Question

Background: A Western European automobile manufacturer is considering entering markets in Southeast Asia. The company wants to construct an assembly plant outside Ho Chi Min City, Vietnam, to assemble its lower-priced cars. Major components would come from manufacturing plants in Brazil, Poland, and China. The cars would then be sold in emerging markets throughout Southeast Asia and the Indian subcontinent. Managers are hoping to strike a $100 million joint venture deal with Vietnam’s government. The company would supply technology and management for the venture, and the government would contribute a minority share of financing to the venture. The company considers the government’s main contributions to be providing tax breaks (and other financial incentives) and a stable business environment in which to operate. Financial capital is flowing into Vietnam at a fair pace. The currency is strong, and inflation remains low. As with other nations in the region, investors are generally wary of the nation’s stability. The new auto assembly plant would boost the local economy, reduce unemployment, and increase local wages. But some local politicians fear the company might be interested only in exploiting the country’s relatively low-cost labor.

1. Create negotiations on behalf of the government as well as the company

2. report on the results of the negotiations, what barriers you encountered, and how you dealt with them.

Answer 1

1 Negotiation from government:

a) Using human resources from Vietnam and the project will involve no other nation's human resources. It will boost employment.

b) To provide the best quality of the project government of Vietnam may ask to use locally made materials.

Negotiation from Company:

a) To provide subsidiary and other relaxation in operation that will help in smooth functioning.

b) Grant permission for an operation conducted in Vietnam.

c) The company may negotiate security of the business environment on behalf of the project.

2 There can be many barriers based on these negotiations:

a) Barrier regarding the cultural and lingual differences between the employees and the project manager.

b) Government procedure which may take longer for providing.

c) Barriers regarding material import can come in the way of operation for the joint venture.

d) Barriers in management, organizing, directing may hamper the working because of the changed environment of working.

e) need to focus on the risk management of venture and elimination of risk should be done thoroughly to avoid proper functioning