American Rice Inc. in Vietnam Essay

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Pages: 6

American Rice Inc. in Vietnam
American Rice’s strategy is to expand internationally by using one of the three main rice manufacturers in Vietnam. The horizontal integration with Vianafood allowed ARI to expand internationally and enter new markets. This expansion within the same industry was necessary for ARI in order to achieve an economy of scale. This venture brings ARI a larger customer base, bigger facilities, the first American rice maker in Vietnam, a larger work force, lower cost production, new relationships with suppliers and customers, and tax benefits as a result of the joint venture. ARI’s main input for the joint venture is to set up a management team that will run the operation and to consult the plant operation, plant
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trade policy – first mover advantage * Low cost production * Use of facilities and men power * Global expansion
Motivation for this alliance by Vinafood 2: * Gain knowledge in the marketing and manufacturing * More efficiency manufacturing * Newer machinery and equipment * More capital
Exhibit B | ARI | Vinafood 2 | Competition | In the U.S. milled rice mostly brand name 4 main competitors no one controlled more than 25% of the market – relatively stable with moderate competition level | Two other large manufactures. | Barriers to entry | Large capital | Large capital | Key Success factors | High quality riceBrand name | Low quality rice | Customers | Local and international | Local and international |

Exhibit C
Alliance Vs Acquire in an international expansion analysis
When the potential for knowledge is not great – ARI not gaining much knowledge but Vinafood does
To access a restricted market – ARI benefits from accessing the Vietnamese restricted market. Both gain from entering other markets
Reduce liability of foreignness- both benefit from the