International market assessment,

selection, and market entry formulation

report

LECTURER
Ms. Phuong Lien Nguyen

PINK GROUP _ TUT 1

Hoàng Phương Anh - 1904050002
Nguyễn Thị Thu Hằng - 1904050011
Nguyễn Thảo Linh - 1904050021
Bùi Thu Linh - 1904050016
Nguyễn Thu Phương - 1904050036
 EXECUTIVE SUMMARY

Overview of the Report

The purpose of this report is to determine the entry strategy for AA Corporation, an interior fit-out
and furniture manufacturing organization, to enter the foreign wooden furniture market by
analyzing the opportunities and threats of Indonesia and the Czech Republic.

Key Findings
In our findings, it can be seen clearly that the wooden furniture market in the Czech Republic is a
more potential market to enter than in Indonesia. Although Indonesia has a high level of demand
for household furniture and high-end furniture for the hospitality sector, and a similar culture to
Vietnam, it has a number of disadvantages for a foreign company like AA Corporation. Indonesia
is a large market with strong and long-standing companies such as Olympic and IKEA. Moreover,
there are many barriers from the government’s economic policies for foreign companies as well as
struggles in the logistics system. Furthermore, AA Corporation’s products and target customers
are not suitable for the majority of Indonesians because of their purchasing behavior. Meanwhile,
the Czech Republic has a strong purchasing power with the increase in demand based on social,
cultural factors and economic recovery. It is also a large importer of wooden furniture with no
trade barriers for import and export. In addition, the Czech Republic and Vietnam have a strong
relationship with various trade agreements. Not only does the Czech Republic market have few
strong competitors, but it has a favorable environment for developing distribution channels as well.
However, there are some challenges in the Czech Republic that AA Corporation should have taken
into consideration including controlling product quality to overcome EU strict standards,
managing the supply chain of imported timber, competing with regional rivals, and choosing kinds
of furniture to export.

Recommendations and Key Outcomes

To raise the market share to 0.8-1% in the Czech Republic in the first 5 years, we aim to apply
short-term with a large-scale strategy to raise awareness and attract middle class or above
customers. Based on the findings, we recommend that AA Corporation should enter the Czech
Republic market with a direct exporting strategy to customers who are retailers or wholesalers and
restaurant and hotel systems. We position AA Corporation in the Czech market as a mid-to-high-
end furniture brand with a competitive pricing strategy. By manufacturing in Vietnam and then
exporting to the Czech, we can control the whole process and product quality as well as reduce
labor costs. Besides, we can take advantage of FTA as the Czech Republic is a part of the EU.
Therefore, with this strategy, AA Corporation will have time to research and adapt to a new foreign
market for further independent investment strategy.
 Table of Contents
EXECUTIVE SUMMARY .......................................................................................................................0
I. Introduction ........................................................................................................................................2
II. Company and product background ............................................................................................2
1. Company Overview: .................................................................................................................................. 2
2. Company Performance ............................................................................................................................. 3
3. Product line: ................................................................................................................................................ 4
4. International Marketing Strategy .......................................................................................................... 5
III. Country and Product Market Attractiveness ............................................................................6
1. Indonesia....................................................................................................................................................... 6
1.1. Macro Environment Factors .................................................................................................................................................. 6
1.2. Micro Environment Factors ................................................................................................................................................... 9

2. The Czech Republic ................................................................................................................................ 12

2.1. Macro Environment Factors ................................................................................................................................................12
2.2. Micro Environment Factors .................................................................................................................................................14

IV. Justification of countries and selection .................................................................................. 18

1. Indonesia.................................................................................................................................................... 18
1.1. Indonesia's Opportunities......................................................................................................................................................18
1.2. Indonesia's Threats ...................................................................................................................................................................18

2. The Czech Republic ................................................................................................................................ 19

2.1. The Czech Republic’s Opportunities................................................................................................................................19
2.2. The Czech Republic’s Threats.............................................................................................................................................19

