530_AS1_Phan Phu Truong_GBS200816

ASSIGNMENT 1 FRONT SHEET
Qualification

BTEC Level 5 HND Diploma in Business

Unit number and title

Unit 18: Global Business Environment (530)

Submission date

April 12, 2022

Date received (1st submission)
Date received (2nd submission)

Re-submission date
Student name

Phan Phu Truong

Student ID

GBS200816

Class

GBS0904A

Assessor name

Nguyen Kim Hao

Student declaration
I certify that the assignment submission is entirely my own work and I fully understand the consequences of plagiarism. I understand that
making a false declaration is a form of malpractice.
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M1

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Table of Contents
I.

Introduction ....................................................................................................................................................................... 3

II.

Main contents .................................................................................................................................................................... 4
1.

PESTLE analysis ............................................................................................................................................................... 4
Political ............................................................................................................................................................................... 4
Economical ......................................................................................................................................................................... 5
Social .................................................................................................................................................................................. 5
Technological...................................................................................................................................................................... 5
Environmental .................................................................................................................................................................... 5
Legal ................................................................................................................................................................................... 6

2.

Key drivers affecting a specific industry to go globalization based on Yip’s model ....................................................... 6
Market driver ..................................................................................................................................................................... 7
Cost driver .......................................................................................................................................................................... 7
Competition driver ............................................................................................................................................................. 7
Government driver ............................................................................................................................................................. 8
Opportunities ..................................................................................................................................................................... 8
Threats................................................................................................................................................................................ 8

3.

The complexity of strategic challenges faced by organizations when operating in a global environment ................... 8
International trade laws ..................................................................................................................................................... 8
Global Economy ................................................................................................................................................................. 9
Global supply chain management .................................................................................................................................... 10

III.

Conclusion .................................................................................................................................................................... 12

References................................................................................................................................................................................ 12

I.

Introduction

Some Japanese firms have recently considered withdrawing their manufacturing plants from China to establish
new ones in other countries such as Vietnam. As an intern at an investment consulting firm in Vietnam, I am
responsible for assisting my team in preparing a report for a potential Vietnamese client to review the effects of
globalization and its drivers and challenges for the Vietnamese company and industry. This report is made to
persuade the potential Japanese partner to collaborate with the Vietnamese firm in expanding their business
into the Vietnam market.


Company introduction
KFC is an acronym for Kentucky Fried Chicken, one of the brands of Yum Brands Inc (USA). KFC specializes in
fried and grilled chicken products, with side dishes and sandwiches made with fresh chicken. KFC is known in
Vietnam by another familiar name, Kentucky Fried Chicken. KFC entered the market for the first time in

December 1997 at the Saigon Super Bowl mall. Up to now, KFC's restaurant system has grown to more than 140
restaurants, present in more than 21 major provinces/cities across the country. The KFC brand goal is to bring
consumers a leading brand of food, creating bright and fun for people of all ages. Young in the soul, dynamic in
life is the strategy of the KFC brand in Vietnam. (KFC Viet Nam, n.d.)

(Source: zomato.com, n.d.)

II.

Main contents

1. PESTLE analysis
Political
Vietnam's political stability is one of the top factors attracting investors to Vietnam. When looking at some
countries in the region, it is easy to see that most of the countries have experienced coups or political crises,
while Vietnam's politics has always been stable and secure. This ensures consistency in economic development
policy.
The Vietnamese government has shown its commitment to economic liberalization and international
integration. Vietnam joined the WTO in January 2007. This should give a major boost to Vietnam’s export-led
economy and should spur the country’s economic liberalizing reforms. Besides, it reduces barriers for foreign
companies.


Economical
According to the General Statistics Office, Vietnam's GDP in 2021 is estimated to increase by 2.58% compared to
2020. In the context of the COVID-19 epidemic seriously affecting all sectors of the economy. This is a great
success for Vietnam in disease prevention and maintenance of production and business.
GDP per capita increased by 2.7 times between 2002 and 2020, reaching nearly 2,800 USD. During this time, the
poverty rate (based on a daily income of 1.9 USD) fell sharply from more than 32% in 2011 to less than 2%.
According to the General Statistics Office, the consumer price index (CPI) in November 2021 increased by 0.32%

compared to the previous month. The average consumer price index in the first 11 months of 2021 increased by
1.84% over the same period last year, the lowest average increase in 11 months since 2016. The controlled
inflation rate will stimulate economic growth, encourage consumption, and increase consumer demand.

