Porter’s Five Force Analysis of Vietnam

Threat of New Entrants

For Naya, the threat of new entries into the market is taken to be moderate. In a nutshell,
it’s like there are not many barriers to entry, therefore, any application can pop up and
compete with Naya. In fact, Naya has just been around for 8 months, but it is also well
financed and covers all Ho Chi Minh city. For any new entrant that poses a serious
threat, it has to first access millions of dollars to venture into this business as well come
up with great branding equity to capture the needs and demands of various clients
besides competing with Naya.

Bargaining Power of Supplier

In relation to Naya, the bargaining power of suppliers is negligible since it controls both
the supplier and the clients. This makes it difficult for individuals trying to approach to
their clients with no other alternative way to connect with customers using the Naya app
or website.

In Naya, the supplier is the one who provides services to clients; they are the individuals
or team that run the business. Since the Naya’s partner form the basic level they provide
the potential customer services that are required. On its part, Naya works closely with
the partners so that they can avoid problems with the clients. Even though there is no
comparable union for these suppliers to work together to place demands on Naya, Naya
nonetheless, provides the partners with the freedom to determine the condition to their
customers while following specified regulations and brand principles.

In the future, due to the development of online payment, Naya can reach a large number
of customers by collaborating with variety of online payment providers, such as: Momo,
Airpay and Viettelpay…
Intensity of Rivalry

Rivalry among existing companies that provide the same services as Naya is either
moderate. There are not many high-quality Naya competitors with excellent networks
and websites that are similar to Naya websites.

Applications such as bTaskee, WeFit, Tidy, and Sayyou are working around the clock
to overthrow Naya from competing in the market. For instance, Btaskee, this is a 2-year
old tech driven company, bTaskee is a leading company in the cleaning service sector
in Vietnam. Btaskee allow both users and cleaner to directly book and confirm tasks via
bTaskee application.

To handle the threat from existing competitors, Naya has been expanding its existing
system in terms of multi-service and maximizing the benefits of the sharing economy
through the Big Data Analysis System .

Threat of Substitute

Social Networking Site – Naya considers these as the most competing products in the
market that are growing at a much faster rate. Besides, they are readily available and
well-known by most users to use. Since Naya come to existence, social networking site
have realized the shift in consumer preferences owing to the availability of the modern
social-oriented products and even more functional applications.

It can be said that the threat of alternative products is pretty high since the switching
costs are non-existence for individuals who use Naya. They can easily choose these
alternatives without any consequences.

Moreover, Naya has continued to provide convenience and comfort to not only tenants
but also the specialty providers. As such, Naya is confident that customers will continue
using their favorite service providers - Naya.

Bargaining Power of Consumers

In relation to Naya, Naya’s target customers range from 18 – 40 years old. The
bargaining power of customers is currently high due to the broad range of services they
can choose from such as location, price, and partner ratings. Economic growth has
played a role in improving sharing economy across the country. In comparison to other
available options like social networking site, Naya is considered as a trustworthy
alternative for most users.

In addition, clients have price negotiation function of the services with the Naya’s
partners on Naya App so they can deal a reasonable price.

PESTEL analysis of Vietnam

Political factors

Vietnam is one of the most politically stable countries in South East Asia. Its leadership does
not welcome riots. Although, last year, there were high-profile protests to express public
disagreement to the Special Economic Zones – Phu Quoc. Since January 2019, Cyber Security
Law, which requested greater compliance of international service providers to set up local
offices and store data locally.

Economic factors

Vietnam’s GDP per capita is 2,600 USD. The country falls in the lower-middle income
group . As a result, it is safe to say that Vietnam is a portential market for any business.
The annual inflation rate in Vietnam increased to 2.24 percent in October 2019 from
1.98 percent in the previous month.

A recent survey by Google and other digital firms valued Vietnam’s digital market
at $3 billion in 2015 and $9 billion in 2018, which is estimated to rise to $30 billion
by 2025. In the coming time, the government plans to put enterprises at the center of its
innovation effort, supporting local tech firms in developing digital platforms and
through the digital transformation process.

In Vietnam, Airbnb is a typical example of the sharing economy, next to the long-line
up of platforms such as transports service (Grab, Goviet, Uber, Bee), labour
(Vietnamwork, Timviec365, CareerBuilder), Food Delivery (Now, Grab, Bee, Goviet,
Vato). Market researcher Nielsen Vietnam noted that 76 per cent of Vietnamese people
like using “shared products and services”, compared to 66 per cent globally, and this
has created fertile grounds for the sharing economy phenomena.

Social factors

Vietnam has an abundant labor force. In 2019, the number of people in working age is
48,4 millions, (General Statistics Office 2019). However, the labor force is still under-
skilled. Many Vietnamese workers still lack of skills such as: language, technical and
behavioral skills. Foreign firms also find it hard to recruit Vietnamese managers,
directors, leaders, etc for their companies. Top positions cannot be fulfilled due to the
lack of advanced management skills and essential knowledge in law and financial fields.
(Vietnam Briefing 2019.)

Technological factors

In 2019, the percentage of the adult population that uses desktop computers and laptops
are accounted for 43 percent and 72 percent with smart phone.

A number of 64 million people meaning around 66 percent of the population is

connected to the internet in 2019 (Ministry of Information and Communications 2019).
Vietnam is ranked 14th in the world for the number of internet users and 98 percent of
the total internet users have already made purchases online.

The government has approved many plans and projects that support information
technology and telecommunications in Vietnam in recent years such as:

Prime Minister’s decision on ‘Approving the strategy on Vietnam information and

communication technology development till 2010 and orientations toward 2020’ (No.
246/2005/QD-TTg, published on 6, October 2005) (Legal Normative Documents 2005).

Prime Minister’s decision on ‘Approving the scheme to early make Vietnam a country
strong in information and communication technologies’ (Decision No. 1755/QD-TTg,
published on 22, September 2010) (Legal Normative Documents 2010)

Project ‘Improvement of computer usage and public Internet access ability in Vietnam’
launched on 26, December 2011 in Hanoi (Ministry of Information and
Communications 2011)
Evironmental factors

Ho Chi Minh city is one of the most contaminated city in Vietnam because of high
population density and exsessive transportation (New America Media 2019). Pollution
remains associate unsolved drawback for both citizens and the government. However,
people in Vietnam are more and more aware of the surrounding environment.

However, in spite of the growing awareness of people on visible environmental

problems, there are still a big number of people do not acknowledge how important the
surrounding environment is in their everyday activities. Therefore, people will not pay
attention to the invisible environmental benefits that the sharing economy would bring.

Last but not least, natural disasters seldom hit most parts of Vietnam. Cities along the
coastline located in the middle part of the country, on the contrary, are constantly ruined
by storms and floods.

Legal factors

Following the plan, the government would put measures in place to protect lawful rights
and responsibilities of parties joining the sharing economy, including service providers,
users and companies providing necessary platforms.

However, there is the fact that, sharing economy is not a separate part of the economy,
while there must be a change in the mindset of state agencies to catch up with the
advancement of digital economy and the Fourth Industrial Revolution, as well as raising
awareness and capabilities of enterprises, provinces and the people on sharing economy.