3. Country Selection .................................................................................................................................... 19

V. Marketing objectives .................................................................................................................. 20
VI. Entry Strategy.............................................................................................................................. 21
REFERENCES ....................................................................................................................................... 22
APPENDICES ........................................................................................................................................ 25

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 I. Introduction
Recently, Vietnam has witnessed significant development in the wood industry thanks to diverse
natural wood sources. Many Vietnamese companies have promoted exports to foreign markets,
especially in the wooden furniture market. This report aims to determine which country AA
Corporation, an interior fit-out and furniture manufacturing organization in Vietnam, should enter
and the entry strategy for it.
Our report includes 4 main parts. First is background information about AA Corporation. Next,
after investigating the microenvironment and macroenvironment of the wooden furniture market
in Indonesia and the Czech Republic, we will compare the opportunities and threats of both
countries to decide which one to enter. Then, we will provide marketing objectives before
discussing the entry strategy for that company.

II. Company and product background

1. Company Overview:
AA corporation is a Vietnamese multinational firm founded in 1993. AA Corporation has grown
rapidly over the previous 25 years, from a Vietnamese-owned and run enterprise to an international
corporation. (AA Corporation, 2020).

AA Corporation became ISO certified in 2008, Chain of Custody (COC) Certified under FSC™
in 2007, and began implementing SAP management system in their manufacturing and retail
division in 2006 (Yen Khe Design, 2019). Since then, they have expanded their operations to
execute projects all over the world, establishing 13 subsidiaries in Myanmar, Bhutan, Cambodia,
Japan, the United States, Thailand, and Singapore, offering some of the top-quality furniture goods
to hospitality projects globally. In 2015, AA Corporation had a total workforce of more than 2000
employees.

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AA Corporation's objective is to be the world's leading interior fit-out firm as well as the leading
company in Vietnam's wood and wood processing industry. They promise to be the first to develop
a global furniture hub in Vietnam.

2. Company Performance
In terms of strengths and capabilities, AA Corporation is the leading interior fit-out and furniture
manufacturing organization with a well-established reputation for providing cutting-edge interior
service to the hospitality market on a constant basis. They are pleased to provide the best quality
services for the most prestigious hospitality projects in Vietnam and around the world, thanks to
their skilled interior staff and significant expertise. The corporation today operates six factories
that manufacture architectural millworks, hospitality bespoke furniture and cabinets, and retail
furniture collections (Yen Khe Design, 2019). According to the Fiin Group Report, AA
Corporation has recognized a charter capital of US$8.46 million and revenue generated in 2015 of
US$58.09 million. The company recorded a consistent increase in revenue from 2015 to 2017,
with a growth of 5.41 percent in 2016 and 7.26 percent in 2017. Following a distinct pattern, the
Company's profit after tax reached a new high of VND130.79 billion in 2016, owing to a record
abnormal financing income.

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 3. Product line:
As for the target market, AA Corporation’s domestic market is nationwide while the foreign
market is expanding rapidly. Business activities in the overseas markets accounted for around 30%
of the Company's sales, which Bhutan, Cambodia, and Myanmar are among the Company's
primary destination exporting markets.
The Company operates in two business segments including providing interior fit-out services and
manufacturing and retailing indoor furniture.
The Company targets 05 main client segments in the interior fit-out business sector: hotels and
resorts, restaurants, cafés, and clubs, shops and boutiques, office and commercial projects, and
residential projects, with hospitality fit-out projects accounting for roughly 40% of the total
number of projects in which the Company has been involved as of 2019 (Fiin Group Report, 2019).
Reputable hotel and resort brands such as Marriott, Hilton, Hyatt, and InterContinental are among
the company's key customers.

In terms of production, the Company now maintains a facility in Long An Province that features
one-stop manufacturing facilities totaling 500,000 square meters and specializes in the

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manufacture of indoor furniture and specialty items provided to the interior fit-out market (Gỗ
Việt, 2021).

