Business Model Analysis of Vinacafe Bien Hoa Company

BUSINESS MODEL ANALYSIS OF VINACAFE BIEN HOA COMPANY

NGUYEN THI TUYET NGANID NUMBER: A1111025

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A Research Paper Submitted to

FTMS GLOBAL ACADEMY, SINGAPORE

In Partial fulfillment of the requirements

For the degree of

HIGHER DIPLOMA IN ACCOUNTING AND FINANCE

By

Nguyen Thi Tuyet Ngan

Student ID: A1111025

(Month/ Year) 02/2013

Ho Chi Minh City, Vietnam



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ACKNOWLEDGEMENT

At first, I would like to extend my gratitude to my supervisor, Mrs. Duong for her

constructive advice throughout the course of this thesis. Secondly, I want to thank

members of the faculty in Nguyen Tat Thanh Institute of International Education (NIIE).

My heartfelt thanks go to Mr. Khanh for his valuable advice and his helpful ideas in

developing the research questions throughout the course of this thesis. And I would like

to thank all my friends for their encouragement and enthusiasm. Finally, I want to thank

my family members. Especially, I would live to give a thank you to my parents, who

always prayed and encouraged me and helped me complete this work successfully



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TABLE OF CONTENT

Cover Title Page…………………………………………………………………

Acknowledgement………………………………………………………………

Table of content…………………………………………………………………

Abbreviations……………………………………………………………………

List of Tables……………………………………………………………………

List of Figures……………………………………………………………………

Abstract………………………………………………………………………….

Chapter 1: Introduction…………………………………………………………

Chapter 2: Description of Vinacafe Bien Hoa…………………………………………..

Chapter 3: Literature review……………………………………………………..

Chapter 4: SWOT Analysis and Evaluation……………………………………..

Chapter 5: Report and Recommendations……………………………………….

Chapter 6: Conclusions…………………………………………………………..

Chapter 7: Learning Points/ Future Work………………………………………..

Bibliography/ List of citations……………………………………………………



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ABSTRACT

According to statistics, the United States, Brazil, Germany is the third leading coffee

consuming countries in the world, consuming about 37% of the world's coffee

production. And it is worth noting that growth in coffee consumption between developed

and developing markets differ. The traditional coffee consumption market in the U.S.,

Germany, and Japan maintained a relatively stable growth rate, and the market with

strong demand as emerging markets: Brazil, Vietnam, China, Indonesia, the Philippines.

Coffee consumption per capita in 2007:

Kg/person

World 1.3

Nordic 10.0

Western Europe 5.0

Brazil 5.3

U.S 4.2

Viet Nam 0.7

Indonesia 0.5

Source: World Resources Institute

Vietnam is the largest producer of Robusta coffee in the world. In particular, by domestic

coffee consumption of the two countries with large export of coffee is Brazil and

Indonesia should increase these countries to strengthen domestic demand service that

coffee production for exports will decline. This is a considerable advantage for the

Vietnamese coffee industry for our country currently exports around 90% of the total



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coffee production. For the Vietnamese market, the company Vinacafe Bien Hoa able to

maintain its dominance in the market despite stiff competition from manufacturers the

world's oldest coffee is Nestle (Nescafe product line ) and major player in the domestic

company is Trung Nguyen (with brands G7) by well-known brand, customer loyalty and

extensive distribution system. Currently, Vinacafe Bien Hoa distributed throughout the

64 provinces in the country with the line products such as coffee roasters, instant coffee

and cereal nutrition

Beside that, Coffee business not only VINACAFE own sake but to achieve the objective

of contributing to the economy, the country's society and create conditions that promote

economic restructuring towards industrialization and modernization water. To make full

use of land, labor, markets, capital of the People's coffee industry to promote effective

development of the highest economic growth contributing to national economy. Business

must be associated with the market and should consider expanding overseas markets and

domestic survival conditions. Diversification of products, application of science and

technology, advanced media management, to increase productivity, reduce costs, improve

product quality is the key solution, throughout and the business development and also as

a measure of victory in the competition. Contributing to a clean environment.



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CHAPTER 1: INTRODUCTION

As you know, every day millions of people drink coffee. It is gradually becoming the

most popular drinks today. Coffee aroma, taste and flavor characteristics reminiscent, that

many if not touching each cup of coffee, they will feel like missing something. Many

people prefer unleaded coffee for its taste, but also has the following advantages: it

makes us easier and more comfortable, it can help target fat in the body, coffee reduces

the risk of asthma and allergy treatment, protection against liver diseases, it stimulates

mental activity.

According to statistics, Brazil is the largest coffee producing countries in the world (36%

of total production in 2009), follow by Viet Nam (15%), Indonesia (8%) and Colombia

(6%). Coffee harvest depends heavily on climatic conditions and natural properties of

coffee- usually after a Service acquired, the coffee harvest for the following year would

decline. And specially, economic development has accelerated the process of

urbanization in many countries in the coffee and creates significant changes in the needs

of the world’s coffee consumption. And that is a reason why I chose this topic: Business

model analysis of Vinacafe Company.

