Group Members: 1. Phạm Ngọc Diệp MSSV: 2221001539 2. Ngô Võ Thái Hà MSSV: 2221001561 3. Nguyễn Thùy Linh MSSV: 2221001630 4. Lê Hoàng Mai Khanh MSSV: 2221001609 5. Nguyễn Thu Trâm MSSV: 2221001845
Ho Chi Minh City, 2024
TABLE OF CONTENT MODES OF ENTRY...................................................................................................1 Topic: Cocoon exports hair care products made from coconut oil (Shampoo, Spray, Serum) to Singapore. ...............................................................................................1 1. Why we choose Singapore ...............................................................................1 2. Cocoon’s hair care products are made from coconut oil..................................1 3. List the costs, advantages, and disadvantages associated with each mode of entry .........................................................................................................................2 4. Exporting would represent the best option for the product and country of entry. 5 REFERENCES ............................................................................................................7 LIST OF TABLE Table 3.1: Modes of entry ...........................................................................................2 MODES OF ENTRY
Topic: Cocoon exports hair care products made from coconut oil (Shampoo, Spray, Serum) to Singapore.
1. Why we choose Singapore
The Singapore Professional Hair Care Market is projected to reach $98 million by 2030, growing at a CAGR of 2.9% from 2024 to 2030. This market encompasses a range of products, including shampoos, conditioners, hair masks, and styling products, which address various hair issues such as hair loss, dandruff, and dryness. Key growth drivers include increased consumer spending, rising demand for chemical-free and luxury hair care products, and the impact of social media. There is a significant trend toward organic and natural hair care, spurred by consumer awareness of the risks associated with synthetic chemicals. Sustainability is also crucial, with consumers preferring brands that utilize eco-friendly packaging and ethically sourced ingredients. The market is witnessing a rise in personalized hair care solutions tailored to individual needs and hair types. Among the 15 Free Trade Agreements (FTAs) currently in effect, 9 FTAs include both Vietnam and Singapore as members, highlighting the close alignment in viewpoints, interests, and development directions between the two countries. Additionally, the Vietnam Trade Office in Singapore has implemented numerous programs to assist Vietnamese businesses in connecting for trade, showcasing products, promoting brand identity, and increasing the presence of Vietnamese goods in the region, as well as facilitating exports to this market. Therefore, choosing Singapore as a destination for export offers many advantages.
2. Cocoon’s hair care products are made from coconut oil
Cocoon is a distinguished Vietnamese brand renowned for its commitment to vegan cosmetics, particularly hair care products enriched with coconut oil. With a strong dedication to using natural ingredients sourced locally, Cocoon offers a diverse array of products including shampoos, conditioners, and hair masks specifically formulated to tackle issues like hair loss and damage. The brand has earned accolades for its unwavering focus on sustainability, social responsibility, and cruelty-free practices. Cocoon proudly holds certifications from reputable organizations such as PETA and Cruelty-Free International, affirming that their products are both cruelty-free and fully vegan. Beyond product formulation,
1 Cocoon actively participates in eco-friendly initiatives, including recycling programs and community campaigns that promote environmental awareness. Coconut oil, as a core ingredient, possesses remarkable potential in the cosmetics industry, especially in hair care. Its rich composition of medium-chain fatty acids provides deep hydration and repair for damaged hair, making it a favored choice for consumers seeking natural solutions to hair concerns. As awareness of the benefits of organic and natural ingredients grows, more consumers gravitate toward products that are free from harmful synthetic additives. Furthermore, sourcing coconut oil locally not only reinforces sustainable practices but also bolsters the Vietnamese economy, resonating with the values of environmentally conscious consumers. By positioning itself in the mid-range price segment, Cocoon ensures its products remain accessible to a broad audience. The combination of authentic, locally sourced ingredients and innovative marketing strategies has been pivotal to its growth in the competitive beauty landscape, allowing Cocoon to carve out a niche among discerning consumers looking for quality and integrity in their beauty products.
3. List the costs, advantages, and disadvantages associated with each
mode of entry Table 3.1: Modes of entry
MODE COST ADVANTAGES DISADVANTAGES
Exporting International shipping By accessing a diverse - Payment Risk: There is a risk
costs can be quite high customer base, businesses can that foreign partners may not pay due to fluctuations in explore new product lines, on time or may not pay at all, fuel prices and creating additional revenue especially when financial or legal challenging geographical streams and receiving more conditions abroad are unstable. factors, which include orders. Entering international - Exchange Rate Fluctuation shipping, packaging, and markets reduces risks and Risk: Changes in currency insurance of goods. dependency on the domestic exchange rates can either reduce Additionally, import market, as businesses expand or increase export costs, directly taxes and various fees their customer base and affecting the company's profits. impact the selling price increase sales opportunities, - Political and Legal Risk: and profitability of leading to multiple revenue Changes in trade policies, tariffs, exporting businesses. To sources. or political instability in the gain recognition in importing country can impact the international markets, import process, making it difficult companies need to invest for businesses to continue in marketing, exporting. advertising, and
2 participation in trade shows. Licensing The company does not - Low costs: Licensing does - Lack of control: Since the need to invest heavily in not require the company to licensee holds management and infrastructure or business spend much on direct operational authority, the licensor operations, but will investments in international has limited control over business collect royalties from markets. Costs are mainly for activities and product quality. foreign partners. protecting intellectual property - Risk of losing technological However, licensing fees and managing contracts. know-how: When sharing are often low and - Rapid market entry: The technology or trade secrets, there generally not substantial, business can quickly penetrate is a risk that the licensee may as the licensor has international markets without develop competing products or already utilized the having to directly build fail to adequately protect intellectual property for infrastructure or organize technological secrets after the a certain period of time. distribution networks. contract ends. - Low financial risk: By using - Dependence on the licensee: licensing, the company does The success of the product not need to spend a large depends on the licensee's amount of capital, minimizing capabilities