Opportunity Analysis.

Since the Vietnam joined WTO, many companies have started to invest into Vietnam, and a large of number of manufacturers has built. Star Industry is not exception. There are some advantaged reasons in the process of finance and administration. Low cost and available resources for starting new venture For Star Industry can expand business in Vietnam will be required a list of requirement: 1. Land and equipments Star Industry (SI) leases the 1000 square meters space to build factory for 36000$ annual and the location is near the port to facilitate international shipment, especially for Australia. The price of lease is cheaper if to compared with other country, and it will help the financing. 2. Inventory control The company has decided to use the Just-in-time strategy for reducing the warehousing cost and computer-base inventory control software is used. Advantages for the Star Industry is that, the technology in Vietnam for recent years have developed significantly. According to WITFOR (2010) held in Hanoi, Vietnam has ranked number one on the development rate of information technology in the South East Asia. Again, it will help reducing financing cost. 3. Other essential costs Labour and direct material is essential term of cost that enterprise need to concern. Here is the labour force chart in Vietnam:

Based on this chart above, the labour force in Vietnam has increased significantly for 1998 to 2010 that create opportunities for the company who intend to work here. Advantages of funding activities in Vietnam Vietnamese banks, branches of foreign banks, financial institutions have increased number in Vietnam. There are six state commercial banks and 37 foreign banks branches and around 17 finance companies that create a big a mount of funds to loan. As a result, it allows more choices for the Star Industry in financing activities whenever it requires capital for investment. The graph below shows the activities of Vietnam Bank Deposit from the year 2001 to 2009 and the statistic reflects that the deposit has grown up dramatically for the period. This mean the loanable funds also increase.

Vietnam Bank Deposit 45 40 35 30.4 26.1 22.2 17.3 12.7 14.5 19 30 25 20 15 10 5 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 35.7 41.8

Recommendations Income Statement The sales revenue is expected to half its mother company in Australia because it is just the first year operating in Vietnam. The operating expenses will be higher and account for more percent of cost due to running marketing campaign including heavy advertising and setting up exhibition about company products to capture the customers in Vietnam. The interest expense is also risen since borrowing money for local banking for staring the business.

Billion US$

Category Sales Revenue Cost of Goods Sold Materials Salaries Factory Salaries Sales Factory overhead Total Cost of Goods Sold Gross Profit Operating Expenses Salaries Admin **Marketing Occupancy General Total Operating Expenses R&D Expenses Restructuring expenses Operating Profit Interest Expense Other Income Profit/Loss Income tax Profit after tax Salary/Revenue ratio

$
(millions)

% of
Sales

Notes

25,45

(7.635) (3.053)

30% 12%

(0.763) (4,3265 ) (16.05) 9.4

3% 17% 63% 37%

Operations and Manufacturing divisions Sales division

(0.509)

2%

CEO plus HR, Finance and Admin, Marketing divisions

(2.036) (1.527) (1.018) (5.09) (0.763) (0.254) 1.017 (1.06) 0.64 2.55 (0.254) 2,11 18.9%

10% 6% 4% 20% 3% 1% 4% 3% 1% 10%

9%

** Marketing include: 0.5 million for advertising activities including advertisements on TV channel and website development 1.5 millions for building the exhibitions and retailers shops

Borrowing money for the local banks Star Industry should take loan for the bank to gain the advantage for operating in Vietnam. The reason is that, the loanable funds in Vietnam is big and the moderate interest rate of 20 percent annually. Benefit - Have sufficient funds for operating - Reduce problems of unstable exchange rate Cost - Pay the interest rate - Require conduct the financial

statements for the banks. - Flexible capital for expand activity reduce cost