. ORANA uses both its own sales staff and independent distributors to increase retail sales in Vietnam. Discuss the advantages and disadvantages of this strategy. ORANA realized the huge opportunity in covering new market areas due to the increasing demand in Vietnam as an emerging market, many indications showed that annual sales has a potential growth rate of around 20%, due to the increasing purchasing power, the middle class is growing, and people are willing to try new products. Therefore ORANA wanted to take the opportunity of being a fast mover and expanded its distribution from Ho Chi Minh City (Saigon), to the central and northern parts of Vietnam, by starting direct sales through independent distributors instead of relying
- Economies of scale: A greater economies of scale can be accomplished due to the increase in production which will result in the reduction of cost for each additional unit sold, and improve revenue growth.
- Improved resource utilization (RBV): By owning a production facility in Vietnam, it’s easier for the distributers to meet the demand of Retailors, Hens provide better service output by improving lead time, and less shipping documentation complication from transporting in same country.
- Increased flexibility ”Real options”: To take certain business initiatives and seize opportunities, especially in dynamic environments such as; quickly changing consumer preferences and segments, and high entry/exit of competitors, potential channel partners.
- Uppsala model: In 1993 ORANA started its trade with Vietnam by using traditional exports and gradually moved to intensive and demanding operation modes, such as joint venture/production facility which was established in 2002, and now they are expanding their retail sales by dealing with local distributors to cover the central and northern parts of Vietnam, ORANA is striving for growth in Vietnam but with a low risk taking level, they often develop their