HOMEWORK CHAPTER 8:

GROUP 6:
List of members:

1. Nguyễn Thị Thu Hiền- BABAWE20055

2. Đặng Nguyễn Minh Thư- BABAIU19333
3. Trần Nguyễn Lâm Vy- BABAWE20215
4. Nguyễn Phan Ái Vy- BABAWE20023
5. Phạm Ngọc Linh- BABAWE20057
6. Nguyễn Thị Thiện Ý-BABAUH20048
7. Phan Dương Tú Anh- BABAWE20175

Part 1: Essay.
1) In the case that you want to open new business, what is your decision in identifying the
location of your business. Explain your decision.
One of the most crucial steps in launching a small business is selecting a site. Finding the
ideal site is crucial, especially if I'm running a small retail or restaurant business. For my little
business, it can determine foot traffic, the work environment, and long-term success. Knowing
what to search for in a possible venue means you can find the ideal spot. Finding and selecting
the ideal location involves several different factors, like examining my neighborhood, reading
about prospective customers' demographics, and taking competitors' locations into account.
Before choosing a site, it's crucial to think about my requirements as a business owner.
Consideration should be given to access if I'm not operating a restaurant or retail operation and
won't be dependent on foot traffic. Deliveries of supplies, client consultations, and big storage
space for my company are all examples of what this might entail. I'm on the right track to
locating the ideal company space because I've carefully considered my options and identified my
needs.
2. Choose one multinational company doing business in VN, and give reasons why they choose
the location for their business
The location decision is considered an important one for the company, which might help
them increase profit by reducing costs and increasing revenue. Samsung Electronics Co., Ltd. is
a Korean multinational electronics company headquartered in Suwon City, Gyeonggi Province,
with manufacturing facilities in Vietnam. This essay will explore why Samsung picked Vietnam
as the location of their component manufacturing plant, based on three key success factors
(KSF): labor productivity and cost; a good business climate, and political stability; as well as
proximity.
The beginning of Samsung Electronics in Vietnam began on March 25, 2008, when
Samsung Electronics Vietnam received an investment certificate with a total capital of 670
million USD. Up to this point, Vietnam has not only been a desirable investment location but has
also effectively turned into a second home for the company. Samsung has been in Vietnam for
12 years and is currently one of the companies with the most investment capital in Vietnam.
Besides, it also has six factories and one R&D center, with SEV (Bac Ninh) and SEVT (Thai
Nguyen) being the two largest Samsung mobile phone factories in the world. Meanwhile, SEHC
(Ho Chi Minh City) is southeast Asia's largest home electronics manufacturer, and SVMC is
Samsung's largest R&D center in the region.
It is necessary to discuss why Samsung chose Vietnam to invest in their factory in
2009.At that time, Samsung invested in Vietnam with the purpose of maintaining current sites
while adding another facility elsewhere. This means that besides the headquarters in Korea and
other countries, Samsung will invest more in Vietnam to have more factories to produce
electronic equipment and components, This is Samsung Electronics Vietnam in Bac Ninh
province. With the purpose of choosing a manufacturing plant, Samsung managers will make
decisions about which locations can help them increase their profits by cutting costs instead of
increasing revenue. Vietnam would be an ideal location for them to implement this technique.
One of the factors to consider while lowering manufacturing costs is labor expenses.
Indeed, while Vietnam's labor productivity appeared to be an unappealing factor for attracting
international investors like Samsung at the time, low labor costs were one of the bright spots for
attracting foreign investors. Furthermore, the work ethic of the Vietnamese people is one of the
characteristics that persuades firms to invest in Vietnam. Because of wet rice cultivation, most
Vietnamese are highly industrious, conscientious, and hardworking, which will serve as the
foundation for long-term labor productivity improvement. Indeed, Vietnam's labor productivity
increased by 15.12% year on year in December 2021, compared to a 6.45% increase the previous
year, according to Ceicdata.com . Furthermore, Vietnam is now working to fix this issue in order
to enhance its labor force's competitiveness with other nations.
A stable political environment will lay the groundwork for stable economic growth. As a
result, the next element influencing Samsung's decision to locate its next production unit in
Vietnam is the country's political status. This will affect the decision to invest in easy
management for Samsung managers. This will affect the decision to invest in easy management
for Samsung managers. Indeed, in the context of tension between the US and China, Vietnam is
a country that pursues the strategy of having a peaceful relationship with these two big countries,
which is to its sustainable political stability. Furthermore, authorities have laws in place to assist
in the rapid resolution of any obstacles linked to land lease, factory development, and export,
making it simpler for international corporations to invest in Vietnam. This is also evident in tax-
cut plans designed to encourage foreign investment in the early years. Currently, Vietnam's
institutions, rules, and transparency are steadily improving in tandem with integration, not only
establishing long-term conditions for investors to operate, but also assisting businesses in
participating in the supply chain. positive reaction to the global value chain. This is also probably
the reason why, after opening a factory in Vietnam in 2009, Samsung now has more than 6
factories and its headquarters in Vietnam. In addition, Vietnam's supportive policies during the
Covid-19 pandemic also created and built Samsung's trust in Vietnam, which will continue to
make Vietnam a destination for their business expansion.
 Finally, the geographical location of Vietnam is also one of the advantages to be able to
make decisions about its location. Viet Nam has an excellent geographical location and the
potential to link with the world's main economies. First, it has the advantage of close proximity
to suppliers. First, Vietnam is a small country that has not been able to produce small
components for phones, meanwhile, China is a place to provide these devices to help them
produce electronic devices. Choosing Vietnam, a country adjacent to China will help Samsung
reduce shipping costs, as well as create more flexible sourcing. In addition, Vietnam occupies the
east coast of peninsular Southeast Asia, and Laos and Cambodia are to the west. This coastline
provides direct access to the Gulf of Thailand and the East Sea. Combined with the improved
freight transportation system. This will help Samsung connect with more customers by putting it
in close proximity to markets. The selection of close distances is also smartly chosen by
Samsung in terms of where they choose to locate their component factories and sales offices. For
example, factories such as Samsung Electronics Vietnam (SEV) - Bac Ninh, mobile device
assembly and component factory, or Samsung Electronics Vietnam - Thai Nguyen (SEVT),
Components and Assembly Factory Mobile device assembly is selected by Samsung in two
provinces that are close to its supplier, namely China. Meanwhile, a representative office dealing
with sales and marketing-related issues such as Samsung Vina Electronics (SAVINA) is located
in Ho Chi Minh City, one of the major cities of Vietnam, which is close to customers. goods as
well as favorable traffic conditions. It will make it easier for them to support customers as well
as bring their products to their customers more easily because they already have an office that
has close proximity to customers.
In conclusion, through the case of Samsung choosing Vietnam as a destination for their
business expansion, we can see the factors influencing their decision. Those advantages are labor
productivity and labor costs, stable politics, and the geographical location of Vietnam, which has
supported Samsung in the proximity of suppliers and markets. These key success factors have
partly contributed to reducing its costs and increasing Samsung's profits
References:
Over a decade of Samsung's investment in Vietnam - Lesson 1: 'Elder Brother" FDI) and a
record capital of 17.4 billion USD. (2022). Retrieved 3 November 2022, from
https://nhadautu.vn/dau-an-hon-mot-thap-ky-samsung-dau-tu-tai-viet-nam-bai-1-anh-ca-fdi-va-
so-von-ky-luc-174-ty-usd-d44190.html
ASEAN COMMUNICATION AND INFORMATION Steering Committee ASEAN VIETNAM
PORTAL - Economic Pillar Model VISION - Identities - A COMMUNITY.(2022). Retrieved 3
November 2022, from http://trucotkt.asean.vietnam.vn/Default.aspx?
Page=NewsDetail&NewsId=110455
Vietnam's Labor Productivity Growth. (2022). Retrieved 3 November 2022, from
https://www.ceicdata.com/en/indicator/vietnam/labour-productivity-growth