Vinacafe Bien Hoa was established in 1975 in the form of an acquisition of the first

coffee processing plant in Viet Nam. The company’s product portfolio included coffee

roasting (0.6% total revenue), instant black coffee (1.5%), 3 in 1 milk coffee and ginseng

coffee (79%) and nutritious cereal (19%). The nutritious cereal products have right

revenue growth, although coffee milk is still the main product in the company. With over

30 years experience in the industry, Vinacafe Bien Hoa becomes the largest coffee

producer in Viet Nam and accounts for about 40% market share. A famous brand,



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customer loyalty and a strong distribution system, are competitive advantages

characteristic of Vinacafe Bien Hoa. In Brief, although competing with coffee producers

of the world’ oldest coffee company was Nestle (with product lines Nescafe) and

formidable competitor in the country, Trung Nguyen company (with the brand G7), but

Vinacafe Bien Hoa has maintained its dominance in the market.



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CHAPTER 2: DESCRIPTION OF VINACAFE BIEN HOA

History: Company Vinacafe Bien Hoa precursor as Coronel Coffee Factory was

established in Bien Hoa Technology (now the Bien Hoa Industrial Zone 1) 1969. 1975:

plant Coffee Coronel is renamed the name of Bien Hoa Coffee Factory and handed over

to the General Department of Food Technology and Management, under the Enterprise

Union Confectionery Milk-Coffee-1 (this is Vinamilk). 1988: Bien Hoa Coffee Factory

switches directly under the Union of Vietnamese coffee factory (now Bien Hoa Coffee

Corporation). 29/12/2004: Bien Hoa Coffee Factory transformation of business into

Vinacafe Bien Hoa Joint Stock Company with a capital of 80 billion. 01/11/2006: Issue

of shares for existing shareholders and offered for sale to the outside, to increase charter

capital to 94.5 billion. 30/06/2007: Payment of dividends in shares, increase its charter

capital to 113,398.6 million.01/07/2008: Payment of dividends in shares, increase its

charter capital to 141,757.1 million. 25/06/2010: Payment of dividends in shares, increase

its charter capital to 177,195.16 million. 30/10/2010: Issue of bonus shares to increase

charter capital to 265,791.35 million. 28/01/2011: 26,579,135 shares of the Company are

listed and traded on HOSE

Scope of business: Manufacture, sales, import and export of coffee, tea, beverages and

fast food products other

Line of products and brands:Coffee Roasters: including coffee roasters Vinacafe Select,

Vinacafe Super, Vinacafe Natural, Vinacafe Gold. Instant coffee: includes dissolved

Vinacafe black, Vinacafe dissolving 3 in 1, Vinacafe 4 in 1. Cereals nutrition: include

Vinacafe nutritional cereals, cereal nutrition for the yeast



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Development and investment strategy: Vinacafe Bien Hoa is instant coffee processing

plant first of all Indochina. Currently the coffee processing plant the company has the

largest processing capacity in Vietnam with a total capacity of about 1,200 tons of pure

soluble coffee / year. By the end of 2009's instant coffee products Vinacafe Bien Hoa

accounted for 40% of domestic market share, accounting for the largest share of coffee.

Research and manufacturing company 4-in-1 coffee ginseng. And products consumed in

the Korean market, China. Vinacafe distributors covering 64 provinces and cities across

the country and the brand "Vinacafe Bien Hoa" registered trademark in 70 countries

around the world such as United States, Canada, Europe, Pakistan, Japan, and South

Korea... Sales Policy Vinacafe Bien Hoa stable than the competitors. Most of the

company's material used are ordered according to the standards set by the company

should give less volatile



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The organization chart of Vinacafe Bien Hoa:

General Meeting ofShareholders

Board of Supervisors

Board of Management

Board Director

Finance-Accountin

gDepartme

nt

MarketingDepartment

Advertising

Department

Organization &

Administration

Department

Department about

milk-coffee factory

Department about instant black coffee factory

Technical Departme

nt

Business Departme

nt

Deputy Board DirectorDeputy Board Director



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CHAPTER 3: LITERATURE REVIEW

The table summarizes some of the most prevalent definitions suggested for the business

model.

Author(s)

Year

Definitions Paper citing the definition

Timmers, 1988 The business model is “an architecture of

the product, service and information flows,

including a description of the various

business actors and their roles; a description

of the potential benefits for the various

business actors; a description of the sources

of revenues” (p.2)

Hedman & Kalling, 2003

Amit & Zott,

2001

The business model depicts “the content,

structure, and governance of transactions

designed so as to create value through the

exploitation of business opportunities”

(p.511

Hedman & Kalling, 2003,

Morris et al.,2005; Zott &

Amit, 2007; Zott & Amit,

2008; Santos et al., 2009;

Bock et al., 2010; Zott &

Amit, 2010.

Chesbrough &

Rosenbloom,

2002

The business model is “ the heuristic logic

that connects technical potential with the

realization of economic value” (p.529)

Chesbrough et al., 2006;

Chesbrough, 2007a, 2007b;

Teece, 2007, 2010



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Morris et al.,

2005

A business model is a “concise

representation of how an interrelated set of

decision variables in the areas of venture

strategy, architecture, and economics are

addressed to create sustainable competitive

advantage in defined markets” (p.727).

[…]It has six fundamental components:

value proposition, customer, internal

processes/competencies, external

positioning, economic model, and

personal/investor factors.