In terms of commerce, the Company provides interior furnishings to both domestic and
international clients. In particular, in the domestic market, the Company provides products through
a distribution network that includes a sales center and showroom, representative offices, and
branches mostly located in Hanoi and Ho Chi Minh City.

4. International Marketing Strategy

With the signing of numerous new FTAs, 2015 was a landmark year for Vietnam's greater
integration into the global market. In 2015, Viet Nam completed negotiations for four free trade
agreements (FTAs), including those with the Eurasian Economic Union, the European Union,
South Korea, and the Trans-Pacific Partnership (Delegation of the European Union to Vietnam,
2019), which is likely to boost furniture exports. As previously stated, serving both domestic and
oversea markets, AA Corporation has 13 wholly-owned subsidiaries in 7 countries and also exports
to over 40 nations worldwide. AA Corporation has the benefits to expand further by having a vast
system of machinery and factories which is capable of satisfying the needs of the domestic and

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international markets, as well as abundant raw resources and experience and relationships in
foreign nations.

III. Country and Product Market Attractiveness

1. Indonesia
1.1. Macro Environment Factors
a. Political environment:
Indonesia is the world’s third-largest democracy, the largest economy in South-East Asia, and the
only member of ASEAN in the G20. (U.K. Government, 2021). The political stability index is
nearly average with the latest score being -0.5 in 2020 (World Bank, 2020). Even though there is
a stable situation in the president's chair as Joko Widodo has taken up the office for 2 periods from
2014 till now, the continuing and widespread corruption plus occasional political demonstrations
over the country has made Indonesia lag the regional average, just ranked 96th over 180 countries
in Corruption Perception Index (ITA, 2021).

Figure 1. Indonesia Political Stability Index (TheGlobalEconomy.com, 2020)

On the bright side, the crime rate in Indonesia has gradually reduced since 2011 and can be
concluded to have a moderate safe situation (the rate was 94/100,000 resident population in 2022)
according to Statista 2022.

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 Figure 2. Corruption rate in Indonesia from 2011 to 2020 (Statista, 2022)

b. Foreign relations/trade
Indonesia has joined various foreign trade blocs including the United Nations, East Asia Summit,
International Monetary Fund, ASEAN, APEC, G-20, WB, WTO. Indonesia's business climate is
ranked 73rd among 190 countries in “Ease of Doing Business” (Export Finance Australia, 2019).
Compared to the regional average, starting a firm or enforcing contracts remain somewhat more
challenging. This could be explained by several factors such as protectionist sentiment, persistent
corruption, inconsistent enforcement of laws,... (ITA, 2021).
Indonesia has potential growth for foreign businesses, despite existing challenges, and those that
are present in the market generally achieve good returns (U.K. Government, 2021)

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 Figure 3. Ease Of Doing Business in Indonesia (Export Finance Australia, 2019)

c. Social and cultural environment

Indonesia is a diversified archipelago nation with over 300 ethnic groups and is the fourth most
populated country on the planet (World Bank, 2021). Indonesia has the potential for future
economic growth due to a golden opportunity in the demographic bonus until 2045, which, if
suitably utilized, has the capacity to drive the Indonesian economy (Arieza, 2019).
In terms of consumer buying behavior, with rising disposable income levels, Indonesia's
developing middle class is becoming increasingly interested in products and services imported
from abroad (ITA, 2021). Indonesian people have had an affinity for wood products for a long
time and have an extensive local understanding of them. According to the Ministry of Industry and
Trade of the Republic of Indonesia (2015), the usage of wood dominates the material of wood
furniture in Indonesia by 67.02 percent, depending on the degree of need.

d. Economic environment
Indonesia's economic indicators are favorable, with stable and low inflation. It is also the tenth
biggest economy in purchasing power parity and has made significant progress in reducing
poverty, from 50% in 1999 to under 10% in 2019 before the COVID-19 epidemic hit (World Bank,
2021). Indonesia ranks the highest in Social Capital and Economic Quality, but the lowest in terms
of Living Conditions (Legatum Prosperity Index, 2019).
Although Indonesia is an open economy, its reliance on commodity exports and foreign portfolio
inflows (which account for nearly 40% of tradable Indonesian government bonds and 40% of stock
exchange trading value), makes it vulnerable to global economic developments, particularly US
economic policy and the declining Chinese demand (U.K. Government, 2021).

