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Do a SWOT analysis of the Vietnam opportunity faced by American Rice

when it entered in 1994. What do you think that American Rice could
have done better?
Reasons for failing:







American Rice said Can Tho-based mill failed because it was given a
smaller export quota than it needed to break even
American Rice was overcharged by Vinafood II for land and equipment
leasing
Vietnamese said American Rice executives of mismanagement
regulations are unclear and liable to change from one month to the next
Vinafood II was responsible for the purchase and sell of rice to the jointventure allow them to benefit from selling its rice to the joint-venture
with a margin
American Rice has the sense of urgency and determination to move asap
into the Vietnamese market  unhealthy decision making
American Rice lacked a long-term plan for its business in Vietnam, not
enough time to build up more local expertise and expand the company's
knowledge and understanding of the Vietnamese market beyond one
person.
Lack trust between American Rice and Vinafood which is essential in joint
ventures
Clash of major linguistic, cultural and administrative differences
Vietnam has poor legal protection, hostile joint-venture partners, heavy
bureaucracy and a deep-seated suspicion of capitalism and foreign
interests

Alleged benefits of joint venture:






increase competition in a state-dominated sector riddled with inefficiency
Better equipment, higher quality control and a reputation for reliability
help these firms fetch higher prices for Vietnamese rice, which should
ultimately help the nation's poverty-stricken paddy farmers
able to bring in overseas customers for Vietnamese rice
upgrading of facilities, invest in the most modern rice-processing
equipment in the country
Vietnamese companies would directly benefit from the inflow of more
efficient ways of running the rice commodity value chain
increase Vietnamese access to additional financial resources
provide local players direct access to the know-how and more expansive
network of the foreign JV partner
potential positive externalities: increase in productivity and income of
involved farmers, to increased competition among local rice processers
and a way to restock Vietnam's depleted foreign reserve

Why not 100% American Rice



lack of political certainty
inadequacies in the legal framework
expected long duration of the whole process to be finished
absence of a network that would be instrumental in staffing the new entity

Yes No    rice = the Vietnam’s second largest export item after oil only regional food corporations and provincial food companies possess licences to export rice (Vinafood belongs to these three) Vinafood II has concentrated on higher quality Vietnamese rice and has become Vietnam’s largest rice exporter (over $00 million and 5-40% of Vietnam’s total rice exports in 1)        predominantly low quality rice exports (due to poor drying. the fact that Vinafood II is government owned can facilitate the arrangements. which is the largest government owned rice exporter in Vietnam. legal concepts joint venture arrangements include technical transfer as part of a capital contribution 3. cultural and administrative differences between the two-parties this might have been too fast to build a healthy foundation for mutual trust 1. IRA is going to provide 55% of the capital + furnish machinery. Americans and Vietnamese are not best friends. 4. Do you think that things would have worked out differently if American Rice had chosen another partner for the joint venture? Instead of partnering with Vinafood. Does American Rice “have what it takes” to be a successful international competitor? Yes  the combination of product and rice source diversity. Should American Rice have entered the Vietnamese market using another form of entry? Instead of majority owned Joint venture. technology and some working capital + consulting competencies. and confidence will be hard to build between the two parts. milling and seed) frequent delays in filling contracts high shipping costs Government’s restricting export measures Corporate profits in Vietnam are subject to 50% tax Numerous cultural differences exist between the Vietnamese and Western invertors negotiating style vs. Do you think that Vietnam is the right market for American Rice? Given that there are far too many cultural and managerial differences between Vietnam and US? There is not enough trust. coupled with predominance of branded sales . Taking into consideration the major linguistic. What do you think is the most important factor that caused the failure of this joint venture? 5. On the other hand. regarding History. they chose a privately owned rice exporters instead? 2. they could have considered minority owned joint venture?    Considering Vietnam is a communist republic. equipment.

   huge resources and already strong export basement first mover strategy to enter new markets the company’s reputation for selling high quality rice 6. Do you think that American Rice decision to move in so quickly into the Vietnamese market is too opportunistic? Like there was not enough planning done? .