Luận văn thạc sĩ quản trị kinh doanh quốc tế MBA (281)

a GROUP PROJECT STRATEGIC MANAGEMENT TOPIC: “A development strategy on ECOMART organic vegetable products of ECO-LINK Company” CLASS: GamBA01.X0810 GROUP: LIST OF GROUP MEMBERS: ĐÀO THỊ ÁNH TUYẾT NGUYỄN THỊ ÁNH TUYẾT NGUYỄN XUÂN VINH ĐỖ QUANG VIỆT Hanoi December 2011 1168 INDEX INDEX LIST OF TABLES .4 ACKNOWLEDGEMENT INTRODUCTION .5 General context, necessity and meaning of the research project Objecs and scope of the research Research methodology Structure of the project CHAPTER THEORITICAL BACKGROUND OF THE RESEARCH PROJECT .10 1.1 CONCEPTS AND CLASSIFICATION OF BUSINESS STRATEGIES .10 1.1.1 Concepts on strategies .10 1.1.2 Classification of business strategies 10 1.2 Management of business strategies .11 1.1.3 Identification of functions, duties and goals of a business strategy: 12 1.1.4 Assessment, analysis of factors that have impacts on a company and identification of goals of a company 12 1.2.1.1 Analysis of the external environment: 13 1.2.1.2 Analysis of the internal environment in a company 18 1.1.5 Development and selection of strategies: 20 1.2.1.1 Tools for development of strategies 20 1.2.1.2 Strategic selection .21 1.1.6 Organization and implementation of a strategy 22 1.1.7 Strategic assessment 22 CHAPTER ANALYSIS OF REAL SITUATIONS OF THE COMPANY .24 2.1 OVERVIEW OF THE COMPANY .24 1.1.8 Establishment and development 24 2.1.2 Situations and outcome of its business activities from 2008 to 2010 28 2.1.3 A general direction for development of Ecolink 31 2.1.4 Techniques for organic agricultural production .33 2.1 ECOMART AND ANALYSIS OF ITS REAL SITUATIONS 34 2.2.1 Analysis of the external environment .34 1.1.9 Analysis of the internal environment 44 2.1.2.1 Resources 44 2.1.2.2 Assessment on core capacity of the company 51 CHAPTER DEVELOPMENT, SELECTION OF STRATEGIES AND SOLUTIIONS FOR IMPLEMENTATION OF STRATEGIES 54 3.1 Development of possible strategies for Ecomart: 54 2268 3.2 Selection of a strategy: 57 3.3 Target and strategies function of A strategy on market expansion and occupation Focus strategy .58 1.1.10 Target of A strategy on market expansion and occupation focus strategy: .58 1.1.1.1 Marketing strategy 60 3.3.2 Strategies function 60 1.1.1.2 A strategy for sustainable development of material-growing areas: 64 1.1.1.3 Solutions for human resource management: 65 1.1.1.4 Solutions for financial management: 66 CONCLUSION 67 REFERENCES 68 3368 LIST OF TABLES Table 2.1.2: Business and production outcome for 2008, 2009 and 2010 28 Unit: million VND .28 Chart 2.1.2 a: Revenues structure of Ecolink 28 Unit: VND million 28 29 Chart 2.1.2 b: Before tax profits structure of Ecolink 29 Unit: VND million 29 30 Table 2.2.1b: A matrix on competitive imagesCPM 41 ACKNOWLEDGEMENT For completion of the master program and the graduation project, we have been provided with guidelines, assistance and comments from many people without whom we would not have received such a result like we have today First of all, we would like to thank organizers of the Master program on International Business Management for successful MBA courses for us The courses in the program have provided us with new knowledge and improved our knowledge in business administration The program has created conditions for us to accomplish our work and to ensure our learning quality We would like to express our sincere thanks to teachers from the Vietnam National University and the Griggs University for their enthusiasm and devotedness while teaching for the program 4468 We would also like to convey our gratitude to the leadership and the Vietnam Ecology Link Limited Liability Company for providing us with documents and enthusiastic support for accomplishment of this project Our sincere thanks also go to everyone who has supported and encouraged us while we were working on this project We have been trying out best with this project using our own knowledge and capacity Still, shortcomings are unavoidable and we look forward to valuable comments from our teachers and friends Members of Group INTRODUCTION General context, necessity and meaning of the research project At present, there are significant demands for healthy food in Vietnam, given in a context that increasing attention has been given to food safety and harm from chemicals used in production of food and vegetables While organic food has been popular in the world and in the region, this market still remains undeveloped in Vietnam There is limited supply of healthy food and food health is only sold at very high prices in some high qualify restaurants in hotels and supermarkets Vietnam Ecological Link Limited Liability (Ecolink Co Ltd) was established in 2003 and is a leading country in development of its internal control system (ICS) 5568 for an international organic certificate for its export of products to the markets in Europe and America In addition to stability in export of organic tea, since 2009, Ecolink has gradually developed its trademark of Ecomart with its outstanding product of organic vegetable In addition, Ecomart has distributed fresh organic food and GAP fruits that are naturally ripen as well as dry food that have been raised and processed naturally According to a study on the industry’s development cycle, Ecomart has been in its process of changing from a creation