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 e. Technological
Indonesia has become Southeast Asia's leading spender on information technology (IT)
(Cekindo, 2022), giving a plethora of prospects for this field, particularly e-commerce and
fintech. Combining this with drivers such as urbanization, mobile usage, mass consumption and
tech-hungry in the young generation makes a positive impact on economic growth.
However, the challenge in the forest business is a lack of expansion policy for infrastructure,
which partly makes it impossible to utilize wood economically in some regions, thus forcing
Indonesia to import wood technology to a large extent (Von F. M., 2021).

1.2. Micro Environment Factors

a. Product Market Analysis
The rapid growth in urbanization and awareness-raising about eco-friendly furniture lead to an
increase in the revenue of the furniture market in Indonesia. The furniture market in Indonesia is
at the growth rate of the product life cycle with the expectation of rising by USD 3.29 billion in
the period of 2021-2026. However, the market value will decrease at a CAGR of 12.08% per year
(Technavio, 2022). In 2020, the import value of wooden furniture was 13% lower than in 2019
(FLEGT, 2020).
The most consuming product is living room and dining room furniture (Statista, 2021). The
materials used for wooden furniture come from both local and international sources which consist
of the traditional rattan and high-quality teak, mahogany, and redwood (CSIL, 2012).

9
 Figure 4. Revenue of furniture industry in Indonesia (Statista, 2021)

Indonesia's wooden furniture industry mostly uses domestically raw materials; however, imported
products also contribute to the market revenue. The largest supplier, China, shared an amount of
USD 108 million in the revenue of wooden furniture in 2020 (FLEGT, 2020).

Figure 5. Indonesia’s furniture import value (FLEGT, 2020)

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Though offline marketing channels like domestic showrooms are still the most popular in
Indonesia (Clements, Alwang & Achdiawan, 2019), customers are moving to online channels for
furniture consumption.

Figure 6. Online and offline sales channels for the furniture industry in Indonesia (Statista, 2021)

b. Competitive Analysis
The wooden furniture parking market in Indonesia is a market with many formidable players.
Leading those players is Ikea - the world's largest furniture retailer with 2 stores and 8 distribution
points in Jakarta (Lam X., 2019). According to Xuan Lam, leading the local market is Olympic
Group with 23 operations factories, and 23 stores with monthly sales of $100,000. The other two
competitors are Fabelio and Informa, respectively, with a chain of stores across cities in Indonesia.
These competitors are all selling well with products such as cabinets, shelves, wood-based paper,
and pulp.

c. Buyer Analysis
Indonesians tend to prefer distribution channels such as supermarkets and hypermarkets in central
cities, which account for 32.9% of the total sales (Marketline, 2017). Moreover, they are quite
price-sensitive, although 35% of the population are middle-class consumers who regularly spend
more than Rp 2 million per month on household appliances. (Farisa H. Y. & Megawatt S. & Bagus
S., 2019). For the Indonesian market, AA should focus on customers based on geographic
segmentation and demographic segmentation.