Celia et al., 2007

The business model is the plan implemented by a company to generate revenue and make

a profit from operations. The model includes the components and functions of the

business, as well as the revenues it generates and the expenses it incurs. In other word, it

merely describes the way in which a company makes money. It is the accumulation of all

of the sales, marketing, operations, administration, R&D, finance, and everything else

that goes into a business-all the strategies and tactics-hat determine if the company makes

money or does not make money. First, every entrepreneur can pick whatever business

model they want. Second, eventually our efficient market will determine the superior

business model for each industry. Those who innovate the best model for their industry

will most likely win. Those who quickly adapt to this model will likely survive. And

those who stay entrenched in their out-dated and archaic models will die.



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Every business chooses one business model is suitable for enterprise development. And

Vinacafe Bien Hoa as well. Vinacafe gave the 10-year development strategy from 2004

to 2014. Based on the analysis of the demand for speed as well as coffee consumption

increased rapidly, we can see the coffee industry has developed well in the past as well as

promises rapid development in future. Here is the business model that the company

Vinacafe Bien Hoa doing business to grow well

Business model includes 4 aspects: infrastructure, offer, customer and finance.

Regional "infrastructure" consists of three elements: Capacity core: is the ability, or core

competencies, the things that businesses can do the best, the best. These capabilities

contribute to the competitive advantage of the business. Then, Network partners (partner

network): unit includes partnerships with business. The last, Configuration value (value

configuration): the structure of the enterprise that brings value to customers (products,

services).



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Regional "offering" (offer) including an element: word of the declaration or statement of

value (value Proposition): the affirmation of the value / benefits of the products and

services that bring business to customers.

Regional customers (customer), consists of three elements: Target (target customer): the

customers towards business. Distribution (distribution channel): is the channel through

which business to sell products and services to customers. Customer Relations (customer

relationship): a form of connection, interaction, emotional cord between enterprises and

customers.

Financial sector (finance) consists of two elements: The cost structure (cost structure): the

components that make up the cost of the business model. The revenue (Revenue streams):

cash flows of the business.

In addition, the business model of Vinacafe also focuses on the types of products to serve

customers. Vietnamese coffee market today is fierce competition between Vinacafe Bien

Hoa, Nestle, and Trung Nguyen. While, Vinacafe and Nestle to focus on market Trung

Nguyen coffee, focus more on the roasted and ground coffee market. That's one part of

the business model that the company created.



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Vinacafe Bien Hoa Nestle Trung Nguyen

Main products Coffee roasters,

instant coffee,

cereal nutrition

Coffee roasters,

instant coffee,

cereal nutrition

Coffee roasters,

instant coffee,

Design

capacity(ton/year)

1.200 1.000 3.000

Market share of

instant coffee

40% 38% 10%

In 2012, the company achieved a growth in sales and profits. Company maintains a

capital structure and properties quite reasonable at least in the situation now and avoids

the risk of the use of financial leverage. The information on the effective use of company

resources, ability to pay debt, stock form better than in 2008.The Company will review

the investment policy for the coming year to use company funds more efficient and

rational plan reserve materials imported from abroad as cream powder. In general,

operations of the company were relatively good years. Also in last year the company also

focused on implementing other important tasks: Annual Report 2012 Vinacafe -Taste of

Nature Vinacafe. Step by step the company restructured towards specialization and

division and implement decentralization clear, detailed position towards self-

determination and take personal responsibility. This is the step by step application of

governance practices best practices. Restructuring, brand repositioning, new step by step

with pictures Vinacafe strategy of "think globally, act locally", focusing on core values:



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price natural values, values Vietnam. Prepare recognition system, focusing on the major

labels, and upgrade the system designed to meet the needs of multi-product

diversification in both vertically and horizontally. Better use of marketing tools to

promote your brand performance results.



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CHAPTER 4: SWOT ANALYSIS AND EVALUATION

1. Strength

The strength of the coffee sector is a natural condition that Vietnam has. It was a hot and

humid tropical monsoon climate, and it is suitable for the production and development of

coffee. Particularly in South Vietnam under the hot and humid tropical climate suitable

for Robusta coffee. North Vietnam with cold winters and rainfall should fit coffee

Arabica. With favorable weather conditions, Vietnam is one of the largest Robusta coffee

producers in the world. In addition, the price of Robusta coffee cheaper than Arabica

Robusta coffee so popular in developed markets such as Brazil, Indonesia… Vietnam

will have more advantages from Robusta coffee in the world market as the major

exporting countries such as Brazil and Indonesia tend to reduce output Robusta exports to

keep domestic demand service by type of coffee the average segment as soluble Robusta

is more and more popular in emerging markets compared to expensive Arabica coffee

roasters. This trend is creating favorable conditions for the Vietnamese coffee industry

because now we are exporting to more than 90% of the total domestic harvest Robusta.

Vinacafe Bien Hoa company brand and reputation for years. The company has loyal

customers and distribution network throughout 64 provinces with more than 120 dealers.

Vinacafe Bien Hoa Company is one company that has a staff of highly qualified and have

the skills and experience to the coffee industry. When employees work in the company,

they will be trained in the knowledge related to coffee. In particular, they are responsible,

dedicated and passionate about his work. And when staff encounters these problems, the

company will have direct management work and staff will be able to react acumen for the

job.



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In addition, the main product is instant coffee market share in the country (more than

40% market share). And most of the material is taken from the company, longtime

partners in the country. Companies maximize the advantages of modern technology,

longtime production experience to boost coffee production. And production technology

does not affect the environment.

