THEORITICAL BACKGROUND OF THE RESEARCH PROJECT
CONCEPTS AND CLASSIFICATION OF BUSINESS STRATEGIES
According to Chandler (1962), strategies involve identifying a company's key long-term goals and objectives, along with the implementation of a series of actions and the allocation of necessary resources to achieve these goals.
Historically, the concept of strategy was primarily associated with military operations As societies evolved and the exchange of goods became more prevalent, these strategic principles began to influence business practices The core idea of strategy in this context is that a business can dominate its competitors, even formidable ones, by effectively managing the competitive landscape and positioning itself advantageously to enhance its strengths.
In today’s context, the term of strategies in military strategies used in management refers to business strategies
Companies implement targeted strategies to achieve a competitive advantage by carefully selecting and managing a diverse range of business activities This approach focuses on competing within specific industries and market segments for particular products, aligning with the organization's overall goals and objectives.
In large companies, each business unit develops its own strategy tailored to its department, using it as a competitive tool in the market This commitment and strategic action enable the company to leverage its core competencies, ultimately securing competitive advantages in specific markets.
1 Chandler, A (1962), Strategy and Structure Cambridge, Massachusetts MIT Press
They are strategies that help effectively implement strategies at the department level and the company level thanks to its components of resources, process, human resources and essential skills
They are ways for invasion in a foreign market to gain a competitive advantage and maximize the core capacity of a company.
Business strategies, as defined in the Griggs University textbook for the master's program in business administration, involve a series of commitments and actions that enable a company to achieve a competitive advantage by leveraging its core capabilities within a specific market.
Management of business strategies
Illustration 1.2 A process of strategic management
Identification of vision, missions, duties and current strategies of the company
Analysis of the macro environment
Analysis of the industrial environment Analysis of the micro environment
Identification of goals for the company
Budget planning Policy development organizational structure
The first step is to identify functions of a company In fact, it is to identify strategic mission, vision, goals of a company.
+ Mission: clarify the reason for existence of a company and indicate what the company needs to do.
+ Vision: this is a message that specifies a mission into an overall target, which creates belief in the future of the company.
+ Strategic goals: clearly identify duties of a company, things that a company expects to achieve in a medium and long term.
A company's mission serves as a foundation for understanding and categorizing various issues it faces These issues can be classified into two main groups: those arising from the internal environment of the company and those originating from external factors.
Illustration 1.2.2: Companies and their influential factors
1.1.3 Identification of functions, duties and goals of a business strategy:
1.1.4 Assessment, analysis of factors that have impacts on a company and identification of goals of a company
1.2.1.1 Analysis of the external environment:
An external environment includes all factors outside a company that manager cannot control but they have big impacts on achievement of a company’s goalss, on its growth and profit generation
Analyzing the external environment involves examining both the macro and industrial environments, which enables a company to assess its current position and contextual factors This analysis is crucial for understanding the potential impacts of external elements on the company, allowing for informed strategic planning decisions.
The macro environment significantly influences all business sectors and industries, as shifts in this environment can directly impact various forces within the industry These changes can alter the relative power of these forces and affect the overall attractiveness of the industry.
A macro environment includes: (1) Economic environment; (2) Political and legal environment; (3) Cultural and social environment; (4) Natural environment;
The economic environment significantly influences a company's success and strategic direction, as it reflects the current state and future trends of the economy in which the business operates Key macroeconomic factors, including economic growth rates, monetary policies like primary and lending interest rates, exchange rates, and inflation rates, can alter a company's ability to generate value and income Understanding these elements is crucial for businesses to adapt and thrive in a changing economic landscape.
The political and legal environment significantly influences a company's operations, presenting both opportunities and challenges These factors can create favorable conditions for growth while also posing potential obstacles and risks that businesses must navigate Understanding the interplay between legal regulations and political dynamics is crucial for strategic planning and risk management.
A government is the biggest consumer in an economy
Political stability and policy consistency are always what attract investors A complete legal system is the foundation stable business.
Decisions on tax and fees may bring about opportunities but also prevent production development
The Labor Code, rules on recruitment, retirement regime, unemployment allowances are what a company has to consider.
The sociocultural environment is rapidly evolving, influenced by borrowed lifestyles that present opportunities for producers Companies must consider consumer attitudes, demographic shifts, marriage and birth rates, and the changing status of women in both work and family settings Additionally, the emergence of consumer associations poses challenges, emphasizing the need for businesses to prioritize product quality to protect consumer rights and benefits As awareness and demands among consumers grow more diverse, producers will face increasing challenges in meeting these expectations.
