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ContentsIntroduction..............................................................................................................................2
Main Content............................................................................................................................3
1. Define the context of GARMENT 10 business strategy:.................................................3
1.1. Vision statement’s theory and its application in GARMENT 10 Corporation .......3
1.2. Mission statement’s theory and its application in GARMENT 10 .........................4
1.3. Value’s theory and its application in GARMENT 10..............................................5
1.4. Business strategy of GARMENT 10.......................................................................6
2. Explain the significance of stakeholder analysis............................................................7
2.1. Definition of stake holder........................................................................................7
2.2. Influence of stakeholder...........................................................................................7
3. External environment and organizational audit of GARMENT 10...............................12
3.1. External environment.............................................................................................12
3.2. Organizational audit...............................................................................................20
4. Apply strategic positioning technique to the analysis of GARMENT 10......................27
Recommendation....................................................................................................................30
Conclusion...............................................................................................................................31
References...............................................................................................................................32
1
IntroductionKINH DO was established in 1993 and has gone through 17 years of formation and
development. Up to now, we, KINH DO has become a system of corporations in the field of
foodstuff including: cake, candy, beverage, ice-cream, and products from milk.
From the size of only 70 staffs at the initial establishment, up to now, KINH DO has
total staff of over 7,741 persons. Total charter capital of KINH DO Corporation is 3,483.1
billion dong. Total revenue reaches 3,471.5 billion dong, in which the revenue from foodstuff
accounts for 99.2%, total profit reaches 756.1 billion dong.
Products under the KINH DO trademark are selling in all provinces through a
diversified distribution system nationwide including 524 distributors, 31 KINH DO Bakery
shops and 200,000 retail outlets as well as franchised distribution systems with a growth rate
of 30%/year. The products of KINH DO have been sold to 35 countries; particularly KINH
DO has conquered the most difficult customers such as Japan, USA, France, Germany and
Singapore, etc.
2
Content1. Define the context of KINH DO business strategy:
A business strategy typically is a document that clearly articulates the direction a
business will pursue and the steps it will take to achieve its goals. In a standard business plan,
the business strategy results from goals established to support the mission and vision
statement of the business.
1.1. Vision statement’s theory and its application in KINH DO Corporation
1.1.1. Vision statement’s theory
The vision statement is a form of values statement which is simply an
acknowledgment of the inherent worth of the company and the products it produces. In some
ways, a vision statement also is intended to be no more than a couple of sentences that clearly
outline a specific goal of the company, while not providing the details of how that goal will
be reached. (www.wisegeek.com)
1.1.2. Vision statement of KINH DO
According to official website of KINH DO, in terms of KINH DO Foodstuff, its
vision is specified very simply as:
“Flavor your life”
(Source: www.kinhdo.vn)
3
Vision statement
Mission statement
Value
In the first place, this vision statement sounds like very short and compendious.
However, as the requirements of a vision statement, in my opinion, this statement is too
equivocal and general. In specific, it has not shown the readers the answer for the question
“what we want to become”. There is no clear position or achievement that we can find out
through this vision statement. Moreover, it does not have any figure or time-bound which
means it does not transfer enough information as well as the level of working motivation for
employees.
In overall, with the long operation history and the talents of the founding chairman,
Mr. Tran Kim Thanh, KINH DO should have a clearer and bigger vision in the future.
Therefore, from the information on KINH DO’s official website, as the nearly first company
which operating in the field Foodstuff in Vietnam, it is easy to see why KINH DO has a
really big vision as quickly enlarge the foodstuff division to become a leading foodstuff
group in Vietnam as well as to become one of the leading foodstuff group in the
Southeast-Asian region.
1.2. Mission statement’s theory and its application in KINH DO
1.2.1. Mission statement’s theory
A mission statement is a formal, short, written statement of the purpose of a
company or organization. The mission statement will guide the actions of the organization,
spell out its overall goal, provide a sense of direction, and guide decision-making. It also
provides the framework or context within which the company's strategies are formulated.
(www.wisegeek.com)
1.2.2. Mission statement of KINH DO
Due to the variety in terms of the number of field which KINH DO has taken part in,
there are also specific missions for each field which can help KINH DO to manage
organization better and achieve these missions well. However, Foodstuff could be always
seen as the first and major field which KINH DO focuses on. Therefore, in terms of
Foodstuff, the mission of KINH DO is presented as:
4
Consumer Mission is to identify and produce affordable staple and packaged foods,
snacks, bakery products, beverages and juices, confectionaries and condiments,
instant foods, processed meats and health supplements which people want.
Shareholder Mission is to not only maximize investment returns over the long-term,
but also to manage risk in order to give surety and confidence those investments can
achieve our shareholder's goals.
Partner Mission is to create sustainable value for supply chain partners through
creating innovative food products which address consumer demand trends and satisfy
or exceed consumer expectations, and provide equitable returns for all.
