TOPIC INTERNATIONAL BUSINESS STRATEGY FOR 3 YEARS (2023 2025) HIGHLANDS COFFEE IN THE NETHERLANDS

THE FINANCIAL UNIVERSITY OF FINANCE – MARKETING FINAL ASSIGNMENT TOPIC: INTERNATIONAL BUSINESS STRATEGY FOR YEARS (2023-2025) HIGHLANDS COFFEE IN THE NETHERLANDS Implementation group: PHAM BA QUOC (Student ID: 1921005179) LE PHUNG TUE MAN (Student ID:1921005113) HOANG VIET TAN (Student ID:1921005193) Lecturer/Tutor/Facilitator: HUYNH THI THU SUONG Page 0 Table of Contents I Executive Summary The importance of building a business strategy Objectives of the report II Introduce Overview of Highlands Coffee company Highlands Coffee developed in the Netherlands III Highlands Coffee PESTLE MODEL IN THE Netherland Market Political problems 1.1 Political system 1.2 Political stability 1.3 Political relations with Vietnam Economic problems 2.1 Product Consumption 2.2 Average income 10 2.3 Economic relationship with Vietnam 11 Social issues 11 3.1 Population size 11 3.2 People's attitude to the product 11 Technology problem 11 4.1 Ecommerce 11 4.2 Intellectual property rights 12 Legal issue 12 5.1 Current legal system 12 5.2 Principles of cooperation with Vietnam .12 Ethical issues 12 6.1 Corruption rate 12 6.2 People's views on environmental protection 12 IV AUDITING THE BUSINESS MARKET IN THE NETHERLANDS 13 Market potential 13 The level of competition 13 3, Political and legal environment .13 Social and cultural influences .14 V PLAN FOR BUILDING INTERNATIONAL BUSINESS STRATEGY IN THE Netherlands IN YEARS (2023 - 2025) 15 SWOT matrix analysis of Highlands Coffee in the Netherlands 15 Formulate a strategy within years (2023 - 2025) .15 Page 0 2.1 Market penetration strategy .16 2.2 Market development strategy .16 2.3 Product development strategy 16 Choose the method of market entry .17 3.1 For franchisors 17 3.2 For franchisees 17 Highlands Coffee's available product lines 18 4.1 Phindi - new generation coffee 18 18 4.2 Espresso 18 4.3 Freeze no coffee 19 4.4 Tea 19 4.5 Cake 19 Product pricing of Highland Coffe in the Netherlands .20 5.1 Cost-based pricing .20 5.2.Competitor pricing 20 Distribution method of Highlands Coffee in the Netherlands 21 6.1 Target market 21 6.2 Positioning Strategy (Quality Positioning) 21 6.3 Set up distribution channels .21 Promotional activities may apply 22 Estimate the budget needed for the plan 22 VI CONCLUSION 23 VII REFERENCES 24 Page 0 Member scorecard: NAME PHAM BA QUOC LE PHUNG TUE MAN HOANG VIET TAN STUDENT ID 1921005179 1921005113 1921005193 Page 0 SCORE 33,3% 33,3% 33,3% I EXECUTIVE SUMMARY The importance of building a business strategy Business activities of enterprises are always influenced by external and internal factors Therefore, building a business strategy helps businesses orient their operations in the future through analyzing and forecasting the business environment Building a business strategy helps businesses be both flexible and proactive to adapt to market fluctuations, while also ensuring that businesses operate and develop in the right direction That can help businesses strive to improve their position in the market Objectives of the report The goal of building a business strategy is to expand the Highlands Coffee market to all over the world Specifically here is the Netherlands, to be able to develop product brands Besides, expanding the scale of the business to be able to reach more customers in order to increase the profit earned from the product II INTRODUCE Overview of Highlands Coffee company Highlands Coffee is a very familiar name for those who are passionate about coffee or fast food in Vietnam, especially young people or those who have worked Highlands Coffee was founded in 1999 by an overseas Vietnamese businessman named David Thai with a strong love for his homeland, ready to leave his family in the US to return to Vietnam to set up a business Figure 1: Founder of Highlands Coffee Page 0 Mr David Thai is the founder of Highlands Coffee Group Mr David Thai was born and raised in Vietnam in 1972, at the age of his family moved to the US and settled in Seattle He studied business administration at the University of Washington, which is one of the most famous schools in the US Figure 2: Highlands Coffee's store Highlands Coffee developed in the Netherlands The Netherlands consists of islands belonging to Aruba and the autonomous territory of the Netherlands Antilles belonging to the Kingdom of the Netherlands in the Caribbean Sea The Netherlands is located in Western Europe, to the east by Germany, to the south by Belgium, to the west and north by the North Sea The climate in the Netherlands is characterized by a temperate oceanic climate, with an average temperature of 10 degrees Celsius to 25 degrees Celsius Because of the north and west facing the Atlantic Ocean The weather in the Netherlands is very mild and pleasant Page 0 Figure Highlands Coffee's logo Figure Highlands Coffee's Logo (2009-2010) (2010 - now) Page 0 III Highlands Coffee PESTLE MODEL IN THE Netherland Market Political problems 1.1 Political system Dutch politics is characterized by efforts to reach broad consensus on important issues, both within the political world and in society The monarch is the head of state, which according to the constitution has limited