Smart strategy makers recognize the importance of the natural environment, particularly in relation to ecology and climate Seasonal producers and service providers are increasingly aware of the threats posed by unpredictable climate changes, such as the ELINO phenomenon, which raises global temperatures Recent winters have seen a decline in prolonged cold weather, creating challenges for winter clothing producers while simultaneously offering significant opportunities for those specializing in spring and autumn apparel.
The scientific and technological environment plays a crucial role in influencing the life cycle of products and services Technological advancements not only impact production methods and materials but also shape the attitudes and behaviors of workers Therefore, it is essential for strategy makers to consistently monitor these changes and invest in technological progress to stay competitive.
A global environment: Regionalization and globalization have been an inevitable tendency that all companies, all industries and all governments have to take into consideration
Vietnam's participation in international organizations like ASEAN and the WTO has opened up significant opportunities for local companies, including increased investment and access to broader markets However, this integration also presents challenges that businesses in Vietnam must navigate in order to thrive in a competitive landscape.
Duties of strategy markers are to analyze and make prediction on competitive forces in an industrial environment to identify opportunities for and threats to their companies
Companies in an industry are affected by factors in that industry, including: (1) current competitors; (2) potential competitors; (3) suppliers;(4) customers; (5) alternative products
Current competitors : the first force in the model of five competitive forces of
M.Porter is the competitive scale among current companies in a production industry If competitors get weaker, companies will have opportunities to increase prices and earn more profits On the other hand, when current competitors are strong, there will be significant competition in prices All competition in prices leads to damages Competition among companies in an industry often includes the following main issues: the competition structure in the industry, real situations of demands in the industry and barriers to exit.
An industrial competitive structure is based on data and product distribution capacity of a company Different competitive structures have different implications in competition
The level of demand within an industry significantly influences the intensity of internal competition Typically, rising demand creates more opportunities for companies to expand their operations Conversely, declining demand intensifies competition, as businesses strive to maintain their market shares Companies that fail to remain competitive are likely to lose their market positions.
Barriers to exit pose a significant threat to competition, especially when demand in an industry experiences a sharp decline These barriers can be economic, strategic, or emotional factors that compel a company to remain in the industry despite unfavorable conditions When exit barriers are high, companies may find themselves trapped in an industry they no longer wish to be a part of, hindering their ability to adapt to changing market dynamics.
Potential competitors are businesses that are not currently active in an industry but could enter the market if they choose to do so This poses a threat to existing companies, as increased competition can lead to a dilution of market share and profits To maintain their position and profitability, current companies strive to deter potential entrants, recognizing that a larger number of competitors can significantly intensify rivalry within the industry.
Suppliers pose a potential threat to companies when they raise the prices of raw materials or compromise the quality of their products and services Such actions can diminish a company's profit-generating capacity and create a greater dependency on these suppliers.
Customers wield significant bargaining power, posing a competitive threat that compels companies to lower prices and enhance quality and services However, when this power diminishes, companies can seize the opportunity to raise prices and boost profits The customer base encompasses end-users, distributors, including both wholesalers and retailers, as well as industrial buyers.
ANALYSIS OF REAL SITUATIONS OF THE COMPANY
OVERVIEW OF THE COMPANY
Name of the company: Vietnam Ecology Link Limited Liability Company
(Ecolink) Head quarter: Room 524, A1, 17 Ngọc Khánh, Hà nội.
Website: ecolink@hn.vnn.vn
Vietnam Ecology Link Limited Liability Company (Ecolink) was created in
Founded in 2003 by Hiep Thanh Limited Liability Company and Mr Koen Den Braber, the organization aims to tap into the high-end food market by utilizing Vietnam's distinctive nutritious agricultural products This initiative focuses on the development of organic agriculture in accordance with the standards set by the International Federation of Organic Agriculture Movements (IFOAM), promoting fair trade and fostering community development.
Ecomart, a trademark of Vietnam Ecology Link Limited Liability Company (Ecolink), specializes in the distribution of organic and natural products under an internal control system (ICS) Established three years ago as part of the ADDA project funded by the Danish government, Ecomart is one of the few initiatives supporting organic development in Vietnam, focusing specifically on the domestic market Currently, Ecomart's production and business operations represent 30% of Ecolink's total scale.
The project aims to promote the Ecomart trademark by offering financial support and technical assistance to facilitate the introduction of organic products from the ADDA initiative into local communities The total budget allocated for this endeavor is USD.