Staff Mission is to nurture and develop the skills and abilities of our people to meet
the professional demands of their work and satisfy their personal needs. In this way
we create dynamic, creative, innovative and dependable members of the KINH DO
family.
Community Mission is to contribute to the communities in which we operate through
sponsorship programs and targeted community development and support activities.
(www.kinhdo.vn)
Unlike some other companies, KINH DO in general and KINH DO Foodstuff in
particular have specific mission for each position both inside and outside company which are:
consumer, shareholder, partner, staff and community. By dividing missions clearly like this,
KINH DO can somehow find the best way to manage and achieve them as well as satisfy
each kind of stakeholder.
1.3. Value’s theory and its application in KINH DO
1.3.1. Business value’s theory
"Business value" is a broad term that is used to identify the many different forms or
types of value that go into the overall stability of a business over the years. While economic
value is accounted for, business value also includes components such as the value of long-
time customers to the operation, the talents of employees, the efficiency of management, and
even the value of channel partners in the overall structure of the company.
(www.wisegeek.com)
5
1.3.2. Values of KINH DO
KINH DO Corporation employs synergies to integrate the creation delivery of Food
products and services which make Living Fine and deliver the greatest returns and rewards.
Therefore, its values are really obvious to achieve this.
Creation and Innovation
Dynamism
Pioneering and Vanguardism
Quality
Trust
Vision (www.kinhdo.vn)
With the overall mission that using state-of-the-art technologies, research and
developments, quality raw materials from environmentally sustainable sources and the
creativity and innovation of our people and selected external resources to produce and
deliver an extensive range of affordable staple and packaged foods, snacks, bakery products,
beverages and juices, confectionaries and condiments, instant foods, processed meats and
health supplements; KINH DO has set up the list of value which clearly present the aim of
bringing about the best convenience as well as products’ quality for customers.
1.4. Business strategy of KINH DO
In a severe competitive environment as well as the demand for consuming food in
general and confectionery in particular nowadays, according to the internal and external
factors, KINH DO has chosen the general strategy from 2006 to 2011 is hold fast and
increase the growth rate annually about 15% and maintain continuously the profitability with
ROE ratio from 25% and above by extending the market (locally and globally), take full
advantage of production ability, invest in human resources and promote the business
corporation with foreign partners.
However, in specific, when talking about the most effective strategy which KINH DO
has applied recently, it should be mentioned as M&A. The big and first merger between three
companies KDC – NKD – KIDO. This one could be considered as the spotlight of M&A of
Vietnam in 2010. In December of 2010, KDC has released more shares to take stock swap
6
NKD and KIDO of shareholders, thereby, KDC owns 100% shares of these companies, and
NKD and KIDO will transform into the one-member limited company under the KDC after
the swap. (www.atpvietnam.com)
2. Explain the significance of stakeholder analysis
2.1. Definition of stake holder
As presented in www.worldbank.org, “a stakeholder is any entity with a declared or
conceivable interest or stake in a policy concern. The range of stakeholders relevant to
consider for analysis varies according to the complexity of the reform area targeted and the
type of reform proposed and, where the stakeholders are not organized, the incentive to
include them. Stakeholders can be of any form, size and capacity”. They can be individuals,
organizations, or unorganized groups. According to BPP Professional Education highlighted,
(2004) there are three main kinds of stakeholders:
Internal stake holders of an organization: include managers and employers
Connected stakeholders: embrace shareholders, customers, suppliers, financiers, and
competitors
External stakeholders group: the central government, local authorities, pressure
group, and community representatives
2.2. Influence of stakeholder
The level of effects of stakeholders on an organization could be separate into four
parts as the mapping below
Low interest/aspirations High interest/aspirations
Low
power/influenceMinimal effort Keep informed
High
power/influenceKeep satisfied Key players
Figure 01: Stakeholder mapping 1
7
“Key players”: strategy must be acceptable to them, at least
Stakeholders in “keep satisfied” segment must be treated with care. While often
passive, they are capable of being key players
Stakeholders in “keep informed” segment do not have great ability to influence
strategy, but their views can be important in influencing more power stakeholders,
perhaps by lobbying
“Minimal effort” is expended on this segment.”
Types Stakeholders
Stakeholder Mapping
Key
Players
Keep
Satisfied
Keep
informed
Minimal
effort
Internal
Stakeholders
Managers X
Employees X
Connected
Stakeholders
Shareholders X
Customers X
Suppliers X
Competitors X
External
Stakeholders
Central Government X
Local Authorities X
Community
Representatives
X
Figure 02: Stakeholder mapping 2
Internal Stakeholders
- Managers
In company, managers are the one who adopt good verbal communication skills with
their team members, so that the goals and targets can be discussed in a useful manner.