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 Figure 7. Buyer power of Indonesian customers (Marketline, 2017)

2. The Czech Republic

2.1. Macro Environment Factors
a. Political environment:
Czech Republic is a parliamentary democracy and among the most advanced CEE countries. The
recent government was established based on elections to the Chamber of Deputies of the Czech
Republic Parliament in October 2021 (European Commission, 2022). The political structure is
estimated to be consistent and predictable. (CzechInvest, 2022).

b. Foreign relations/trade:
The Czech Republic maintains an open economy, with few barriers to trade and investment. Being
a member of the EU, its tariffs, standards and procedures must conform to EU norms. (International
Trade Administration, 2021).
Regarding the wooden furniture industry, its imports in 10 months of 2021 were worth 530.28
million euros, (up 11.7% in volume, 31.1% in value over the same period in 2020). Meanwhile,
imports from Vietnam only accounted for 0.6% of the total imports (Goviet, 2022).
Concerning FTA and EVFTA customs tariffs, import duties of about 83% of tariff lines will be
eliminated as soon as the Agreement comes into effect, and those remaining (17%) will be
eliminated within a schedule of 3-5 years (WTO center, 2016). Furniture for bedroom, living room
and dining room… has a tariff rate of 0% (Office of Commercial Affairs, 2016).

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 Figure 8. Customs Tariffs in 2004 (Office of Commercial Affairs, 2016)

c. Social and cultural environment:

Czech’s population is 10.647.448 people. Like other European countries, Czech Republic is facing
an aging demographic population. In 2020, the pre-productive population part (0–14 years)
represented 16.1 %, the productive part (15–64 years) 63.8 %, and the post-productive (65 years
and more) 20.2 % of the total population (European Commission, 2022).
The population is linguistically homogeneous, the official language is Czech. National minorities
are not numerous. Religious faith is traditionally low, only some 20% of the population is religious
(European Commission, 2022).

d. Economic:
The Czech Republic is estimated to be among the most stable and prosperous markets in Central
Europe.
- GDP and GDP per capita (PPP): Its PPP stood at £30,600 (2020), among the highest in
CEE countries. Czech’s economy is slowly recovering after the covid pandemic with this
year’s growth predicted at about 3% GDP. (U.K Government, 2022).
- Unemployment rate: It has a low unemployment rate of 2.94% in 2020. Its overall trend is
decreasing (Statista, 2022).

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 Figure 9. Czech Republic Unemployment rate (Statista, 2022)

- Inflation: In the first half of 2022, its inflation rate is expected to culminate and start falling
in the second half of the year, returning to the 2% target towards the end of 2023 due to the
Bank’s recent monetary policy (Czech National Bank, 2022).
- Currency: Czech’s currency (koruna) is convertible and its stability has been maintained
since 1991. (BusinessINFO, n.d)

e. Technological:
Research and Development investment: Investments in innovation projects rose to 113.4 billion
(Czech Statistical Office, 2021). Expenditures on research and development (R&D) have grown
rapidly, though slowing down lately due to the Covid-19 impacts.
The digitalization environment: The country is one of top-30 world countries regarding the digital
environment’s quality, improving its ranking by four places compared to 2020 (Lucia L., 2021).

2.2. Micro Environment Factors

a. Product Market Analysis
In 2015, customers in the Czech Republic spent USD 648.13 on average. They were expected to
reduce the period of utilization of furniture because of the growth in living standards (Office of
Commercial Affairs, 2016).
The wooden furniture market in Czech is at the growth rate of the product life cycle with the
amount of USD 2.25 billion in revenue in 2022. This market is predicted to grow at a CAGR of
4.23% annually in the period 2022-2026 (Statista, 2021). Most purchasing furniture in the Czech
Republic is living room furniture which is followed by bedroom furniture. Materials used to

14
produce wooden furniture are pre-processed wood or wood products, especially agglomerated
wood products, plywood, and veneer (Filgas, 2009).

Figure 10. Revenue of furniture industry in the Czech Republic (Statista, 2021)

EU countries contribute the biggest value to import market share in the Czech Republic, followed
by China, a major supplier in Asia with mostly wooden indoor furniture, metal furniture, and
furniture parts of metal, which reached 12.4% in 2015 (Office of Commercial Affairs, 2016).

