An international market assessment

An international market assessment of potential countries identified Vietnam as an emerging market for Papa John’s Pizza (please refer to market audit in the appendix for full detail of market indicators)
Political: Unfortunately Vietnam's ruling Communist Party, who give power and benefit to Government members, are nepotistic (The Economist, 2013). This creates an un-transparent environment to do business; hence Papa John’s Company should establish a good relationship with Government members to get the right to open business in Vietnam. Papa John’s can easily offer franchises to any party who has a relationship with the Government.
Economy: In the analysis of CEL - consulting, supply chain and operation in Southeast Asia, with rising income levels, Vietnamese people are spending more money on food and drinks. In 2013, the country’s annual gross income is 117,958.40 million USD in which 98,546.60 million USD is considered to be disposable income.According to Campaign Asia Pacific, a higher disposable income, coupled with a consuming class that is spending more on branded food, will benefit the fast- food giant.
Social: Firstly, fast-food restaurants in Vietnam are positioned as a place for the consumer to appear stylish and relaxed in an air-conditioned setting or for family bonding activity. The localization of menus at affordable prices is also aiding penetration. Papa John’s Pizza is suitable for the Vietnamese market because it meets market needs at an affordable price, is a convenient place for people to eat and will be fast to accommodate.
Culture: Vietnam, like many other Asian countries, has a strong culture of eating out and consuming food with family and friends. Most business relationships also have a strong component of dining out and almost all business negotiations and meetings would involve hospitality around a meal. Indeed, an American branded restaurant like Papa John’s Pizza would become a familiar place for family, friends and businesses to dine out everyday.
Market trend:Another factor that makes Vietnam an attractive market for Papa John’s Pizza to enter into is the large amount of Vietnamese returning home from Western or American countries. Vietnamese returning home after extended stays in Canada, the USA and Australia have developed more western style eating habits and are keen to dine out in western style restaurants(Balmer, 2009).This group may already be aware of the brand ‘Papa John’s Pizza’, which creates a major demand for the product.
Population:It has been estimated by Vietnam News that the population of Vietnam hit 90 million people in November 2013, with 70% of this population being younger than 35 years old. Specifically, ages of 0-14 years and ages of 15-24 years account for 24.6% of the population and 18.4% of the population respectively. In fact, the younger generation is main market segment which fast-food industry tailors themselves to. The youth tend to be aware and inspired by modern lifestyles which help increase the popularity and internationality of branded fast-food chains. In relation to Papa John’s Pizza, these products have the potential to be consumed by nearly 70% of Vietnam’s 90 million person population. The market size is extremely big and could yield huge profits to the company.
Technology:Technological factors include the rate change in technology, Research and Development activity, automation, etc., and are not directly related to Papa John’s Pizza’s decision as to whether they should enter into the Vietnam market.
Environment:Environmental factors include the country’s climate, weather change, nature affection, etc. which, like technological elements, do not have a hugely tangible impact on Papa John’s Pizza.
Market entry mode
Even though Vietnam has a relatively weak infrastructure and a growing level of middle class income only, it is considered as one of the fastest growing countries in the world (World Bank, 2010). In addition, Papa John’s Pizza has previous and successful experience in entering the Pacific Asian fast food market with countries of a similar economic status, such the Philippines and Thailand.
It is more appropriate for Papa John’s Pizza to establish a franchise relationship when entering the Vietnam market. Since the company has been successful in franchising the brand in neighboring South Pacific Asian, where the food tastes are similar to Vietnam. Franchising will also allow the company to expand the business whilst saving in initial capital outlay (Olutu & Awoseila, 2011). In addition, trained and motivated management are included in the package of franchising; hence the original company does not have to spend much financial resource but are still able to maintain a certain level of control in terms of product, service quality and branding image.