2.110.000 The operation period of the project is from November 2004 to October
In 2010, the project brought together key partners including the Vietnam Farmer Union, the Ministry of Agriculture and Rural Development, various institutes, NGOs, and private organizations ADDA provided essential financial and technical support to these partners Although the project concluded in October 2010, Ecomart continues to operate independently, engaging in introduction sessions and training courses focused on new organic farming techniques.
Ecomart facilitates the production of organic vegetables by coordinating groups of farmers rather than producing them directly The company establishes agreements with these farmers, where it provides essential technical assistance for both the cultivation and marketing of their entire output Under Ecomart’s guidance, farmers adhere to Participatory Guarantee System (PGS) standards, ensuring quality and sustainability in their farming practices.
Ecomart has established itself as a promising business model in Hanoi, with its operations centered around a single store located in Nghia Tan and an online presence at ecomart.vn.
Ecolink is a prominent company specializing in organic products, initially focusing on developing an organic tea-growing region for export to markets in Belgium, Scotland, Germany, the Netherlands, and America Since 2009, Ecolink has partnered with the ADDA project to cultivate organic vegetables and clean food, such as pork and chicken, in the northern provinces for the Hanoi market The Ecomart brand was established to distribute organic vegetables and food to consumers in Hanoi.
The product structure of Ecolink in 20100 has affirmed the trademark of Ecomart Though it has just entered the market, it has had a stable number of customers.
Chart 2.1.1: The product structure of Ecolink by revenues in 2010.
Ecolink's technical strength is enhanced by strategic partnerships with reputable organic agricultural organizations, including BIOGLOBAL in New Zealand and GREEN NET in Thailand, as well as the International Federation of Organic Agriculture Movements (IFOAM) These collaborations enable Ecolink to effectively market its products both domestically and internationally, leveraging the expertise of its partners to promote organic agricultural development.
Ecolink operates under a line functional organizational structure, with a Director overseeing the entire business and production outcomes, accountable to the Board of Directors Supporting the Director are two Deputy Directors and four functional departments: Finance and Accounting, Warehouse Management, Business, and Export, along with the Ecomart shop Each department head is tasked with implementing directives from the Director General and is responsible for the performance and results of their teams Due to the company's small size, there are no deputy heads, allowing department heads to directly assign tasks and monitor staff performance effectively.
The current organization model at Ecolink is as follows:
Labor structure : At present, there are 35 employee at Ecolink as follows: Table 2.1.1: Labor structure of Ecolink
EDUCATION NUMBER OF PEOPLE Percentage
Table 2.1.2: Business and production outcome for 2008, 2009 and 2010
- Revenues from export of organic tea
Chart 2.1.2 a: Revenues structure of Ecolink
Unit: VND million 2.1.2 Situations and outcome of its business activities from 2008 to 2010
Chart 2.1.2 b: Before tax profits structure of Ecolink
The revenue of the company in 2010 increased 133% compared with that in
In 2009, Ecomart experienced a remarkable profit increase of 128.6%, driven by a revenue growth rate that surpassed profit growth due to rising organic tea prices in the production area, while previously signed export contracts prevented price adjustments Despite being a new entrant in the market, Ecomart's brand has achieved significant revenue growth and impressive profits, indicating a successful strategy in targeting the clean food market in Hanoi.
In 2010, Ecomart experienced a remarkable revenue increase of 101% and a profit surge of 152.6% compared to 2009, highlighting the growing consumer acceptance of organic products in Hanoi To achieve its goal of becoming the leading company in Vietnam's organic agricultural sector and to establish the Ecomart brand as a recognized name both nationally and globally, it is essential to implement targeted business strategies.
Therefore, we will use analytic tools for selection of the best business strategy for the trademark of Ecomart
+ To develop a system of sustainable agriculture
+ To provide organic products from famers, process and distribute products to consumers
+ To introduce natural products of high quality to the market to improve the life quality of consumers
+ To contribute to social responsibiliieis and improve the living standard of people in the mountainous areas and other people in the chain of values
+ To become a number-one company in Vietnam in the field of organic agriculture
+ The trademark of organic products and fair products of Ecolink is well known in Vietnam and in the world
+ To become a company with the most reputation in Vietnam in the consultation for development of organic projects with international certification
+ To provide organic products with the highest quality of natural products + To make customers happy and satisfied
+ To bring about happiness and values for members
+ To generate profits and to gain growth
2.1.3 A general direction for development of Ecolink
+ To pay attention to communities and environment
+ To develop a win-win partnership with suppliers
+ To improve health of the community through education programs
+ To provide nutrition (food) for good health
They have to be natural products (organic) with high quality, good taste, smell, colour, cleanness, nutrition, and other neutralities.
