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Contents Introduction................................................. 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

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Page 1: BS - Hoang Vu Hiep - 101310 5331

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

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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.

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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

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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:

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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)

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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

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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

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“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

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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

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- 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.

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- 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.

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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

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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

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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.

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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.

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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.

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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.

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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,

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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.

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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

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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.

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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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