15
Figure 11. Import of Furniture for Homes and Offices to the Czech Republic ((Office of Commercial Affairs, 2016)

The Czech customers purchase furniture mostly through offline channels, especially in large
specialized stores like retail stores, showrooms, and purchasing departments (Office of
Commercial Affairs, 2016).

Figure 12. Online and offline sales channels for the furniture industry in the Czech Republic (Statista, 2021)

b. Competitive Analysis
The Czech Republic is one of the potential countries for wood products when, according to a report
from the Ministry of Agriculture, the country is identified as both import and export, and domestic

16
demand is increasing. From a report of Marketline in 2014, the leading company for forest products
in the Czech domestic market is LST a.s. offering a range of related services and products such as
timber hauling, and the disposal of brushwood. In addition, direct competitors from Finland such
as Metsa Group, Stora Enso Oyj, and UPM-Kymmene are all famous for paper and wood products.
In general, the competitors in the Czech market are all strong, but the categories they target are
different from AA, which is focused on wooden furniture.

c. Buyer Analysis
The buyer market for forest products in Czech varies regionally, with different customers and
needs in each location (Marketline, 2014). Most of the demand for timber comes from construction
companies or construction traders. The rest is a small market for individual consumers with the
purpose of home decoration, DIY furniture, ... as follows:

Figure 13. Most Frequently Purchased Categories of Furniture (Office of Commercial Affairs, 2016)

Concerning buyer behavior, the Czech Republic is the second-largest country in terms of furniture
consumption among Eastern European countries, after Poland, according to the Center for Italian
Industrial Research (CSIL, 2012). Also, Czech people tend to replace living room and bedroom
furniture earlier than other furniture types.
In general, the purchasing power of furniture in the Czech Republic is quite high, so if AA decides
to enter this market, the segmentation strategies should be based on geography segmentation and
behavioral segmentation.

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 Figure 14. Czech’s purchasing power (Marketline, 2014)

IV. Justification of countries and selection

1. Indonesia
1.1. Indonesia's Opportunities
Before 2019, the demand for furniture in Indonesia increased significantly due to the development
of new housing and household income, namely the economy grew from 4.8 - 5, 17% and the
population increased by 1.1 - 1.27% annually (Lam X., 2021) During these years, the hotel industry
development also increases the demand for high-end furniture items in hotels and resorts (Lam X,
2021). With the benefit of Indonesia being a country with culture similar to Vietnam, such as
combining modernity with tradition, this significant growth is an opportunity for AA to penetrate
into the market with products that are modern but also very contemporary.

1.2. Indonesia's Threats

Indonesia's furniture market has many strong competitors both domestic and abroad, such as
Olympic leading the local market or IKEA, a foreign corporation (Xuan L, 2019). The market also
requires strict regulations for foreign companies such as supplying 75% of input materials for
domestic projects, however, advanced production here is still limited (ITA, 2021). Because
Indonesia has over 17,000 islands, logistics is a challenge due to the difficulty of transportation
between countries and the high cost (The Department For Trade, 2021). Another threat factor is
the consumption behavior of Indonesians, most families prefer supermarkets and hypermarkets or
products from the domestic market because of their price-sensitive purchasing behavior
(Marketline, 2017). Therefore, AA needs to build a strategy with different and cheap products to
be able to compete with these well-known competitors and can combine both direct and online
retail to target customers.