To ensure product quality which is vital for the existence/survival of the company
We are interested in natural organic products with the highest quality Ecomart acts as a representative of customers to bring about the highest quality
+ Customers: Ecomart not only provides good fresh organic products but also makes customers the most satisfied through:
Knowing and forecasting their demands
Providing services that are even better then customers’ expectation
Providing conditions for consumers to live in harmony with the nature, to protect the environment and to ensure fair trade
Each Ecomart shop is an interesting place for customers’ meetings
+ Staff: Ecomart will be a living and working with equal development opportunities for staff Ecomart values:
+ Individual responsibilities and group-based efficiency: responsibilities at work of each member for their assignment and related work Each member is part of the group.
Being enthusiastic with customers for the best services
Open and rapid information, solutions and feedback
+ Suppliers: Ecomart wants to work with partners to share core values that
Ecomart values Ecomart values the following criteria:
Being a leader in quality and environment
Creation of clear books and control the organic system
Ecomart preserves and values typical features of each province for each kind of good, which is based on their knowledge on the province.
Ecomart prioritizes the importance of suppliers and is committed to maintaining a natural organic environment and ecological balance The company emphasizes sustainable practices in agriculture and husbandry, promotes biological diversity, and rejects extreme measures that harm nature Additionally, Ecomart focuses on the preservation and enhancement of land fertility to support a healthier ecosystem.
Organic agriculture, as defined by the United Nations, is a natural cultivation system that avoids chemical fertilizers, promoting reduced pollution and enhancing the health of both people and animals This approach merges traditional farming techniques with scientific practices to create sustainable agricultural methods.
2.1.4 Techniques for organic agricultural production technological advancements to bring about benefits for the environment and to promote equal relations and improve the life quality for all participants
To cultivate organic products, farmers must adhere to 24 stringent technical standards set by PGS, which prohibit the use of chemical fertilizers, chemical plant protection agents, and synthetic hormones They are required to meticulously document all input materials used in their farming practices and establish a buffer zone of at least 1 meter to prevent chemical contamination Additionally, the use of treated seeds that have been exposed to banned fertilizers prior to planting is strictly forbidden.
ECOMART AND ANALYSIS OF ITS REAL SITUATIONS
Vietnam's economy has experienced remarkable growth in recent years, averaging around 8% annually, significantly influencing the development of various economic sectors As of July 2010, the population reached 89.5 million, with over 26.5 million residing in urban areas The average annual income was USD 1,800 in Hanoi and USD 31,000 in Ho Chi Minh City, where approximately 15% of the population falls into the middle or high-income bracket This improvement in living standards has led to a heightened demand for safe, high-quality products, ultimately fostering market growth in the region.
+ Interest rates: The interest rates in recent years in Vietnam have been very high in comparison with that in the region and in the world, especially those
2.2.1 Analysis of the external environment in 2011 Changes in interest rates in the market have direct impacts on costs of production and business of the company When interest rates go up, an increase in the cost of borrowing money may reduce business efficiency of the company in the accounting period
In 2010, the inflation rate reached 11.75%, with projections indicating a rise to 19% in 2011, as reported by the General Statistics Office This surge in inflation drives up input costs, consequently leading to increased output prices.
Exchange rates do not directly affect agricultural production, particularly for organic products, as these do not rely on imported fertilizers or materials However, fluctuations in exchange rates significantly impact the cost and availability of imported organic products.
Vietnam excels in agricultural production; however, its citizens often lack access to high-quality agricultural products The sector faces significant challenges, including environmental pollution, land degradation, reduced biodiversity, and pesticide contamination There is an urgent need to promote clean and environmentally friendly agricultural practices Moreover, the demand for organic products has surged, particularly in major cities like Hanoi, as more consumers recognize the benefits of organic farming and the risks associated with pesticide use and bacterial contamination.
