You are proud of your success. Your products are good, and you have developed valuable new product development and production process know-how. Moreover, you have also established good relationships with your employees and with the community around the small factory. You do not want to lose everything. Therefore, you told your friend and the Vietnamese CEO that you will consider all their suggestions. You recognize they may help you to remain competitive and to grow more rapidly. However, at the same time, you are also aware that all of them present potential problems. You are stuck with a dilemma in your mind. You must ponder all the kinds of risks and opportunities the proposals may represent and think about possible other ways to solve the problems. You must try to find the best trade-off from a business point of view but also from an ethical and social responsibility perspective.

The best way to make decisions is to look at all the proposals and assess the opportunities and threats they represent to your business. Then, you must devise the best strategy in the short, medium, and long term.

You are a US citizen with a background in engineering. You have established a profitable business in Vietnam 7 years ago. The company works as a supplier of electronic components of medium-range technological level, almost exclusively for two foreign companies (one from the US and one from Korea) which produce in Vietnam finished products such as fridges, ovens, toasters, and other consumer devices that are exported to Japan and the US. Starting alone, you have now 45 employees and you plan to recruit more in the years to come. Your ambition is to become a supplier of higher value-added components and enlarge your customer base. Competition is becoming very tough for companies that offer products that are not very differentiated, and you think it is very risky to depend on two companies for the bulk of your business. You produce the highest value-added parts and components yourself and you outsource those that are standardized and do not count much in the value-added of your product. You also import software from a US company that is installed in your products. Everything worked well so far but you face several problems related to your software purchase that could threaten the competitiveness of your business: 1. The US company significantly raised the price of the software (+ 40%). It would be difficult to bargain with them because you are not a very important customer. 2. Your two clients face increasing competition and want you to reduce your price by 20% this year and another 10% next year. 3. The Vietnamese government decided to significantly raise the minimum wage to cope with the 15% inflation rate in the country. It is likely to push up your labor cost. Overall, you think the cost of your products will go up by 6%, a significant increase, making it difficult to maintain your competitiveness. You discussed all those matters with a friend, and he suggested several things that he thinks could help you to remain competitive: 1. Vietnam has a thriving software industry, and it is not difficult to find a company ready to work for you. He already introduced a company that can develop similar software for a much lower price by using the technology of the US company. Your friend and the Vietnamese company's CEO recognize that the US is exerting pressure on Vietnam to respect intellectual property rights. However, they assure you that you should not worry too much. Vietnamese public authorities won't check what you are doing. They are only interested in having the Vietnamese economy grows. The Vietnamese CEO knows the officials in charge of the products' inspection before they are exported. They can facilitate the process if you treat them appropriately. Moreover, he is confident you can become a more successful company in Vietnam. He has high-level connections with public authorities and large Vietnamese companies. So, he can help you to get access to public markets for your products and to deepen relationships in the Vietnamese business world. 2. Your friend also believes there are components that you should not produce yourself. This is the best solution to lower your cost. You can find Chinese, Thai, and Vietnamese companies making similar products. Of course, your customers will check the origin of the main components and you must be careful. However, your friend is confident that local suppliers can be good partners. They are better than before in terms of quality and have a lower cost basis. Your two customers are in a rush to produce and export. You can assume they will accept your products if you are competitive on price and deliver on time. Anyway, you can help the local companies to become even better at transferring some of your know-how. So, the best solution for you is to focus on what you do the best and outsource all the other parts and components that do not contribute significantly to the value-added of your products. 3. Otherwise, the other solution would be to lay off some of your employees. Some tasks to make your products are quite simple. So, you could replace some of your regular employees with people working from home for a much lower wage. Many Vietnamese people are looking for a job and you can easily impose your conditions. You are a US citizen with a background in engineering. You have established a profitable business in Vietnam 7 years ago. The company works as a supplier of electronic components of medium-range technological level, almost exclusively for two foreign companies (one from the US and one from Korea) which produce in Vietnam finished products such as fridges, ovens, toasters, and other consumer devices that are exported to Japan and the US. Starting alone, you have now 45 employees and you plan to recruit more in the years to come. Your ambition is to become a supplier of higher value-added components and enlarge your customer base. Competition is becoming very tough for companies that offer products that are not very differentiated, and you think it is very risky to depend on two companies for the bulk of your business. You produce the highest value-added parts and components yourself and you outsource those that are standardized and do not count much in the value-added of your product. You also import software from a US company that is installed in your products. Everything worked well so far but you face several problems related to your software purchase that could threaten the competitiveness of your business: 1. The US company significantly raised the price of the software (+ 40%). It would be difficult to bargain with them because you are not a very important customer. 2. Your two clients face increasing competition and want you to reduce your price by 20% this year and another 10% next year. 3. The Vietnamese government decided to significantly raise the minimum wage to cope with the 15% inflation rate in the country. It is likely to push up your labor cost. Overall, you think the cost of your products will go up by 6%, a significant increase, making it difficult to maintain your competitiveness. You discussed all those matters with a friend, and he suggested several things that he thinks could help you to remain competitive: 1. Vietnam has a thriving software industry, and it is not difficult to find a company ready to work for you. He already introduced a company that can develop similar software for a much lower price by using the technology of the US company. Your friend and the Vietnamese company's CEO recognize that the US is exerting pressure on Vietnam to respect intellectual property rights. However, they assure you that you should not worry too much. Vietnamese public authorities won't check what you are doing. They are only interested in having the Vietnamese economy grows. The Vietnamese CEO knows the officials in charge of the products' inspection before they are exported. They can facilitate the process if you treat them appropriately. Moreover, he is confident you can become a more successful company in Vietnam. He has high-level connections with public authorities and large Vietnamese companies. So, he can help you to get access to public markets for your products and to deepen relationships in the Vietnamese business world. 2. Your friend also believes there are components that you should not produce yourself. This is the best solution to lower your cost. You can find Chinese, Thai, and Vietnamese companies making similar products. Of course, your customers will check the origin of the main components and you must be careful. However, your friend is confident that local suppliers can be good partners. They are better than before in terms of quality and have a lower cost basis. Your two customers are in a rush to produce and export. You can assume they will accept your products if you are competitive on price and deliver on time. Anyway, you can help the local companies to become even better at transferring some of your know-how. So, the best solution for you is to focus on what you do the best and outsource all the other parts and components that do not contribute significantly to the value-added of your products. 3. Otherwise, the other solution would be to lay off some of your employees. Some tasks to make your products are quite simple. So, you could replace some of your regular employees with people working from home for a much lower wage. Many Vietnamese people are looking for a job and you can easily impose your conditions