MSc BUSINESS DEVELOPMENT AND INNOVATION

Department of Marketing, Entrepreneurship and Strategy

Ulster Business School

University of Ulster

Eoin Killian Costello

Student Number B00570977

Coursework Assessment: Global Marketing Assignment Part 2

January 2011

Word Count (excluding references, bibliography and appendices): 1622

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Explanatory Note

For the purposes of this assignment the education market has been chosen as the target sector and a

market entry plan for Dublin City University’s ICT and Business faculties has been developed with an

accompanying communication strategy for entry to Vietnam. On the basis that the choice of entry

strategy is dictated by the long term objectives of the potential entrant, it is assumed that DCU wish to

establish a permanent base within Vietnam in order to achieve their long term strategic objectives in

the South East Asia region. The factors affecting the decision include the following requirements of

the ultimate strategy:

1. Cost effective: The resources for the project are subject to limits.

2. Timely: Achieve scale before market becomes saturated.

3. Maintain moderate risk manner: Due to the limited funding DCU does not have a large

appetite for risk.

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Market Entry Strategy for Dublin City

University (DCU) into Vietnam

Rationale: The Vietnamese education sector is an attractive market to enter as there are generous tax

incentives available, there is increasing disposable income and predicted rapid long term growth in the

market. Please see Appendix 1 for more detail on each of these points.

1. The market entry strategy

According to Terpstra and Sarathy (2000) the criteria for evaluating foreign market entry methods

depends on the answer to two questions, firstly how well can the entrant market its services through

any particular entry strategy and secondly what are the costs and benefits of the different strategies.

Meyer et al (2008) state that the relative strength and maturity of the potential entrant has a direct

influence on the choice of entry strategies.

As we are dealing with a service the above choice will be influenced by intangibility (i.e. requiring the

presence of the customer and a suitably qualified lecturer simultaneously for the delivery of the

service) and heterogeneity (different experience of the service by different students due to the fact that

different lecturers perform the service ibid. (Terpstra and Sarathy 2000). Erramilli and Rao’s (1993)

research on service firms’ choice of entry method highlights the importance of control as a basis for

making a choice of a particular entry mode. Due to these considerations the entry method that

provides a high degree of control over service quality to the entrant is a considerable influence on the

choice of method for an educational institution. Set against the control imperative are the cost

implications of complete or near complete control (ibid.).

Therefore taking into account the above analysis it is advised that DCU follow the entry strategy

outlined below:

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1.1 Entry Method: It is recommended that a joint venture be entered into with a Vietnamese

institution of high reputation. It is noted that the type of entry strategy has a major impact on

subsequent success (Jeannet and Hennessey 2004) therefore this course is recommended after

consideration of the alternatives which were rejected for the detailed reasons contained in Appendix 3.

1.2 Entry Offering: Establish a joint venture for the DCU ICT and Business Masters offerings (the

so-called current ‘hot fields’ of study according to research by the Netherlands Education Support

office (2009)) as these are the two disciplines in highest demand in Vietnam. This approach will

reduce the risk of under utilisation/failure to win clients (Ashwill 2010).

1.3 Place: Ho Chi Min City (formerly Saigon) has the highest concentration of upwardly mobile

families with the necessary disposable income. Many private schools and universities have been

opened in the past 10 years in Ho Chi Minh City to meet this demand. As a result the new venture will

also potentially benefit from the cluster effect (Maine et al 2008) of staff and resource availability.

1.4 How: In terms of the offering the one-year Master's course is increasingly popular with

Vietnamese students (British Council 2010) therefore Masters in Business and ICT disciplines are

recommended as the initial offering. By adopting a one year approach risk is reduced and the entrant

can build on their experience. Further considerations on the composition of the initial offering are

included in Appendix 7.

1.5 Ownership and control: It is recommended that the joint venture be 50/50 in terms of legal

ownership with the local provider however DCU should:

A. Retain control over curricula and intellectual property.

B. Include an option to purchase an increasing percentage of the joint venture once agreed

milestones have been reached.

The physical property where tuition is provided should be in the ownership of the local partner to

avoid any restrictions under Vietnamese law associated with property ownership (Dasgupta et al

2008).

