IB Business SL IA

Should Lock & Lock sustain its F2C model to remain competitive and maximize its profitability in the Vietnamese market?

INTRODUCTION

Background Information

Lock & Lock is a company manufacturing household product, headquartered in South Korea. Since its establishment in 1978, the company has been exporting its products – food containers, bottles, and cookware to 119 countries worldwide.1

One of its production units is located in Vietnam. The country has a population around 98 million2, among whom 70% belong to the productive population. It has abundant labor and consumption potential, as well as a significant economic growth rate. Lock & Lock, with its premium household goods, has been successful in the market since its penetration as consumers’ purchasing power and preference for branded products increased. In fact, the company is ranked in the Top 20 famous brands in Vietnam and has been voted as the Top 100 best products by Vietnam Economics times.3

Business Problem

Considering that most of the Vietnamese population are low-income earners4, it is highly necessary for Lock & Lock to maintain its price-competitiveness to appeal to the consumers. Hence, the company decided to minimize its operating cost via the Factory-to-Consumer (F2C) model and offer its product at a more affordable and competitive price. However, the Sales Director is concerned about sustaining this business model as the e-commerce market has been significantly growing in Vietnam. Considering the market phenomenon, it may be wiser for Lock & Lock to focus on the online market.

Hence, the research question is: “Should Lock & Lock sustain its Factory-to-Consumer (F2C) model to remain competitive and maximize its profitability in the Vietnamese market?”