Organic agriculture presents a viable solution to pressing issues in Vietnam, where it has not received significant attention despite its global popularity In response to this gap, the ADDA of Denmark has launched a project aimed at cultivating organic crops to combat hunger, reduce poverty, and protect the environment in Soc Son and Luong Son The initiative seeks to foster efficient and sustainable practices in organic agriculture, benefiting both production and consumption Over four years, the project has trained 1,500 farmers in organic methods for growing vegetables, tea, fruits, flowers, and fish, while establishing 28 farmer groups Additionally, it has conducted market-related activities to enhance consumer awareness of organic food and developed a participatory system Ecolink serves as a key partner in connecting these farmer groups with consumers through a structured product distribution and consumption network.
The government has implemented various legal documents and policies aimed at supporting and encouraging farmers and businesses in the production and supply of safe vegetables to the market.
- The Decision No 04/2007/QĐ-BNN on “regulations on management and RAT certification”.
- The Decision No 106/2007/QĐ-BNN on “regulations on management of RAT production and business”.
- The Decision No 99/2008/QĐ-BNN on “regulations on management of production, business on safe vegetables, tea, fruits”.
- The Decision No 107/2008/QĐ-TTg on “some policies to support development and production of safe vegetables, tea, fruit”.
- The Decision No 104/2009/QĐ-UBND on “regulations on management of RAT production and business in Hanoi”…
- The Decision No 03/2007/QĐ_BNN on standards, product quality, typical features of agricultural products.
-Official documents of VIETGAP of the Ministry of Agriculture and Rural Development.
- GAP standards issued by the Department on Plant Protection
- Agricultural development projects are encouraged which is a convenient conditions for Ecomart to get access to production technology under the ADDA project.
In Vietnam, a significant majority of consumers (95%) still prefer purchasing vegetables from nearby locations, despite the safety concerns associated with these options However, there is a noticeable shift, with 42% of people opting for safe vegetables in supermarkets due to the superior quality and freshness offered Supermarkets adhere to strict preservation and processing standards, ensuring high-quality, safe, and sanitary produce, including packaged items like cabbages and mushrooms Despite this, only 7% of consumers frequent dedicated safe vegetable shops, primarily due to their inconvenient locations.
A market survey conducted with 300 participants revealed that 67% of customers are either unfamiliar with or have limited knowledge of organic products, while 24% are aware of organic products but have never used them Only 9% of customers have experience using organic products, primarily consisting of middle to higher-income individuals who prioritize health, particularly those with elderly family members or children Notably, 23% of respondents have utilized Ecomart products and particularly appreciate the daily home delivery services offered by Ecomart.
Growing awareness of food safety, environmental impact, and nutrition has led to a significant increase in the demand for organic products Consumers are increasingly seeking organic options to ensure healthier choices and sustainable practices in agriculture.
European countries, particularly England, Sweden, and The Netherlands, are experiencing a significant annual growth rate of 20% in the organic product market Although organic products typically command higher prices than conventional ones, this price gap is narrowing due to an increase in the availability of organic options This trend presents both opportunities and challenges for vegetable producers and entrepreneurs in Vietnam.
A matrix on assessment of external factors (EFE)
The Ecomart External Factors Evaluation (EFE) matrix summarizes key opportunities and threats from the external environment that could impact the company's trademark By assessing these factors, Ecomart can determine their potential advantages or challenges, enabling informed decision-making regarding their strategic responses to external influences The following table illustrates the EFE matrix for a clearer understanding of these dynamics.
Table 2.2.1a: A matrix on assessment of external factors (EFE)
Main external factors Levels of importance
- Policies that encourage agricultural development
- Fruit and vegetable importa and export tax
- Transfer of organic production technology from foreign organizations
- People’s concerns on food safety
- People’s understanding on organic products
- Habits of buying in open markets
- Expansion of material-growing areas
The total score in the EFE matrix is 3.11 which shows that the company is good in reaction towards changes in the external environment
2.2.2.2 Analysis of the industrial environment and competition
− Competitive pressure from current competitors
+Phúc Đại Việt Limited Liability Company: address: 301 Nguyễn Trãi –
Thanh Xuân, located in Hà Nội, is a participant in the ADDA organization's organic food project from Denmark The company promotes its organic products through its website, organicfoods.vn, featuring the slogan "Green Foods, Green Life." Prices for their products range from VND 18,000 to VND 25,000 per kilogram Additionally, Thanh Xuân offers home delivery services every Monday and Thursday.
The Company's products are available for purchase on their website, organicfoods.vn, and are also distributed at Big C Thăng Long and Big C The Garden, which are part of the largest retail supermarket chain in Hanoi.