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 2. The Czech Republic
2.1. The Czech Republic’s Opportunities
First of all, there is a considerable probability that demand for wooden furniture in the Czech
Republic will increase due to social, cultural factors, and initiatives to support economic recovery
following the pandemic. The Czech Republic, behind Poland, is the second-largest consumer of
furniture in Eastern Europe, according to the Center for Italian Industrial Research (CSIL, 2012).
As a result, it is clear that the Czech market's purchasing power in the wood furniture sector will
be strong.
Additionally, thanks to the EVFTA Free Trade Agreement and strong diplomatic and trade
relations between Vietnam and the Czech Republic, there is still sufficient space for Vietnamese
wooden furniture manufacturers to expand in the Czech Republic. Another advantage is that there
are no trade barriers for the imports and exports of wood furniture for the living room, dining room,
and bedroom (Office of Commercial Affairs, 2016), as well as Czech consumers' proclivity to
change their furniture, which allows AA Corporation to export those types of products.
Lastly, new entrants are likely to benefit not only from the distribution channels but also from an
environment that is technologically stimulating in terms of manufacturing, distribution and
logistics, which helps raise productivity and cut costs. Also, thanks to digitalization, there is also
the chance for AA corporations to take advantage of Czech’s e-commerce market. An absence of
dominant brands in the industry can also be seen as an ideal proposition for new entrants
(MarketLine, 2014).

2.2. The Czech Republic’s Threats

Since the Czech Republic is a member of the EU, its products must adhere to EU strict standards,
which might be a challenge. Because Vietnam imports timber from more than 100 nations and
territories, with 120 distinct species of wood, determining risk species and risk geographical
locations when formulating laws to manage the supply chain of imported timber is a significant
difficulty. Therefore, even with the benefit of tariffs, Vietnamese goods must also improve a lot in
quality to be able to overcome these barriers. Furthermore, competing with regional rivals is a
significant challenge for Vietnamese entrants. As previously stated in the trading section, the tax
on kitchen furniture is 2.7 percent, and with the large enterprises focusing on this segment, AA
Corporation will face a challenge if they export kitchen furniture.

3. Country Selection
To summarize, the markets of Indonesia and the Czech Republic are both promising. However,
based on the preceding analysis, Vietnamese exporters have a greater chance of extending their
businesses into the Czech since the opportunities outweigh the threats. Therefore, we suggest AA

19
Corporation expand its market share in the Czech due to the ideal appropriateness between the
company and the country.

V. Marketing objectives
1. Target market share and marketing strategy scale
As mentioned above, the overall scale of wood resources imported from VietNam to Czech is
accounted for 0.6% plus with limited historical data about the wood market share of the targeted
country, we would like to raise the total scale of Vietnam up to 0.8-1% by implementing AA’s
strategy in Czech in the first 5 years.
Our main customers will be importers and large retailers as we apply the direct method to this
market. Therefore, the marketing strategy will be short-term with a large scale to raise awareness
and attract favorable consumption objectives.

2. Target marketing segmentations

The buyer will mostly come from the corporate sector such as hotels, restaurants and the household
sector, who specialize in bedroom and living & dining furniture. Customers have a middle income
or above. They pay attention to high-quality products with attractive designs, made from materials
using state-of-art technologies, which AA corporation is famous for.

3. Price
Since AA products are manufactured in Vietnam, which has cheap and high-skilled workers and
sufficient wood resources followed by the standard quality guideline of the company itself, AA
can set a highly competitive price while offering comparable values to its caste competitors.

4. Position
The current vision of AA Corporation is “being the world-leading interior fit-out company”.
Therefore, we want to keep and expand the vision by positioning AA’s products in Czech as high-
end furniture with unique state-of-art designs and technologies, which are based on “Price and
Quality” and “Benefit and Attributes”, to spread worldwide and consistent AA’s specific
characteristics.