powers, has the right to receive reports and to be consulted in government matters Cabinets typically consist of 13 to 16 ministers and a variable number of secretaries of state There are one to three ministers who are non-ministerial ministers The head of government is the prime minister (primus inter pares), which has no apparent additional power over the powers of other ministers 1.2 Political stability To maintain political stability, state institutions are indispensable in the Netherlands, such as: Ỉ Executive: ü Head of State: The Queen Unlike many other European countries, the Queen of the Netherlands - head of state - participates as part of the government alongside the Prime Minister and ministers Head of government: Prime Minister ü Cabinet: appointed by the prime minister The current cabinet of the Netherlands includes Prime Minister, Deputy Prime Ministers and Ministers, 14 Ministers, Secretary of State Ỉ Legislative: Bicameral National Assembly consisting of an upper house and a lower house, a term of years ü The Upper House consists of 75 members, elected indirectly by representatives of 12 provinces in the country ü The House of Representatives (Lower House) consists of 150 members directly elected by voters Ỉ Judiciary: Supreme Court The Supreme Court is composed of judges appointed for life by the Queen from a list nominated by the House of Commons Under the Supreme Court there are three other types of courts: 61 district courts specializing in small criminal and civil cases; 19 Page 0 The District Court hears more substantial cases and the Court of Appeals hears complaints from the district courts 1.3 Political relations with Vietnam Political-diplomatic relations between Vietnam and the Netherlands in recent years have been increasingly consolidated and strengthened The two countries' senior leaders maintain regular bilateral visits and contacts at international and regional forums, creating an important basis for strengthening political trust and good cooperation in all fields fields The Netherlands has become an important leading trade partner of Vietnam in Europe with trade turnover increasing steadily over the years Economic problems 2.1 Product Consumption The Netherlands is currently ranked in the top 10 in the world in terms of coffee consumption The total value of coffee consumption in the Netherlands is about 3.5 billion euros per year In particular, the Netherlands is an important gateway in the world with the amount of coffee imported and re-exported to other countries in the region For small and medium-sized manufacturing enterprises that want to penetrate the European market, the Netherlands is the right and favorable first step to expand the market later Thereby, we see that the Netherlands is a country with great potential for coffee consumption Typically, in 2017, coffee consumption in the Netherlands reached approximately 55,000 tons and most of the total coffee production was imported from countries such as Brazil, Vietnam and Honduras Statistically speaking, every Dutch person drinks two and a half cups of coffee a day Figure 5: Consumption of coffee products in EU countries in 2017 ge 0 Page 10 0 4.2 Intellectual property rights Usually, intellectual property in the Netherlands refers to specific rights to use immaterial things and obtain certain benefits from this use TYPES OF INTELLECTUAL PROPERTY RIGHTS OF THE Netherlands: The main intellectual property rights in the Netherlands are copyright, patent rights, proprietary rights, trademarks, designs and trade names Legal issue 5.1 Current legal system The Dutch legal system is based on the civil law system, also known as the continental European legal system, which comprehensively covers the rules applied and interpreted by the magistrates Dutch law or at least the Dutch civil code (Burgerlijk Wetboek) also has some influence on the judiciary of other countries 5.2 Principles of cooperation with Vietnam The Prime Minister hoped that the Netherlands would support Vietnam in connecting ports and industrial zones with Europe, and at the same time, push the Dutch Parliament to soon ratify the EU-Vietnam Investment Protection Agreement (EVIPA) to promote business activities Trade and investment between the two countries grew faster, stronger and more sustainable Ethical issues 6.1 Corruption rate According to Transparency International, the Netherlands is rated as one of the countries with the lowest corruption index in the world In 2020, the anti-corruption level of the Netherlands is at 82 and it tends to increase 6.2 People's views on environmental protection Not expensive cars, bicycles are the main means of transport are recommended to be used at Netherlands Wastewater treatment in the Netherlands over the Decades has since been greatly improved, thanks to the tough and drastic policies and measures of government and relevant ministries, departments and agencies of the Netherlands 0 IV AUDITING THE BUSINESS MARKET IN THE NETHERLANDS Market potential The Dutch market is considered as a gateway and one of the hubs for transshipment of goods into the European market, helping to connect ports and industrial zones with Europe Dutch agriculture is increasingly focused on sustainability, healthy, safe