Starbucks and a Proposed Entry into Vietnam

Presented bySabrina Nguyen

Tu LuuDom Lewis

The Proposal

• With so much of the coffee shop market in the US, we are simply trying to expand Starbucks to international markets, particularly Vietnam.

Why Vietnam?

• 2nd largest producer of coffee in the world

• Ranked 13th in the World in population

• Economic Growth– Modern infrastructure – Increasing education– Free Trade Agreements

w/ ASEAN and the WTO

Vietnam - a potential market in area

Ho Chi Minh City

• Population of 6,240,000 (2005)

• 28%-35% of Vietnam’s total tourism revenue– Tan Son Nhat

International Airport has 15-17 million visitors per year.

• HCMC makes up 1/3 of Vietnam’s GDP

• Wealth concentration

SWOT Analysis

Strengths• Fine coffee and quality

service.• Ethical and Social

Responsibility– Starbucks Foundation

• Excellence as an Employer• Starbucks is Global• Flexible Company

Weaknesses• Premium coffee and other

products– Higher prices

• Heavily Invested in the US– Over 2/3 of stores in US

SWOT Analysis (con’d)

Opportunities• Co-Branding

– Partnerships w/ other countries

• Strong Brand Recognition will create awareness in tourist areas.

Threats• Competitors

– Offering quality product at affordable prices.

– Competitors are also worldwide

• Saturation in the US

Micro Analysis

• Reasons– Untapped market• Big tourist site• Growing economy- the time is now

– Declining Sales in the US• Economic Crisis• Expansion of competitors• Saturation of Starbucks in the US

Macro Analysis• Tropical lowlands, hills, and

densely forested highlands• Waterways

– Gulf of Thailand and Gulf of Tomkin

– Red River Delta– Mekong River Delta

• Major Industries• Agriculture

– Wet rice, coffee, tea, cashews, etc

• Mining• Manufacturing

Macro Analysis (con’d)• Population- 86,967,524 (July

2009 est.)• Government

– Communist State• Heavy involvement in Economy• Increased Int’l trade• Create more jobs• Joined Trade organizations• Trade Organizations

– WTO– ASEAN– APEC

• Economy– GDP

• PPP- $241.8 billion (2008 est.)• Growth Rate- 6.2% (2008 est.)• Per Capita- $2,800 (2008 est.)

– Unemployment Rate- 4.9% (2008)

– Inflation Rate- 24.5% (2008)– Exchange Rate- Dong 17,185:

$1 USD • Major Trade Partners

– China, US, and Japan• Attitude Toward American

Business

Entrance Strategy

• Joint Venture • Foreign Direct Investment is very risky– Intellectual Property Rights a concern w/ foreign

investors– Dual price system– Corruption– High Corporate and Personal Income Taxes– High level of competition

Domestic Competitors: • Trung Nguyen Coffee Company• Vina-Cafe Vietnam National Coffee Corp• Sinh Thai Corp. • An Giang Coffee Corp.• Vinamilk Corp.Foreign Competitors in Vietnam: • Nestle Corp• Unilever Corp• High Land Coffee Corp• Dutch Lady Corp

Join venture strategy

• The only coffee company issuing stocks and selling franchises

• Local brand recognition• Widespread retail

distribution network

Entrance Strategy (con’d)

• Promotional Strategy– Target Students and office worker w/ discounts– High Traffic Tourist areas– Prestige as a coffee shop

Conclusion

• Enter the Vietnamese market via Ho Chi Minh city

• Although Vietnam is a Communist State, international trade has increased from the 90s until now.

• Target the student population , office workers and tourists

• As a result, Vietnam’s GDP will continue to grow and disposable income will increase.

Questions and Comments