Executive Summary

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.

Alternative Courses of Action & Analysis

ACA 1: The Utilization of Swot Analysis in Identifying the Strength, Weaknesses,

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, in the shape of a matrix. It aids in the
strategic study of Mr Nam's Dilemma in Vietnam's Private Sector Development.

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. 

ACA 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.
Advantages:
A. The political, environmental, social, technological, environmental and legal (regulatory)
factors are assessed as to how these affect the organisation under question.
This encourages the development of external and strategic thinking of a business such as
in financing activities.  This would help the organization look for complementary funding
providers that would help capitalize the business expansion.
B. The business can ethically follow the laws regarding taxations 
Legal (regulatory) factors are being evaluated hence, prevent the business from stepping
again into fraudulent activities.
C. Increases awareness in case of new developments.
It raises awareness about potential threats in an external operating environment in an
organization. PESTEL analysis allows Mr. Nam to thoroughly examine the changes to
develop a plan which can increase profits especially when the business is expecting
expansion.
Disadvantages:
A. The results obtained from this model may not be extensively useful or complete. 
Internal issues affecting organizations must still be considered while assessing the
external environment and improving the operational competence of the business. In
addition, the actions of competitors and the industry trends in which a firm operates must
be taken into account.
B. Costly and time-consuming
The data gathering and analysis process is subject to regular data accumulation. In Pestel
analysis, the procedure of data collecting, information gathering, and evaluation of the
findings is both costly and time-taking.
C. The risk of mishandling information
The business is prone to lose sight of the important points when overburdened. Instead of
focusing on the data that matters most, the organization may struggle on with lesser
information.

ACA 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.
Advantages:
A. Simple and understandable
It is not complex and doesn’t need many calculations, it gives us four alternatives to
choose from which we think may be best to implement.
B. Helps analyze the risk involves 
Helps analyze the risk involved in those four strategies. 
C. All possible alternatives are observe
Helps observe all possible alternatives that might be encountered so as to make a sound
judgement.
Disadvantages:
A. Competitors are ignored
 The analysis only focuses on the company’s product and market but has failed to take
into consideration the competitors we’ll encounter in implementing the strategy in real
life.
B. There would be a lack cost benefit analysis 
The strategy is wilful in choosing what best of the four alternatives to choose from
without taking into consideration the cost of it. In the end it might not be cost-benefit at
all.
C. Difficult to predict
The alternatives presented seem simple but the implementation of it would be anything
but and it is hard to predict what changes might come, so it has a lot of risks.
ACA 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.
Advantages:
A. Mr. Nam can provide “land use right” as a collateral for a bank loan.
Mr. Nam had paid his factory’s land use levies, therefore, he can use these rights as a
collateral for a bank loan.
B. Land use rights are free of defects
The right is marketable, so the asset can be transferred or sold legally. 
C. Typically  has lower interest rates
The plus side to applying for a secured loan is that the funding providers or banks
typically charge a lower interest rate. This is because collateralized loans are less risky
than unsecured loans. As a result, banks are more inclined to charge a lower annual
percentage rate on collateral loans than they are on unsecured ones.
Disadvantages:
A. There are instances that the law doesn’t require a bank to give the borrower a mortgage
or to accept the LUR as collateral
If this happens, the bank will not consider the market of the LUR as collateral.
B. The bank only offers Mr. Nam 10% of the land’s market value, much lesser compared to
the money needed for the expansion of his business’ production.
 There is still a risk that Mr. Nam cannot repay the loan. If Mr. Nam is permitted to
borrow a huge amount of money and doesn't fully meet his obligations, the bank would
have difficulty in collecting the money.

C. The bank is strict towards collateral loans

The bank sees the risks of Mr. Nam’s target. If he defaults, only the remaining item on
the lease will be owned by the bank. And after obtaining all the proper licenses and LUR
in their name, the bank will shoulder the burden of the new processes and activities that
would still result in the same low worth or carrying amount of the collateral.

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. 

Recommendations and Action Plan

Recommendation: 
 After the adaption of the strategic framework which is the 3 Alternative of Course of Action:
rd

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.