Essay On Business Management

This report helps in understanding about impact of external factors on the business expansion while developing the strategy which is beneficial for business in overcoming such factors. This report is based upon organization Lyft, which is an organization based in San Francisco that provides different services associated with hiring vehicles, ride-hailing, vehicles for hire etc (Startup Talky, 2022). Furthermore, it reflects upon conducting the external analysis which would help Lyft in expanding its operations into the Vietnam and understanding about the transportation industry within the Vietnam. It does focuses on identifying the appropriate strategy for organization in expansion of its operations in the global market.

 

Such analysis would help Lyft in understanding about different factors which could influence the business of organization and help in understanding about the policies and legislation within the Vietnam. Such analysis is effective in strategy formulation and implementation.

 

Political Factor – Vietnam focus on maintaining the good relations with different countries and it is also a member of the United Nations, World Trade Organization etc. Vietnam has the poor record in terms of human rights as government controls the media of the country. The corporate tax rate in Vietnam is project around 20% in 2022 which is less in comparison to the USA which is 28% and it could be beneficial for Lyft in gaining the significant revenues (Tax Summaries, 2022). Vietnam has free trade policy which does allow organization to export and important their products and such environment would allow Lyft to conduct its trade practices without facing any significant problems. Corruption is one of the problems which is faced by the Vietnam and it could make impact on the Lyft operations as corrupted officials would ask for the bribe in exchange of providing the business license to Lyft.

 

Economic Factor – Vietnam is considered as 46th largest economy in the globe and its nominal GDP which was $245 billion in 2018 has increased and reached to the $362 billion in 2021 (Trading Economics, 2022). The increase in the GDP does help Lyft in expanding its business Vietnam as it help performing its operations and would provide greater prospect for the growth of organization. Interest rate in the Vitenam is 4% and in comparison to USA is it is slightly more as USA has interest rate of 2.75%. Lyft has to pay more interest rate in the Vietnam which does make impact on its cost structure. The employment rate in Vietnam was 72% in 2020; it shows that there are number of skilled workers available for organization which could help Lyft in operating its business.

 

Social Factors – The middle class in growing in the Vietnam which does show that working class people are in the phase of development which could be considered beneficial for the Lyft as it focuses on targeting the middle class people and could focus on providing them the service of vehicle at efficient cost. The lifestyle trend of the Vietnam is based upon using the product which is affordable and could help in satisfying their need. Such trend allows the Lyft to provide its services to the Vietnamese consumer at affordable prices.

 

Technological Factors – Vietnam is one of the developing countries across the globe and due to the start-up culture, low costs and skilled workforce does help in building the effective IT infrastructure in the Vietnam. The tech park such as Da Nang Hi-Tech Park and Saigon Hi-Tech Park does help in accommodating the number of factories and offices for the companies that would help Lyft in setting up its business and allowing them to use such tech park to conduct its business operations efficiently (Longhau, 2021). Vietnam is also eighth largest provider of IT services in the world and that would help Lyft in gaining access to the IT resources which is required for the business.

 

 
Legal Factors – Foreign companies are allowed to operate in the Vietnam and the government also focuses on attracting them by direct or indirect investment. The company law in the Vietnam is easier as international investors could setup its business in Vietnam (Legal 500, 2022). Such flexible legal environment would allow Lyft to setup its business Vietnam and start performing its business operations. In order to conduct its business in Vietnam, Lyft has to register the company to the authorities and such registration process is conducted by the Business Registration Department of the Provincial.

 

Environmental Factors – Vietnam is one of the beautiful countries across the globe and it has eight UNESCO heritage sites which do help in attracting millions of tourist (UNESCO, 2022). Vietnam does face the issues of pollution and to overcome such issue, it has strict laws which should be followed by Lyft to ensure smooth functioning within the Vietnam.

Bargaining power of substitute products – Within the current transportation infrastructure of the Vietnam, motorbike has been utilized frequently by the people. Lyft does not require extensive capital to launch its business within the transportation industry of Vietnam but it has to face the fierce competition from the organization such as Grab and Be, GoJek etc. which do provide the similar services to the Lyft and it could affect launching of Lyft business in the market (Vietnam, 2022). Lyft does provide option of car and bike ride option to its consumer and it could help organization in setting its business into the Vietnam but it has to focus on adopting the cost efficient strategy. Such force could make impact on the Lyft business and could be considered as strong force for the business of Lyft.

 

Threat of new entrants – The transportation industry of the Vietnam is not that big but it does have the capacity of generating the profits for the organization and that could be helpful for the Lyft in setting up its business in Vietnam (Vietnam Briefing, 2022). Tax cut tariffs in the Vietnam does help in attracting lot of organization in the industry and it does lower the barrier for the new entrants and allow the organization to enter into the new market. Vietnam could be considered as the exciting prospect for the Lyft in terms of the opportunity and it does allow the organization to enter into the market and such factor could make impact on entry of Lyft but could be considered as moderate force for the business expansion of Lyft.

 

Bargaining power of consumer – The transportation industry of the Vietnam does provide the flexibility to its consumer in terms of transportation choices and it would allow the consumer to influence the prices of the transportation services. Lyft has to focus on introducing the flexible services at affordable prices as the switching cost within the Vietnam transportation industry which does allow consumer to switch on to the services of other organization such as Gojek, Grab and Be group which does operate in similar industry and provide the bike and car services to its consumer (NodeFlair, 2022). Such force does have strong impact on the business of Lyft within Vietnam and could be considered as strong force for the business expansion of the Lyft.

