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Case Study
Case Study
Mr. Nam’s dilemma is ascertaining which is better: whether he would allow the bank to
audit his company records or if not expand his firm. The main problem would be Mr. Nam
engaged in practices that are against the legal and regulatory policies of Vietnam. This gave him
the dilemma of choosing the right source of financing. The group presented four alternative
courses of action: 1) Utilization of SWOT Analysis in identifying the strength, weakness,
opportunity and threat. It is a strategic management tool that outlines an organization's internal
strengths and weaknesses, as well as external opportunities and threats. It aids in the strategic
study of Mr. Nam's Dilemma in Vietnam's Private Sector Development. 2) Construct a PESTEL
Analysis. The PESTEL analysis particularly looks at the macro environmental factors that affect
the business industry. This suggests Mr. Nam to consider the organization's external business
environment and find strategies to be incorporated as problems may arise along business
expansion. 3) Ansoff Matrix. Helps decide whether an organization should pursue future
expansion in new markets and products or should it focus on existing markets and products. 4)
Applying for a Bank Loan with a Collateral. After Mr. Nam unsuccessfully convinced the
foreign investor, Mr. Frank, he then proceeded to apply for a bank loan handing out the rights of
his land use as collateral.
The group recommended ACA #3: Ansoff Matrix as the best solution to Mr. Nam’s
dilemma. The Ansoff Matrix is a common tool that is a strategic framework that is used by
organizations to develop and grow even further. After the adaption of the recommended ACA, it
is suggested that Mr. Nam should apply for a Bank Loan with his land as Collateral, which is the
4th Alternative Course of Action. Mr. Nam can utilize his "land use right" to secure a bank loan.
The action plan states that in applying the Ansoff Matrix, the business must organize a team of
business analysts to evaluate and assess the performance of the business, determine the risk
areas, to select the best course of action to take, and to determine a reasonable decision on
whether the business should accept the opportunity to expand or remain the same.
Introduction
The case study “Vietnam’s Private Sector Development: Mr. Nam’s Dilemma” is about
Mr. Luong Ahn Nam’s problem in determining whether allowing the bank to audit his company
records or not expanding is better for his firm.
Vietnam established the Enterprise Law in 2000 to encourage private sector growth and
aid the country’s transition from a centrally planned to a market economy. The Enterprise Law
shifted the paradigm for a private company in Vietnam by making business registration a legal
right rather than a prerogative.
The European distributor was impressed by Mr. Nam’s business and reputation for
honesty and timeliness. This opened an opportunity for Mr. Nam to expand his business because
when he calculated the revenue that he would get from the orders that were placed by the
distributors for the next year, he would be able to gain high revenue. However, to pay for this big
order he needs more sources of capital.
Mr. Nam, a prominent Vietnamese furniture manufacturer, is looking for ways to support
the expansion of his company, which was launched under the Enterprise Law. Mr. Nam had
previously been able to fund the business development through retained earnings and informal
borrowing, but the continuing expansion needed the identification of the “arm’s length” funding.
In his search for other sources of capital, there were two problems that Mr. Nam
encountered, and this caused his dilemma in making a decision. The first is the banking sector,
which was still heavily influenced by the government, lacked significant incentives to lend to the
private sector. The second ones are the private banks and other sources of capital because these
require for his business to be submitted to an independent audit. The problem in the second is
that it will surely expose a lot of the business practices that were technically illegal. It was
mentioned in the case that the success of Mr. Nam’s business included “Monkey Tricks.”
Before making any judgments, Mr. Nam decided to look into other possibilities. Foreign
investments, requesting for a bank loan with collateral, and borrowing money from a
moneylender were all choices he might examine. Even with all of these options, Mr. Nam is back
at square one—the question of whether he should enable the bank to examine his records or just
choose not to expand.
Statement of the Problem
Main Problem: Mr. Nam engaged in practices that are against the legal and regulatory policies of
Vietnam. This gave him the dilemma of choosing the right source of financing.
Advantages:
A. To deal with the Firm's Fundamental Problem
To cope with the fundamental issue of how techniques will be produced and developed.
Strengths, for example, will be utilized to one's advantage while addressing problems.
B. The problem is Highly Observed
It provides a prioritized list of problems to be addressed, as well as aids in the
establishment of corporate goals and ways for achieving them.
C. To Distinguish the Internal Strategic Factor
The use of internal strengths and weaknesses to benefit on opportunities and avoid
possible challenges, such as risks in the company environment and market. It engages
with internal factors that the corporation may utilize as skills and to fix weaknesses and
protect the firm from rivalry.
Disadvantages:
A. No Weighting Factors
SWOT analysis yields four distinct lists of strengths, weaknesses, opportunities, and
threats. However, the tool does not provide a mechanism for ranking the importance of
one factor compared to another within any list. As a result, determining the real influence
of any one component on the target is complicated.
B. Creating a One-Dimensional Model which leads to Uncertainty
SWOT analysis develops a one-dimensional model in which each problem aspect is
classified as a strength, weakness, opportunity, or threat. As a consequence, each
character seems to have only one effect on the topic under consideration. One
component, on the other hand, might be both a strength and a weakness.
C. SWOT Analysis is a Subjective Analysis
To have a substantial influence on company performance, business choices must be
founded on credible, relevant, and comparable data. However, SWOT data gathering and
analysis is a subjective process that reflects the bias of the persons who collect the data
and engage in the brainstorming session.
Conclusion
The case study "Vietnam's Private Sector Development: Mr. Nam's Dilemma" is about Mr. Luong
Anh Nam's problem in deciding whether allowing the bank to audit his company records or not growing
is better for his company. Mr. Nam's major issue is that he was engaging in acts that were against
Vietnam's legal and regulatory policies. As a result, he was faced with the challenge of determining the
best source of funding. We recommended four (4) Alternative Courses of Action but we chose ACA 3:
Ansoff Matrix as the best solution to his problem.
The Ansoff Matrix is a common tool that is a strategic framework that is used by organizations to
develop and grow even further. It is designed to help figure out which of the four strategic directions is
best suitable for a business to grow, which are Market Development, Market Penetration, Product
Development, and Diversification. It also utilizes the other alternative course of action further such as
SWOT and PESTEL analysis in creating a logical decision that will be useful for the business.
Ansoff Matrix will help him decide whether he should pursue future expansion in new markets
and products or should it focus on existing markets and products. Ansoff Matrix is a great starting point
when contemplating strategic development. Doing the Ansoff Matrix will determine what course of
action should be taken next based on the outcome.
Recommendation:
After the adaption of the strategic framework which is the 3 Alternative of Course of Action:
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Ansoff Matrix. It is suggested that Mr. Nam should apply for a Bank Loan with his land as Collateral,
which is the 4 Alternative Course of Action. Mr. Nam can utilize his "land use right" to secure a bank
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loan. Mr. Nam can use these rights as collateral for a bank loan because he has paid his factory's land use
charges. Because the right is marketable, it can be legally transferred or sold. Applying for a secured loan
has the advantage of a reduced interest rate from the financing providers or banks.
Action Plan:
In the 3 Alternative Course of Action, it proposes that Mr. Nam’s furniture production business should
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adapt the method of Ansoff Matrix. To establish such a method, the business must organize a team of
business analysts to evaluate and assess the performance of the business, determine the risk areas, to
select the best course of action to take, and to determine a reasonable decision on whether the business
should accept the opportunity to expand or remain the same. It is a thorough research and evaluation
process to determine and assure the safest alternative action to take while keeping in mind the risk and
opportunity that it encounters.