stage to a development stage Ecomart’s products have gained a certain position in production and distribution of organic food products in Hanoi Goals in plans and action strategies for Ecomart’s long term development direction play a really important role in its development direction, which creates a competitive advantage for Ecomart in the coming period Therefore, our Group has decided to select a project “A development strategy for ECOMART organic products of ECOLINK Company from 2012 to 2015” for our graduation paper This project has proved the importance and meaning of development of a business strategy if the company really wants to experience sustainable development Also the project has provided the company with a standard process for development of strategies, with analysis and assessment on real situations of the company’s production and business; analysis of various objective and subjective elements that have impacts on production and business of the company Then we will make recommendations on selection of the most suitable business strategy for the company for the period of 2012 – 2015 Objecs and scope of the research Objectives: - Development of a theoretical foundation for creation of a development strategy of ECOMART organic products of the ECOLINK Company from 2012 to 2015 6668 - Analysis and assessment on macro and microenvironment and the internal environment of ECOMART organic vegetable products for recognition of opportunities and threats from the business environment; strength and weakness that affects the development of the Company - Development of strategic targets for production and business of ECOMART organic vegetable products from now to 2015 and proposal of a plan for achievement of strategic targets which helps the Company with its sustainable development in its competitive environment and integration - For us, the group that is responsible for this project, this is the application of theories on business management/administration that has been provided through the MBA program for application in settlement of Ecomart’s practical issues Scope of the research: - The object of the research: Vietnam Ecology Link Limited Liability Company (Ecolink Co Ltd), with a focus on Ecomart’s organic vegetable products However, for analysis and clarification of research issues, the project may expand its research on competitive companies that also produce and distribute organic food products - The research scope includes issues related to the Development Strategy of ECOMART organic vegetable products - The research is based on data taken during the period of 2009 - 2011 and impacts on production and business of the Company by 2015 for analysis and assessment on situations of production and business Research methodology Step 1: Data collection Primary data is collected through observation, interviews with leaders and employees and surveys 7768 Secondary data is taken through summary of accounting balance sheets, financial statements, with references to related data in the Internet, newspaper, books, magazines, the General Statistics Office… Step 2: Methods for processing data (1) Comparison, analysis, synthesis of data: data is taken from financial statements, accounting balance sheets over years for comparison and analysis for reasons, as well as summary for comments, conclusions on the company’s operation, with assessment on strength, weakness of the company (2) Statistics, analysis, combination of theories and practice for development of a matrix for selection of suitable strategies for Ecomart, as well as development of plans for implementation of strategies Structure of the project Apart from the introduction, conclusion, the project is divided into three chapters and the summary of each chapter is as follows: Chapter 1: Theoretical background on strategies and development of business strategies: This part briefly presents basic concepts on business strategies and a process for development of a business strategy At the same time, it provides matrixes for selection of a business strategy Chapter 2: Analysis of real situations: This part provides an overview on creation and development of Ecolink and Ecomart and an introduction on general development directions of the Ecolink It then focuses on analysis of real situations of Ecomart including: analysis of an internal environment and creation of an EFE matrix; analysis of the internal environment, assessment on strength, weakness, and core capacity of the company and creation of IFE matrixes Chapter 3: Development of a possible strategy for Ecomart, selection of a strategy and development of a solution for implementation of the strategy for Ecomart during the period of 2012 – 2015: Development of a possible strategy for Ecomart, select the most 8868 appropriate strategy, the goals of that strategy and some recommendations for improved efficiency of the company’s production and business 9968 1.1.2 of business strategies 1.1.1 Classification Concepts on strategies CHAPTER THEORITICAL BACKGROUND OF THE RESEARCH PROJECT 1.1 CONCEPTS AND CLASSIFICATION OF BUSINESS STRATEGIES Chandler 19621 defines « Strategies are to identify major long term goals and objectives of a company and application of a series of action as well as allocation of essential resources for implementation of those goals” However, previously, this