 

Bargaining power of suppliers – The suppliers does have moderate influence over the transportation industry within Vietnam which allows them to make impact on the productivity and profitability of organization. Vietnam transportation industry is influenced by the supply chain and exchange of the resources within the industry (Research Gate, 2020). Lyft does have the various options in terms of suppliers which could allow them to expand their business operations and does influence the cost of the resources provided by them. Such force does have moderate impact on the Lyft and considered as moderate force in the business expansion of Lyft in Vietnam.

 

Competitive Rivalry – Vietnam transportation industry is very flexible as there are different players which are operating in the market and such industry does not require extensive capital to enter into the market which is beneficial for new organization to enter into the market. The organization such as Gojek, Vato, GV taxi etc. does provide similar services like Lyft and it does lead to the fierce competition in the industry which could make impact on the business expansion of Lyft (Net Solutions, 2021). Such force has strong impact on the Lyft and could influence the business expansion of Lyft in Vietnamese market.

 

The Integration-Responsiveness Grid helps in making the strategic choices for organization which are operating globally and it does help in identifying the relationship between integration and responsiveness. The concept of Integration-Responsiveness Grid is based upon internal efficiency and flexibility that would allow organization to identify the effective marketing strategy while understanding about the balance which is required by the organization. Such framework allows organization to identify about the challenges which is faced by the organization and it does help in understanding about the flexibility that would allow them to act swiftly and decisively based upon the market development (Banerjee, Venaik and Brewer, 2019). Flexibility is considered as the characteristic of the organization with local responsiveness strategy while focusing on the portfolio management within the business units. Efficiency within such framework is based upon adopting the effective product strategy which could help in managing its business while boosting the productivity and profitability of organization.

 

Lyft is one of the ridesharing services which is managed to offer the vehicles for hire and providing the option of scooters for its consumer and Lyft is looking to expand its business operations within the Vietnam. The organization focuses on adopting the effective intonation strategy for its operating its business within Vietnam that could help in boosting the productivity and profitability of business. Lyft could focus on adopting the global strategy which is associated with sacrificing the responsiveness to local requirements and focusing on adopting the lower costs while focusing on achieving the efficiency. Lyft could focus on adjusting its cost and strategy according to the need of Vietnamese market and it does help organization in associating with the local consumer and gaining the efficiency within the market (Pehrsson, 2020). Such strategy would allow Lyft to deliver the quality services and managing the efficiency within the market. The organization could focus on managing its prices within the market and it does help Lyft in attracting the consumer and help them in expanding its consumer base within the market. With the help of IR grid, such strategy could be adopted by the Lyft and would allow them to achieve the efficiency within the market.

 

This report concludes about the external environment analysis and identifying the impact of external factors on the productivity and profitability of the organization. It concludes about the organization Lyft which provide its ride sharing services in the US and the organization is looking to expand its operations into Vietnam. The organization does have to analyse the external environment of Vietnam by the help of PESTLE model which could help organization in identifying factors which could affect the business of organization. It includes about the use of Integration-Responsiveness Grid to adopt the effective international strategy for the expansion of Lyft within the market of Vietnam.

 

Banerjee, S., Venaik, S. and Brewer, P., 2019. Analysing corporate political activity in MNC subsidiaries through the integration-responsiveness framework. International Business Review, 28(5), p.101498.

 

 

Legal 500, 2022. HOW TO SET UP A FOREIGN COMPANY IN VIETNAM. [Online] Available at: https://www.legal500.com/developments/thought-leadership/how-to-set-up-a-foreign-company-in-vietnam/ [Accessed 03 August 2022].

 

 

Longhau, 2021. Information about Hi-Tech Parks in Vietnam. [Online] Available at: https://longhau.com.vn/en/communication/news-events/information-about-hi-tech-parks-in-vietnam [Accessed 03 August 2022].

 

 

Net Solutions, 2021. The 10 Best Rideshare Apps of 2022 (And What Startups Can Learn From Them). [Online] Available at: https://www.netsolutions.com/insights/best-ridesharing-apps/ [Accessed 03 August 2022].

 

 

NodeFlair, 2022. Grab vs GoJek: which is the better company to work for in 2021. [Online] Available at: https://www.nodeflair.com/blog/grab-gojek-which-is-better-to-work-for [Accessed 03 August 2022].

 

 

Pehrsson, A., 2020. Balancing Global Standardization and Responsiveness. In Competitive International Strategy (pp. 112-119). Routledge.

 

 

Research Gate, 2020. The Supply Chain and Logistics of Vietnam in the Context of International Economic Integration. [Online] Available at: https://www.researchgate.net/publication/341738786_The_Supply_Chain_and_Logistics_of_Vietnam_in_the_Context_of_International_Economic_Integration [Accessed 03 August 2022].

 

 

Startup Talky, 2022. Lyft Success Story - The Process Of Becoming An Household Name. [Online] Available at: https://startuptalky.com/lyft-success-story/#:~:text=Lyft%20was%20launched%20in%202012,driver%2C%20delivering%20food%2C%20etc. [Accessed 03 August 2022].

 

 

Tax Summaries, 2022. Corporate - Taxes on corporate income. [Online] Available at: https://taxsummaries.pwc.com/vietnam/corporate/taxes-on-corporate-income [Accessed 03 August 2022].

 

 

Trading Economics, 2022. Vietnam GDP. [Online] Available at: https://tradingeconomics.com/vietnam/gdp [Accessed 03 August 2022].

 

 

UNESCO, 2022. Viet Nam. [Online] Available at: https://whc.unesco.org/en/statesparties/vn [Accessed 03 August 2022].

 

 

Vietnam Briefing, 2022. Vietnam’s Logistics Industry: How Vietnam’s Expanding Economy is Boosting Growth. [Online] Available at: https://www.vietnam-briefing.com/news/vietnams-logistics-industry-how-vietnams-expanding-economy-boosting-growth.html/ [Accessed 03 August 2022].

 

 

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