1.6 Finances and pricing: Particular attention will need to be paid to costs in what is a high inflation

country (education inflation was running at 18% per annum in 2009, please see appendix 6). The

necessary sales projections will need to be supplemented with detailed cost data (Jeannet and

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Hennessey 2004). Pricing of student fees will also be a difficulty given the low fees typically paid in

Vietnam (undergraduates pay 3.5million dong on average per annum which is approximately €140

(Runckel 2009).

1.7 Industry Standards: While there are no specific industry standards applied to international

education providers, those wishing to engage in joint venture arrangements with Vietnamese

institutions need to satisfy the partner institution in relation to course content (Austrade 2010).

Advantages and Disadvantages of the proposed market entry strategy

The advantages of the proposed market entry strategy include overcoming barriers to entry, risk

minimisation (while retaining the ability to achieve DCU’s long term goals), increased expertise and

feedback for DCU, higher returns and potential for growth, increased quality control and reduced

requirement to deal with local red tape. The disadvantages include sourcing suitably qualified staffing

due to shortages, relatively high costs, conflicting objectives and working practices with the joint

venture partner and finally the relatively high failure rate for joint ventures in Vietnam.

For a detailed discussion of the advantages and disadvantages please see Appendix 4.

2. The communication strategy

The stages involved in the development of the communication strategy are:

1. Market research: Marketing creates strategies to work towards the goals of the joint venture

but to do this understanding of the market place and the target customers must be gained from

market research and this will then inform the marketing mix adopted ( Churchill and

Iacobucci 2005).

2. Developing the marketing mix: Onkvisit and Shaw (2009) state that the marketing mix

comprises price, place, product and promotion. Price (fees in this case) considerations are

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discussed in section 1.6 Finances and Pricing above, place is identified in 1.3 Place and the

product offering is identified in 1.2. Promotion is composed of personal selling, sales

promotion, public relations, direct mail, trade fairs and exhibitions, advertising and finally

sponsorship.

3. Developing the communication strategy: This is outlined below.

Developing the communication strategy

According to Onkvisit and Shaw (2009) to be successful in a marketing context communication must

observe a five stage process consisting of source, encoding, information, decoding and destination. In

order to ensure the correct encoding (and maximise the potential for the message to resonate with the

target audience) the communication strategy for the new joint venture will be informed by the

following considerations.

Legal requirements on content

Advertisements and promotions will need to take cognisance of government rules concerning probity,

dissent and accuracy (for more information please see Appendix 6).

Cultural norms in Vietnam

Branding is very important to Vietnamese which has given US and UK providers an advantage over

other providers of international education (Ashwill 2010) therefore exploiting Ireland’s brand and

reputation in education will be a key message.

Another key message will be the advantage of avoiding leaving family for study abroad but still

benefitting from a European quality education. Vietnam is a very family orientated society and many

people cannot leave jobs and families behind to study abroad (Ashwill 2010).

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The needs of the target student market

The communication messages need to take account of research concerning the student’s needs which,

according to Bonnema and Van der Waldt (2008), include factors such as employability prospects,

course content, student experience, sporting aspects and financial aspects.

While looking at the advertisements of competitors on one of Vietnam’s international education

marketing websites (such as http://www.hotcourses.vn , please Appendix 5 for samples) it would

appear that the key factors include:

1. Level of tuition fees

2. Learning experience

3. Student experience

4. Job prospects

The current market environment in Ho Chi Minh City

It is recommended that brand name protection of the names used to promote the individual courses

and the joint venture institution is put in place in advance of any publicity as piracy is a problem in

the very competitive education landscape of Ho Chi Minh City.

Also it will be important to emphasise the bona fides of the joint venture as there are a number of

degree programs offered by unaccredited schools (or “diploma mills” (Ashwill 2010)) in the local

market.

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The communication mix

In terms of the formulation of the advertisements it needs to be borne in mind that clients in emerging

markets are generally looking for immediate results with a physical "call to action." (Terisse 2009).

All promotions should use preferred sources that prospective Vietnamese students consult when

deciding on a tertiary institution for further or higher education which would includes:

Print – Magazines such as Kien Thuc Ngay Nay are popular with the target market of affluent

teenagers and young adults.

