Dell to invest assembly plant in Vietnam - final project for Bus230

1. Bus 230
PRE-FEASIBILITY STUDY
DELL TO OPEN ASSEMBLY PLANT IN VIETNAM
Student: Khoi Tran
Professor: Rubana Choudhury

2. Executive Summary
Objectives
Company Background
Cultural impact
Opportunities
Threats
Conclusions
Recommended Entry Methods

3. Objectives
Dell has entered Vietnam market in the form of
exporting
Dell achieved good development in the market
Dell has some assembly plants around the
globe, but not in Vietnam yet
The objectives of the study is to help Dell to
decide to invest into an assembly plant in Viet-
nam in the form of a FDI

4. Company Background
Third-largest manufacturer of personal com-
puters in the world
Dell sells computers and provides additional
professional services
Follows strategy of low costs: direct sales
model
The globalization brings both opportunities and
threats to Dell

5. Cultural Impact
Densely populated – 90 billions, with the per-
centage of young people take 60% in the
population
Has the speed of internet development raked
number one in the region
GDP per capita increase yearly promises an
increase in the purchasing power
US brand products are highly evaluated by lo-
cal customers
English becomes one of major languages in
Vietnam

6. Opportunities
Itel has built its largest plant in Vietnam,
promising to supply computer processors at
high quality, lower price and more cus-
tomers tailored.
More and more IT companies, both upstream
and downstream, come to Vietnam, promis-
ing Vietnam will be one of the largest ex-
porters of PC
Low labor cost in compared with China or oth-
er neighbor nations.

7. Opportunities
Import tariffs for electronics: spare parts 5%,
finished product: 20%
Export Processing Zones and Hi-Tech Indus-
trial Parks provides favorable conditions to
investors: tax, rent, utilities...
Vietnam is an official member of ASEAN, a
free trade zone, building factory in Vietnam
to produce products and then sell to other
ASEAN member countries at 0% import tar-
iffs.

8. Threats
Geographic: the nation is
long from the North to the
South but narrow from the
East to the West. It makes it
inefficient in distribution sys-
tem from the North to the
South for any investors.
Threat of war with China in
the North makes the in-
vestors feel less confident in
investing into Vietnam

9. Threats
Lack of viable legal structure for international
business
Few lawyers
Few protections for copyright and intellectual
properties
Poor infrastructures system
Power outages are very often

10. Conclusion
Vietnam is a good potential market for Dell
The demand is huge and not yet satisfied, es-
pecially from students and small and medi-
um enterprises
Dell import its product produced by Foxconn,
China to sell in Vietnam market
Dell highly evaluate Vietnam market and give
a strong commitment to invest more into the
market

11. Recommended Entry Methods
Dell should build up its own assembly plant in
Vietnam
Develop distribution system by Dell itself or in
cooperation with local parters, bringing
products to the hands of customers
Set up production factory in Hi-Tech parks to
enjoy favorable conditions from the gov-
ernment in tax, rent, utilities ...