food sources and great care for the landscape and the environment The level of competition It is worth mentioning that the export turnover of Dutch agricultural products is ranked high every year, so efficiency and competitiveness are at the top of the world This is a huge challenge for investors in agricultural products in general and coffee in particular 3, Political and legal environment The Netherlands has supportive tax and business policies to attract foreign investors There are not many formalities required for setting up and maintaining a business in the Netherlands In addition, the Netherlands has special government organizations to help foreign companies set up businesses and adapt in the country The Netherlands has signed many bilateral and multilateral agreements with partners and participates in organizations Dutch policies are uniform, the law is fair In general, the Netherlands has a legal framework that encourages fair competition between companies Page 14 0 Social and cultural influences  Language The Netherlands is one of the top countries in the world with a percentage of the population that can speak English However, there are some e-commerce websites that use local languages Therefore, businesses need to take note of this  Dutch way of life When first interacting with Dutch people, foreigners will have a general impression that they are quite cold Dutch people usually won't start a conversation with strangers However, if you are proactive in starting a conversation, the Dutch people will be more friendly  Consumption habits of people Usually the people of this country are not too important Focus on choosing domestic or foreign manufactured goods They appreciate the products good quality, and willing to pay a higher than average price if the product hits get into their hobby With state support, business, and scientists in the windmill country have taken the lead in recovering all that is still valuable from the discarded things: filtering phosphorus and nitrogen in the urine as manure fertilizer; turn old fishing nets into floor mats; using waste plastic bottles as bicycle paths, cement bricks, wash basins This technology will help Highlands Coffee save a large amount of money, for example, reducing waste treatment costs, recycling garbage waste into water cups, trays, etc In addition, winning the majority of consumers' trust in professional ethics Page 15 0 V PLAN FOR BUILDING INTERNATIONAL BUSINESS STRATEGY IN THE Netherlands IN YEARS (2023 - 2025) SWOT matrix analysis of Highlands Coffee in the Netherlands Weak Point (W) Strengths (S) The Dynamic and enthusiastic staff Applying many convenient means of support for the process of payment and SWOT HIGHLAND effective marketing strategies COFFEE Active all classes of customers There is across stores Rarely financial resources at branches Diverse really suitable for heterogeneity service at the shop Have price is not appear in remote rural areas products, suitable for many customer groups No feedback corner for customers yet Chance (O) Young population Top coffee consuming country in the world Dutch tax support policy Extremely S(2,3) & O(1,2,3,4): Market development strategy S(5) & O(3,4): Product development strategy W(1,3,4) & O(1,2,3,4): Market penetration strategy developed technology Challenge (T) Economic pressure after the Covid-19 S(2,3,5) pandemic & T(2,3): from diversification strategy Pressure W(3,4) & T(1): Forward integration strategy competitors Pressure Horizontal of substitute products 0 Table 1: Highlands Coffee's SWOT model Page 17 0 Formulate a strategy within years (2023 - 2025) In order for Highlands Coffee to appear on the coffee market in the Netherlands, businesses need to implement a few appropriate strategies to develop their brand 2.1 Market penetration strategy Although the Netherlands is one of the countries that consume the most coffee in the world, most of the coffee is imported from Brazil, Vietnam, Honduras, etc Drinks are also somewhat different In addition, Dutch people have a hobby of enjoying coffee with snacks This is a potential opportunity for Highlands Coffee to use its strengths to penetrate the coffee market in the Netherlands 2.2 Market development strategy In the Netherlands, the franchising strategy is still very new and is considered a potential strategy for market development At the same time, the Highlands Coffee brand will quickly become familiar in the eyes of the people Highlands Coffee can fully apply this strategy to develop its business in the international market in general and the Netherlands in particular 2.3 Product development strategy Highlands Coffee divides the menu of the restaurant into main groups: Beverages and FOODS Regarding the analysis of the beverage group: Beverage group: Highlands Coffee is divided into six groups: Café, Phindi, Café Espresso, Tea, Freeze and other beverages But there are really only three main groups: - Group 1: CAFÉ (Café, Phindi and Café Espresso) - Group 2: TEA (Lotus tea, fruit tea and green tea) - Group 3: FREEZE (Grilled ice) The appearance of these drink groups is simply because these three items have brought the most revenue for Highlands Coffee up to the present time and made Highlands Coffee successful About