General Motors Vietnam Case Study
1) In order to increase customer lifetime value, what is/are the possible business strategy/strategies for General Motors (GM) Vietnam?
Most of the people believe, that new customer is the fundament of the profit of companies; however, indeed, the effect on revenue from the customer retention is influential, as well. In addition, the common strategy of customers acquisition costs 7 times more that actual customer retention. Customer lifetime value represents the present total amount of a customer to the company over their lifetime. In other words, CLV demonstrates the value of the customer retention and brand loyalty, which takes important roles in the revenue of the company. According to the data, from 25% to 40% of companies’ total revenue
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Nowadays, Vietnam has high taxes on the domestically produced cars. According to the thanhniennews.com, ‘ In Vietnam, cars are subject to numerous taxes and fees, including import tax, value-added tax, special consumption tax and registration fees’ (Anh, 2014). This tax regulations slow down the development of the whole car industry in the Vietnam. In another word, in case, the government does not relax the taxes on car production, the price for the cars is going to be unaffordable to the local consumers.
However, our prediction is based on an assumption that Vietnamese government won't decrease the taxes on the domestically produced cars. Implementing the AEC for Vietnamese automobile industry will cause an increase of importing cars. One of the first strategies that AEC is going to take is decreasing the tax on the import automobile products.According to the road map of the ASEAN, the import tax rate will be reduced to 30- 20% in 2016, 10% in 2017 and totally removed at 2018.Consequently, the amount of import from all ASEAN countries to Vietnam will face dramatic grow. With more automobile products in the market, the competition is going to be increased, as well. Due to the fact that Vietnam is a high potential market, with growing demand for the automobiles, increasing the disposable income of the population. Therefore, with the implementation of AEC in Vietnam, the domestic automobile producing companies will suffer from competition in the
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