The company faces a significant weakness as its products are primarily sold at BigC, the largest supermarket in Hanoi, which has a high consumption capacity However, this reliance leads to challenges with low-quality inventory, as vegetables must be sold within a day Additionally, customers often compare the prices of its organic vegetables with a wide range of alternatives offered by BigC, making it difficult for the company's products to compete in terms of appearance and pricing.
Kiếm, Hà nội It slogan is “Thanh Xuan organic vegetables” Its website is rauthanhxuan.com It is a social company with a mission to support the development of organic agriculture
• Sales: Every Tuesday and Friday at 1 Phạm Ngũ lão Products are sold on Saturday at the weekend market at No 4, Lane 67/12 Tô Ngọc Vân , Tây Hồ ,
Hà nội An order of at least 10 kg will be delivered at home for free
• Prices: VND 24.000/kg (for all kinds of vegetables)
• In addition, there are some groceries shops such as Family Mart 24h at 58 Vạn Kiếp, Bạch Đằng – Hai Bà Trưng – Hà nội
• Also, the center has organized trips for families or groups to visits their organic vegetable-growing fields
• Strength: A stable number of customers including hotels in Hanoi
DEVELOPMENT, SELECTION OF STRATEGIES AND SOLUTIIONS
Development of possible strategies for Ecomart
+ S2: Various material-growing areas in different parts in the country
+ S4: A leading company in the organic food market in Vietnam
+ S7: Certified by organizations with good reputation
+ S8: Activities for improvement on consumers’ awareness of the products for good impacts
+ S9: Ecolink’s experience in organic tea export to Asia and Europe
+ S10: Employees are carefully selected in terms of capacity and ethics and thus, they have good working attitudes and love the work
+ S11: supply does not sufficiently meet demands
+ W1: Because the products are new, the number of consumers that know the products remains modest.
+ W2: The products’ appearance is not as attractive as that of alternative products
+ W3: Its operational scale remains small with low financial capacity
+ W4: Distribution channels are not various
+ W6: Low capacity in product development
+ W8: Inflexible and limited product/service packages
+ W9: Advertisement does not reach majority of population
+ O1: The organic food market in Vietnam is potential.
+ O2: There have been increasing demands of safe food in Vietnam, especially in big cities
+ O3: Improvement in people’s awareness on health protection
+ O4: An increase in people’s income
+ O5: Young population with higher education, better capacity to absorb new knowledge
Use strength to make the best of opportunities
Overcome weakness through making the best of opportunities
+ O6: Government’s policies in encouragement of organic agricultural development
+ O7: More techniques for organic production which are disseminated widely in the world and in Vietnam
+ T1: Quality and quantity of organic products, especially that of vegetables depends much on weather and diseases.
+ T2: Alternative products are about 30% cheaper
+ T3: Consumers’ capacity in making distinction of organic products and ordinary ones remains low.
+ T4: It is estimated that there will be more competitors entering the market in the coming time
Use strength to avoid threats
Minimize weakness and avoid threats
− SO strategies (use strength to make the best of opportunities):
+ Use S3, S4, S5 to make the best of O6, O7: this combination results in a
Ecomart employs a cost leadership strategy by organizing skilled farmers and leveraging government policies to enhance organic food production, leading to increased productivity and lower costs By integrating S4, S7, and S8 with O1, O2, and O3, Ecomart develops a robust trademark competition strategy The company's strong branding is supported by its leadership in the market and certified quality products, alongside initiatives to educate consumers about organic offerings This approach, combined with the growing demand for safe food in Vietnam, positions Ecomart as a competitive leader in the organic food sector Utilizing S1, S7, and S11 to maximize O1 and O2 further strengthens Ecomart's market presence.
Strategy on market expansion and occupationFocus strategy: At present,
Ecomart offers high-quality, certified products, and in light of the current supply-demand imbalance, there is a significant opportunity in Vietnam's organic food market By leveraging this potential, Ecomart can implement a market expansion strategy to address existing shortages and satisfy growing consumer demand for organic food.
− WO strategies (Overcome weakness through making the best of opportunities):
+ Make the best of O2, O3, O5 to overcomec W1, W7 A strategy on market expansion and occupation Focus strategy
+ Make the best of O6 to overcome W3, W4, W5, W6 A strategy on market expansion and occupationFocus strategy
− ST strategies (Use strength to avoid threats):
To enhance competitive advantage in trademark differentiation, Ecomart leverages strategic relationships with farmers and reputable organizations such as NGOs and ADDA By providing technical assistance and financial support, Ecomart focuses on improving production techniques and investing in infrastructure This approach minimizes the impact of weather and diseases on product quality As a result, once Ecomart achieves superior product quality compared to competitors, it will secure a significant edge in the marketplace.