Part 2: Textbook Homework.

8.1.
The total labor cost is the number of laborers times per day pay.

In Myanmar (formerly Burma), 6 laborers, each making the equivalent of $3 per day, can
produce 40 units per day.

Total laborers cost is: 6×$3 = $18

They can produce: per unit

In rural China, 10 laborers, each making the equivalent of $2 per day, can produce 45 units.

Total laborers cost is: 10×$2 = $20

They can produce: per unit

In Billings, Montana, 2 laborers, each making $60 per day, can make 100 units.

Total laborers cost is: 2×$60 = $120

They can produce: per unit

Therefore, the most economical location is in China.

8.6
SCORES (OUT OF 100) WEIGHTED SCORES
Factor Weight
Philadelphia New York Philadelphia New York

Customer 0.25 70 80 0.25*70 = 17.5 0.25*80 = 20

convenience

Bank 0.2 40 90 0.2*40 = 8 0.2*90 = 18

accessibility

Computer 0.2 85 75 0.2*85 = 17 0.2*75 = 15

support

Rental cost 0.15 90 55 0.15*90 = 13.5 0.15*55 = 8.25

Labor costs 0.1 80 50 0.1*80 = 8 0.1*50 = 5

Taxes 0.1 90 50 0.1*90 = 9 0.1*50 = 5

Totals 1.00 73 71.25

Solution: Northeastern Insurance Company should locate their office in Philadelphia city
because it has a higher total weighted score.

