Supply Chain Issues in Vietnam. Critical issues for international Fast Food Companies

Seminar paper from the year 2012 in the subject Instructor Plans: Gastronomy / Hospitality / Tourism, grade: 80, , language: English, abstract: The aim of this research is to illuminate issues for both existing and potential franchisors in the areas of franchising and supply chain management in Vietnam. The results of this research not only help international fast food franchises that are already operating in Vietnam to improve the management of their supply chain but also help international fast food franchises by getting a better understanding of the Vietnam market and some of its challenges before starting to operate in Vietnam. The result of this research is a summary of critical issues supply chain issues international fast food franchise companies face when operating in Vietnam. The author also provides a variety of recommendations of how to overcome the identified issues.

Vietnam's hospitality industry is growing all over the country and big international hotel chains like Hyatt Hotels, Sheraton, Hilton, Novotel, Marriott, MGM Grand, Nikko Hotels, Crown Plaza and InterContinental have already entered the country and are operating since the last few years. The famous western style restaurant chains on the other hand are still not that common in Vietnam.

Although Vietnam has a growing economy and young population craving for western food concepts, so far just a few big international fast food franchises have entered Vietnam and most of them are operating for only a few years. The conspicuous absence of some highly successful multinational franchises like McDonald's begs the question, why are they not operating in Vietnam and why do international fast food franchise companies that are currently operating in Vietnam mainly operate in HCMC and Hanoi?

The research identified that there are several issues international fast food franchise companies need to overcome when operating in Vietnam. Most of the issues are supply chain related and may vary from finding suitable local partners and good retail outlets to having long supply chains with obscure import procedures and high import duties. Moreover, the weak domestic infrastructure such as poorly established railway or road system, substandard port infrastructure or warehouses make storing and shipping within Vietnam a challenge too.