.

About Global Cost Forces, the cheap cost of unskilled labor used to be a major
deciding factor in factory placement , it includes not only cheaper unskilled and
skilled labor costs, but also design costs and additional transportation and logistics
costs, that drive decisions on global location. . A supplier and manufacturer must be
integrated to deliver products effectively, this can be accomplished more efficiently if
they are located close together.

Reduce or share costs through high quality, lower total cost global production sites. In
the past, the low cost of unskilled labor was a decisive factor in determining factory
location. Recently, in many cases, the Cost of inexpensive and unskilled labor are
offset by the increase in other costs associated with operating facilities in remote
location

the capital cost of building a new facility often dominate labor cost so many
goverments are willing to provide tax breaks or cost-sharing arrangements to lower
the cost of the new facility in remote area. In some cases, cheaper skilled labor is
attracting more and more oversea companies.

. => For example, Samsung can reduce production costs and increase profits when
manufacturing in Vietnam, because Vietnam has a younger and cheaper
skilled workforce.

About political and economic forces:

- First, about Exchange rate fluctuation, it may be good or bad for multinational
companies when operating globally.

If your company sells a product or service in a foreign country, a change in the exchange
rate will have a direct impact on your bottom line. Since your customers will be
paying in their local currency, if the exchange rate moves unfavourably/ un phấy vơ rờ
bờ ly/ , you might receive less money for your product or service than expected

For instance right now about 24000 VND exchange for one US dollar. The trade between
both countries will be on the basis of that exchange rate. If by tomorrow the rate
changes to 26000 per dollar, the balance changes even more in favour of the US
economy and the VietNam economy suffers more.

. → Becuz for example, when the value of the US dollar decreased, Uniliver, which is
an Vietnamese multinational company, quickly moved its production to the American
plant, and by doing that, they could gain a cost advantage over its competitors.

- Second, about Regional trade agreements: treaties among two or more governments that
agree to offer more favorable treatment to trade between themselves than they do
goods imported from outside the region.
 . For example, as u can see in the picture, there are some trade agreements of Viet
Nam when participating in international integration, such as

ASEAN: ASEAN is an international organisation that has 10 member countries

in Southeast Asia

APEC: The Asia-Pacific Economic Cooperation with 21 member economies in

the Pacific Rim that promotes free trade throughout the Asia-Pacific region

VJEPA: Vietnam - Japan Free Trade Agreement

VKFTA: VIETNAM - KOREA FREE TRADE AGREEMENT (VKFTA)

and these have the same purpose :

reduce barriers to trade and increase the movement of goods, services,
people and capital within member states.
-generate of more job opportunities, lower unemployment rates, and market
expansions.

The next factors is tariffs system

- Tariffs:. The aim of it is to raise the cost of imported goods to make them less
attractive than domestic goods, Protect in particular infant industries – small firms
where there are significant economies of scale, Raise revenue for the government.

→ For example: in 2019, Donald Trump was imposing heavy tariffs on China, which
was a pressure to force China to narrow the trade between the 2 countries.

Similar various trade protection mechanisms can affect the international supply chain
decisions:

Trade protection mechanisms : defined as a nation, or sometimes a group of nations

working in conjunction as a trade block, creating trade barriers with the specific goal
of protecting its economy from the possible risk of international trading

Protecting jobs and industries

 National security
 Protecting consumers from unsafe imported products

→ For example, the Vietnamese government imposes quotas on imported

tobacco and alcohol beverages, which would make the price of these goods
higher, and encourage Vietnamese consumers to buy more products made in
Vietnam
And more subtle regulation include Voluntary export restrictions affect supply
chain

And about or VER: It is a self-imposed restriction on the quantity of a good that an

exporting country is allowed to export. It is considered as non-tariff barriers, which
are restrictive trade barriers—such as quotas and embargoes.

The most common examples of it is: In the 1980s, because of American pressure,
Japan imposed a VER on its auto exports to the US. And the advantage of the VER is
it provided some protection to the American auto industry, from Japan automakers.

Even Local content requirements: it is generally used by developing countries to

shift their manufacturing from products, with components made in many countries/ to
products.And if any foreign company wants to operate or manufacture in their
country, it must verify that the majority of the product’s value, is manufactured in
their country

For example, about Japanese automakers in the EU: they have reached 80% European
local content, for their Japanese-brand cars, which helped them not only have a right
to operate in Europe but also create more jobs for European

- And the last thing is Government procurement policies can affect the ability of
the internation companies to be successful in various market, it is a kind of non-
tariff trade barriers for purchasing goods and services by governments. It means that
the national government may prefer domestic suppliers over foreign ones
when imported goods are cheaper, or of higher quality.

For example, US government policies gave American companies, up to a

50% advantage, on US defense contracts.. means that foreign companies only have a
50% advantage in bidding directly on such contracts.

Next, Risk management will be presented by ms VY