8.8

Scores Weighted Scores

Factor Weigh ( Out of 100)
description t
Present Newb Hyde Present Newb Hyde
location ury Park location ury Park

Average 0.30 40 60 50 (0.3) (0.3) (0.3)

community (40)=12 (60)= (50)=15
Income 18

Community 0.15 20 20 80 (0.15) (0.15) (0.15)

growth (20)=3 (20)= (80)=12
potential 3

Availability 0.20 30 60 50 (0.2) (0.2) (0.2)

of public (30)=6 (60)= (50)=10
transportation 12

Labor 0.35 80 50 50 (0.35) (0.35) (0.35)

availability, (80)=28 (50)= (50)=17.5
attitude, and 17.5
cost

Total 1 49 50.5 54.5

a) Base on the calculation above, Helm’s new retail outlet should be in a new
shopping mall in Hyde Park because it has the highest weighted score among
three other alternatives.
b) When the third factor raised to 40, we have new calculation below. Instead of
choosing Hyde Park now we will opt for Present location since it has the highest
weighted score among three other alternatives.

Scores Weighted Scores

 Factor Weight ( Out of 100)
description
Present Newb Hyde Present Newb Hyde
location ury Park location ury Park

Average 0.30 40 60 50 (0.3) (0.3) (0.3)

community (40)=12 (60)=1 (50)=15
Income 8

Community 0.15 20 20 80 (0.15) (0.15) (0.15)

growth (20)=3 (20)=3 (80)=12
potential

Availability of 0.20 40 60 50 (0.2) (0.2) (0.2)

public (40)=6 (60)=1 (50)=10
transportatio 2
n

Labor 0.35 80 50 50 (0.35) (0.35) (0.35)

availability, (80)=28 (50)=1 (50)=17.
attitude, and 7.5 5
cost

Total 1 51 50.5 54.5

8.16
a.
● For site 1:
TC1 = 500 + 11X
● For site 2:
TC2 = 1,000 + 7X
For site 3:
TC3 = 1,700 + 4X
● The crossover point for site 1 and site 2:
500 + 11X = 1,000 + 7X
11X – 7X = 1,000 – 500
4X = 500
X = 125 units

● The crossover point for site 1 and site 3:

500 + 11X = 1,700 + 4X
11X – 4X = 1,700 – 500
7X = 1,200
X = 171,4 units

● The crossover point for site 2 and site 3:

1,000 + 7X = 1,700 + 4X
7X – 4X = 1,700 – 1,000
3X = 700
X = 233.3 units

In conclusion,
● Site 1 is optimal for less than or equal to 125 units.
● Site 2 is optimal for production between 125 and 233 units.
● Site 3 is optimal for production above 233 units
b. Total cost for a production of 200 units:
● TC1 = 500 +11(200) = 2,700 (dollars)
● TC2 = 1,000 + 7(200) = 1,800 (dollars)
● TC3 = 1,700 + 4(200) = 2.500 (dollars)
Therefore, for a production of 200 units, site 2 is the most optimal.

8.25
 Score Weight score

I Factor Weight A B C D A B C D

1 Labour 20 5 4 4 5 100 80 80 100

Quality

2 Quality of 16 2 3 4 1 32 48 64 16
Life

3 Transport- 16 3 4 3 2 48 64 48 32
ation

4 Proximity 14 5 3 4 4 56 42 56 56
to Market

5 Proximity 12 2 3 3 4 24 36 36 48
to
Customer

6 Taxes 12 2 5 5 4 24 60 60 48

7 Energy 10 5 4 3 3 50 40 30 30

Total 100 334 370 374 330

a. Based on the Factor- rating Method, Chicago is the recommended site for Eagle
Electronics’s new facility. This is because it has the highest total weight score,
with 374.
b. In order to maintain the same answers in Part A, the total weighted score of
Atlanta, Baltimore, and Dallas need to be lower than that of Chicago.
Let w7: the weight of factor 7.(w >0)
Meanwhile, we have
- Replace w7=10 in the overall score calculations above, we have:

A 20(5) + 16(2) + 16(3) + ... + 5w7 = 298 + 5w7

B 20(4) + 16(3) + 16(4) + ... + 4w7 = 330 + 4w7

C 20(4) + 16(4) + 16(3) + ... + 3w7 = 344 + 3w7

D 20(5) + 16(1) + 16(2) + ... + 3w7 = 300 + 3w7

Now, we find all values of w7 that make C>A, C>B and C>D:
344 + 3w7 ≥ 298 + 5w7 ⇔ 27 ≥ w7
344 + 3w7 ≥ 330 + 4w7 ⇔ 14 ≥ w7
344 + 3w7 ≥ 300 + 3w7 ⇔ 344 ≥ 300 (which holds for all values of w7)

Hence, C remains a recommended site for all positive values of w7

such that w7 ≤ 14.