1.

0 Executive Summary This report enables DHL to analyze the logistics and transportation market of Vietnam, also the three based views to determine the firm competencies. There are three sections of analysis which are Porters five forces, SWOT analysis and also PESTLE. Recomm endations are provided at the end of the report. The first section is the PESTLE analysis of Vietnam which consists of Political, Economic, Social, Technology, Legal and Environment. This model will help DHL to overview the different Marco environmental factors that the company has to take into consideration. The section is the SWOT analysis. The internal and external environment is analysed according to the strength, weaknesses, opportunities and threats of DHL. The third section is Porters five forces which explained the situation of DHL in Vietnam. Porters five forces include bargaining power of buyers, bargaining power of suppliers, and threat of substitute products, potential new entrants, and rivalry among competitors. This model will assist DHL to identify the firms position and its competencies in Vietnam in order to gain competitive advantage. The fourth section is the resource base view of DHL in Vietnam. Resources such as tangible and intangible resources are discussed and reverse logistic process is the issue that face by DHL by properly allocating their resources to achieve maximum efficiency. 2.0 Introduction DHL is a leading Germany logistics company under the division of Deutsche Post DHL which provides international express mail services and cargo transport. Dhl quickly became a world market leader in sea and air mail that operates around more than 220 countries and about 275,000 employees worldwide, generating 64 Billion Euros in 2013. Dhl aggressively expanded to countries including Eastern Bloc, Iran, China and venture into Vietnam in 1998.

3.0 General Environment 3.2.1 Legal-political

Vietnam governmental policies and regulations on the logistics sector are uncertain to provide create conditions for the Vietnams fledgling logistics industry to grow. However, the government started allocating funds into the industry and below is some contributions that act as main drivers: Implementation of favorable policies and supportive regulatory changes are catalyzing development by removing inefficiencies. Special economic regions for development of logistics industry On- going infrastructure projects such as national highway development project gain long-term prospects.

3.2.2 Economic With a 5.3% GDP growth rate from last year, Vietnam is a booming economy with main industrial activities revolving processing and manufacturing of products (Vietnam 2010). This provides DHL an advantage to dominate the less publicized logistic sector of Vietnam by exuberating different aspects of services such as DHL supply chain and DHL Global Forwarding. The further liberalization of services sub-sectors in Vietnamese economy is also a huge potential for DHL. However, according to Lucintel, a leading global management consulting research firm, the country attained momentous economic growth due to its economic reforms but also faces critical challenges such as inflation and constant currency depreciation. Besides, a recorded trade deficit of $9.84 in 2011 has led to serious trials such as increasing fiscal deficit and public debts that is highly vulnerable to economic shock.

Technological Technological section on Vietnam provides strategic inputs on information communications, transporting technology, laws, patents data and relevant laws. With the rise of web commerce, over 18 million internet users were recorded in 2009 and the IT savvy growth will provide DHL the opportunity of online entrepreneurial promotions. Besides, the government invests as much as 10 percent of its GDP on infrastructure including energy, telecommunications and transport. Improved

infrastructure developments and ancillary services provides excellent warehousing, distribution centers will further enhance the opportunities for existing logistics service provider such as DHL. Furthermore, VICT (Vietnam internal of commercial technology) introduced computerize EDI system, automated billing, gate operation and also CFS stock management that increase its efficiency and effectiveness. 3.2.4 Sociocultural The population of Vietnam houses approximately 88 million citizens (Vietnam 2010). This large quantity of people provides a wide customer base for DHL to target. However, the literacy of employees is low and lack of experienced logistics professionals is a major contributor to the scarcity of skilled labor. This is a major challenge and downside for DHL as it is hard to hire the right talent. 4.0 Business-level Strategy 4.1 Potential new entrants The threat of new entrants that eliminate new competitors from Vietnam is high as there are many barriers for FDI. The procedure of setting a new business in Vietnam requires tedious and lengthy period as firms are obliged to obtain business registration certificates issued by the Department of Planning and Investment up to 220 days, and a Vietnamese foreign accounts. Based on relative economies of scales, it can be inferred that Dhl have created an advantage extending to all incumbent firms as the greater the economies of scales, the greater the barrier. Brand loyalty will also be a component of differentiation strategy that creates primary
source of advantage. These barriers prevent logistics firm like DHL from indirectly invading the Vietnamese market.

4.2 Bargaining power of buyers As for International Logistic services, buyers have lesser bargaining power because they have only a few choices for international courier services that manage to operate at high fixed costs but there is still a lot of competition among local logistic providers. 4.3 Bargaining power of suppliers The bargaining power of suppliers is relatively low for DHL as they are large multinational company with the proficiencies and resources of supply chain and international forwarding

that many suppliers want to cooperate with them. Thus, there is a low reliance from DHL towards the supplier. 4.4 Threat of substitute products Threat of substitutes for DHL is high as there are many alternatives for this service in Vietnam which include PCS, A.C.I local service providers. However, replacement threats for international courier are moderate as there are only a few large multinational corporations such as United Parcel Service and FedEx. The rest of international courier providers can only provide low volume and price is relatively expensive. 4.5 Rivalry among competitors The rivalry among competitors is moderate for the logistic services as there are about 11-15 local competitors whereas 3-4 international competitors. There will be price wars and powerful rivalry through reducing price and enhance levels of services for customer in order to outstand competitors.

3.4 SWOT Analysis Strengths Prominence and proficient organization in the world being in the Vietnam market since 1989. Weaknesses As it is a massive firm, there will be complications in control as the top administration may face difficulties monitoring and supervising lower level workforces. High fixed cost will be suffered as there is a requirement for continuous maintenance equipment and warehousing. Faces issues of price manipulation during different season. Hence, profits will vary based and creates customer dissatisfaction which will affect DHL negatively in the long run.

