Reference no: EM133130622

Based on the below article answer the following question:

1. Why would McDonald's want to open stores in Vietnam?

2. Historically, why haven't franchises done well in Vietnam

3. How might the introduction of businesses like McDonald's change the culture of the Vietnamese?

Article:

For many of Vietnam's young, the question is loaded with impatience. Why isn't there a McDonald's there?

Decades after the Vietnam War, the communist country will pass another milestone as a member of the global economy when its first McDonald's opens next year in Ho Chi Minh City.

McDonald's already operates around the globe. Getting to Vietnam has taken a little more time, but few doubted that one of the world's most recognizable brands would get to another developing country with a growing middle class.

For Vietnam, McDonald's is turning to a partner with a uniquely American experience: Henry Nguyen, an investor with a medical degree and masters in business from Northwestern University who worked at the Golden Arches as a teenager.

Fled, Then Returned

Nguyen was born in Vietnam and fled with his family as a toddler in the final days of the war. He returned to the country more than 12 years ago and is a highly visible businessman. His father-in-law, Nguyen Tan Dung, is the country's prime minister.

Nguyen, 39, recalls the french fries and hot fudge sundae he enjoyed on his first trip to McDonald's as a 4-year-old. Ten years later, he was making fries and working the front counter. "It's a love affair with the brand that started as a young boy," he said in a phone interview Tuesday from Australia.

He and McDonald's believe rising income and a young, urban population in the nation of 90 million will spell success for the company in its 119th country.

"This current young generation is Vietnam's golden generation," Nguyen said. "They will be the ones leading the market and economic development, the ones who are going to change consumption habits."

McDonald's has had difficulty translating its cuisine in other parts of Asia like Japan, where consumers aren't accustomed to touching their food, Nguyen said. But Vietnam was once a French colony, and people there are used to bread and using their hands to eat.

And just because there isn't a McDonald's, Nguyen doesn't think consumers there have much learning to do. "More than two-thirds of the people here in Vietnam have heard of McDonald's brand, and the vast majority think of it in very positive light," he said.

A Changing Vietnam

Nguyen's bet is a symbol of a sea change underway in Vietnam. The nation joined the World Trade Organization in 2007 and has loosened some of the restrictions on foreign companies since then.

"It's a market we've wanted to get into, and one of the things was finding the right partner," said Mike Flores, vice president of global restaurant development at McDonald's.

Flores said McDonald's has watched Vietnam's highly educated young population, and seen manufacturing investment being moved there from China, another country where the chain has had success.

"As China has been building its middle class, manufacturing is moving more into Southeast Asia, and Vietnam is picking up the overflow," he said.

Starbucks opened its first location in Ho Chi Minh City this year. The city was known as Saigon when it was the capital of South Vietnam and fell to North Vietnam in 1975.

"I've had so many friends, colleagues and others ask, 'Why isn't there a McDonald's here?' " Nguyen said. " 'Do they think there's something wrong with Vietnam?' "

Elizabeth Friend, who studies the food business for the company Euromonitor, said Vietnam has a $33 billion food service industry, making it the 20th-largest market in the world.

But chain restaurants are a fraction of that market. Although Pizza Hut, KFC and Subway also have locations in Vietnam, chain restaurants only rang up $216 million in receipts last year.

"Maybe people haven't caught on to chains," she said. "But you can also see there is a huge untapped potential to move in and claim that market share."

"To Me, It's Exciting"

Disposable income, or the money people have available to spend after paying taxes, has doubled in Vietnam since 2007, to nearly $1,000 per person, Friend said. Vietnam's currency is called the Dong.

Nguyen founded Good Day Hospitality, a company that will run his McDonald's franchise in Vietnam. The businessman has taken on an even more public life since marrying the prime minister's daughter.

He was surprised that media reports seemed to link his McDonald's deal to his family. He said that he had been talking with McDonald's about coming to Vietnam for more than a decade. He pointed out that he was selected through a drawn-out search, during which the burger giant sifted through hundreds of applications and interviewed more than 50 people or companies for the first franchise.

As the businessman got set to introduce the Big Mac - and the drive-thru concept - to Vietnam, Nguyen said he understands he will face challenges, from nutrition to food safety to real estate and staffing. He was speaking from Sydney, where he and his restaurant team were going through training.

"I think about all of these challenges, and to me, it's exciting," he said.