With over 30 years experience in the industry, Vinacafe BH has become the largest

coffee producer in VietNam, accounting for about 40% of the market. Famous brand,

customer loyalty and strong distribution system is the characteristic competitive

advantage of Vinacafe BH. Instant coffee products of the company stand out with bold

coffee flavors Vietnamese style than taste more prepared Western style of the

competitors. Coffee recipes of Vinacafe BH very difficult to copy. So, although

competing with coffee makers Nestlé is the world's oldest (with Nescafé product line)

and formidable competitor in the company Trung Nguyen (with brands G7) but Vinacafe

BH maintains its dominance in the market. In addition, one of the other edges of

Vinacafe BH compared to its competitors is widely distributed network with two

branches in the area and approximately 120 dealers across 64 provinces. Vinacafé BH

introduced our products to the U.S. and South Korea and are two market acceptance.

Tendency to expand the scope of activities, bringing the brand to the world is essential

for the development of Vinacafe BH in the future, especially when the new plant goes

into operation:



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2. Weaknesses:

One of the difficulties of the Vietnamese coffee industry in general and the company

Vinacafe Bien Hoa in particular, that the product is not high quality. Technology

harvesting, drying, roasting, drying coffee is made one by hand, are not equipped with the

modern technology leads to the amount of groceries in much coffee reduces the quality

and ensure the quality standards in the world. In addition to the quality of the coffee, we

need to consider the infrastructure. For example, poor roads will increase transportation

costs, reduce the purchase price at the various coffee buyers. And in particular, system

testing and monitoring product quality standards are weak and backward. Countries with

large coffee consumption seriously check and monitor the quality, origin and brand of

merchandise, while in Vietnam; this work has not paid attention to.

Besides, the brand Vinacafe Bien Hoa only attraction in the country that do not have

international power. Annual export earnings at a very modest (about 7-8% of revenue). In

addition, the company has invested heavily for communication, advertising products.



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Communications budget for only about 2% of total revenue. If the company does not give

the product advertising, the consumer will not know the company's brand coffee Vinacafe

Bien Hoa. Risks in business process are the volatility of raw material prices. Due to

production costs accounted for 80% of the selling price should be any changes in the

price of raw coffee and sugar prices have a significant impact on profit of the company.

One of the important factors that affect the company, it is the staff. They can have

negative work habits and lack of work experience. While the company facilitates

academic staff, they do not care and that the lack of formal training, basically.

Natural disasters, epidemics occur regularly and on a large scale with the level of damage

is most severe central region and the Central Highlands. The lives of the majority of

working people face many difficulties, unemployment in the urban high rise, high prices

cause the purchasing power plummeted.

3. Opportunities:

In the current period, the coffee industry has been the interest of the State and has taken

steps to facilitate development, reaching the international level. Since joining the WTO,

Vinacafe Bien Hoa has created vast consumer market. In particular, Vietnam annually

produce 1 ton of coffee, the country's second-largest coffee production in the world, after

Brazil. However, coffee consumption was modest, accounting for about 6% of total

annual production. This suggests that the coffee market potential in Vietnam is still very

large. Moreover, the annual growth rate in Vietnam is high (8-10%). In addition, the

WTO is a great opportunity for the coffee market. Because Vietnam will have access to

the modern technologies more easily. That coffee can help our country with quality

products, to meet the market demands stricter quality. Since that will improve profits



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bring the enterprise and the State. Along with access to modern science and technology,

energy, management level and working style of employees will be improved to compete

to survive in a competitive market fierce as today.

In addition, the company Vinacafe Bien Hoa is building a new coffee processing plant

with a capacity of 3,200 tons / year. When in operation, the total capacity of the

company's coffee processing will increase to 4.080 tons / year.

4. The Challenge:

Joining the WTO, Vietnam has the opportunity to join the world market. However it is a

difficult challenge. First, the WTO requires Vietnam to comply with the agreement on

sanitary and technical measures. That would put the financial burden on small non-

technical and Vietnam. Second, trade barriers will be erected Vietnamese goods as a

necessity in the global economy. In addition, we need to mention the tax policy. Vietnam

is a country not tax-preferred to soluble products when engaged in traditional markets

like the U.S., Japan, and EU ... (this tax is applied in Vietnam is from 2.6% to 3.1%).

Next is the strategic development of the company's coffee Vinacafe Bien Hoa. Currently,

the target set for the Vietnamese coffee industry in the years to not put them in the

context of the overall development of the agricultural sector as well as the Vietnamese

economy. As a result, received positive support from the development strategy of the

national agricultural sector.

For the domestic market, the price of raw material fluctuations, including coffee prices of

raw materials, the prices of sugar, cream powder. These materials are mainly agricultural

goods should be dependent on weather conditions. Since 2010, the price of raw materials

has increased dramatically, while the selling price of the company is difficult to increase



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correspondingly. In addition, fierce competition in the coffee market in Vietnam, with

many famous brands such as G7, Nescafe... Three big brands that dominate the domestic

coffee market now are Vinacafe BH, Nestlé and the Central Highlands. In as Vinacafe

BH and Nestlé focuses on market Trung Nguyen coffee, the market focus more on coffee

roasters. However, after the Central Highlands acquired factory Vinamilk coffee in

September / 2009, the company is likely to increase coffee production three-fold to 3,000

tons / year. Therefore, we expect the competition for market share between these

companies will become increasingly fierce.

