22 November 2012
Datuk Steven Sim
Chief executive officer and managing director
Secret Recipe Cakes and Café Sdn Bhd
FINAL REPORT SUBMISSION – EXPANSION PLAN TO VIETNAM MARKET Please find attached the reported requested by the Board.
This report reveals an insight into the Vietnamese market and explains why this is a potential one to invest in. We hope that the information provided is useful in the decision-making with regard to further development of Secret Recipe in the future. If you need any farther clarification on the report, please do not hesitate to contact me, the team leader, at an email address: email@example.com
Nguyen Huynh Bao Ngoc
On behalf of the Global Strategy Team
Table of Contents
4.Findings and Discussion6
4.1. Motives of internationalization6
4.2. Justification of entering into Vietnam6
6.1.Most appropriate strategy14
6.3.Appropriate organization structure15
1. Executive summary
This report critically examines the possibility of Vietnam to be the next stop in Secret Recipe’s global expansion plan. Initially, the report highlights the current great achievements that Secret Recipe has been attaining from its very first internationalized activity. Employing the proper strategy and being favored by consumers all guarantee an auspicious future for the chain. Taking all of these merits, the company consecutively looks for new marketplaces with new resources. Simultaneously, findings have shown that Vietnam is an appealing market because of its potentials in a fast-growing economy and long-term profitability, as well as rich resources. Then, the country risk analysis and the country market and industry opportunities analysis were introduced to evaluate Vietnam’s benefits and drawbacks. The result is that there are rooms for both of them. Therefore, so as to be successful, recommendations on appropriate entry mode, strategy and organization structure are specified. To be more detailed, the most suitable entry mode is master franchising via a joint venture because it brings about the positively high certainty in operating. As for strategy, it is an international one to ensure consistency in the menu and concept by taking control over the core competencies and leaving other decisions to foreign subsidiaries. Besides, the Worldwide Area Structure is vital in terms of managing the company’s global expansion as it enables local responsiveness and decentralized authority, which both matter for future growth. Finally, the main conclusion is that Vietnam is the right solution for the Board’s decision to expand overseas. Nonetheless, the management should cautiously take into account the recommendations so that Secret Recipe can win.
Secret Recipe has gained its popularity not only in Malaysia but also across the region. The great succeed stemmed from the ambience brought to customers and the high-quality food served at reasonable prices. The number of foreign outlets is now exceeding 40 and is expecting to increase. According to Welch and Luostarinen (1988), internationalization can be described as a process by which the level of involvement in overseas activities of a firm rises. Indeed, adding the number of overseas outlets up to 100 was part of the ambitious global expansion plan. Recently, the company has spent RM60 million to invest in 2 more new markets which are India and Cambodia (TheSundaily.com, 2011). Evangelista (1994) argues that the readiness to fund international activities proves that firms desires to move further. In the past 3 years, the company has witnessed an annual growth rate of 30% (Articlebase.com, 2011). Taking advantage of both the reputation and the growth pace, it is the...