Besides, managers also have complete understanding of the targets fixed by the organization
in order to lead the company accordingly to follow them. In addition, managers exist to
motivate the workers, so that they can easily adapt to the prevailing working environment.
Furthermore, without the influential management from managers, the growth of the
8
organization as well as the employees is hampered and this can bring the work to a standstill.
Their duty is to make arrangement for the growth of the employees through training and
constant evaluation process. In terms of KINH DO, they often provide proper benefits, both
material and spiritual needs through training and developing opportunities for managers.
Thus, it can be seen that management influence is of great importance to keep the
organization’s working style on the right track. Hence, the role of an influential manager is
considered important for a business organization.
Figure 03: KINH DO’s managers
9
- Employees
If the managers are the leaders, who have a general observation, then employees are
the ones who directly do the specific jobs to produce products. Therefore, the ability and the
attitude towards jobs of employees strongly influence the operating process as well as the
products’ quality and company’s prestige. Therefore, with the vision “quickly enlarge the
foodstuff division to become a leading foodstuff group in Vietnam as well as to become
one of the leading foodstuff groups in the Southeast-Asian region”, KINH DO needs to
take the satisfaction of its 7,741 employees into consideration.
Connected Stakeholders
- Suppliers
Without suppliers, it would be very difficult for a company to start up. Therefore, the
influence of suppliers is obvious. According to BPP Professional Education, 2004; suppliers
are the ones who will provide business goods, services or financial capital and “if an
organization wishes to follow a strategy that improves the working capital management by
paying suppliers late, existing suppliers may decide to stop supplying the organization
leading to the increased cost of finding new suppliers”. In terms of KINH DO, from the start
up time until now, they must have taken advantages from suppliers much for the success
now. They might be provided raw material, financial capital, technology, etc. However, the
suppliers have no rights to participate in the operating or any decision making process of
company.
- Customers
According to the contemporary marketing, satisfying customers is always the main
objectives of every company to exist. No customer, no business. Therefore, customers play a
very important role in business operation. They could be seen as the output for the products
of company in the operating process. Being successful or failing in satisfying customers will
result directly to the destiny of company: success or failure. Hence, KINH DO needs to pay
attention strongly to satisfy the needs and wants of this kind of stakeholder. And in fact, in
the business strategies, KINH DO somehow pays attention to the position of company which
is represented by the satisfaction of customer and always has plans to improve it.
10
- Shareholders
As a Corporation which is listed, the role of shareholders in the operation of KINH
DO is truly important. Briefly, shareholders can be seen as the ones who give company the
essential source of capital for all operating activities.
One of the most important shareholder rights is being compensated when a company
makes a profit. If a person purchases stock in a company, it is not the company’s option to
share or to refuse that person a portion of the earnings. A shareholder is legally entitled to a
certain portion. The amount that he is entitled to, however, will vary based upon how much
stock he owns and the type of shareholder that he is. In case of company delays the time of
pay off the dividends, pay less than actual or make loss, it is very easy that shareholders feel
unsatisfied and leave.
Therefore, the values and rights of shareholders must be considered carefully;
especially with big Corporation like KINH DO, satisfying shareholders is the same as
maintaining the strength of firms.
External Stakeholders
- Central government
Beside the rules and procedures inside the company that internal stakeholders have to
follow, organization must know and understand clearly the legal restriction provided by
Central government. Government always encourage and create good conditions for business
to operate, however, in return, each company must follow the law given from it to ensure that
there is nothing which harms to country as well as citizens.
11
3. External environment and organizational audit of KINH DO
3.1. External environment
3.1.1. PESTEL model – macro environment
- Economic
YearGDP
(billion USD)
GDP per capita
(USD)Growth rate
2007 71.4 823 8.5%
2008 89.83 1,024 6.2%
2009 92.84 1,040 5.3%
2010 104.6 1,165 6.78%
Figure 04: Vietnamese GDP (www.gso.gov.vn)
The world economy in 2010 despite recovering from the global financial crisis and
there are positive changes, but generally not really stable and also potentially adverse factors
affecting our economy. The table above presents a relatively high growth rate to compare
with 2008 of 6.31%, higher than the level of 2009 with 5.32% and exceeding targets of 6.5%.
The higher GDP is, the higher income that consumers have. In specific, the GDP per capita of
Vietnamese in 2010 is 1,165 USD which is much higher than that on 2009.
In particular, confectionery is potential export items. Confectionery sector in Vietnam
in recent years have developed by remarkable steps due to a stable consuming demand
domestic and foreign. The export turnover of Vietnam's confectionery rose dramatically,
accounting for 0.5% of total merchandise exports of the country in 2010. Confectionery
products of Vietnam are now available in many countries such as Cambodia, China, United
States, Japan, UAE, Hong Kong, Taiwan and so on; in which Cambodia is a stable market,
has taken the lead in turnover Export of Vietnamese confectionery. China is just the new
market but brings about the highest growth rates.