Social
According to Facebook's 2020 report on the 6 major Southeast Asian economies, Vietnam is one of the
countries with the highest level of preference for branded goods, with 54% of people tend to come to famous
and long-standing brands. This figure is much higher than 45% in Malaysia and 43% in Thailand.
According to the General Statistics Office, the proportion of the urban population increased by 14.3 percentage
points after 30 years, from 20.1% in 1989 to 34.4% in 2019. The urban population's increased pace of life and
their desire for faster and more affordable food options. The fast-food industry is also fueled by a languid
population that expects food to be delivered to their door.
Food is an indispensable part of Vietnamese culture. Vietnamese people love to eat and believe that eating
delicious food can bring harmony and closeness to family and relationships. In general, Vietnamese people do
not care about nutrition as much as Westerners. They care more about the quality of the food.

Technological
According to statistical reports, there are currently 68.17 million people using internet services in Vietnam in
January 2020. An increase of 10% compared to 2019. 65.00 million people are currently using social media to
entertain, connect with friends, share moments, and life tips, and even promote sales.
According to Q&Me (2021), 87 percent of people have ordered fast food online. Grab Food and Now are the
most popular methods for ordering fast food online. As a result of this trend, many restaurants now allow
customers to order food online.

Environmental
Nature has bestowed upon Vietnam a plethora of biological and hydrological diversity. The north of Vietnam
has a humid subtropical climate with high temperatures in mountainous areas, while the south has two seasons:
rainy and dry, with average temperatures ranging from 25 to 27 degrees Celsius. Despite Vietnam being in the

tropical climate zone, there is still some difference between the two regions, allowing Vietnam to
have a diverse food supply.
According to public opinion research implemented by GlobeScan, consumers in Vietnam tend to favor socially
responsible companies. In Vietnam, 47 percent of those polled said they had supported a socially responsible
company in the previous year, compared to a global average of 33 percent.

Legal
The Intellectual Property Law No. 50/2005/QH11 regarding rules for securing and enforcing legal rights to
license of invention, industrial designs, semiconductor integrated circuit layout designs, business secrets,
trademarks, trade names, and geographical indications.
Law on Food Safety No. 51/2001/QH10 stipulates the rights and obligations of organizations and individuals in
ensuring food safety; conditions for ensuring food safety, food production and trading, and food import and
export; advertising, food labeling; food testing; risk analysis for food safety; prevent, prevent, and remedy food
safety incidents; information, education, and communication on food safety; responsible for state management
of food safety.

➔ Through PESTEL analysis, Vietnam is a potential market for the fast-food industry to expand and develop.
And KFC is one of the leading companies in this industry in Vietnam.

2. Key drivers affecting a specific industry to go globalization based on Yip’s
model

(Source: Research Gate Website, 2017)


Market driver
KFC's dishes have conquered diners and are loved all over the world. This success of KFC began with Colonel
Harland Sanders opening the first "Kentucky Fried Chicken" franchise in Utah in 1952. KFC was later one of the
first American fast-food chains to expand. went international, opening stores in Canada, the United Kingdom,
Mexico, and Jamaica in the mid-1960s. KFC became the first Western restaurant chain in China in 1987.

