Motivation To International Business

Domestic market VOSCO will fluent be the biggest exile union especi ally in mass and dry out out bulk lode transportation while continuing to develop anele and container shipping International market VOSCO tend to be more wide awake and concentrate on seaborne flock within Asian contri justion ( a lot(prenominal) as Korea, china, Indonesia) as well as furthering other freight routes all all over the world (Africa, Europe and America). Motivation why VOSCO want to cover their market to foreign market because Currently the pick out of shipping in Vietnam is limited and just holds a minor part.So VOSCO certainly will postulate to enter foreign markets to get more profit and customers (sources of cargo-supply in wide term) and utilize the surpass capacity (bulk, tanker and container ships) as well as reduce the inventory cost and promote economies of scale. In the near incoming demand for import-export from regional countries and the amount of cargo in international s hipping expects to rise tremendously in the near future.According to UNDESA 2012, worldwide commercial steady-going transported by sea will increase by 36% in 2020 and double the gross tonnage by 2033, specially bulk cargo still remain as the major which is also the strength of VOSCO decease. The barriers to influence foreign market are reduced or eliminated when Vietnam joined ASEAN and WTO late VN has been a member of WTO since 2007, commercial relations with over 220 countries and territories, sign 88 bilateral trade agreements, establish 7 FTA with 15 countries.So removes signifi shadowertly trade barriers and is good condition for Vietnamese companies, specifically VOSCO to enter foreign markets. VOSCO has a lot of good competitive favors to develop further like low-priced and skilled crew (seafarers), good related and supporting system such as shipbuilding industry, ports (VOSCO is a member of VINALINE) Moreover the company can manage and exploit their own fleets ther efore positively implementk to customers and introduce in international market without dependence on other partners.In addition, VOSCO formally takes part in foreign market also means the company have to deal with a lot of threat. The biggest one is the competition from much bigger rivals around us such as COSCO, Hanjin in some(prenominal) price and quality wars, then other threats emerging from the host uncouth like culture, policy and currency. Now move to movers this company should consider in pliant their strategies to compete in foreign market.We did mention that mainland China and Indonesia can be potential foreign market so lets take a look at some external environmental analysis of them Political agentive role both Indonesia and China are considered as stable political environment, unlikely the high political risk in Africa. Tariffs are high but on decreasing slope. The recent difference on The East Sea in the midst of China and some countries including Vietnam whit ethorn not affect too much on trade between countries. Economic Factor both countries are in trillion sawhorse GDP club. Currently Chinas economy is the second biggest economy in the world and Indonesia ranks 15th.Especially FDI plays a vital role in China and Indonesia growth rate. Trade between these two countries with other all over the world continues to rise significantly regardless of the bad impact of earth debt in Europe economy. Socio-cultural Factor Population in Indonesia and China is highly high not only in Asia but in the world. hitherto theres a big difference between these culture, especially in religion(major religion in China is Buddhism but Indonesia is Muslim) Technological Factor Transport system and Communication System in these countries are legal and highly developed compared with other in region.From this analysis we can see that the company should choose a proper method to access the market. We regain the way of merger and acquisition or integration wi th a topical anesthetic freight forwarder would be efficient because setting up a tender affiliate is risky (postponement). Nevertheless setting up subsidiary or using will help the firm take the initiative in linking with local anesthetic customers. Beside that VOSCO should focus on its own strength in shaping other strategies.Generic competitive strategies Focus on market niche will be a good choice because VOSCO now take advantage in dry and bulk cargo transportation. It also means mineral, iota and other agricultural product will be the major commodity. In shaping the production strategy, there are two main factors fleet and logistics service. alike(p) we said before, VOSCO should renew and upgrade regularly their quality and functionality fleet to meet the international transport demand. For exampleFirstly, technical improvement in ship sizes and draft is required (international coal shipping require 30,000 70,000 DWT vessels demand for regional rice shipping currently co ncentrate on infra 10,000 DWT vessels but in the near future it will increase to 20,000 30,000 DWT) Secondly, standardization factor (the problem of registry Vietnamese registered vessel may pay off the operation standard but in fact it is unfavorable in international transport because standards by VR may not strict enough). The factor of logistics activities in both home and host country is very important.Investing in logistics infrastructure such as warehouse, inland transportation in China or Indonesia should be a long-term documentary. Initially it should be integration with local providers. Expanding business in foreign market certainly contend to consider factors in human resources. Integration can be seen as the first step before M&A process. Initially local shipping agent and logistics provider will run totally by local employees (inpatriate) then gradually replaced by our expatriates especially the top position. hence selection, training and development those expatr iates will play an important role (Ex conclusion China Indonesia).Secondly VOSCO must set up a competitive remuneration package to motivate them and finally a proper relocation policy. displace to financial issues, initially the company should not consider the financial objective as the most important. Instead, the outcome better focus on (which is reflected by customer satisfaction). Another factor is the source of fund for the subsidiary. Depend on the (high) IR and exchange rate in both China and Indonesia, itll be better if the fund depends on both parent company and local borrowing and they uses the most common method dividend remittance to pay jeopardize the parent firm.Finally regular financial report to the VOSCO headquarter is necessary in severalise to hedge the risk and develop their own financial strategy. The last but not least is containerization. Expand the business focusing on dry and bulk cargo market doesnt mean we skip the container market. Like I said, this is a long-term objective because the current inefficiency of VOSCO container vessels. Therefore, profit from bulk cargo shipping can be reinvested in developing container lines go in the future.