To effectively expand its market presence, Ecomart leverages S7 and S8 strategies to counter T3, focusing on market expansion and occupation While alternative products may be cheaper, their lower quality poses health risks to consumers Ecomart addresses this issue by enhancing consumer awareness through its initiatives and PGS certification, enabling customers to distinguish between organic and conventional products This approach not only promotes healthier choices but also supports Ecomart's gradual market expansion.
− WT strategies (Minimize weakness and avoid threats): Minimize W2 and reduce
To effectively implement a market expansion strategy, Ecomart must address the perceived inferiority of its product appearance compared to competitors By educating consumers on how to distinguish between organic and conventional products, as well as highlighting the nutritional benefits and food safety advantages of its offerings, Ecomart can strengthen its market presence and enhance consumer trust.
So, possible strategies for Ecomart include:
(1) A strategy on cost-based competitionCost leadership strategy
(2) A strategy on trademark competition Differentitation on Branding strategy
(3) A strategy on market expansion and occupation.Focus strategy
Selection of a strategy
The QSPM matrix is utilized to analyze and determine the most suitable strategy for Ecomart, comparing options such as cost-based competition, trademark competition, and market expansion.
The Strategy on cost-based competition Cost leadership strategy
The Strategy on trademark competition Differentitation on Branding strategy
The Strategy on market expansion and occupation Focus strategy
AS TAS AS TAS AS TAS
Attitudes of sales people/delivery people
Management capacity of the leaders 4 3 12 3 12 3 12
Policies that encourage agricultural development
Fruit and vegetable importa and export tax
Transfer of organic production technology from foreign organizations
People’s concerns on food safety 3 4 12 4 12 4 12
People’s understanding on organic products
Habits of buying in open markets nearby 3 1 3 2 6 2 6
Expansion of material-growing areas 2 4 8 3 6 3 6
After evaluating the internal and external factors affecting strategic decisions, Ecomart's market expansion strategy, characterized by a focus on differentiation in branding, aligns closely with its objectives and overall orientation This approach ensures a high and consistent TAS, positioning Ecomart effectively in the competitive landscape.
Target and strategies function of A strategy on market expansion and occupation
− Target markets: In the development period from now to 2015, Ecomart aims at its taret market in big cities including Hà Nội, Hải Phòng, Huế, Đà Nẵng, Hồ Chí
− Identification of target customers: Middle income people or higher, with high awareness of health protection for themselves and their families:
1.1.10 Target of A strategy on market expansion and occupation focus strategy :
+ Foreigners living and working in Vietnam
+ Middle income people or higher
+ Slogan: Return to the nature
− Target: In 2015, Ecomart has 10 stores in the big cities of Vietnam such as Hanoi, Haiphong, Hue, Da Nang, Ho Chi Minh and occupy 30% organic food market of
+ Prices are identified based on the input costs + operational costs + expected profits, which are about 20% to 40% higher than ordinary products depending on kinds of products
+ Suitability with each group of customers.
Individual customers often face higher prices compared to corporate clients due to elevated shop and transportation costs However, discounts may be available based on delivery locations to incentivize group purchases.
Corporate customers typically generate substantial and stable revenue over extended periods, often through contracts lasting from six months to a year As a result, the anticipated profit per product unit is generally lower compared to that derived from individual customers.
+ Investment for development of an image of professional and friendly delivery and sales people:
To enhance customer service, it is essential to train sales and delivery staff to maintain a friendly demeanor and possess comprehensive product knowledge, enabling them to effectively advise customers and address their inquiries.
Means of transportation: van, motorbike
+ Upgrade current shops and develop new shops in the shop systems:
By 2013, the company plans to open one additional store in Hanoi's Old Quarter (Hoàn Kiếm district) and one more store in each of the urban areas of Mỹ Đình, Trung Hòa – Nhân Chính, and Linh Đàm.
By 2015: it will open 01 more shop in each city of Hải Phòng, Huế, Đà Nẵng and 03 shops in HCM city.
By 2020: there will be shops in some other provinces and products are exported
+ Exploitation of other distribution channels:
Dining rooms for luxurious hospitals: Việt Pháp, Việt Sing…
Currently, the primary channel for customer engagement is the Internet, which significantly enhances efficiency To capitalize on this, Ecomart should prioritize the maintenance and enhancement of its website, ecomart.vn Additionally, focusing on popular forums and websites such as Lamchame, Webtretho, Ttol, Gia Dinh, Mua Chung, Hotdeal, and platforms dedicated to health or pregnancy will further strengthen its online presence.