food group analysis At Highlands Coffee, the food group is divided into two main groups, which are fast food and cake (sweet) Why did Highlands Coffee choose to sell cakes and not other items? Because Dutch people love to eat cake with coffee In addition, the flavor of the cake is also based on the taste of the local people so that everyone can enjoy it comfortably Page 18 0 Choose the method of market entry In order to limit the risks when entering a large market like Netherlands, choosing the right penetration method is indispensable Franchising is one of the wisest and surest investments, especially for the F&B industry This method of entering the international market by franchising will help the company to indirectly penetrate into large markets at the lowest cost, and is also an effective way to protect the brand in the foreign market 3.1 For franchisors The franchise agreement typically includes training, provision of management services, and activities carried out under the franchisor's instructions − Expand your business model and distribution system of products and services as quickly as possible − Get more stable income from franchise fees from franchisees − Minimize risks and costs when developing in new markets − Increase brand reputation for the company 3.2 For franchisees Franchisees not need to have business experience to be able to operate a franchise Franchisees support training programs and everything to run their business model like employee training, financial planning, business formula, store layout or even design Dutch staff uniforms − Inherit the franchisor's proven reputation and image, management and working practices − Increase the likelihood that customers know about the products/services you sell and buy more − Significant savings in advertising costs and ongoing support − Higher success rate than startups It can be said that franchising helps to spread the brand to the whole region, the consistency in sales style, brand, and service quality is very important There are different ways of making payments to the franchisor Usually, when a company joins a franchise, they will have to pay a onetime entry fee Upon continuing operations, the franchisee pays the associated service fees, typically based on the franchisee's sales Highlands Coffee's available product lines 4.1 Phindi - new generation coffee 0 g generations full of enthusiasm, creative and m Vietnamese coffee beans combined with the 4.2 Espresso Espresso cups full of flavor due to An elaborate combination of two types of coffeepremium Arabica and Robusta coffee, And most importantly the skill of concocting Training from the Barista will make customers customers have new experiences Figure 9: Espresso 4.3 Freeze no coffee The new and sophisticated taste of ground coffee combined with the cool green tea flavor will create a unique flavor, enough to impress all classes of Dutch people 0 Figure 10: Freeze Green Tea 4.4 Tea The typical deliciousness of tea flavor is reproduced by Highlands Coffee in iced tea dishes With a diverse and rich flavor combination, tea is the ideal refreshment on hot days Figure 11: Tea 4.5 Cake The cakes with typical traditional flavors are handcrafted in Higlands' kitchen with assurance of quality and food safety Light cakes are a harmonious choice when combined with drinks when enjoying at the bar Figure 12: Cakes Page 21 0 Product pricing of Highland Coffe in the Netherlands 5.1 Cost-based pricing Highlands Coffee is always aiming for long-term profit after entering the market, the valuation method is calculated as follows: Selling price = Import price of raw materials + Other business expenses + Profit Normally, businesses will apply an average profit of about 10-20%, to bring stable profits and growth for the company 5.2.Competitor pricing The company often considers determining a moderate profit to offer a price lower or equal to other competitors, but always maintains the spirit of bringing quality, safe and hygienic products to increase customer satisfaction compete for the products the company offers Page 22 0 Figure 13: Price list of some cafes in the Netherlands As we can see in the picture, Dutch cafes all sell products in the range of € - 20 € (about 100,000 VND - 500,000 VND) which is almost similar to foreign competitors like STARBUCKS with prices around € - 10 € (about 125,000 VND 250,000 VND) or other domestic coffee brands From there, we can determine that the average price of Highlands Coffee will be around € - € (about 100,000 VND - 200,000 VND) The price of Highlands Coffee's cakes will also be around € - € (about 75,000 VND - 150,000 VND) With such an average price, it will be very suitable for all age groups of customers That will become a strong point for the long-term profitability of the business Page 23 0 Distribution method of Highlands Coffee in the Netherlands 6.1 Target market In the Dutch market, Highlands Coffee will initially choose locations near companies, offices, and schools with mid-range store rents to easily reach target customers Highlands Coffee's target customers towards the Dutch market are students, business people, people with good and average income With the average age that Highlands Coffee targets is 18-50 years old After building