- Socio-cultural
Life is becoming fast and eventful, KINH DO confectionery has many flavors, and
the service is fast and convenient and affordable. Therefore, its product tends to be very
12
popular among citizen. Vietnam is developing and integrating, thus the people do not just
feed and clothe themselves properly but even demand for delicious food and good clothes.
KINH DO is one of very few companies which can provide variously and uniquely many
kinds of confectionery products. KINH DO’s Moon cake has the flavor which is innovate
year by year and cover from popular to luxury style. For example, KINH DO provides a kind
of Pizza which is small with the low price that about from 10,000 to 12,000 VND.
Besides, the movement of encouraging Vietnamese people to use Vietnamese goods
has been launched and expanded also leads to the development of KINH DO’s confectionery.
- Technology
This is one of the factors that are very active, containing many opportunities and
threats to businesses. The pressures and threats from technology can be:
The introduction of new technologies to enhance the appearance and competitive
advantages of alternative products, threatening the traditional products of existing
industries.
The explosion of new technologies makes existing technology obsolete and creates
pressure for enterprises to technological innovation to enhance competitiveness.
The born of new technology as creating favorable conditions for the penetration of
new and increasing pressures threaten the existing businesses in the industry.
The explosion of new technology makes the technology life cycle tends to be short,
this feature increases the pressure to shorten the depreciation period than before.
From the beginning, the KINH DO’s steering committee is clearly aware of the
importance of technology if company wants to have a long-term operation, dominate the
domestic market and compete with other Foodstuff company in the world. Therefore, KINH
DO always catches up with the most modern technologies in the world.
Early on, KINH DO was in the right direction with the investment in technology
production. In 1996, KINH DO imported the Danish Cookies lines which is worth $ 5 million
- Cookies industry was born. Since then, KINH DO succeeded consecutively in terms of
bread industry, industrial cake, chocolate, hard candy, soft candy. The most prominent
13
feature was in 2000, Cracker lines were imported from Europe and the birth of AFC (the
name of a product line of KINH DO) has set up brand names KINH DO.
Thus, until now, food sales contribute over 90% of total KINH DO Group sales
annually.
- Environmental
In recent decades, humanity had to face with environmental pollution is increasing,
the depletion and scarcity of resources and energy, the imbalance of ecological environment.
In the context of so, the business strategy of KINH DO must meet the following
requirements:
Prioritize the development of business activities or services in order to exploit the
conditions and advantages of the natural environment on the basis of ensuring the
maintenance, regeneration and contribute to enhancing the natural conditions if
possible.
There was a sense of saving and efficient use of natural resources, particularly the
needs to make administrators aware of moving away from the use of resources cannot
be recycled into using artificial materials.
Promote research and development of technology and products help protect the
environment, ecology, and minimize the effects of environmental pollution caused by
the operation of the business causes.
Confectionery market is seasonal. Therefore, consumption increased rapidly in
September after the time of the Lunar New Year, in which staples taste of Vietnam as
traditional cakes, hard candy, soft, luxury biscuits, assorted jams, nuts and so on being
consumed strongly.
- Legal
Since the tariff reductions for confectionery has decreased to 20% in 2003, the
domestic firms has been under the competitive pressure from imports to continual innovation
in technology. This opens up more opportunities than challenges because lowering trade
barriers will create more favourable to the product of Vietnamese enterprise to go into the
ASEAN countries.
14
3.1.2. Five Forces analysis
Figure 05: Michael E. Porter’s five forces (www.y29.wikidot.com)
Rivalry
In terms of rivalry, KINH DO truly has a lot of competitors. For example: Bibica,
Vinabico, or Haiha kotobuki.
o Pricing pressure
In a market which has many rivalries like Vietnam, KINH DO always has to face the
pressure of reducing price to increase the competitive strength of company. By the way, the
decrease of product’s price also leads to many other promotional activities. Therefore,
economies of scale really deserves to concern about.
o Products’ quality
Due to the big number of companies which are participating in Vietnamese market,
the products’ suppliers are various. Therefore, beside pricing pressure, the products’ quality
is even much more important which could be seen as the determined factor for KINH DO to
maintain a stable development. Furthermore, the development of economy brings about the
increase in income and demand of customer. In specific, now they will not accept to pay
amount of money for a low quality product; indeed, they are willing to even give out a bigger
amount of money just for good quality products. Therefore, quality is always the criterion
which is focused the most in KINH DO.
15
o Changing of market scale
Vietnam now is having a potential confectionery industry. In 2008, the output is
estimated as 476,000 thousand tons with the retail turnover accounted for about 674 million
USD. In 2012, the expectation is about 706,000 thousand tons with 1,446 million USD in
terms of sales. The current market share in Vietnam could be considered as a competitive
advantage for KINH DO. As mentioned so far, KINH DO now is accounting for the biggest
market share in Vietnamese market in terms of confectionery industry. However, KINH DO
is still suffering a really strong pressure from rivalries, which always use the most modern
technologies and be ready to use trickery to topple KINH DO.