Nowadays, there are more than 20,000 KFC restaurants in 109 countries and territories worldwide. KFC serves
more than 4.5 billion pieces of chicken annually and about 7 million customers a day worldwide. This brand
accounts for a 2.82% market share of the global fast-food industry according to research data from T4 2020. In
Vietnam, KFC has grown to more than 140 restaurants, present in more than 21 provinces. KFC is said to be the
most frequently visited fast food restaurant chain in Vietnam, with 45% of respondents frequenting its store,
according to a survey by market research firm Q&Me based in Ho Chi Minh City. The top reasons cited to love
KFC are good food (66%); convenient location (63%); suitable for families and young people (60%); and variety
in the menu (56%). (Nhu, 2021)

Cost driver
By 2019, the financial statements of KFC Vietnam Joint Venture Company Limited recorded net revenue of VND
1,498 billion, an increase of more than 1% compared to 2018. Thereby, KFC always looks for the optimal ways to
reduce costs and optimize production. They take advantage of places where there is continuous excess
production capacity and large potential customers. In addition, they optimize production by using available
materials from the country that they add to import besides still using and maintaining their recipe and knowhow stored in the US. KFC has improved its operational efficiency by applying new technologies in food
processing and preservation. In addition, by recognizing the market and choosing a good business strategy, KFC
has optimized costs to create uniformity in its brand image. During tough times for the fast-food industry. By
improving its image, implementing the "Soul Food" campaign, innovating its brand image with a series of
reorganized store chains with the same tone. It can be said that they have used one of the favorable features of
the franchise form to optimize cost reduction, create uniformity, and increase their image value. (Nguyen,
2018)

Competition driver
Vietnam's Fast-food market is highly competitive with many big brands such as KFC (USA), Lotteria (Korea), Mc
Donald's (USA), Pizza Hut (USA), Popeyes (USA), Jollibee (Philippines), Burger King (USA), and several smaller
brands. Specifically, KFC accounts for 48% of the market share, Lotteria with 26%, PizzaHut with 5%, McDonald's
with 5%, the rest belongs to Popeyes, Jollibee, BurgerKing, and other food companies. Which, KFC, Lotteria, and
McDonald's are often widely covered in big cities. Meanwhile, Jollibee and some other brands are more popular
in smaller cities. This makes fast food companies in the industry face stiff competition to maintain their market
share and at the same time capture more market share from other brands. (text.123docz.net, n.d.)

Government driver
Global activity and a significant increase in free trade agreements open import and export opportunities, more
foreign investment, attracting development and technology transfer; That is the problem of improving the
business environment with the legal system, infrastructure, traffic, or issues related to sustainable
development. This allows fast food companies to have convenient logistics and efficient sourcing, which has also
proven effective when considering product development costs. (tapchicongthuong.vn, 2021)

Opportunities
Asian consumers are tending to prefer Western-style food. As the pace of life is accelerating along with the
increasing introduction of Western culture and lifestyle, the demand for fast and convenient fast-food culture is
higher than ever. According to VietMAC's research, the fast-food market in Vietnam is currently very developed
with 19,700,000 transactions per year, bringing in VND 869 billion in revenue. The growth rate of this industry is
about 26%/year. With most of the population under the age of 25, this younger generation will be more and
more receptive to foreign tastes and products. Besides, with products such as fried chicken, hamburgers, salad,
or French fries, an agricultural country like Vietnam can completely become an abundant source of supply. In
addition to the rapid development of the economy and the increasing consumer demand in modern life, the
Vietnamese fast-food market is fertile land for investors. (123docz.net, n.d.)

Threats
Currently, Vietnam is a promising market for businesses and that is also attracting big bosses to compete with
KFC such as Jollibee, Lotteria, Pizza Hut, Burge, and especially McDonald's with soft prices. than other fast-food
brands. Besides, KFC and other fast-food restaurants are considered harmful to human health with the fatal
disadvantage of being fat, high in protein, and low in fiber.

3. The complexity of strategic challenges faced by organizations when operating
in a global environment
International trade laws
The World Trade Organization (WTO) is a global international organization to establishes and maintains free,

transparent, and favorable global trade. Vietnam's accession to WTO has created more position and strength of
Vietnam in the international arena. Vietnam's economy changed very positively in 2007 such as GDP growth
increased by 8.48%, industrial output increased sharply by 10.6%. In addition, the total import-export turnover
is equivalent to about 160% of GDP, of which nearly 90% of GDP is imported. In addition, the amount of capital
committed to foreign direct investment has reached a record number of 20.3 billion VND. Vietnam is
increasingly attracting many large investors in the world to invest and become one of the countries with strong
economic breakthroughs. (agro.gov.vn, n.d.)