Vinacafe Bien Hoa Nestle Trung Nguyen

Main product Coffee roaster,

instant coffee,

cereal nutrition

Coffee roaster,

instant coffee,

cereal nutrition

Coffee roaster,

instant coffee, cereal

nutrition

Design

capacity(ton/year)

1.200 1.000 3.000

Market share of instant

coffee

40% 38% 10%



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Development SWOT matrix reduced:

Strength(S)

∑ Like good coffee.

∑ There is prestige in Vietnam market

by leading a unit of Vietnam's

coffee industry.

∑ Understand the Vietnam market.

∑ Get support from the Government.

Weakness(W)

∑ Mainly by the office, companies,

foreign subsidiaries in Vietnam.

∑ The great difficulty of capital.

∑ Poor facilities, outdated technology

∑ Made mostly raw form, not high

quality.

∑ The research, development and

marketing have not been enough

attention.

∑ Lack of skilled professionals team

Opportunity(O)

∑ International integration, Vietnam

is entitled to the benefits of trade

liberalization.

∑ The stormy development of

information technology.

∑ The demand for coffee in the world

growing.

Threat(T)

∑ Pressure from competitors.

∑ Requirements for quality coffee

growing.



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Strategic orientation Strength-

Opportunity( SO)

Growth strategy focused on development

and market penetration.

Strategic orientation Weakness-

Opportunity(WO)

Strategic consolidation and reorganization

to centralize the financial machine, take

advantage of opportunities.

Strategic orientation Strength-

Threat(ST)

Growth strategy focused on product

development.

Strategic orientation Weakness-

Threat(WT)

Investment strategy development

production , diversify and improve the

quality of export products



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CHAPTER 5: REPORT AND RECOMMENDATIONS

About Manufacturer: Company creates products with high added value content,

competitiveness in foreign markets. Besides, Vinacafe also promote the strength of the

modern industrial, longtime production experience to boost coffee production. And

special production technology does not affect the environment.

Marketing: Vinacafe Bien Hoa was the number one brand and a market share of

Vietnam's largest coffee. In addition, the company also exports branded products

Vinacafe. The company also focuses on effective distribution channels both inside and

outside the country. And also understand the market and consumers by systematic

research.

Management and organization: the company to attract capital from outside and in

particular, safety and efficiency in the financial investment

Human resources: human resources strong enough. In addition, companies create

motivated and employee development.

In the medium term, Vinacafe Bien Hoa strive in the top 10 companies with the largest

market capitalization Vietnam operating in the food processing sector listed on HOSE in

2015

In the long term, in addition to maintaining the core product is coffee with diversified

products, the company will expand its business scope to other products in the food and

beverage industry, serving the domestic demand and the world

Below is a table of the company's revenue structure Vinacafe Bien Hoa



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.

Can see that coffee is the company's flagship product, accounting for 78%. And cereals

account for 20% of total revenue in 2012. In the future, Vinacafe Bien Hoa tries to

produce more coffee roasters to achieve high sales.



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VINACAFE BIEN HOA COMPANY

THE BALANCE SHEET AT 31 DECEMBER 2012

THE BALANCE SHEET 31 DECEMBER 2012

CODE NOTE 31/12/2012 31/12/2011

ASSETS

Short-term Asset 100 606.591.514.523 762.111.591.781

Cash and Cash Equivalents 110 5 275.247.810.871 298.221.643.448

Cash 111 36.247.810.871 23.773.004.391

Cash Equivalents 112 239.000.000.000 274.448.639.057

Receivables 130 93.356.340.665 162.234.866.084

Customer Receivable 131 45.473.617.260 110.802.709.997

Prepayments to suppliers 132 46.233.637.411 48.738.881.714

Other receivables 135 1.705.716.110 2.693.274.373

Allowance for doubtful debts 139 (56.630.116) -

Inventory 140 6 235.125.058.511 252.328.534.372

Inventory 141 237.524.985.122 254.728.460.983

Provision for impairment of inventories 149 (2.399.926.611) (2.399.926.611)

Other current assets 150 2.862.304.476 49.326.547.877

Short-term prepaid expenses 151 - 3.669.537.281

Value-added tax deductible 152 2.054.465.851 3.809.286.020

Other current assets 158 807.838.625 41.847.724.576

Long-term assets 200 526.596.112.341 55.953.111.735

Fixed Assets 220 521.226.687.073 55.953.111.735

Tangible Fixed Asset 221 7 145.292.224.060 33.881.155.340

Cost 222 294.992.911.341 173.572.644.029

Accumulated depreciation 223 (149.700.687.281) (139.691.488.689)

Intangible Fixed Assets 227 8 16.917.097.709 17.319.885.750



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Cost 228 17.319.885.750 17.319.885.750

Accumulated depreciation 229 (402.788.041) -

Construction in process 230 9 359.017.365.304 4.752.070.645

Other long-term assets 260 5.369.425.268 -

Long-term prepaid expenses 261 10 5.369.425.268 -

TOTAL ASSETS 270 1.133.187.626.864 818.064.703.516



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THE BALANCE SHEET AT 31 DECEMBER 2012(CONTINUE)

THE BALANCE SHEET 31 DECEMBER 2012( CONTINUE)

