Strategic Investment Analysis: Vietnam vs. Canada for Global Business

This report provides a comprehensive analysis of potential strategic investment locations for an Australian manufacturing company, comparing Vietnam and Canada. It examines key economic indicators such as Gross Domestic Product (GDP), Foreign Direct Investment (FDI), and Human Capital Index to evaluate the market attractiveness of each country. The analysis highlights Vietnam's strong GDP growth and established manufacturing market, contrasting it with Canada's developed economy, free market principles, and robust banking sector. The report delves into the advantages and disadvantages of each location, considering factors like purchasing power, business ethics, political stability, and government policies. It also considers cultural aspects and Hofstede's cultural dimensions, which influence business operations. Ultimately, the report recommends the most suitable investment location for the manufacturing company based on a thorough evaluation of market scenarios and potential risks, with a focus on making the most informed strategic investment decision.

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Recommendations
The case study provided is from the viewpoint of a manufacturing industry based in
Australia. They are planning to invest in the market place of either Vietnam or Canada. From the
case study provided, it can be said that both the regions possess advantages as well as
disadvantages for strategic investment that the Australian manufacturing organization is planning
to do. While Vietnam possess a strong Gross Domestic Product growth rate, an established
manufacturing market, high Human Capital Index score, Canada is regarded as a developed
country with a free market, high Gross Domestic Product per capita along with a strong banking
sector. But at the same time, the present Foreign Direct Investment market is small in the region
of Canada, whereas at this present time the Gross Domestic Product per capita is low in Vietnam
apart from facing fluctuations in inflation rates in the market place. But as only one country can
be selected for strategic investment by this manufacturing industry from Australia, it will be
good to analyse the entire market scenario for both these nations, so that the better can be
recommended at the end of this discussion.
Vietnam is regarded as an emerging economy and has passed through a significant
growth in the last decade. It can be stated in this context that Gross Domestic Product plays an
integral role in explaining the amount of wealth that is possessed by the population of a
particular nation along with the capacity of purchasing power towards different products and
services. During the time of this discussion, it can be said that the region of Vietnam possess
lower Gross Domestic Product rate than that of Canada or Australia, from where the
manufacturing organization belongs (worldbank.org 2020). This will lower the ability of the
people to invest in purchasing of the products that will be manufactured by the manufacturing
organization identified in the case study. The same can be done in the market of Canada, as the

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rate of Gross Domestic Product is high there, and the people possess more purchasing capacity
than that of Vietnam. It can be stated in this context that the capability to purchase different
products by the population of a particular country is beneficial for an international organization
like that of the manufacturing company who are looking to expand their business operations and
market reach in either Canada or Vietnam.
The management of this company will be able to manufacture and sell the products in
either of the market place without enduring more costs to send products back to Australia to sell.
Though it can be stated from the case study that there is a strong manufacturing market present
in Vietnam along with an increased rate of Foreign Direct Investment. An increase of 454% in
exports and an increase of 472% for imports has occurred in the region of Vietnam in between
2007 and 2016 (Anh, Thai & Trinh 2019). It can also be stated from different researches that an
established market involving Foreign Direct Investment can create competition between the
business houses operating in a particular region along with reducing the prices of the products.
This allows the population to have more purchasing power apart from providing opportunities
for different companies to operate in the climate of Vietnam, where international trade is
accepted. Another improvement can be in the economy of Vietnam is the Human Capital Index,
where Vietnam ranked 48 out of 157 nations across the world. The Human Capital Index helps to
show the level of education and productiveness possessed by the Vietnamese population (Kalra
and Dzung 2018).
But as discussed, the rate of Gross Domestic Product is low, along with inflation in the
prices of the products. Fluctuations within an economy can hamper the overall productivity of an
organization and it will not be a suitable market scenario when it comes to make strategic
investments by an organization who are planning to launch their products in another nation apart

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from Australia. It also reflects the government policies and presence of external factors that can
hamper the operations of this Australian manufacturing company. There are evidences where it
has been seen that there are continuous rise and fall in the prices of the commodities and as a
result there are fluctuations in the trading market place. Lack of business ethics, lack of
education provided to the children, non-prioritizing employee training and unreliable statistics
are the barriers that are faced by the society and culture of this nation to make any kind of
strategic investments. Changes in leadership approaches and style along with hierarchical orders
also restricts business operations in this country. Issues related with ownership of land and rules
and regulations related to using and managing the land which is to be used by the manufacturing
company, and using the land can be granted only for 50 years (Shira 2019). The Government
possess all the right to take back the land if terms and conditions are not followed properly, and
as a foreign investor, the management of this manufacturing organization will not take any risks
to operate their business in these uncertainties.
To avoid all these factors, Canada will be a better option to make strategic investments,
though there are opportunities in the market of Vietnam. Risk taking and overcoming these risks
are better done in the business atmosphere in the region of Canada, which will help this
manufacturing organization to manufacture and sale their products more efficiently (Kranc
2013). Individualistic attitude will help in promoting the hard working employees, and it can be
said that the individualism score is high in this nation. Canada is also a highly developed
economy, which is also market-oriented in nature (Investcanada.ca 2020). Owners of the
organizations are free to produce and sell different kinds of products, which will be a healthy
opportunity for the management of the manufacturing organization from Australia. The
Government of Canada also helps in economic growth of the nation, as well as creating

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opportunities for Foreign Direct Investments (Geoffrey, Belsher and Christopher Kozub 2012).
All these factors are enough for the management of this manufacturing company to invest in this
region, where the overall rate of tax is also low for fresh business developments. Political
stability, low corruption rate, similar Gross Domestic Product rate with that of Australia and
healthy and strong banking sector similar to Australia and similar economic standards will help
the manufacturing organization from Australia to make their strategic investment in the Canadian
market (budget.gc.ca 2020).

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References
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