a brand, Highlands Coffee will proceed to expand its network in the centers of major cities such as Amsterdam , Rotterdam , The Hague, 6.2 Positioning Strategy (Quality Positioning) The Highlands Coffee brand will become a high-quality brand in the Dutch market Because the characteristics of the target market are young people, business people, office workers, and have a good to moderate income, the company's products will have lower prices than current competitors in the Dutch market, but the quality is not too much inferior to fine coffee 6.3 Set up distribution channels Highlands Coffee in the Netherlands market will establish two distribution channels: direct distribution channel and indirect distribution channel Direct distribution channels will sell products directly to customers (eg Ahold, Schuitema, Sperwer Holding, Laurus, etc.) Indirect distribution channel, Highlands Coffee will establish with intermediary partners such as coffee agents in the Netherlands, coffee shops to conduct trade in goods To end customers who are using Highlands Coffee's coffee but keeping the company's packaging and logo From there, increasing brand awareness for the company Raising the level of product prestige, making the Dutch market gradually familiar with coffee products from the highlands of Vietnam - Highlands Coffee Promotional activities may apply Promoting promotions and vouchers on online channels has helped Highlands to gain an advantage in the hearts of consumers who often limit going out such as office workers in need And promotions attract younger groups of people and also help promote strong brand exposure Promotions: : the brand creates promotional time frames or days to buy preferential coffee prices, buy get free, 20% off when buying filter coffees, organize promotions such as free coffee Upsize fee for women on March 8th, afternoon tea and cake combo, collect all three stamps, get a free iced milk filter, Page 24 0 Estimate the budget needed for the plan For any business operating in the market economy, it is necessary to have financial resources, economic potential is extremely important in the development of the company Financial resources help the company to be stable in production and business activities TOTAL STT DURA ITEMS TION Materials Living expenses (electricity, water, repair, ) EXPENSE COST (YEAR) month 1,750 € 21,000 € month 2,000 euros 24,000 euros Labor costs month 8,000 € 96,000 € Marketing expense month 3,000 € 36,000 € Space costs month 15,000 € TOTAL COST OF THE STORE/YEAR 180,000 euros 357,000 € Table 2: Budget table for a cafe within year VI CONCLUSION Dutch consumers are very health conscious For them, black coffee has health benefits, so they switch to black coffee more, instant coffee tends to decrease But the Dutch prefer decaffeinated coffee, which is not very popular in the Netherlands With strategic management measures analyzed and clarified by our team, we can help Highlands Coffee increasingly assert its brand position in the country in general and the international market in particular In order to bring Vietnam's cultural identity to the international level and affirm its position in the international market Page 25 0 Opportunities and challenges when exporting coffee to Netherlands Opportunities: − Korean coffee market depends entirely on imports − Vietnam is known as an exporter of high quality coffee − Coffee is a popular drink − Low import tax and excise tax exemption Challenge : − Consumers also love bold flavors, cafes in Korea boast that their coffees have the strongest flavors in the world − Taste and price are two points Korean consumers are very interested in when choosing to buy coffee − Korean consumers are also quite loyal to their chosen brand − The coffee market is quite competitive Vietnamese coffee brands in general and Highlands Coffee in particular can completely conquer fastidious consumers in any country if we have quality, a clear international marketing strategy and the right mindset VII REFERENCES An, H (2020) Highlands Coffee, Starbucks, Phuc Long and The Coffee House - how is the "great war" about business? Dung, TM (2021) Highlands Coffee's target market Taken from https://tranminhdung.vn/thitruong-muc-tieu-cua-Highlands Coffee-coffee/ https://doanhnghieptiepthi.vn/thi-truong-ca-phe-quy-3-2020-san-luong-ca-phetoan-cau-giam- nhe-trong-nien-vu-2019-2020-161201023154536962.htm Thon, N (2019) Highlands Coffee microenvironment Page 26 0 VinID (2020) What dishes does Cafe Highlands Coffee have? Highlands Coffee coffee recipe Taken from https://vinid.net/blog/cafe-Highlands Coffee-co-nhungmon-nao-congthuc-cafe-Highlands Coffee/ Page 27 0 ... PLAN FOR BUILDING INTERNATIONAL BUSINESS STRATEGY IN THE Netherlands IN YEARS (20 23 - 2025) 15 SWOT matrix analysis of Highlands Coffee in the Netherlands 15 Formulate a strategy. .. factors Therefore, building a business strategy helps businesses orient their operations in the future through analyzing and forecasting the business environment Building a business strategy helps businesses... supportive tax and business policies to attract foreign investors There are not many formalities required for setting up and maintaining a business in the Netherlands In addition, the Netherlands has