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VI. Entry Strategy
To enter the Czech Republic's wooden furniture market, we decided to apply the direct exporting
strategy. Furniture products are often bulky, requiring thorough care during transportation, so we
plan to manufacture and finish the furniture parts at AA's existing woodworks in Vietnam and
assemble them in Czech to optimize the logistics process.
In terms of distribution, with a direct exporting strategy, AA can work directly with large hotel or
restaurant systems. Meanwhile, we apply a B2B model in which AA directly distributes its
products to customers who are furniture retailers or wholesalers. Also, it can collaborate with e-
furniture shops as a result of the digitalization trend. Concerning pricing strategy, a competitive
pricing strategy is applied to gain the maximum competitive advantage as a company enters a new
market. Regarding positioning strategy, we define AA as a mid-to-high-end furniture brand with
standards and quality commensurate with Europe's luxury brands.
There are rationales for us to choose the direct exporting strategy. Firstly, since the furniture
manufacturing process requires strict supervision, keeping the production process in Vietnam and
then exporting the products to the Czech helps AA control its procedure more carefully and ensure
the quality of finished goods. Additionally, exporting also helps AA corporations to take advantage
of FTAs or EVFTA to reduce tariffs. Together with the low labor cost in Vietnam, it can provide
the company with lower total costs, which helps the company build a competitive price in
comparison with other European companies. Last but not least, using exporting provides the
company time to understand and adapt to Czech’s furniture market before considering risky but
more independent investment decisions, such as wholly-owned subsidiaries.

21
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 APPENDICES

Figure 1. Indonesia Political Stability Index (TheGlobalEconomy.com, 2020)

Figure 2. Corruption rate in Indonesia from 2011 to 2020 (Statista, 2022)

Figure 3. Ease Of Doing Business in Indonesia (Export Finance Australia, 2019)

Figure 4. Revenue of furniture industry in Indonesia (Statista, 2021)

Figure 5. Indonesia’s furniture import value (FLEGT, 2020)

Figure 6. Online and offline sales channels for the furniture industry in Indonesia (Statista,
2021)

Figure 7. Buyer power of Indonesian customers (Marketline, 2017)

Figure 8. Customs Tariffs in 2004 (Office of Commercial Affairs, 2016)

Figure 9. Czech Republic Unemployment rate (Statista, 2022)

Figure Revenue of furniture industry in the Czech Republic (Statista, 2021)

10.

Figure Import of Furniture for Homes and Offices to the Czech Republic ((Office of
11. Commercial Affairs, 2016)

Figure Online and offline sales channels for the furniture industry in the Czech Republic
12. (Statista, 2021)

Figure Most Frequently Purchased Categories of Furniture (Office of Commercial

13. Affairs, 2016)

Figure Czech’s purchasing power(Marketline, 2014)

14.

25
 STATEMENT OF AUTHORSHIP

We each certify that our own contribution in the attached material is original work and that we
have no knowledge of an act of plagiarism committed by any member of this group. We declare
that no other person's work has been used without due acknowledgment. Except where we have
clearly stated that we have used some of this material elsewhere, it has not been presented by us
for examination in any other course or Subject at this or any other institution.

We understand that we are subject to student discipline processes in the event of an act of
plagiarism by us. We understand the nature of plagiarism to include the reproduction of someone
else's words, ideas or findings and presenting them as our own without proper acknowledgment.
Further, we understand that there are many forms of plagiarism which include direct copying or
paraphrasing from someone else's published work (either electronic or hard copy) without
acknowledging the source; using facts, information and ideas derived from a source without
acknowledgment; producing assignments (required to be independent) in collaboration with and/or
using the work of other people; and assisting another person to commit an act of plagiarism.

Name Student Section Allocated Sections completed Signature Date

number

Hoang 1904050002 Microenvironment Microenvironment April 29,

Phuong 2022
Justification Justification
Anh

Nguyen 1904050011 Macroenvironment Macroenvironment April 29,

Thi Thu 2022
Entry strategy Entry strategy
Hang

Bui Thu 1904050016 Macroenvironment Macroenvironment April 29,

Linh 2022
Marketing objectives Marketing objectives

Nguyen 1904050020 Executive summary Executive summary April 29,

Thao Linh 2022
Introduction Introduction
Microenvironment Microenvironment
Company and product Company and product
Nguyen 1904050036 April 29,
Thu background background 2022
Phuong Justification Justification