Power of suppliers
In every industry, suppliers always play a very important role. Especially in terms of
confectionery industry like KINH DO, suppliers could be considered as the determined
factor. Therefore, KINH DO needs to maintain a strong and close relationship with its
suppliers to create a stable competitive structure. The suppliers can put pressure to business
by many ways.
o Pressure from quality of raw material
Suppliers can affirm their power just by reducing the quality of raw materials. The
objects that KINH DO needs to concern about are: raw material or equipment suppliers,
banks or credit agency, human resources.
o Price
KINH DO uses both domestic and foreign raw materials. However, normally, KINH
DO buys by big orders; therefore, its bargaining power is very high.
o Delivery’s rate of progress
KINH DO Company signs the contracts with suppliers very strictly; therefore, the
delivery’s rate of progress is always ensured. Besides, company usually have good plan of
using raw material which lead easily to gain initiative of ensuring enough material for
manufacture.
16
o Number of suppliers
The whole suppliers of KINH DO could be divided into some specific group of
goods.
- Flour: suppliers are Binh Dong, Dai Phong
- Sugar: Bien Hoa sugar factory, Juna, Bonborn.
- Dairy butter: mainly imported from foreign countries through distributors or agency
in Vietnam
- Aromatic species and adjuvant: also imported from foreign countries: Mane, IFF,
Griffit, and Cornell Bros
As can be seen from the list of suppliers above, it is easy to see how KINH DO pay
attention to the quality of its products by choosing raw material from the sources which were
selected carefully.
With the corporate vision “Living Fine” and the food division “flavor your life”,
KINH DO’s mission is to supply of safe, delicious, nutritious, convenient and unique foods to
consumers. Basing on that mission, we always consider our suppliers as the very important
partners, who can help KINH DO to achieve our mission.
With the position of a leading foodstuff Corporation in Vietnam, KINH DO always
cooperate with both domestic and abroad prestigious suppliers in order to exploit the good
quality and certified sources of materials.
KINH DO always highly appreciates suppliers, who have responsibility, creatively
renovation, and continuously improve the material quality and maintain competitive price in
the market. Such effort will create and maintain the win-win and long-term cooperation.
Power of customer
Normally, businesses will be affected by the scale product demand or current services
and potential benefits desired, tastes, the solvency of the customer. KINH DO interested in
this information to orient its operation.
17
o Pricing pressure
Even though Vietnamese economy is increasing and brings about the higher income
of customer and be willing to pay more for high quality products, however, in case of
comparing between two products which have the same quality, customer still prefer the one
which has lower price. Therefore, besides concerning about quality of products, KINH DO
also needs to find ways to lower its products’ price; for example, by trying to lower the cost.
o Pressure of products’ quality
Vietnam is a young market and be eager to absorb the new ideas from Western.
However, Vietnamese consumers have not had the enough bargaining power to force big
companies to change themselves and improve. Besides, Vietnamese also have a very vague
impression about big firms around them. According to a research of Nielsen, about 60%
Vietnamese consumers believe in the sweet advertisements, just after Philippines and Brazil.
Confectionery has existed together with Vietnamese culture for a very long time, however,
understanding and catching up with the updated confectionery products are still the weak
point of Vietnamese. Therefore, somehow Vietnamese customers still put a not so strong
pressure on big companies and KINH DO is not an exception.
Threats from substitute products
The goods can be substituted for each other and lead to competition in the market. As
the price of primary products increased, the trend will encourage the use of alternative
products and vice versa. Because the highest price is controlled when substitutes appear,
therefore, it will limit the potential profit of the industry. Thus, KINH DO must continually
research and test potential alternative products.
In fact, most substitute products are the result of the tech-boom. Therefore, KINH DO
also needs to consider resources for development and application of new technology into
business strategy.
Confectionery product is not the one of daily consumption, but demands for these
products are always changing because of consumer demand. The product requirements may
vary according to several trends such as product trends for healthy, convenience... Thus,
18
substitutes in confectionery industry which KINH DO is facing are products made with
different materials that can meet those needs of consumers.
Threats of new entrants
o Rivalry who has not been in Vietnamese market but will appear in the future
and trade the same products as KINH DO
Beside potential new entrants who are preparing to break into confectionery industry,
KINH DO will face very strong competitors who have long seniority in terms of trading
confectionery when Vietnam enter AFTA, WTO such as Kellog, Cookies company from
Denmark, Malaysia.
o Rivalry who has been in Vietnamese market and traded another products but
will trade the same products as KINH DO
New competitors entering the business sector could reduce the profitability of their
businesses by putting into operation new production capacities, with the desire to gain market
share and the necessary resources.