CODE NOTE 31/12.2012 31/12/2011

CAPITAL

LIABILIATIES 300 181.732.436.025 92.882.197.492

Short-term debt 310 181.732.436.025 89.863.136.392

Payable to seller 312 11 85.067.348.919 27.302.489.529

Advances to buyer 313 4.666.340.859 2.533.904.489

State tax payable 314 12 22.815.785.614 27.194.221.226

Pay employees 315 11.664.445.994 5.752.911.518

Accrued expenses 316 13 44.589.151.600 1.552.694.388

Payable, other payable 319 2.160.525.595 21.544.833.149

Bonus and benefit 323 14 10.768.837.444 3.982.082.093

Long-term debt 330 - 3.019.061.100

Long-term prevention 337 - 3.019.061.100

CAPITAL OWNERS 400 951.455.190.839 725.182.506.024

Capital owners 410 15 951.455.190.839 725.182.506.024

Shares capital 411 16 265.791.350.000 265.791.350.000

Surplus shares capital 412 29.974.241.968 29.974.241.968

Investment and development fund 417 17 193.925.282.879 137.456.077.032

Financial reserves 418 17 39.585.566.068 30.814.459.873

Undistributed profits 420 442.178.749.924 261.146.377.151

TOTAL CAPITAL 440 1.133.187.626.864 818.064.703.516

TARGETS OUT THE BALANCE SHEET

31/12/2012 31/12/2011

Currency 2.399.346.830 42.237.081.175



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STATEMENT INCOME FOR THE YEAR ENDED 31 DECEMBER 2012

CODE NOTE 2012 2011

Total revenue 1 18 2.141.776.188.691 1.586.025.888.575

Deductible amounts 2 18 (27.177.318.962) (453.464.823)

Net revenue 10 18 2.114.658.869.729 1.585.572.423.752

Cost of goods sold 11 (1.530.525.587.622) (1.193.485.460.589)

Gross profit 20 584.133.282.107 392.086.963.163

Financial revenue 21 19 17.377.976.589 35.466.973.189

Financial cost 22 20 (2.402.076.249) (10.402.749.967)

of which 23 (508.800.000) (3.567.025.719)

Selling expense 24 (254.799.624.784) (170.264.287.348)

Enterprise cost

management 25 (41.611.558.271) (32.184.921.309)

Net profit from

operations 30 302.697.997.392 214.701.977.728

other income 31 21 23.789.399.663 18.770.793.007

other costs 32 (318.128.588) (13.085.529)



31

Result from other

activities 40 23.471.271.075 18.757.707.478

Profit before tax 50 326.169.268.467 233.459.685.206

Current tax expense 51 22 (27.927.220.906) (22.347.148.981)

Net profit 60 298.242.047.561 211.112.536.225

Basic earnings per share 70 23 11.221 7.943



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CASH FLOW STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2012

CODE 2012 2011

CASH FLOWS FROM OPERATING ACTIVITIES

Profit before tax 1 326.169.268.468 233.459.685.207

Adjusted for losses

Depreciation 2 11.867.826.836 8.251.026.072

The provision 3 (2.962.430.984) 4.037.090.801

Foreign exchange losses unrealized exchange 4 - 436.480.000

Clear drop of fixed assets 5 4.533.282 -

Interest expense 5 (16.941.494.589) (32.747.714.181)

Interest on deposits 6 508.800.000 3.567.025.719

Profit from operating activities before changes in

working capital 8 318.646.523.012 217.003.593.617

Fluctuations in accounts receivable and other current

assets 9 110.973.609.915 (88.147.256.005)

Changes in inventories 10 17.203.476.861 (57.994.086.381.)

Changes in accounts payable and other liabilities 11 82.405.882.078 (40.482.801.369)

Changes in prepaid expenses 12 4.720.185.183 (3.669.537.281)

533.949.676.049 26.709.912.581

Interest paid 13 (508.800.000) (3.567.025.719)

Corporate income tax paid 14 (25.250.558.702) (19.386.190.716)

Other costs for business 16 (12.024.337.395) (24.974.091.035)



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Net cash flows from operating activities 20 496.165.979.952 (21.217.394.889)

CASH FLOWS FROM INVESTING ACTIVITIES

Purchase of fixed assets 21 (483.566.028.626) (11.766.278.151)

Proceeds from interest on deposits 27 17.584.486.097 31.320.481.042

Net cash flows from investing activities 30 (465.981.542.529) 19.554.202.891



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CASH FLOW STATEMENT FOR THE YEAR ENDED 31 DECEMBER

2012(CONTINUE)

CODE NOTE 2012 2011

CASH FLOW FROM FINANCING ACTIVITIES

Short-term Borrowings 33 - 18.122.657.000

Repayments of borrowings 34 - (34.354.442.636)

Cash Dividend 36 (53.158.270.000) (45.184.529.500)

Net cash flows from financing activities 40 (53.158.270.000) (61.416.315.136)

Net cash flow for the year 50 (22.973.832.577) (63.079.507.134)

Cash and cash equivalents at beginning of year 60 298.221.643.448 361.737.630.582

Effect of exchange rate changes on cash and

cash equivalents 61 - (436.480.000)