Internet – Websites such as http://www.hotcourses.vn are important sources of information

for the target market of teenagers (please see appendix 5 for sample). Less than 2% of

Vietnamese households have access to the internet however the target market of under and

post graduates Vietnamese do use the internet in internet cafes to seek tertiary education

options.

Exhibitions/education fairs: These are common in Vietnam, for example the European Higher

Education Fair takes place in Ho Chi Min City every two to three years.

Public relations: Given that Vietnamese teenagers are enthusiastic fans of European soccer it

might be an idea to host an event with an Irish soccer theme to launch the courses.

TV advertising is not recommended due to its cost and lower ability to reach the target audience in

Vietnam. Personal selling is not recommended due to the cost of the intensive use of a sales force.

Conclusion

The market entry strategy proposed seeks to achieve the goals of DCU in a timely, cost effective

manner while exposing the entrant to minimum risk. The communications strategy proposed

seeks to establish the joint venture in the attractive niche of providing an alternative to studying

abroad while still experiencing a European standard of education.

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REFERENCES

Allens Arthur Robinson Limited 2010, Legal Guide to Investment in Vietnam.

Ashwill, M. (2010) Vietnam: A Rising Star on the U.S. Higher Education Scene. World Education

Services, 23(6).

Austrade 2010, 8 Jul 2010-last update, Education to Vietnam. Available:

http://www.austrade.gov.au/Education-to-Vietnam/default.aspx [9 Jan 2011] .

Bonnema, J.; Van Der Walt,D.; (2008) Information and source preferences of a student market in

higher education International Journal of Educational Management, 22(4).

Bradley, F. (2005) International Marketing Strategy. Fifth Edition, FT Prentice Hall

British Council 2010, Vietnam education market introduction - Education UK Marketing. Available:

http://www.britishcouncil.org/eumd-information-background-vietnam.htm [2011, 1/9/2011] .

Clark, N. 2010, August 2010-last update, Higher Education in Vietnam: Student Growth, Faculty

Shortages and International Partnerships. Available:

http://www.wes.org/ewenr/10aug/practical.htm [09/01/2011] .

Churchill, G. & Iacobucci, D. (2005) Marketing Research - Methodological Foundations.

Washington: Thomson Corporation.

Dasgupta, V. & Knapp, A. 2008, Forecasting office capitalization rates and risk premia in emerging

markets [Homepage of DSpace@MIT], [Online]. Available:

http://dspace.mit.edu/handle/1721.1/59495.

Government of Vietnam 2005, Socio-economic Development Plan 2006-2010.

Jeannet, J.,David (2004) Global Marketing Strategies. 6 edition edn, Houghton Mifflin.

Maine, E., Shapiro, D. & Vining, A. (2008) The role of clustering in the growth of new technology-

based firms. Small Business Economics, 34(2), 127-146.

Meyer, K., Estrin, S., Kumar Bhaumil, S. & Peng, M. (2008) Institutions, resources and entry

strategies in emerging economies. Strategic Management Journal, 30, 61-80.

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Netherlands Education Support Office 2009, 2009-last update, Vietnam's Higher Education - Trends

and Strategies. Available:

http://www.nuffic.nl/home/docs/neso/neso-e-newsletter/2010/vietnams-higher-education-trends-

and-strategies.pdf [09/01/2011]

Onkvisit, S. & Shaw, J. (2009) International Marketing - Strategy and Theory, Third Edition

Pinsent Masons 2009, Sept 2009-last update, Making it Easier to do business in Vietnam

[09/01/2011].

Quang, T., Swierczek, F.W. & Chi, D.T.K. (1998) Effective leadership in joint ventures in Vietnam: a

cross-cultural perspective. Journal of Organizational Change Management, 11(4), 357

<last_page> 372.

Runckel, C. 2009, 01/10/2009-last update, The Education System in Vietnam Available:

http://www.business-in-asia.com/vietnam/education_system_in_vietnam.html [2011]

Schwab, K., Porter, M. & Sachs, J.: 2002, The Global Competitiveness Report 2001–2002, Oxford

University Press, New York • Oxford.