Has a strong financial position with a record of 64Billion Euros in 2013

Has a variety of services and facilities such as DHL Supply Chain, DHL global Forwarding, DHL Wap Track,

Strong corporate and influential leaders that capable of managing divisions.

Expansion requires large areas to accommodate the facilities. Therefore, consideration is needed during land purchasing due to numerous requirements for building complex landmarks especially rural area. This will increase the need for managerial effort and be time consuming. Threats Corruption in Vietnam is high. Vietnam ranks 121 out of 179 countries under the Transparency Internationals Corruption Perceptions Index (Heritage 2010). Bad economic conditions in Vietnam. For example, the increase in inflation by 7% in 2009 (Vietnam 2010). Many competitors. For example, UPS, FEDEX

Opportunities Transformation in demographics such as increasing population, purchasing power and globalization.

Resource-Based View A fundamental proposition of the resource-based view is a firm consists a bundle of dynamic capabilities and productive resources. Resources are defined as intangible and tangible assets of a firm to implement its strategies. According to Bourne, competitiveness and high performance is not attained by following rules dictated by industry or institution such as government regulation, but profitability is achieved by focusing on protecting, developing and leveraging firms unique operational resources and capabilities. Resource-based view emphasises on the link between competitiveness and core competencies which this research aims at determining DHL Vietnam strengths and weaknesses that challenge them currently. Delivery processes is not a one way process anymore and does not always end the business cycle. Goods are often returned and downstream trading partners will have to reclaim it which incurred costs and time wasted. Historically, the actual volume of returns has been astounding. For example, returns are commonly be seen in magazine publishing industry, where half of all products are returned, and reoccurrence figures of 30% are common in retail catalogue industries. Return rates of 11 to 20% are recounted in consumer electronics industry where recalls of products such as laptop batteries, spinach, and toothpaste are

becoming everyday process which negatively impacts the bottom line. In Logistic industries, returns can reduce profits by as much as 30-35% due to transportation, warehousing, handling and disposal expenses that incurred to DHL are estimated at $100 Million per year. Therefore, reverse logistics is implemented to reduce the cost and increase efficiency.
Reverse logistics is the process of controlling the efficient, cost effective flow of raw materials, finished goods from point of consumption to the point of origin for the purpose of recapturing value or proper disposal. Goods or defects move from the customer to the distributor from typical destination to remanufacture and refurbish especially in hardware leasing business. If customers return the product, the logistic providers such as DHL will have to organize shipping, testing, recycling or disposing the product. However, insufficient resource commitments to reverse logistics are cited as one of the biggest problems in developing successful returns programs. Besides, manpower commitment is important and critics claim that attributing success to reverse logistics is too often neglected after delivery process. Managing the flow of goods through reserve supply chain faces a numbers of unique challenges. For instance, Jrg Seufert, executive vice president of DHL at Vietnam, a Human Resource standard and guidelines
division, propose that the reverse supply chain is regularly much more labour-intensive than the forward supply chain. Deutsche post is facing shrinking mail volumes as digital communications expand, DHL Germany realized that is current manpower was being challenged by the swift of technological advancement because of relatively old workforce with high attrition rate(average age of 45). DHL freight business in Vietnam is facing a workforce issue due to large knowledge gap that caused by high attrition rates and demographic effects in certain area. Furthermore, reverse logistic requires highly sophisticated computer software to help in analysing and forecasting the process of reverse supply chain. The software comes in only a few major languages which some workers find problematic to process data. DHL Vietnam expected 30% of internal finance and HR operations workforce will leave the company due to retirement over the next ten years which will create a server shortage of highly rare, critical expert and management functions in several departments. According to Ed Wodarski, a reverse supply chain specialist and chief strategist for the DHL supply chain division says that reverse logistics processes must often be customized and not all goods were return in the same conditions. Historically, DHL Vietnam tried to create standardization so that it can do the same thing at maximum efficiency in reverse logistic. However, not all return situations are the same and the process needs to be distinctive for each return based on the demand and products. Every circumstances is hard to imitate because the goods need to go through several department such as repairing, recycling and disposing before going through the effort of shipping it back again to clearinghouse. These departments are able to minimize the costs of return shipping but also burdened DHL by creating extra fixed cost such as warehousing and manpower. Reverse logistics often are not accustomed to handling large quantities, heavy and unpackaged items. Most of the returnable do not have serial number to track and trace at the time of pickup and these results in the potential loss or stealing of items during transportation process. Desertion of assets through negligence or criminal activities is a breach of data security which client expects DHL to demonstrate a proper security for high technology assets in transportation and chain of supervision at every process. On the other hand, there are also cost effective issues for the pick-up of small quantities assets from different points to another depends on Vietnam geographical area which can be prohibitively expensive and generate inefficient economics of scale.

Conclusion and recommendation As a result of factor like these, DHL should carry out the strategic-workforce-planning (SWP) an IT-based simulation models that helped in forecasting the development of workforce supply and age structures that shows all areas of company workforce groups in different job functions. Besides, DHL Vietnam can either implement new resolutions to better manage their reverse logistic process or outsource the procedures to service providers to gain economies of scales and specialized expertise in reverse logistics. According to Charlto, The key to a successful supply chain is not only planning how to distribute products but also bring back both customers returns and obsolete products. Managing returns effectively will recapture value to both firm and customer; provide rare services which inimitable by competitors and well organized firm to gain sustainable competitive advantage in the industry.