concept is often related to military or army When behaviors of goods exchange have developed in the society, strategies have been applied in business The main argument of strategies is that one party can crush its competitors – or even strong ones if it can lead the fighting situation and take the competitors to a convenient situation for promotion of its capacity In today’s context, the term of strategies in military strategies used in management refers to business strategies Corporate strategies They refer to specific action of a company to gain a competitive advantage through selection and management of a group of various business activities and competition in certain industries and market segments for certain products They aim at goals and overall scope of the organization Strategies on business areas Each business unit in a big company selects its own strategy at its department level and considers it a tool for competition in a certain market It is the commitment and action that help a company gain its competitive advantages through exploitation of core capacity in specific market; Functional strategies Chandler, A (1962), Strategy and Structure Cambridge, Massachusetts MIT Press 101068 10 + 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 Threats – T + 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 ST strategies Use strength to avoid threats WT strategies 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 Strategy on cost-based competitionCost leadership strategy: Based on organization of groups of good farmers, being a leader in production and business of organic food, with its leadership of good mangement capacity, Ecomart has been able to make the best of government’s encouraging policies in development of organic agriculture and techniques for production of organic food, which results in increased productivity and reduced production costs + Use S4, S7, S8 to make the best of O1, O2, O3: this combination is to bring about a Strategy on trademark competitionDifferentitation on Branding strategy: Ecomart has its advantages of being a leader in the field and its products have been certified for quality The Company has conducted activities for improvement of customers’ understanding on organic products which has brought about good impacts Such advantages combined with a potential market for organic food in Vietnam and increased awareness and demands of safe food from Vietnamese people will help Ecomart gain a competitive 555568 55 advantage for its trademark, develop a trademark of Ecomart among consumers as a leading producer and distributor of organic food in Vietnam + Use S1, S7, S11 to make the best of O1, O2: this combination results in a Strategy on market expansion and occupationFocus strategy: At present, Ecomart’s products are of good quality and are certified for its quality and quality control Given the current situation that supply is less than demands, if we can make the best of the potential organic food market in Vietnam and the demands of organic food among people, Ecomart can develop a Strategy on market expansion and occupation to cover the current shortage and to meet the potential demands − 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): + Use S3, S7 to avoid T1: this results in a Strategy on trademark competitionDifferentitation on Branding strategy We use our close relations with groups of farmers and technical assistance as well as financial aids from organizations of good repuation like NGO, ADDA… for improvement in production techniques, investment in infrastruture to minimize the dependence of product quality on weather and diseases Once Ecomart’s product quality is higher than that of other trademarks, Ecomart will gain its competitive advantages over trademarks + Use S7, S8 to overcome T3: this results in a Strategy on market expansion and occupationFocus strategy Alternative products in the market are cheaper but of lower quality and may affect badly consumers’ health Through Ecomart’s activities for improvement of consumers’ awareness on products and with its PGS certificate, Ecomart can help consumers better make distinction of organic products and ordinary ones, through which it can expand and gradually occupy the market − WT strategies (Minimize weakness and avoid threats): Minimize W2 and reduce T3 in order to develop a Strategy on market expansion and occupationFocus strategy Because the apperance of the Company’s products is not as good as that of alternative products, in order to minimize this weakness, Ecomart should help 565668 56 consumers improve their capacity to make distinction of organic products and ordinary ones, help them understand benefits of nutrition and food safety in order to implement its Strategy on market expansion and occupation 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 3.2 Selection of a strategy: We use the QSPM matrix for analysis to make a decision on which strategy among the Strategy on cost-based competition, the Strategy on trademark competition and the Strategy on market expansion and occupation is the most suitable for Ecomart Table 3.2 QSPM matrix Possible strategies Main factors Classi ficatio n 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 Internal factors Diversification of products 2 2 Diversification of product packages 1 3 4 Product