The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) was officially signed in
2018, by 11 members. The CPTPP's overarching goal is to reduce import taxes to 0% for all tariff lines. According


to a study by the Ministry of Planning and Investment, with other light and labor-intensive
industries, the CPTPP can generate an average growth rate of 4% - 5%, and an increase in exports can reach
8.7% - 9.6%. (cptpp.moit.gov.vn, n.d.)

Global Economy

International-expansion entry modes
Type
Exporting

Licensing &
Franchising

Strengths
- Fast-entry
- Low risk

-

Fast-entry
Low cost
Low risk

Weaknesses
Opportunities
Threats
- Low control
- An unfulfilled
- Shifts in
- Low local knowledge
customer needs.
consumer taste
- Potential negative
- The arrival of new
away from the
environmental
technologies.
firm's products.
- Impact of
- Loosening of
- The emergence
transportation
regulations.
of substitute
- Removal of
products.
international
- New

trade barriers.
regulations.
- Increased trade
barriers.
-

-

Partnering
and
Strategic
Alliance

-

-

Acquisition

-

Shared costs
reduce the
investment
needed
Reduced risk
Seen as the
local entity

Fast-entry

Known,
established
operations

Less control
Licensee may
become a
competitor
Legal and regulatory
environment (IP and
contract law) must
be sound

-

Higher cost than
exporting
licensing, or franchising
- Integration
problems between
two corporate
cultures

-

High cost
Integration issues
with home office

-

-

-

-

-

Economies of
Scale
Unsaturated
market
Opportunity to
explore and
expand the
market

-

Access to
distribution
networks
(especially
internationally)
Access to greater
resources (i.e.,
technology and
finance)

-

Expansion
opportunities
with a large
assets base
Enhanced debt
raising ability/
cheaper credit

-

-

-

-

-

Newer Business
Models
Declining
Position of
Brand in the
Market
Competitor
Franchises
Lack of
communication

between
companies
Competitor's
products remain
superior

Enhanced
regulatory
interference
Retention of
loyal customers
Retention of
skilled


Greenfield
venture

-

-

Gain local
market
knowledge
Can be seen as
the insider
who employs
locals
Maximum

control

-

High cost
High risk due to
unknowns
Slow entry due to
setup time

-

Tax benefits

-

Economic
development
incentives
Can form
partnerships with
local businesses
to increase
market
penetration.

-

manpower
-

-

-

Political
instability or
lack of legal
protection of
ownership.
Immediate
competition
from the local
players.
There can be
high barriers to
entry

KFC entered Vietnam with a master franchisee through the establishment of a joint venture KFC Vietnam, so the opening
of distribution stores in Vietnam will be funded by KFC Vietnam. Then KFC will be more flexible in opening restaurants in
big cities like Ho Chi Minh, Hanoi, etc. in choosing the opening time and location. This creates a competitive advantage for
KFC compared to competitors. Besides, the price for a franchise contract according to the regulations of the parent
company is 1 million USD. In addition, the law on franchising in Vietnam in the early years when KFC entered Vietnam was
not strict. Therefore, to compete with alternative fast-food products in Vietnam and the big players in the world.
(text.123docz.net, n.d.)

Global supply chain management
1. Supply Chain Management

(Source: chegg.com, nd.)

2. Production
From input materials such as chicken, sauce, vegetables, etc., KFC will process and transfer to cold
storage and normal storage. From these warehouses, the airline will move to KFC franchise stores
nationwide. KFC's output products are fried chicken pieces, deep-fried chicken wings, French fries,
salads, drinks, etc., which are distributed at KFC stores to consumers. The evaluation and quality control


