Lyft Entering the Vietnam's Market

Global Strategy
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Global Strategy
Question 1
Introduction
As a company with a significant market share in the US, Lyft can either license its copyrights, set up a joint venture with a host country firm, or set up a wholly-owned subsidiary in Vietnam. Each option has to be carefully analyzed to ensure that the company has the highest earning potential. Licensing is critical to an organization because it makes it possible to reduce the cost of operation while retaining the local expertise. It is easy to enter a new market while diffusing the conflict that may arise due to competition. However, there is also a high risk of having intellectual; property theft if the licensing agreement goes through. Furthermore, the company can have a new competitor due to technical know-how that will be transferred from the company to the local communities.
Licensing, Setting A Joint Venture With A Host Country Firm, and Setting Up a Wholly Owned Subsidiary in Vietnam
Lyft is currently listed on the New York stock exchange, and its current price is 32.86 dollars as of April 2022 (Yahoo Finance, 2022). The company was founded in June 2012 by John Zimmer, and it has its headquarters in San Fransisco (Bloomberg, 2022). The company is still competing with Uber because it operates only in North America (Lyft, 2020). The main benefit of licensing strategy is that the company does not risk losing ownership rights. The company will be able to have a passive income without having any overhead costs. As a result of this strategy, the organization will be able to enter the Vietnam market more efficiently. However, there are several challenges that the company may face when they choose to use licensing as a strategy to enter Vietnam. The main challenge of using licensing as a strategy for entering a new market is the risk of losing control of intellectual property (Hill, 2014). Additionally, the licensor risk relying heavily on the licensee's skills and expertise to raise revenue. Since the licensor depends on the licensee, there is a risk of Lyft losing its reputation if the quality of service is compromised. Finally, there is a risk that the company will have unintended competition when the intellectual property is shared with a third party.
When entering into the new market, the other option that Lyft has is to consider a joint venture with a firm in the host country. The outbreak of Covid has seen a reduction in business, and it will be critical for companies to consider entering into new markets (Meenakshi, 2021). The introduction of ride-sharing platforms has made it possible for people to travel easily by placing their orders through their mobile phones (Shokoohyar, 2018). The main benefit of having a joint venture as a strategy for entering a new market will be sharing the risks and costs with the new partner. There is also access to more resources such as finance, technology, and specialized personnel (Hill, 2014). However, there are significant challenges to engaging in a joint venture to enter new markets. One of the significant challenges is the clash of cultures. Since Lyft is in the USA, there is a high chance that the organization will have a culture clash when it decides to use a joint venture to enter the Vietnam market. Additionally, there is a high chance that the organization will not be able to meet reliable partners that share the same values and objectives. In such a case, the operations of the organization will be affected. Finally, having a joint venture does not allow efficient operation since all stakeholders do not play equal roles. Such issues may harm the operations and efficiency of the company.
Finally, Lyft may consider setting up a wholly-owned subsidiary in Vietnam. Having a wholly-owned subsidiary in Vietnam is essential because it will allow the company to manage its intellectual property (Hill, 2014). The main benefit of setting up a wholly-owned subsidiary is that Lyft will not share its profits with another company. It will also be able to set up its operation and control the subsidiary without losing control of its operations. Lyft will also be able to expand its brand recognition and have tight control over its technology. However, setting up a new venture can be very costly, and getting local talent may be very difficult for the company.
Recommendation
Since the company is planning to have its first foreign operation, the best strategy to follow would be to have a joint venture with a local company. Such a strategy is essential because it will offer the company the local know-how and save the organization much money needed to set up a new subsidiary.
Conclusion
The three options that Lyft is considering as it plans to enter Vietnam have advantages and disadvantages. Uber, a direct competitor of Lyft, has been able to stay ahead of the competition because of its ability to expand its operations outside North America. Since Asia is an emerging economy with a large population, it would be advisable for the company to expand into Vietnam. The main benefit of licensing its operation to Vietnam will be the ability for the company to have an income without overhead costs. Additionally, it is much easier to enter into new markets using licensing rather than setting up a joint venture. The main challenge will be the risk of loss of control and the potential of having the intellectual property stolen. On the other hand, having a joint venture is advisable because it makes it possible for a company to access new distribution channels at a minimal cost.
Question 2
Introduction
The Geert Hofstede framework on international workplace culture will be instrumental in comparing and contrasting the cultures of the USA and Vietnam. The framework will also be instrumental in determining how the cultural differences would influence the business and management practices of Lyft as it tries to venture into the Vietnam market. Geert Hofstede has proposed different cultural dimensions, which he believes will have a significant impact on how employees behave in an organization. According to him, national and regional factors play a significant role in determining how companies should behave when operating in a foreign land. The management has to analyze and understand the different dimensions in the country in which they are operating to ensure the business's success. Some of the dimensions analyzed in this section are Power Distance Index (PDI), Individualism Vs. Collectivism, Masculinity vs. Femininity, Uncertainty Avoidance Index (UAI), and Long Vs. Short Term Orientation.
Geert Hofstede framework
When analyzing Vietnamese culture through the lens of Geert Hofstede's framework 6-D Model, we can get a good overview of the deep drivers of Vietnamese culture relative to that of the United States. Having such an understanding is critical because it will allow Lyft to formulate policies that are in tendon with the host country's culture (Hofstede, 2011). The first dimension that will be analyzed will be the power distance. A society that has a high-power distance shows that people in the community are accepting of hierarchical order (Stokes et al., 2016). Vietnam has a high-power distance as compared to the United States. Centralization of power is popular in Vietnam as compared to the US. As a result, Lyft will have to develop a policy that will align with the power distance culture of the people of Vietnam. The policies that will be put in place by Lyft have to make sure the company does not contradict any cultural values held dear by the people in Vietnam. Having such a policy will make sure the organization is successful.
Individualism is another factor that has to be considered to make sure that an organization has the best policy when working in a foreign land (Demmler et al., 2018). The individualism dimension is used to determine how people view themselves in society. A society with a low individualism score relies more on the community and less on a close-knit family setup (Truong et al., 2021). Vietnam has a low score which indicates that the society is a collective one. The relationship between the employer and the employee can be perceived based on moral terms. However, the US has a high individualism score indicating that the society is loosely knit together. As a result, promotions and employment are done on merit. Lyft will have to consider this when setting up a subsidiary in Vietnam.
The level of masculinity is another factor that can be used by an organization to determine how it is going to formulate its policies. A high score on this dimension indicates that the society is masculine (Truong et al., 2021). However, a low score on this dimension indicates that the society is feminine. A masculine society is driven by issues like success, competition, and achievement. People in this society tend to speak more freely and are willing to display their wealth and achievements. However, a feminine society cares more about the quality of life and caring for others (Lam et al., 2021). Vietnam has a low score level indicating that it is a feminine society. However, the US has a high score indicating that it is masculine. The management of Lyft will have to reconcile these two differences before they start their operations in Vietnam to ensure the business's success.
Uncertainty avoidance is how society deals with the fact that the future may not be predictable (Truong et al., 2021). The United States score is below average, indicating that the country is more accepting of uncertainty. The people in the US are more accepting of new ideas and products. However, Vietnam has a high Uncertainty score which indicates that the country is less accepting of new ideas and products. As a company that wants to venture into the new market, Lyft will have to invest more in advertisements and promotions to make sure that people in Vietnam have a changed attitude towards the products they are offering. The managemen...