Cash and cash equivalents at end of year 70 5 275.247.810.871 298.221.643.448



35

Based on the business model of the company Vinacafe Bien Hoa, we can see the

company's revenue dramatically. And here are 3 table notes the financial statements for

the year ended 31/12/2012

Table 1: Revenue

Total Revenue represents the total value of goods sold, excluding value added tax

Revenue includes:

2012

VND

2011

VND

Total revenue

Sales 2.141.776.188.691 1.586.025.888.575

Subtracting deductions

Sales bounce back (7.636.794.279) (453.464.823)

Sales decline (19.480.524.683) -

Net revenue 2.114.658.869.729 1.585.572.423.752

Table 2: Revenue from financial activities

2012

VND

2011

VND

interest on deposits 16.941.494.589 32.747.714.181

foreign exchange rates have

made

436.480.000 2.719.259.008

17.377.974.589 35.466.973.189



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Table 3: Financial costs

2012

VND

2011

VND

Interest expense 508.800.000 3.567.025.719

Foreign exchange losses

made

1.893.276.249 6.399.244.248

Foreign exchange losses

unrealized

- 436.480.000

2.402.076.249 10.402.749.967

The problem for VINACAFE in determining the development strategy is to go into depth,

sustainable development. The development of VINACAFE as follows: Care, intensive

area under coffee is, keep yields stable. Stop all development projects under coffee, not

including the area planted to replace old coffee has to liquidation period. Strongly

reduced the area under coffee production switched to aging some plants of high economic

value such as cashew, rubber, pepper...Move some Robusta coffee areas are ecologically

appropriate conditions to grow coffee as tea in Dak Nong Dakrlap, M'Drak (Dak Lak)

and some areas in Gia Lai and Kon Tum. Type out of the coffee market of poor quality.

Implementation of industrialization - modernization of harvesting and processing with

special processes to produce premium coffee. Stable markets have to urgently expand

foreign markets and encourage domestic consumption. Make quick work of equalization

VINACAFE businesses.



37

CHAPTER 6: CONCLUSIONS

World Market Vietnam’s crop drought complicated, many risk reduction in crop yield. In

addition, Indonesia crop harvested this month predicted a decrease of 16 to 30%

compared to the previous season due to bad weather. So in this season supply most likely

lower than the previous season. Arabica coffee prices on the market quickly. In addition

to the supply of coffee is extremely low. So, the roasters are facing Robusta coffee -

coffee is cheaper and capable of mixing. Robusta are high bridge will boost the price

increase. According to the World Association of coffee (ICO): "prices will increase in the

future due to global coffee market will face a shortage large in adults vu2011/12 when

there is no prospect that about the reserves are onus recovery record low today. ICO

predicts the price of Arabica coffee will soon be up to 4 USD / lb and Robusta prices will

hit $ 3,000 / ton. Domestic Market According to forecasts from the ICO: "the major

producing countries are rapidly increasing consumption in 2011, while the supply is

limited due to loss of the season.” Brazil to increase the consumption up 5% and Vietnam

forecast to rise 370,000 bags consumed this year "will do rise, however much coffee

market speculation that the coming months will be volatile with a downward trend

up advantages due to higher prices and improved supply as Brazil and Indonesia harvest

in the future.

After more than 25 years of construction and growth, Vinacafe Bien Hoa has continually

strive for improvement and has made important achievements such as increasing

productivity, expanding markets, speed of import and stable life officers and employees,

creating jobs for workers, especially in ethnic minority areas, remote ... to contribute to

the economic development of the country especially in the area battle Highlands strategy.



38

Besides the achievements Vinacafe Bien Hoa Company also face many difficulties and

challenges: capital, competition, market. By analysis of the results produced coffee

business General coffee Company of Vietnam and Vietnam in recent years, the thesis

also provided strategic direction for the total coffee export company in 2015. At the same

time, the thesis also raises a number of solutions and recommendations for the direction

of this business strategy to stabilize production and export promotion activities,

expanding markets for General Coffee Co. Vietnam



39

CHAPTER7: LEARNING POINT/ FUTURE WORK

Organize, sort and business innovation. Increase productivity by intensive, focused care,

harvesting, processing and storage of coffee. Promote cooperation, diversified investment

products: coffee processing high quality, deep processing, and finished goods coffee

.Survey research and market development

Agriculture:

Vinacafe Bien Hoa has developed a sustainable agriculture project over an area of 37,000

hectares, with coffee breeds for high yield capacity. The Corporation shall focus on re-

cultivating on an area of 11,000 hectares for the next 5 years to replace the old field of

subordinate units. Vietnam National Coffee Corporation plans to ensure a sustainable and

effective agriculture for the national coffee industry, especially for a resource of coffee

breeds.

Processing Industry:

VINACAFE has planned to construct for 8 national and international– scale processing

plants of green coffee for export with modern technology in the world in Bien Hoa, Lam

Dong, Tay Nguyen Coffee Import Export Investment Joint-Stock Company, Buon Ho,

Krong Nang of Dak Lak, Gia Lai, Kon Tom, Tu Son (Bac Ninh). Each year, VINACAFE

produces and exports about 300,000 tons of green coffee per year. The Corporation

experts to 2015 construct some new instant coffee production plants to upgrade the

capacity to 10,000 tons per year meeting the domestic and export demand. The current

capacity is 4,000 tons per year.



40

Export:

The Corporation shall try to maintain the export of 300,000tons of green coffee per year.