Terisse, S.A. , New Rules for Brand Management in Emerging Markets. Available:

http://chiefmarketer.com/disciplines/branding/0106-brand-management/ [2011, 1/12/2011]

Terpstra,V.: Sarathy,R.: (2000) International Marketing. 8th Edition. Dryden Press

US Department of State 2010, Political System of Vietnam. Available: http://www.vietnamembassy-

usa.org/learn_about_vietnam/politics/ [02/12/10].

Vietnam Ministry of Education and Training 2010, 11/02/10-last update, Report on the development

of tertiary education system, solutions to ensure and improve the training quality [Homepage of

Vietnam Ministry of Education and Training], [Online]. Available: http://en.moet.gov.vn/?

page=1.9&view=19704.

Young, S., Hamill, J., Wheeler, C. & Davies, R. (1989) International Market Entry and Development.

Harvester Wheatsheaf

Zhan, W., Chen, R., Erramilli, M. & Nguyen, D. (2009) Acquisition of organisational capabilities and

competitive advantage of International Joint Ventures in transiation economies, The Case of

Vietnam. Asia Pacific Journal of Management, 26(2).

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Zhenhui, R. 2001, 2001-last update, Matching Teaching Styles with Learning Styles in East Asian

Contexts. Available: http://iteslj.org/Techniques/Zhenhui-TeachingStyles.html [2011,

1/10/2011].

APPENDICES

Appendix 1

Rationale for selecting education as the target sector:

1. The political establishment in Vietnam are prioritising investment in education in terms of

incentives such as cuts on import duties and tax concessions (Pinsent Masons 2009) in order

to achieve a 10% increase in university enrolment (Government of Vietnam 2005). Full

details of the incentives can be found in Appendix 2.

2. Spending on education: Total consumer expenditure on this sector has risen significantly,

reaching VND 45,048.9 billion in 2007(up 110.5% on 2006), for further information please

see Appendix 6.

3. Considerable long term opportunity exists in education as only about 2% of the population

currently moves into higher education (Runckel 2009) due to poor local provision and a

rapidly increasing young population. The result is that in excess of 20,000 students study

abroad each year.

Appendix 2

Tax Incentives

In “factor-driven” economies with mainly extractive type economic activity, Schwab and Porter argue

that the focus of government should be on enhancing the basic requirements of economic

development, such as education (Schwab and Porter 2001). The government of Vietnam recognises

that its objectives will not be achieved without foreign participation (Austrade 2010) and has

introduced relevant incentives.

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In March 2000 a decree (No. 06-2000-ND-CP)  was issued that provided incentives for foreign

investment in education and training, healthcare and scientific research.

According to the decree, educational and scientific research establishments shall:

Enjoy the income tax rate of 10 per cent during the entire duration of their operations

Be entitled to exemption from income tax for a period of four years from the time of profit-

making 

Have a reduction of 50 per cent for the subsequent four years

Foreign partners are also encouraged to establish educational institutions to provide vocational and

tertiary education for both Vietnamese and foreigners as joint ventures, under business cooperation

contracts or as wholly foreign owned ventures.

Source: Ministry of Education and Training, Vietnam

Appendix 3

Rejected market entry strategies and reasons for rejection:

100% owned: Acquisition of a publicly funded tertiary institution would not be permissible

by the authorities. Acquisition of a private tertiary institution in Vietnam from Vietnamese

owners is very likely to be seen as exploitation or a blow to national pride (Onkvisit and Shaw

2009) while acquisition from non-Vietnamese owners is too fraught with risk due to poor

quality and potential legal difficulties. Starting a greenfield investment would fail to achieve

sufficient scale before competition in the market is overwhelming.

Cooperation contracts: Such an approach would not achieve the objective of the entrant as

typically these contracts are not designed to further the objectives of the entrant, rather they

provide services and know-how of mutual benefit to both parties.

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Franchise/licensing: Given DCU’s long term strategic aims this route may simply be

nurturing another competitor in the region for the future (Onkvisit and Shaw 2009). Another

issue is the lack of direct control of curricula and quality.