and commitment, financial risks. particularly in maintaining quality standards. Franchising Franchising often comes - Tight control: The franchisor - High initial costs: Franchising with higher costs has high control over how requires larger investments because the franchisee operations are run, quality compared to licensing, including must pay initial fees, standards, and the use of the costs for training, support, and brand maintenance fees, brand. This ensures franchise system management. and may need to invest consistency and brand - Risk of choosing the wrong in infrastructure to reputation worldwide. franchisee: If the wrong partner is comply with the - Rapid growth with little chosen, poor franchisee franchisor's procedures. direct investment: Franchising operations can negatively impact The franchisor also allows businesses to scale global brand reputation. The incurs costs for quickly without needing franchisor needs to carefully supporting and training significant capital investments, manage partners to ensure the franchisees. as the franchisee is responsible consistent quality. for the costs related to opening - Complexity in management: and operating facilities. Managing and supporting - Support from the franchisee: multiple franchisees across The franchisee takes on the different markets requires a role of daily management, complex management system and reducing the load on the higher management costs. franchisor and helping the
3 business expand into multiple markets simultaneously. Wholly This model is costly and The wholly owned subsidiary Setting up a subsidiary in a new owned requires significant offers numerous benefits to the country requires substantial time subsidiary financial resources. parent company due to the and financial investment, creating Companies must have ability to exercise full financial risks. In the event of strong financial backing operational control. Since the failure, the parent company must or raise capital from parent company owns 100% of absorb all losses without a partner financial markets, which the subsidiary’s equity, it to share the burden. Furthermore, can be challenging for ensures consistency in strategy the lack of a local partner means small and medium-sized and values, reducing conflicts the parent company must cover enterprises. Additionally, of interest with external all costs of entering the market. A the parent company shareholders. The parent lack of local expertise could lead bears the full financial company can also make swift to a loss of control when adapting burden of the subsidiary, decisions in response to to new environments. The parent which can negatively market fluctuations or changes company is also solely impact the overall in strategy. Full ownership responsible for addressing financial health of the further protects technology and cultural and regulatory expenses business if the subsidiary trade secrets from external related to the local market. underperforms. partners, optimizes profits by avoiding the need for sharing, and minimizes operational risks through tight control over the subsidiary’s activities.
Joint A joint venture can help A joint venture helps mitigate Joint ventures can lead to venture reduce costs through risk since each partner is only ownership conflicts between resource sharing and responsible for their portion of partners due to disagreements operational optimization, the capital contribution. over investment and profit although the initial setup Moreover, joint ventures distribution. Smaller businesses costs can be high. enhance the competitiveness of may face the risk of being However, once the joint local businesses by overshadowed by larger partners venture is operational, encouraging cooperation with due to a lack of experience. cost benefits can be foreign companies or when Furthermore, if the joint venture realized through governments require shared experiences issues, risks can collaboration and shared ownership. Additionally, it increase significantly. Language, risk. offers opportunities to improve mindset, and cultural barriers may capital, technology, and human also pose challenges in resources through large-scale collaboration. Lastly, legal issues international projects. Finally, related to cultural differences can joint ventures present the arise, creating obstacles for the potential for expanding joint venture process.
4 markets, business sectors, and scale for large enterprises.. Strategic Strategic alliances can Strategic alliances allow A strategic alliance can result in alliance provide valuable companies to share project- the parent company having less benefits, but they also related risks and enter new control than if it had full come with notable costs. markets, thus minimizing ownership, making coordination Key expenses include challenges. They also enable and decision-making more legal fees for negotiating the sharing of resources such difficult. The risk of losing the terms of the as technology and human technology or proprietary partnership, which can capital, creating a competitive knowledge is also a major be substantial. advantage. Moreover, alliances concern, as a partner might Additionally, if help companies enter markets withdraw or replicate the technology is shared or more quickly without large technology, causing harm to the developed, there may be upfront investments. By company. Additionally, significant technology combining the strengths of maintaining a common goal costs for research and multiple companies, strategic within the alliance is often development. alliances create superior challenging, especially when the Marketing expenses products or services compared interests of the parties shift, can arise when launching to competitors. leading to strategic conflicts. new products or entering Finally, reliance on a partner can new markets, and both negatively impact the entire parties might need to alliance if one company faces invest in training and financial difficulties or loses development to ensure credibility. their employees can collaborate effectively. These costs can significantly affect the overall success of the alliance.
4. Exporting would represent the best option for the product and country of entry. The export method not only helps Cocoon save significant costs compared to other methods, but it is also particularly suited to Cocoon’s scale as a small and medium- sized enterprise (SME) in the Vietnamese market. Minimizing initial costs is crucial for a company with limited resources like Cocoon, especially when compared to other entry strategies such as establishing joint ventures or direct investment.
5 Additionally, through a distribution strategy involving intermediary channels, Cocoon has successfully introduced its products into major retail systems like Watsons and Guardian, which have a strong presence in the Singapore market. This not only allows Cocoon to leverage an extensive distribution network but also enhances brand credibility and recognition in the international market. Therefore, continuing to capitalize on these distribution channels will enable Cocoon to expand its market more effectively while minimizing the risks in terms of cost and time compared to other entry strategies.
6 REFERENCES IndustryARC. (2024). Singapore professional hair care market research report: Market size, industry outlook, market forecast, demand analysis, market share, market report 2024-2030. Retrieved from https://www.industryarc.com Cocoon Vietnam. (n.d.). Cocoon Vietnam. Retrieved from https://cocoonvietnam.com
