobile technology (Laguerre, 2012, pp1). This can be seen through various companies providing mobile technologies, which have better growth in their development. Apart from the mobile services organizations in the country, the region also has various financial institutions such as banks and other non-organizations that provide funds for businesses. Through these funds, these organizational are able to expand their businesses and maintain them in case of collapse. Therefore, the presence of such organizations in the country makes Vietnam to be a good place for investment. On the other hand, another aspect that should be considered in order to invest in other countries such as Vietnam is the international trend for the country. According to the development of the country, Vietnam, it has positive international relations in line of development. For instance, the country is capable of trading with other developed countries such as United States. Through these interactions, it has growth both locally and internationally by investing in other people apart from attracting companies from other countries (Smutkupt et al, 2012, 541). Therefore, organizations eyeing to invest in Vietnam have the chances of developing their companies easily and are able to fit into international market freely. Moreover, they will be able of attracting more investors into their businesses as many investors are attracted to invest in Vietnam due to good business environmental through their economic development. Therefore, mobile industries such Tele Finland, should take the opportunity to invest in Vietnam in order to increase their productions and sales of the services provided. Moreover, they will be able to operate their business through business environmental friendly countries with better business rules. Foreign Entry Modes Required by Tele Finland to Venture in Vietnam: Vietnam is one of the best choices for Tele Finland mobile company to invest its services in. As required by the law, in order for an investment agreement to be signed, various factors need to be considered for the agreement to be in effective. These agreements are based on the laws and regulations of the two countries pertaining business operations. Some of these laws and regulations include the registration fees and process, issuing of license, and the permission for operations among other factors (Nakamura, 2009, pp.260). In order for Tele Finland of Finland to invest in Vietnam, the agreement of the two countries for investment should be through foreign entry modes. Therefore, Tele Finland can use modes like exporting, licensing, or joint ventures. Through these modes, the company has the capability of acquiring person in order to operate in Vietnam and be able to invest in that country. Export Mode: Exporting is one of the ways in which Tele Finland can acquire the opportunity of operating its business in Vietnam. This is the process through, which Tele Finland communication will be able to export its mobile services to Vietnam (Akhtar et al, 2009, pp178). Therefore, after getting permission from the Vietnam government through the right procedure, the organization will be able to open various distribution branches in Vietnam and be able to get various contracts through the government of providing mobile services to the Vietnam people. Via these services, the organization is capable of improving in its operations because they will have the opportunity to compete into the international market by competing with tough competitors such as Viettel Groups that provide same services. They will also gain some new skills in the field by interacting with these other mobile companies. After some period, Tele Finland will be able to apply these ideas in developing their organizations. Licensing Mode: Another procedure that Tele communications can use in order to gain permission of operating in Vietnam is through acquiring licensing. Through this process, the organization will be able to plant their company in the region and operate as one of the local companies. Therefore, the organization will have gain full membership in the industrial sector of Vietnam and operate through the laws and regulations of the Vietnam country (Laguerre, 2012, pp1). By acquiring permission through this form of agreement, Tele communication will enjoy most of the business rules of Vietnam, as it will be treated as local company in Vietnam. Some of the benefits of licensing are that the company will operate under cheap tax rate as compared to other international companies. Joint Ventures: Engaging in joint ventures is another process that Tele communications can use in order to get access to the business operation in Vietnam. This is the process where Tele communications incorporating with another mobile telecommunication from Vietnam in order to work on a contract in the same sector. This one of the best methods, which Tele communications, should go for in order to invest in Vietnam (Smutkupt et al, 2012, pp546). Via these joint ventures, Tele communications will be able to gain knowledge and ideas from, which will later help them to develop their organizations. This would be achieved through involving in various operations with the already developed organization such as Viettel mobile company. Therefore, in order for any organization to venture in Vietnam, there is need for one or more modes of operations to be applied, depending on the kind of operation the organization would like to provide in the region. This would help the organization to operate freely within the country and enjoy various development benefits. Merits and Demerits of the above Modes: In the process of getting permission in order to operate in Vietnam through the above modes, there are advantages and disadvantages that an organization can experience. These will depend on the type of mode chosen. Advantages and Disadvantages of Export Mode: Using export mode, the organization will be able to have easy penetration in the international market and be able to sell their services internationally (Akhtar et al, 2009, pp198). The organization will have easy time in development because they will be dealing with different operations, which gives them the opportunity of acquiring new skills. These skills when used wisely help the organization in developing their companies. On the other hand, these organizations also experiences negative impacts of using export mode. One of the negative impact of this form of agreement leads to high charges in taxation by the government as the government must obtain a certain percentage for any foreign organization to operate in the region. This is expensive in the end. Merits and Demerits of Licensing Mode: When licensing method is used, an organization will have full control of their organization in the country and operate within low taxation rate because registered companies become full members of the country. The organization will also be able to attract more customers as it will be treated as one of the companies of the region (Laguerre, 2012, pp1). In the contrary, the organization will find it difficult to cope with the competitors in the region because they will be required to gain trust of the customers in order to try their services. This process may be challenging, therefore, it is important for managers of such organizations to come up with proper strategies of dealing with such situation. This can be achieved through adverting of the services and provision services at lower rates as compared to the existing companies. Impacts of Joint Ventures: Joint ventures are another common method that is used by most organizations in order to achieve their desire to sell their services globally. With joint ventures method, the organization is capable to acquiring new ideas from other companies, which in turn helps them in developing their organizations. Joint ventures also help organizations to sell their products in various countries as one company can involve in joint ventures with various organizations from different countries (Smutkupt et al, 2012, pp555). On the other hand, the use of joint ventures is bad because it may give the competitor the opportunity to discover strengths and weaknesses of another organization, which they may use to bring down other companies. Therefore, it is important for any organization to be very careful during joint ventures in order to uphold the dignity of the organization. References: Plunkett, Jack, W, 2008, Plunkett’s Telecommunications Industry Almanac, Ohio: Plunkett Research, Ltd. Akhtar, Shahid, Hassan, Musa, Abu, Arinto, Patricia, 2009, Digital Review of Asia Pacific, Cambridge: IDRC. Deibert, Ronald, Palfrey, John, Rohozinski, Rafal, Zittrain, Jonathan, 2011, Access Contests: Security, Identity, and Resistance in Asian Cyberspace, Cambridge: MIT Press. Cambridge Learning, 2009, ICT4D: Information and Communication Technology for Development, Cambridge: Cambridge University Press. Plunkett, Jack, W, 2009, Plunkett’s E-Commerce and Internet Business Almanac 2009 (E-Book): E-Commerce and Internet Business Industry Market Research, Statistics, Trends and Leading Companies, Ohio: Plunkett Research, Ltd. 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