The question for KINH DO is to maintain a lawful fence to prevent intrusion from
outside. These barriers include economic advantages of scale, product differentiation, access
to distribution channels, capital requirements, switching costs. With demand for food
increasing, plus the investment incentives of the state and high efficiency in the confectionery
business, a growing number of investors are involve in this industry.
In terms of food sector, important barriers for new competitors entering the industry
are financial resources to the possibility of capital. Since this is a very important factor in the
investment product research, technology investments, to promote products to consumers. For
KINH DO, financial resources have helped company to make a difference in product
diversification, creation of product price and quality of competitiveness through appropriate
investment.
19
3.2. Organizational audit
3.2.1. Core competences of KINH DO
Business development: in years past, KINH DO always posted higher annual sales
growth than the average rate of the industry. The corporation’s leading position in the sweets
and cake sector is clear evidence. KINH DO always attaches importance to increasing the
number of retail points, distributors and salespersons.
Diverse and wide-reaching distribution channels: KINH DO pays much attention
to not only traditional channels but also to modern and public channels including
supermarkets, bakeries, schools and recreational areas. So far, the corporation’s products are
on sale at stores and shops in both urban and rural areas.
Professional staff: KINH DO always places human resources at the center of its
business plans and the company has invested heavily in providing employees with know-how
and skills by organizing seminars and courses for them. The KINH DO training center has
been opened to facilitate this purpose as well as to help staff get a better understanding of
their jobs and what the others are doing with an aim to enhance coordination among
employees and their work efficiency.
Management system: KINH DO has been operating successfully and efficiently over
the past ten years due to a good system of management. The company has spent much on
information technology ERP of SAP as a cost-effective tool to aid in better management,
Enterprise Resource Planning (ERP) and Point of Sale (POS) software to support distribution
and the planning and market forecast department to help adjust business plans in accordance
with market changes.
Market share: In terms of total sales, KINH DO accounts for the largest market
share in the domestic market with 20% leave behind Haiha kotobuki (7%) and Bibica (3%),
which are the biggest competitors of KINH DO in Vietnam. Other small confectionery
companies have the total market share of about 30-40%.
In overall, with the steady development year by year, KINH DO truly showed the
customer a strong and trustful brand name, especially in terms of Foodstuff. Besides, in
common with the development of company, the distribution channel is also extended widely
20
which can bring the brand name of KINH DO throughout the country and raise the awareness
among citizen as well. Moreover, with the strictness in terms of recruitment, KINH DO has
very active and creative staffs. The leadership style in KINH DO (could be guessed as
democratic) also help employees have chances to coordinate and work well with each other.
3.2.2. Value chain
Also known as value chain analysis, value chain is a strategy that involves the
creation of a systematic set of steps or activities that incrementally add value to the goods or
services produced.
Figure 06: Michael Porter’s value chain (www.12manage.com)
VALUE CHAIN
3.2.2.1. Inbound logistics
As mentioned so far, suppliers of KINH DO is various and specific for each group of
raw material. With the position as the leading confectionery company in Vietnamese market,
KINH DO always asks for the best raw materials’ qualities which mostly are imported from
foreign countries.
Human resources management
In 2009, KINH DO continued to undergo changes in quality. Besides continuously
retaining and developing staff via an advanced training mechanism, internal transfers and
promotions, KINH DO also paid attention to drawing new labour from outside that possessed
the competencies and attributes suiting KINH DO culture.
21
Infrastructure
Owing to a vast and modern network of factories, KINH DO can host and store large
amounts of raw materials to ensure the best quality and do not delay delivery time.
Otherwise, KINH DO also carried out a lot of training program for worker which aimed at
raising the employees' awareness of work safety, food hygiene and ISO. Especially, in 2009,
KTC even organized 3 management training program for over 100 key staffs in order to
improve the management capacity of the whole system. From these strengths, the company
will easily produce big orders of both domestic and overseas market; ensure both quality and
quantity of customer demand. (www.kinhdo.vn)
3.2.2.2. Operations
This is the process of transforming inputs into finished products. In this process,
KINH DO needs to pay attention more to human resources and modern technology to ensure
the quality of products.
Human resources management
In 2009, KINH DO has continued to invest in training and staff development. KINH
DO training centre has organized training for the 3,685 arrivals, increase to 17% compared
with 2008. The training programs of KINH DO training center focuses on raising awareness
of officials and employees on occupational, hygiene and food safety, thereby raising the
efficiency of output quality. (www.kinhdo.vn)
Infrastructure
KINH DO has factory area about 350.000m2. In particular, the factory in Hiep Binh
Phuoc Ward, Thu Duc District, Ho Chi Minh City has an area of 14.000m ². In order to serve
markets in Hanoi and Northern provinces, a factory was built in Ban Yen Nhan town of Hung
Yen with 28.000m ². Besides, in 2009, KINH DO moved its head office to a new building at
141 Nguyen Du Street, District 1. This new working environment is expected to promote a
more open and dynamic culture for the whole company. (www.kinhdo.vn)
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Technology
In terms of technology, KINH DO is always up-to-date with the most modern
technology in the world. In specific, KINH DO has invested 10 million USD for modern
technologies for operating from Western countries like Italy, Denmark and USA.