Green coffee product of Corporation is manufactured by modern production line which

shall increase the added value to the Vietnamese coffee. In near future, the Corporation

shall apply new regulations on the selection of green coffee product for export on basis of

geographical characteristics. In the meantime, VINACAFE shall promote the business

with reputable roasted coffee manufacturers in the world in order to enhance the position

of Vietnamese coffee. Eliminating the intermediate agents shall help selling the export

coffee at higher price.

Commercial and domestic consumption:

In its developments strategy, VINACAFE plans to set up 2 new commercial centers in

Gia Lai and Kon Tum. In Dak Lak, VINACAFE has started one commercial center in

Buon Me Thuot city. Currently, the Corporation is planning to expand the domestic

market share (which is currently 40%) with the goal to be the market leader in 2015.



41

Business plan in 2014

Targets Unit Implementation

in 2013

Plan 2014 Versus 2013

I-Major production

Types of coffee Tons 14.156 15.650 111%

Cereal nutrition Tons 3.600 4.500 125

II-Major consumption

Types of coffee Tons 14.727 15.650 106%

Coffee exports Tons 1.277 1.250 98%

Cereal nutrition Tons 3.658 4.500 123%

III-Labor and Income

Total number of

employees

Person 450 480 107%

Total payroll Million/VND 41.500 52.462 126%

IV-Business results

1.Total sales revenue Million/VND 1.021.419 1.227.097 120%

Revenue export Million/VND 77.704 71.760 92%

2.Total cost of

products

Million/VND 874.386 1.129.097 129%

3.Profit before tax Million/VND 147.033 98.000 67%

4.Profit after tax Million/VND 136.005 90.650 67%



42

In the near future, Vinacafe BH can not have a breakthrough in profit because the

existing plant has been operating near full capacity. Revenue growth rate will depend on

sales of product lines and the rising price of grain, if any.

Billion 2011 2012 2013 2014

Revenue 1.277 1.411 1.552 1.708

Net profit 136 150 165 181

Capital 266 266 266 266

Cash dividend 15% 17% 19% 21%



43

BIBLIOGRAPHY/ LIST OF CITATIONS

www.vinacafebienhoa.com.vn

www.cafef.vn

http://www.vinacafebienhoa.com.vn/

http://www.cafef.vn/



44

APPENDICES

Any research questionnaires

Project proposal



45

QUESTIONAIRES

1. Brand of coffee do you normally drink:

∑ Vinacafe Bien Hoa

∑ Trung Nguyen

∑ Nestle

2. Type of coffee you usually drink

∑ Latte

∑ Arabica

∑ Mocha

∑ Robusta

∑ Capuchino

∑ Espresso

3. The importance of coffee to your taste

∑ Important

∑ Does not important

∑ Very important

4. when do you usually drink coffee:

∑ The morning

∑ The afternoon

∑ The evening

5. Whenever drinking coffee, you usually drink:

∑ A small cup

∑ A large cup



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6. Do you drink coffee to relax against sleepy?

∑ True

∑ False

7. How often do you drink coffee with?

∑ Your family

∑ Your friend

8. Do you have to distinguish between Vinacafe Bien Hoa and Trung Nguyen:

∑ Yes

∑ No

9. Can you feel the difference of the first phase of coffee in two different brands?

∑ Yes

∑ No

10. How much coffee you drink once a day?

∑ 1 time / day

∑ Over 1 times / day

∑ 1 times / week

∑ Over 1 times / week

∑ 1 month / time

∑ In 1 month / time



47

PROJECT PROPOSAL

I. Title of project: Business Model Analysis of Vinacafe Bien Hoa Company

II. Academic Objectives:

Applying theories for the project in practice

Analyzing and evaluation the business model of Vinacafe Bien Hoa Company.

Giving solutions for the company

III. Brief outline

Introduction

∑ If the market you are alone in the restaurant business, products, services,

and customers are required to buy any anything else that you can do that,

then you probably do not care and do not need to study this subject.

∑ In the current economy, companies need to have a business model

consistent contempt for developing markets

∑ We need to understand and consider the serious implications that we can

draw valuable lessons from the company

Description of chosen target companies:

∑ History

∑ Scope of business

∑ Line of products and brands

∑ Development and investment strategy

∑ The organization chart of Vinacafe Bien Hoa



48

Literature Review:

∑ Definition of Business Model

∑ Introduce Business Model of Vinacafe Bien Hoa Company

∑ Development strategy of Vinacafe

SWOT Analysis and Evaluation

∑ Strengths

∑ Weaknesses

∑ Opportunities

∑ Threats

Report and Recommendation

∑ About Manufacturer

∑ Marketing

∑ Management and organization

∑ Human resources

∑ The balance sheet and explain



49

IV. Scheduling management

10-Jul-12 18-Oct-12

26-Jan-13

6-May-13

14-Aug-13

Acknowlegement

Introduction

Description

Literature Review

SWOT analysis

Report andRecommendation

Conclusion

Learing Point/ FutureWork

Abstract

Questionaire

Project Proposal

Project meeting record

start date

Duration



50

V. Identification

Name: Nguyen Thi Tuyet Ngan

Id Number: A1111025

Permanent Address: 93, route 54, ward 10, district 6, Ho Chi Minh City

Email Address: [email protected]



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52

Documents

Business Model Analysis of Vinacafe Bien Hoa Company