Appendix 4

Advantages and disadvantages of the recommended market entry strategy

Advantages of the recommended market entry strategy include:

1. Overcoming barriers to entry: Bradley (2005) cites this as a prime reason for choosing this

mode of entry. While the government does not implement any tangible barriers in the area of

education investment culture and the “‘rules of the game’ in the host economy (Meyer et al

2008 ) represent barriers.

2. Risk minimisation: According to research by the Netherlands Education Support office (2009)

this entry mechanism is currently the most common for education entry. Competition will

intensify in the coming years and the joint venture approach offers a faster way to achieve

scale necessary in the market. 81 non-public universities and colleges emerging in the past 10

years (Vietnam Ministry of Education and Training 2010).

3. Expertise and feedback: The joint venture route facilitates greater control, information

feedback from the foreign market and the development of expertise (Young et al 1989).

4. Higher returns and potential for growth: Bradley(2005) states that this course cultivates close

contact with customers, suppliers and the government thereby increasing the long term

growth potential. The returns are also greater than the other routes(apart from direct 100%

ownership). Furthermore given that DCU’s long term objective is to achieve a significant

presence in the South East Asia region with an increasing percentage control of the joint

venture the findings of Zhan et al (2009) support the joint venture route, they find that the

positive impact of knowledge based resources on the joint venture’s competitiveness is

significantly enhanced as the ownership by the foreign parent increases.

5. Increase Quality control, reduce requirement to deal with local Red tape and avoid the need to

deal with corrupt government officials (the joint venture partner will use their local

knowledge to deal with that).13

Figure 1 Risk rises with degree of commitment – Source International Marketing Strategy – Frank

Bradley 2005

Potential disadvantages of the recommended strategy:

1. Staffing: The onus will be on DCU to provide the bulk of the suitably qualified staff for the

joint venture as less than 30% of local lecturers have a Masters or above (Government of

Vietnam 2005). The problem that this will present is that wages in the West of lecturers are

much higher and student fees paid are lower. Expatriate employees working for over 3

months require a work permit and lasts for a maximum of 36 months (Allens et al 2010).

2. Cost: While the Vietnamese Ministry of Education and Training is keen on Vietnamese

institutions forming strategic partnerships with foreign stakeholders from different countries

they expect the costs to fall predominantly on the foreign provider. For example the expected

level of funding and the nature of participation by strategic partners in the proposed New

Model University program is considerable, €100 million in the case of France (Netherlands

Education Support office 2009).

3. Conflicting objectives and working practices: In Vietnam student to teacher ratios have

increased from 6.6:1 in 1987 to 28:1 in 2009. At private universities, the student overload on

lecturers is considerably higher (Clark 2010). This may present culture challenges to DCU

lecturers.

4. Failure rate for joint ventures: While the recent past has witnessed difficulties in joint

ventures located in Vietnam (high profile failures or withdrawal cases, disputes between joint

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venture partners, problems associated with the lack of transparency in the law (Quang 1998))

the situation is improving. Dispute resolution in Vietnam is still however subject to an

uncertain legal and judicial system. If an attempt is made to reduce this risk a choice of

foreign governing law for the joint venture will not release a foreign investor from any

obligations under Vietnamese law (Allen et al 2010).

Ongoing Relationships: Once established via the entry method proposed (and taking into account

DCU’s long term strategy) it is recommended that, once established in the country, DCU maintain

good relationships with educational organisations, particularly the Ministry of Education and

Training, international aid organisations including World Bank and Asian Development Bank to

ensure that the development of funding programs for education and training infrastructure take

account of the interests of the joint venture (Austrade 2010).

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Appendix 5

Samples of promotional pages and advertisements

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Translated version

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Appendix 6

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Appendix 7

Further considerations concerning the initial offering

In terms of developing the Masters course content for the local market Bradley (2005) differentiates

between services that require little contact (whereby standardisation is possible) versus high contact

services (which will need to be culturally sensitive and modified accordingly). Education is a high

contact service and therefore the modification required will need to be agreed with the local partner.

In terms of teaching style it must be borne in mind that the typical student in Vietnam will be

accustomed to a passive, teacher led education with an emphasis on rote memory (Zhenhui 2001)

which might present cultural difficulties for a modern European Masters programme.

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