Television channels: O2 TV, VTV2, VTV1
Newspaper: Medicine and health; The Elderly; Pregnant Women; Beauty; Consumption Consultation
Radio: VOV Transport, programs for the elderly and women
Letters of introduction, direct contacts through telephone to customers.
We engage with customers through various channels, including trade fairs, residential communities, women's unions, trade unions, and product introduction events Our outreach also includes organizing cooking contests featuring organic products and conducting visits to material areas to study the organic food production process Additionally, we connect with potential clients at maternity hospitals, elderly care facilities, and prominent hospitals such as Viet Phap Hospital and Van Phuc International Hospital.
Develop promotion packages: Family (same-blood-families); Colleague; Neighbour
Gifts/coupons for birthdays, holidays
Customers’ feedback boxes at shops
Hotline directly to the Deputy Director of Ecomart
Sales people directly contact customers through telephone, emails or letters for greetings and to get customers’ feedback on quality of their products and services
Create Ecomart clubs (Ecomart online/offline).
Send daily or weekly menus and recipes to customers through emails.
Provide training to sales and delivery people: to ensure they are always friendly and have general knowledge on products so that they can provide advice or answer customers’ questions.
(1) Electronic wallet/purse and coupons are directly sold to customers or customers can use those products as gifts for friends or family members.
Hire nutrition experts to study suitable daily/weekly/monthly menus based on current products of the company.
Encourage customers make orders according to the nutrition daily/weekly/monthly orders
Create customized meal plans for special dietary needs by consulting with nutrition experts These tailored menus cater to various groups, including pregnant women, children of different ages, individuals with high or low blood pressure, and those managing obesity.
(3) “Live in two directions – Enjoy full happiness”
Ecomart understands the needs of busy professionals and businessmen, offering personalized outreach to assess their preferences, demands, health conditions, and the ages of their family members.
Customers may delegate Ecomart to make a list of food products for a month to ensure nutrition balance which is suitable with the health status of each family member
Ecomart can deliver products to customers’ houses every 3 days or once a week or every day according to customers’ request.
1.1.1.2 A strategy for sustainable development of material-growing areas: a Current material-growing areas:
To enhance agricultural productivity, it is essential to sustain existing advantageous products in key material-growing regions while also innovating new products tailored to the specific land conditions, weather patterns, and skill levels of local farmers.
+ A development plan for material-growing areas will be studied and developed completely but the expansion will depend on the real demands: + When supply is equal to demands: preparation
+ When supply is 10% - 15% less than demands: implementation
- Special vegetables of the area
- Special vegetables in the area
- Special vegetables of the area
Cao Bằng - Beef b Development of new material-growing areas: Bắc Ninh, Vĩnh Phúc, Lai Châu, Đà Lạt, Hồ Chí Minh city, Huế, Đà Nẵng.
1.1.1.3 Solutions for human resource management:
Accounting, finance and warehouse/storage
To support operational development and expansion, Ecomart will maintain its current organizational and human resource structures while increasing its workforce Leaders will directly recruit new employees, with key milestones set for the years 2012 and 2013.
In 2012, the Company initiated an active expansion into wholesale, necessitating an increase in wholesale personnel across its business departments By 2014, Ecomart plans to enhance its distribution network, which will further require additional sales staff for retail locations.
To ensure survival and growth, a company must establish an effective business strategy This project consolidates theories from multiple sources to create a straightforward and user-friendly process for developing a business strategy.
The research project has provided us with a way to get acess to a process for development of a business straegy for the trademark of Ecomart, including:
To effectively guide the company’s growth, it is essential to identify clear goals and assess environmental factors that impact operations This includes evaluating opportunities and threats, as well as analyzing the company's strengths and weaknesses By creating strategic matrices, the company can select the most appropriate strategy, ultimately developing a comprehensive market expansion strategy aimed at increasing market share and presence.
Balancing our studies and work commitments has limited our time to fully engage with our graduation project, impacting our understanding of Ecomart's operations However, with the enthusiastic guidance from our instructors and the support of fellow students in the Master’s program in International Business Administration, we successfully completed this project.
We are committed to expanding our research project on theories and real-world applications for Ecomart, aiming to contribute to its success and sustainable development in a competitive and integrated environment in the near future.