3.2.2.3. Outbound logistics
This is the warehousing and distribution of finished goods.
Human resources management
KINH DO training help people understand not only their jobs but also to understand
other people's work to increase coordination and improve efficiency at work:
- Receiving orders from the bakery system.
- Balance inventory, capacity planning and production.
- Balanced materials inventory, order planning.
- Inventory control of raw materials.
- Updates on the use.
3.2.2.4. Marketing and sales
This is the identification of customer needs and the generation of sales. Marketing
activities of KINH DO mainly focus on lunar New Year with slogan: “KINH DO is where
Tet is”; for instance: advertisement on TV or magazines. In 2010, company maintained the
growth rate which is quite impressive with 26%, net revenue reached 1,934 billion, and profit
after tax reached 674 billion.
Distribution channel of KINH DO is considered as one of the most powerful systems
throughout the country, can adapt quickly to market fluctuations. Therefore, despite the
prolonged economic crisis in the two years 2008 - 2009 that all commercial activities,
consumer stagnation, decline, KINH DO still maintained its market, revenue growth of 20%.
This achievement is due to many years his company has been created for the core competitive
advantage to create the foundation for sustainable development in the company's supply
chain.
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Infrastructure
Through 17 years of development, the products branded KINH DO were present in
the province-wide through the distribution system varied across the country including more
than 600 distributors, 31 KINH DO Bakery and 200,000 retail outlets as well as distribution
systems franchise. Furthermore, with the desire to make KINH DO the second home where
everyone strives to achieve a common objective, KINH DO has, for the past several years,
put its effort to build an ideal working environment, promote creativity and encourage
innovations to improve performance. (www.kinhdo.vn)
Technology
KINH DO also applies information technology in terms of selling and marketing such
as: shopping online or e-marketing.
3.2.2.5. After sales services
The support of customers after the products and services are sold to them. KINH DO
applies CRM – customer relationship management to manage the service activities well.
Human resources
KINH DO now has about 1,000 retailers nationwide working in store channels of
KINH DO to support customers in both buying process and after sales. Furthermore, KINH
DO also assigns many staffs for online supporting and this service working 24 hours per day.
3.2.3. Swot matrix
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SWOT matrix
Opportunity (O)
1. Vietnamese economy has a
stable development and
citizen’s income is increasing
gradually
2. Domestic confectionery
market is still big
3. Demands for high-grade
nutritional food is increasing
4. Export market is expanding
when Vietnam join in AFTA,
WTO
Threat (T)
1. The market penetration
of foreign competitors
when Vietnam joins in
AFTA, WTO
2. The increase of
investment in operation of
domestic confectionery
businesses
3. The movements of
human resources into
foreign businesses when
more and more
international companies
join in Vietnamese market
Strength (S)
1. Strong brand, have
the trust of consumers
2. Have a wide
distribution channel
3. Have modern
machinery and
manufacturing system
4. Research and
development activities
are conducting
strongly
5. Strong capital
resources
6. Strong management
Strategy SO: Use strengths
to make full use of external
opportunities
1- Use the strengths: S1, S2,
S3, S5, S7, and S8 to take
advantage of O1, O2, O3, and
O4. (Market development)
2 - Use the strengths S3, S4
and S5 to take advantage of
O1, O2, O3 and O4. (Products
development)
3 - Use the strengths S5 to
take advantage of O1, O2.
(technology development -
functional strategy)
4 – Use the strengths S6 to
Strategy ST: Use the
strengths to limit and
avoid the threats from
external environment
1- Use the strengths S3,
S4 and S5 to overcome T1
and T2. (Differentiation
strategy)
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team
7. Suitable price
8. Ensured products’
quality
take advantage of O4.
(management capacity and
human resources development
– functional strategy)
Weakness (W)
1. Have not exploited
completely capacity of
machinery
2. Management of raw
material inventory has
not been effective
3. Informal
management style still
exists
Strategy WO: Overcome the
weakness to catch the
opportunities and take
advantage of opportunities
to limit the weakness
1- Limit the weakness W1 to
take advantage of O1, O2 and
O4. (Manufacturing capacity
development – functional
strategy)
Strategy WT: Minimize
the weakness to avoid
the threats
1- Minimize the W3 to
avoid T3. (Human
resources development -
functional)
4. Apply strategic positioning technique to the analysis of KINH DO
Ansoff (1987) drew up a growth vector matrix, describing a combination of a
firm’s activities in current and new markets, with existing and new products. It is a
material that helps businesses decides their product and market growth strategy.
