The aim of this research is to illuminate issues for both existing and potential franchisors in the areas of franchising and supply chain management in Vietnam. The results of this research not only help international fast food franchises that are already operating in Vietnam to improve the management of their supply chain but also help international fast food franchises by getting a better understanding of the Vietnam market and some of its challenges before starting to operate in Vietnam. The result of this research is a summary of critical issues supply chain issues international fast food franchise companies face when operating in Vietnam. The author also provides a variety of recommendations of how to overcome the identified issues.
Vietnam's hospitality industry is growing all over the country and big international hotel chains like Hyatt Hotels, Sheraton, Hilton, Novotel, Marriott, MGM Grand, Nikko Hotels, Crown Plaza and InterContinental have already entered the country and are operating since the last few years. The famous western style restaurant chains on the other hand are still not that common in Vietnam.
Although Vietnam has a growing economy and young population craving for western food concepts, so far just a few big international fast food franchises have entered Vietnam and most of them are operating for only a few years. The conspicuous absence of some highly successful multinational franchises like McDonald’s begs the question, why are they not operating in Vietnam and why do international fast food franchise companies that are currently operating in Vietnam mainly operate in HCMC and Hanoi?
The research identified that there are several issues international fast food franchise companies need to overcome when operating in Vietnam. Most of the issues are supply chain related and may vary from finding suitable local partners and good retail outlets to having long supply chains with obscure import procedures and high import duties. Moreover, the weak domestic infrastructure such as poorly established railway or road system, substandard port infrastructure or warehouses make storing and shipping within Vietnam a challenge too.
Table of Contents
1. Introduction
2. Orientation
2.1 Fast Food Franchising
2.2 Supply Chain Management in the Catering Industry
2.3 Vietnam’s Consumer Market
2.4 Franchising in Vietnam
2.5 Local Sourcing
2.6 Importing products to Vietnam
2.7 Vietnam’s Logistics and Transport Infrastructure
3. Research methodology
3.1 Data collection methodology
3.2 Data Analysis
4. Key Findings
4.1 Sourcing locally
4.1.1 Challenge of finding local supplier
4.1.2 Qualifying Local Suppliers
4.1.3 Transportation Challenges
4.1.4 Recommendations to reduce the challenges of sourcing locally
4.2 Import based Franchise Systems
4.2.1 Long and Uncertain Supply Chain
4.2.2 High Import Duties
4.2.3 Recommendations to improve the supply chain for import based concepts
4.3 Finding suitable Master Franchisees
4.3.1 Recommendations to Find Suitable Franchisees
4.4 Finding suitable retail outlets
4.4.1 Recommendations to reduce Retail Space Challenges
5. Key Implications
6. Conclusion
7. Reference list
Research Objectives & Topics
This research aims to identify and analyze the critical supply chain challenges faced by international fast food franchise companies when operating in the Vietnamese market. The study seeks to provide actionable recommendations for existing and potential franchisors to improve their supply chain management and business operations in Vietnam.
- Supply chain management in the catering industry
- Local sourcing challenges in Vietnam
- Logistical and infrastructure constraints
- Regulatory and import procedure hurdles
- Market entry strategy for international fast food franchises
Excerpt from the Book
4.1.1 Challenge of finding local supplier
Finding local suppliers that are able to supply specific products conveniently and efficiently with consistent and acceptable quality is one of the biggest supply chain related challenges fast food companies face when operating in Vietnam.
Most interviewees identified sourcing locally as the biggest challenge and some mentioned that food suppliers should not only be established enough to supply the entire franchise network but also being able to fulfil the necessary hygiene and operational standards and should possess the needed equipment and knowhow to supply the desired food items.
Fore examples Tony Cricenti (2012), CEO of VBF (master franchisee of Burger King), mentioned that there is just one suitable supplier in Vietnam that produces Hamburger buns. VBF only sources the buns and ingredients of minor importance like lettuce, tomato and onion locally.
Summary of Chapters
1. Introduction: Presents the background of Vietnam as an emerging market for fast food franchises and defines the research scope regarding supply chain challenges.
2. Orientation: Provides foundational knowledge on franchising systems, supply chain management in the food service sector, and specific characteristics of the Vietnamese market.
3. Research methodology: Details the qualitative approach taken, including secondary data analysis and primary data gathered through semi-structured interviews with industry professionals.
4. Key Findings: Analyzes major obstacles like sourcing locally, import dependencies, high duties, and real estate costs, while offering strategic recommendations for each.
5. Key Implications: Synthesizes the critical supply chain issues into a summarized framework of recommendations for stakeholders.
6. Conclusion: Summarizes that while Vietnam holds great potential, addressing infrastructure, supply chain efficiency, and sub-franchising constraints is essential for long-term success.
Keywords
Vietnam, Supply Chain Management, Fast Food, Franchising, Master Franchisee, Local Sourcing, Import Duties, Logistics, Quick Service Restaurants, Business Strategy, Infrastructure, Market Entry, Food Quality, Retail Outlets, Foreign Direct Investment
Frequently Asked Questions
What is the core focus of this research?
The research primarily investigates the critical supply chain issues that international fast food franchise companies encounter when expanding into and operating within the Vietnamese market.
What are the central themes discussed in the work?
The study centers on the challenges of local sourcing, the complexity of import-based supply chains, the constraints of local infrastructure, and the difficulties in finding suitable partners and retail locations.
What is the primary objective of this project?
The objective is to illuminate supply chain and franchising challenges in Vietnam, helping both existing and potential franchisors improve their management efficiency and market understanding.
Which scientific methodology was applied?
The author employed a qualitative research approach, utilizing secondary data from industry reports and primary data collected through face-to-face, semi-structured interviews with local experts.
What topics are covered in the main section of the document?
The main sections cover orientation on franchising and supply chains, research methodology, detailed findings on local vs. import sourcing, and specific recommendations for operational improvements.
Which keywords define this work?
Key terms include Vietnam, Supply Chain Management, Fast Food Franchising, local sourcing, import duties, logistics, and retail challenges.
Why are international fast food chains struggling to expand outside of Hanoi and HCMC?
The research highlights weak domestic infrastructure, difficult transportation, and the lack of reliable local supply chains as major factors hindering geographical expansion beyond major urban centers.
How do high import duties impact the business model of these franchises?
High import duties significantly increase the cost of goods sold, making franchise products much more expensive than local dining options and putting financial pressure on master franchisees.
What is the suggested role of regional distribution centers?
The author suggests that establishing regional processing or distribution centers in Southeast Asia could create a more "leagile" supply chain, reducing lead times and import tax burdens for the network.
- Quote paper
- Sascha Spiegel (Author), 2012, Supply Chain Issues in Vietnam. Critical issues for international Fast Food Companies, Munich, GRIN Verlag, https://www.hausarbeiten.de/document/335045
