External Environment Analysis of Mandarin Oriental in HO CHI Minh City, Vietnam - Essay Example

External Analysis – Mandarin Oriental in Ho Chi Minh Vietnam Successful set up of Mandarin Oriental in Ho Chi Minh City,Vietnam would be another addition to the Mandarin Oriental Hotel Group that falls under Jardine Matheosn Group. The wider group has made significant investments in the hotel industry across the globe. Most of these hotels are put up in the developed countries such as the US and in Europe. Mandarin Oriental in Ho Chi Minh City, Vietnam can be seen as the Group’s strategy to set up in the emerging markets.

As it is, the intricacies of managing a hotel in an emerging market might be significantly different from those of managing the same in the developed countries. This is given the economic position of the country and demographics which present different opportunities and threats. In this study, we focus on external factors likely to affect Mandarin Oriental in Ho Chi Minh City, Vietnam. As part of this analysis, we look at the broad environment and the industry as a whole. It is expected that the information available will help in shaping the company’s future strategies especially one concerning the planned set up.

General Status of the Vietnamese Market In general, Vietnam is clearly an emerging market, a factor that provides growing opportunities for companies seeking growth and keen on developing diversity. These opportunities are particularly appealing given the general situation of the country. For the past decade, Vietnam’s expansion has been quite obvious recording rates of around 7-8.5 percent which rates the country among the first in terms of growth. However, the country was not immune to the 2008-9 financial crises which dampened the economic outlook but this still did not affect the attractiveness of the market, especially given the melt-down was global (Bhasin 159).

In recent times, the government has taken keen efforts to make sure that the economy grows sustainably a factor that has been boosted by its aggression in “de-dollarising” the economy and instituting a strong monetary policy which helps strengthen the country’s currency. The government’s effort to address the perennial concerns of the current account deficits is also likely to aid in stabilizing the economy. Very recently, the government has also liberalized the fuel and electricity control which is a shot in the arm for businesses operational in Vietnam.

These factors are in general very supportive of the Mandarin Oriental Hotel as it helps provide some form of stability which is important for planning (Bhasin 162). Other actions such as market liberalization also helps in ensuring fair competition and this has an effect on the long-term growth of the business. In general, the economic direction of Vietnam appears quite supportive and going forward there are potential signs of aggressive reforms likely to affect fiscal accounts earlier than anticipated which good news for businesses.

Drawing into specifics, Mandarin Oriental in Ho Chi Minh as part of a global business is prone to a host of factors unique to the entity given the nature of its incorporation and the industry in which it operates. Additionally, given that the company is keen on meeting the demand of the local clientele it must also deviate from some of the practices that have helped the group thrive in other parts of the world. This is in its attempt to align itself with the local culture and other unique attributes specific to the Vietnamese market.

Legal It is expected that a country with an efficient legal system is most likely to attract FDI. It is thus expected that Vietnam’s legal structure will be a key determiner of whether the hotel sets up or not. The following is a brief examination of the system as it stands. To start with, it is important to note that Vietnam as a country has made significant efforts to revamp its legal framework for businesses. This is especially so after the country joined the World Trade organization in 2007.

The realignments have been largely beneficial to foreign investors and in general all businesses operating in Vietnam. Passage of the Investment Law and the Law on Enterprise has particularly been beneficial in enhancing business for foreign entities operational in Vietnam (Vietnam 42). These factors notwithstanding, the pace at which regulatory regimes and the country’s commercial law is evolving as well as the overlapping jurisdiction has hindered transparency, consistency and stability which has in turn affected decisions on major investment (Vietnam Chamber of Commerce).

Notably, despite the government’s efforts there are still instances of bureaucracy and corruption which is also becoming a challenge for businesses. Lastly, in regard to legal issues likely to face Mandarin Oriental in Ho Chi Minh City, there is still widespread inefficiencies in protecting intellectual property which may affect the establishment sooner or later. Social-Demographics Demographics are critical factors in regard to provision of labor, dictating consumption habits and determining customer’s perception of goods or services on offer.

It is thus important to examine whether the trends, nature and social cues of the Vietnamese would support the hotels service by creating a pool of customers and an able workforce to guarantee the established level of service. As per the most recent census, conducted on 1 April 2009, Vietnam had a population of 85.8 million. This population is thought to have presently grown to around 91 million. Of this population, the most dominant ethnic group is the Kinh ethnic group which has about 73.

6 million people or 86% of the population. The other 14% is made up of minority groups whose way of life is not entirely different from that of the Kinh group (Vietnam 34). This has made Vietnam, whose official language is Vietnamese, a harmonious group this is further confounded in the fact that the dominant religion is Buddhism. These factors have constricted the social factors that the business is prone to. In planning, Mandarin Oriental only needs to understand the social nuances of the dominant group and this will help the business align its products with the cultural dictates of its dominant clientele.

Perhaps important in studying the social set up is the fact that most of the Vietnamese especially the young generation are becoming more open to foreign cultures. These are affecting the perceptions and receptions of trends and lifestyles that have for long been considered as foreign. For instance, the fact that Vietnam has a strong relation to rice related dishes is presently changing as the young population takes in to foreign cuisine (Vietnam Chamber of Commerce). Being able to realize these shifts and adjusting the hotels operations and services accordingly is going to be crucial in the hotels relevance.

This is especially so as the hotel largely derives its clientele domestically. Technology Lastly, the level of technology adoption dictates the company’s ability to keep their customers abreast with latest development and support general service delivery. Notably, the lower the level of technology adoption the lower the chance of meeting customer demands. The growth and acceptance of technology as a fundamental aspect of every business not only in Vietnam but the world has put every business on the spot.

This is especially the case with businesses in the service sector. Most notable and most significant factor likely to affect Mandarin Oriental in Ho Chi is the proliferation of social media platforms. One of the most significant effects of this growth is the customer’s ability to share experiences and the ability for such messages to finds its way to thousands of people (Vietnam Chamber of Commerce). As it stands, the hotel does not seem to have taken strongly the need to ensure strong on-line presence.

This is likely to affect its growth as it lags behind in terms of adoption of what its clientele already considers basic. As a means of planning for the future the hotel need to engage actively with consumers, and continually upgrade its technological application to manage and meet customers’ fast transition into the technological world. Lastly, the fast growth of the Vietnam economy and the strong investment of the government in empowering its people is expected to have a profound impact on the social status as well as the general standing of the Vietnamese.

In the near future, the customers will demand for more specialized services as their status grows. On the other hand, the labor force which is expected to become more sophisticated is going to demand for better remuneration, and become a bit more conscious of the ongoing s in the workplace. These shifts must be countered by a rapid adoption of the hotels operations as it needs to keep abreast with the people’s sentiments, demands and development. As Mandarin Oriental in Ho Chi Minh grows it must plan for these changes if it is to establish itself as a hotel of choice in Vietnam.

Works Cited Bhasin, Balbir B. Doing Business in the Asean Countries. New York: Business Expert Press, 2010. Print. Vietnam Chamber of Commerce. Economic Sector. 2014. 3 March 2014 . Vietnam: Doing Business and Investing in Vietnam Guide. Washington, D.C: International Business Publications, USA, 2009. Print.