quality 16 16 Prices 6 Suitable guarantee periods 3 9 Attitudes 12 12 people Good financial capacity 12 12 12 Human resource stability 3 9 Management capacity of the leaders 12 12 12 After-sales services 2 4 8 of sales people/delivery External factors 575768 57 1.1.10 Target of A strategy on market expansion and occupation focus strategy: 3 9 Regulations on safe food Inflation rates 4 16 16 16 Fruit and vegetable importa and export tax 6 Transfer of organic production technology from foreign organizations Increased population in Hanoi 4 16 16 16 8 People’s concerns on food safety 12 12 12 12 12 12 Habits of buying in open markets nearby 3 6 Expansion of material-growing areas 6 Policies that development People’s products encourage understanding agricultural on organic Total 165 181 So, after considering all the internal and external factors that influence the strategic decisions, A strategy on market expansion and occupationFocus strategy’s TAS is highest and consistent with the objectives and orientation of Ecomart This strategy is include Differentitation on Branding strategy 3.3 Target and strategies function of A strategy on market expansion and occupation Focus strategy − Target markets: In the development period from now to 2015, Ecomart aims at its taret market in big cities including Hà Nội, Hải Phịng, Huế, Đà Nẵng, Hồ Chí Minh city − Identification of target customers: Middle income people or higher, with high awareness of health protection for themselves and their families: + The elderly + Pregnant women + Families with children 585868 58 193 + Foreigners living and working in Vietnam + Middle income people or higher − Products: Organic food + Trademark: ECOMART + Slogan: Return to the nature + Logo: − 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 Vietnam − Development plan: Products 2011 2012 2013 2014 2015 Vegetables 102 117 176 202 304 17 18 19 20 19 Production (tons) 11 13 19 23 30 Average prices (VND/kg) 42 44 46 49 47 10 13 25 26 28 29 28 29 33 50 63 82 100 105 110 116 122 146 168 252 298 429 Production (tons) Average prices (VND/kg) Fruits Rice, other dry products Production (tons) Average prices (VND/kg) Meat Production (tons) Average prices (VND/kg) Total 595968 59 3.3.2 Strategies function 1.1.1.1 Marketing strategy − Prices: + 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: Because of high shop costs + transportation costs, the prices will be higher than those for corporate customers There may be deduction depending to delivery places (to encourage people to buy in groups)  Corporate customers: Because of big and stable revenues in a long period of time (a contract is often from months to year), the expected profit per a product unit is less than that with individual customers − Distribution channels: + Investment for development of an image of professional and friendly delivery and sales people:  Staff: 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 606068 60  Means of transportation: van, motorbike + Upgrade current shops and develop new shops in the shop systems:  By 2013: it will open 01 more shop in the old quarter of Hanoi (Hoàn Kiếm district), 01 more shop in each urban area of Mỹ Đình, Trung Hịa – Nhân Chính, 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:  Canteens  Dining rooms for luxurious hospitals: Việt Pháp, Việt Sing…  Restaurants, hotels  Kindergartens, primary schools 616168 61 + Market promotion:  Internet: At present, the main channel for customer contact is through the Internet which has brought about high efficiency Therefore, Ecomart should focus on maintenance and upgrading its website of ecomart.vn or focus on forum like lamchame, webtretho, ttol, gia dinh, mua chung, hotdeal, nhom mua… or websites on health or for pregnant women  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  Contacts with customers through: trade fairs, residential areas, women unions, trade unions, product introduction events, cooking contests using organic products, visits to material areas to study the organic food production process, maternity hospitals, hospitals for the elderly, Viet Phap Hospital, Van Phuc International Hospital … + Customer care:  Develop promotion packages: Family (same-blood-families); Colleague; Neighbour  Promotion programs  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 626268 62  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 + Diversify product packages: (1) Electronic wallet/purse and coupons are directly sold to customers or customers can use those products as gifts for friends or family members (2) “A balanced life with Ecomart”:  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  Design orders for special customers with consultation from nutrition experts: menus for pregnant women, menus for children (by ages), menus for people with high/low blood pressure, menus for obese people … (3) “Live in two directions – Enjoy full happiness”  For customers that are busy at work or customers who are businessmen, Ecomart may make direct contacts with customers to study their preferences/demands/health situations/ages of the customers and 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 days or once a week or every day according to customers’ request 636368 63 1.1.1.2 A strategy for sustainable development of material-growing areas: a Current material-growing areas: − Principles: + Maintain advantageous products in the current material-growing areas; develop new products that can be suitable with conditions of land, weather and qualification of farmers in the material-growing areas + 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 − Specifically: Materialgrowing area Current products Dry Fresh products products Lào Cai - Tea - Rice - Bamboo shoots - Vermicelli Bắc Giang - Rice - Bamboo shoots - Vermicelli - Peanuts - Beans… Hòa Bình New products Dry Fresh products products - Special - kitchen- - Village vegetables of the hanging area buffalo meat - Mushroom chicken - Village ducks - Horse meat - Salmon - Chicken - Pork - Special vegetables in the area - Chicken - Pork - Special vegetables of the - Ordinary vegetables - Fish - Shrimps - Horse meat - Beef - Duck, goose - Fish - Shrimps - Beef - Horse meat area - Ordinary vegetables Hà Tây 646468 - Pork 64 - Beef - Ordinary - Fish - Chicken - Duck, goose - Pork vegetables Điện Biên - Rice Hải Dương - Rice Sơn La - Fruits Eastern South - Fruits 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: − A human resource development plan: Departments 2011 2012 2013 2014 2015 Senior management 2 2 Accounting, finance and 6 Accounting and finance 4 Warehouse/storage 1 2 Sales and marketing management 9 11 Retail 4 5 Wholesales 4 Product quality control 3 6 Delivery people 12 12 17 Heads of shops 1 5 10 Sales people 1 5 10 warehouse/storage Total 19 24 43 43 64 − Solutions: Continue the organization structure and human resource structure as they are However, according to the plan on operation development and expansion, the human resources will increase New employees will be directly recruited by leaders of Ecomart Two milestones are the year 2012 and 2013 In 2012, the Company will actively expand to wholesales and need more wholesales people for the business departments and in 2014, Ecomart will start its strategy 656568 65 on expansion of the distribution network which requires more sales people for shops 1.1.1.4 Solutions for financial management: − Business plans: Costs Revenues +/Costs +/- 2011 5.196 2012 6.274 2013 9.882 2014 12.683 2015 17.508 59% 21% 58% 28% 38% 4.729 5.761 9.343 12.090 16.891 64% 22% 62% 29% 40% 467 513 539 593 617 20% 10% 5% 10% 4% Before tax profits +/- − Capital plans: 2012 Total cost except depreciation Floating capital cycle Capital demands - Equity Rate - Commercial loans Rate 666668 2013 2014 2015 5473 8595 11122 15540 12 8 10 456 1074 1390 1554 456 860 1112 1181 100% 80% 215 80% 278 76% 373 0% 20% 20% 24% 66 CONCLUSION As we know, for survival and development, a company first of all has to develop a good and efficient business strategy There are many ways for a company to approach a business strategy This project is meaningful in a way that it is the summary of theories from various sources for creation of a process of business strategy development in the most basic, easy-to-undersand and easy-to-use way 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: Identification of goals for the company; Assessment on environmental factors that have impacts on the company, finding out opportunities and threats to operation of the company, along with assessment on strength and weakeness of the company and then creation of matrixes for seletion of a strategy and development of a complete strategy which is “A strategy on market expansion and occupation Focus strategy“ Despite our efforts on studying materials and theories, because we have been studying and working at the same time, we have had limited time for accomplishment of this graduation project, which partly affects our understanding on operation of Ecomart Thanks to enthusiastic instruction from teachers and support from students in the Master program on International Business Administration, we have been able to complete this project We look forward to and will try our best with further expansion of the research project in terms of thoeries and application in real sitautions of Ecomart, with a hope that we can make our contribution to the sucess and sustainable development of Ecomart in a competitive integrated environment in the coming time 676768 67 REFERENCES Fredr.David, “Concepts of strategic management” Micheal Porter, “Competitive Strategy” Nghiêm Xuân Thương, “Basic of Finacial management” Philip Kotler, “Marketing Management” Hà Văn Sơn, “Statistics for business and economics” Griggs University (2011), Textbook of Strategic Management- Training Programme on Master of Global Business Administration, Hanoi Financial accouting report of Ecomart and Ecolink http://rauquavietnam.com http://www.organicfoods.vn 10 http://www.vidothi.org 11 http://www.ifoam.org/ 12 https://sites.google.com/site/pgsvietnam/Home 686868 68 ... like to thank organizers of the Master program on International Business Management for successful MBA courses for us The courses in the program have provided us with new knowledge and improved our... application of theories on business management/administration that has been provided through the MBA program for application in settlement of Ecomart’s practical issues Scope of the research: -... department s Marketing: − − − − Web http://ecomart.vn The shop locates at No 8, lane 347 Hoàng Quốc Việt, Cầu Giấy, Hà Nội Some famous forum in Vietnam like webtretho hay lamchame Advertisement