standards of KFC are based on international standards of Yum Brand Corporation of the US. KFC
only chooses reputable and quality raw material suppliers with quarantine certificates. There are only a
few businesses in Vietnam that are qualified to supply chicken to KFC such as CP Group, Unitek, Long
Binh, and Nguyen Phi long 1. (Ga, n.d.)
3. Distribution
KFC has a wide chain of stores throughout the city's districts and a strong delivery team, delivering goods
to your door in the fastest time. A perfect and convenient distribution model for consumers. KFC
chooses locations to open stores such as supermarket buildings, bookstores, and commercial centers.
such as Parkson, Diamond Plaza, Maximark, Coop Mart Supermarket, and Big C. The advantage of these
locations is that this is where many people come to shop or work at buildings, and the objects that come
here are diverse. Some of them are middle class and above, which is the target customer group that KFC
is targeting. However, the system of supermarkets and commercial centers in Vietnam is not developing
fast enough, so KFC Vietnam recently had to rent houses on the street to open its restaurant. KFC's ice
selection criteria are locations located in urban centers. Currently, KFC has more than 153 restaurants in
three major cities in the North, Central, and South. Distribution channels spread in many localities help
reach maximum customers. (Ga, n.d.)
Providing KFC services has a limited capacity, which manifests itself through several issues:
- The fixed location of the point of sale, is concentrated in big cities, so customers with needs in other
provinces have difficulty accessing the service.
- Service supply depends on natural and social resources, so the capacity to supply is limited, and human
resources are limited, so when the number of visitors skyrockets during the holidays, it will be difficult to
respond in time.

- Service supply is a fixed asset. Because it is a fixed asset, wear and tear or damage also affect KFC's
ability to supply.
Solution
- It is necessary to constantly improve service quality, and train staff capacity to satisfy customers even
when the number of guests is overloaded and a temporary shortage of human resources.
- It is necessary to calculate the number of visitors from time to time to ensure the maximum supply of
goods and services.
- Continuously improve facilities and scale to reach more potential customers
- Add additional services to increase competitiveness with competitors and improve service to retain
existing customers.


III. Conclusion
The report shows the assessment of the impacts of globalization and the motivations and challenges for KFC
Vietnam and the fast-food industry in general. Thereby, showing that Vietnam has great potential to become a
fertile market. With extensive experience in the Vietnamese market, KFC Vietnam will be a promising partner
with Japanese companies in business expansion cooperation.

References
KFC Việt Nam. (n.d.). Về KFC. [online]
Available at: [Accessed 26 Mar. 2022].

Ga, M. (n.d.). Quản lý cung dịch vụ ăn nhanh của KFC. www.academia.edu. [online]
Available at:
/>BB%A5_%C4%83n_nhanh_c%E1%BB%A7a_KFC [Accessed 12 Apr. 2022].

text.123docz.net. (n.d.). Chiến lược cạnh tranh của KFC trên thị trường Việt Nam - Tài liệu text.
[online]
Available at: [Accessed 12 Apr. 2022].
agro.gov.vn. (n.d.). Tác động của WTO với kinh tế - xã hội Việt Nam. [online]

Available at: />[Accessed 12 Apr. 2022].

cptpp.moit.gov.vn. (n.d.). Hiệp định Đối tác Tồn diện và Tiến bộ xun Thái Bình Dương. [online]
Available at: [Accessed 12 Apr.
2022].


Nhu (2021). Tiềm năng thị trường thức ăn nhanh Việt Nam. [online] VNFranchise Trang Nhượng Quyền Thương Hiệu Hàng Đầu Việt Nam.
Available at: [Accessed 12
Apr. 2022].
Nguyen (2018). Phân tích chiến lược kinh doanh của KFC trên toàn thế giới. [online] Flickr.
Available at: [Accessed 12 Apr.
2022].
text.123docz.net. (n.d.). Chiến lược cạnh tranh của KFC trên thị trường Việt Nam - Tài liệu text.
[online]
Available at: [Accessed 12 Apr. 2022].

123docz.net. (n.d.). Nghiên cứu marketing và đề xuất cho sản phẩm fast food vietmac. [online]
Available at: [Accessed 12 Apr. 2022].
tapchicongthuong.vn (2021). Thu hút FDI vào Việt Nam từ các Hiệp định thương mại tự do thế hệ
mới. [online] Tạp chí Cơng Thương.
Available at: [Accessed 12 Apr. 2022].