Figure 07: Ansoff’s matrix
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From the leading general strategy above, together with the strength, weakness and
opportunities, in my opinion, KINH DO has some specific strategies which could mention
about:
- Market penetration
Confectionery market in Vietnam is now considered possibly to achieve revenue
growth of up to 20% on average per year. Confectionery consumption per capita is still
relatively lower than some neighboring countries in the region. High level of population and
low average consumption is the opportunity for companies to continue development.
Therefore, KINH DO has launched efforts to provide the product with variety, high quality,
and low price, along with strong and effective advertising to increase the market share of
products.
Specifically, KINH DO increased promoters in many forms: exhibition fairs,
newspaper ads, and the ad's delivery truck distributor. Selling activity has been boosted:
increased product coverage across the country, expand distribution channels in the provinces
and direct delivery to stores and warehouses agent delivery assembly. Competitive strategy of
KINH DO is focusing on price and quality with the main items: Cakes, Crackers, Cinnamon
bread - Wafer, Cookies.
Besides boosting the advertising activities and promotional campaigns, KINH DO
also needs to focus on expanding the distribution agent, increasing the number of salespeople.
Currently, the KDC has wide distribution network across the country with approximately 200
distributors and 40 KINH DO Bakery stores, more than 75,000 retail outlets and over 1,000
sales people across the country
- Market development
This strategy refers to finding the market development by participating new market
with current or new products. Some features that need to be concerned about in this strategy:
+ In terms of the domestic market, although KINH DO holds about 45% market share
which is a quite high level in context that many confectioneries are operating, KINH DO still
leave the remote areas open. This market is really potential due to the increase of citizen’s
income there. Besides, KINH DO still use traditional distribution channel which is
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distributors. Therefore, KINH DO should re-scheme the distribution channel to cover all the
remote areas in Vietnam. Furthermore, more distribution centre also should be built in
Central region of Vietnam to resolve the problem of customer-serving space and time
because KINH DO’s products now only comes from Hanoi and Hochiminh city. Last but not
least, KINH DO also should increase the number of distribution channel to some modern
ones like supermarket, convenient store or internet.
+ When it comes to global market, the major ones now are US and Japan. These are
very strict market but also very potential. At this stage, KINH DO is trying to maintain
market share in these market by ensuring the products’ quality. Moreover, KINH DO always
participates in any international fair to advertise their image and products.
- Product development
In the trend of modernization and industrialization, everything is changing fast and
the demand of consuming is not an exception. Besides, in the development process of any
business, products’ list is not fixed but always changes as well to adjust to the changes of
environment or business condition.
In terms of KINH DO, product development strategy takes form based on the modern
technology, strong research and development activities and the innate ability to sense smells
of business owner, strong capital resource combining with opportunities from market. To
apply this strategy, KINH DO must follow some steps. Firstly, some surveys should be
conducted to identify the trend of food consuming among customers. Then figure out the
market segments to find out the opportunities for new products. The next step is collecting
the feedback from customer to take them into account to develop products. Last but not least,
participating in trading exhibition is an indispensible step to explore the products of
competitors.
In summary, reasonable growth strategies could help KINH DO expand market size,
achieve business objectives and build a strong brand. Owing to those strategies, the brand
name KINH DO can be known as good product quality and professional promotional
strategies. This will be a solid base for KINH DO to continue to deploy effective business
operations in the coming years, thereby, maintain and confirm the leading position in its
industry.
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RecommendationAfter analyzing the business strategy’s context, stakeholders’ influences, external,
internal environment factors and indicating strategy from strategic positioning technique
application; there are some suggestions that I want to advice KINH DO for further
development afterwards.
Being determined to continue with the goal of becoming a leading food group in
Vietnam.
Learning experience in terms of business operation of large food corporation in the
world such as Nestle, etc. Invite the industry's leading experts on research, product
development, management according to the trend of globalization.
Training human resources and better treatment policy is always required to be there.
Applying the modern business management software which is consistent with the
organizational structure as KINH DO.
Continuing to use the mass media to keep the support of all its customers.
Searching for suppliers of raw material inputs is abundant and rich. Carrier
acquisition or build its own providers to contribute to reducing dependence on price
and quality of materials.
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ConclusionFacing with challenge and competition about human, capital and raw material
resources which are increasing rapidly; in order to meet the requirements in integrated
process and globalization, KINH DO Corp needs to have excellent management staffs so as
to manage all the risks well to exploit the business opportunities and decrease to minimum
the dangers. Moreover, KINH DO Corp also must build a strong Sale channel which can help
company to extend its market, improve the products’ quality. In specific, the products which
are no longer effective should be changed; the products which are potential should be
invested more and select to have the best suitable project at big center areas.
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