1494 SOLUTIONS TO IMPROVE DISTRIBUTOR S SYSTEM OF HOLCIM VIETNAM

MINISTRY OF EDUCATION & TRAINING HO CHI MINH CITY OPEN UNIVERSITY UNIVERSITEÙ LIBRE DE BRUXELLES SOLVAY BUSINESS SCHOOL MBMM PROGRAM PH M V N TRÍ SOLUTIONS TO IMPROVE DISTRIBUTOR’S SYSTEM OF HOLCIM VIETNAM FINAL PROJECT MASTER IN BUSINESS & MARKETING MANAGEMENT Tutor: Tr n Xuân Kiêm, DBA Ho Chi Minh City 2007 i WARRANT STATEMENT This is my original work Any data result or quote in the work is clearly identified Ph m V n Trí iii ACKNOWLEDGMENTS The author wishes to acknowledge to the following people for their support and assistance during the preparation of this thesis Firstly, I would like to express my gratitude to the members of the MMVCFB program who, during the courses have delivered invaluable experience, knowledge and assistance The extensive assistance, guidance, advice and encouragement of my tutor Mr Tran Xuan Kiem-DBA throughout the thesis study are sincerely and gratefully acknowledged My thanks also go to Ms Tran and Mr Serge as program coordinators, without their assistance; my work would not have been completed on time or with quality Secondly, I would like to say thank you sales team of Holcim Vietnam who have given me invaluable assistance during my research Special thanks must go to Mr Suhard Amid – Special Project Manager - for his value advices and considerable assistance Likewise, thanks are also extended to my customers from their kindly cooperation to participate in the interview and shared their opinion and perceptions Finally, there is an important acknowledgment and gratitude to my family They are the foundation of my professional career and my life iv TABLE OF CONTENTS WARRANT STATEMENT i ACKNOWLEDGMENTS ii THE TUTOR EVALUATION ii TABLE OF CONTENT iv CHAPTER 1: INTRODUCTION 1.1 Background of project 1.2 Project objectives 1.3 Research methods CHAPTER 2: HOLCIM VIETNAM OVERVIEW 1.1 Holcim Vietnam introduction: 1.2 Product 1.3 Price 1.4 Place 1.5 Promoting 1.6 People 1.7 Sales performance of Holcim Vietnam CHAPTER 3: RESEARCH RESULTS 1.1 Finding from ODs 1.2 Findings from Holcim sales team 14 v CHAPTER 4: SOLUTIONS & IMLEMENTATION PLAN 15 1.1 SWOT analysis 15 1.2 Strategies suggestion & evaluation of experts 16 1.3 Solution for implementation 16 1.4 Implementation plan 21 1.5 Self evaluation about project 21 EXECUTIVE SUMMARY 22 REFERENCES 26 LIST OF APPENDICES AND ABBREVIATES 27 CHAPTER INTRODUCTION 1.1 Background of project Viet Nam is a developing country with a relatively high annual rate growth for recent years Construction industry in Vietnam is growing rapidly to foster the economic development, and the development of the economy will be greatly contribution to the growth of construction industry Vietnam cement demand is increase incredibly, the growth rate have been more than 20%/year since the last years, and promising for such high rate for the coming years Holcim Vietnam has positioned itself as market leader in Vietnam cement market In order to build and maintain that position, Holcim Vietnam target to develop distributors system which mainly deliver over 95% sales volume of Holcim to the southern market (form Nha Trang to Ca Mau) to be professional company in term of cement suppliers, services, resources… By studying ”Solutions to improve distributor’s system of Holcim Vietnam” I want to understand the current situations of OD system and explore the opportunities to propose solutions to improve it and strategy to develop this system to be professional one in market 1.2 Project objectives To regain and further develop the trust and confidence of the Holcim Distributor channel To help our OD to better manage the business and increase it’s profitability through partnership with Holcim To create an open and a transparent business relationship to the future 1.3 Research methods Research method: qualitative research - exploratory research on the relationship between Holcim and its OD including individual dept interviews (OD) and 02 focus group (Sales team) The research objective defined as below: To understand key challenges that ODs are facing in their business including internal challenges and challenges come out due to Holcim policy To explore the opportunities for the Holcim to extend their help to ODs: what sectors that Holcim needs to provide support and what sectors that Holcim needs to amend its current support or policy To gauge the satisfaction of authorized dealers and Holcim in term of what they are satisfied or unsatisfied, strengths and weaknesses and points to maintain or area to improve To understand Holcim sales staff in dealing with these authorized dealers To identify potential value propositions Sample size: 42 ODs is chosen as sample for the research from 58 ODS of Holcim Vietnam (the chosen criteria are distributor attractiveness, potential evaluation, loyalty assessment and sales performance, SCCC format is used as a system for choosing sample (Pls see in the list of appendices) CHAPTER HOLCIM VIETNAM OVERVIEW 1.1 Holcim Vietnam introduction: Name: Holcim Vietnam Ltd Logo: Address: 2A-4A Ton Duc Thang Street, district 1, HCMC Telephone: 84 8244101 Fax: 84 8243569 Website: www.holcim.com/vn Holcim (Vietnam) Ltd is a joint-venture company between Holcim Group from Switzerland, one of the world’s leading cement producer accounts for 65% of the share and Ha Tien (35%) – a member of VNCC established on 25/02/1994 Holcim is one of the world largest cement group found in 1912 in Switzerland It has presented in more than 70 countries with more than 50,000 employees Ha Tien is a state own company established 40 years ago with strong brand in South of Vietnam Total investment of Holcim Vietnam recently reaches USD 500 million with total capacity 3.5 million tons Honchong cement plant located in Kien Giang province with dispatch capacity of 0.5 million tons/year – commissioned in 1997 to supply for the Mekong region Catlai Terminal: District 2, HCMC with dispatch capacity of 1.76 million/years started operation 1998 supply for HCMC, and East Thivai Grinding Plant: Phu My IP, Ba Ria Vung Tau province with the first stage capacity of 1.3 million tons/year, first product was launched in November 2004 will share the workload for Catlai terminal by taking a part of East region 1.2 Product Holcim Vietnam is the first Cement Company has different products for different application However, the main product of Holcim is Holcim Top Standard It takes 87% sales volume every year Product Portfolio of Holcim Vietnam Product band Holcim Ready Flow Holcim Quick Cast Holcim Extra Durable Holcim Mass Pour Holcim Solid Road Holcim Stable Soil Holcim Top Standard Holcim Easy Wall 1.3 Price: Application Ready mix concrete Precast concrete product Concrete exposed to corrosive environment Mass structure Concrete road, runway Soft soil stabilization, soil improvement For concrete of small and medium projects Plastering and rendering The objectives of Holcim Vietnam are becoming the price leader in the market In order to achieve the target, Holcim Vietnam has invested in facilities and people to add value added services to make sure customers receive a high quality product and good services with best price 1.4 Place Holcim Vietnam has two distributions channel which shows in the char below: Distribution channel of Holcim Vietnam Holcim Vietnam 95% 80% Retail Direct sales 5% Distributors 15% 11% RMC Small and medium projects 4% Contractors 5% CPM Large Projects 1.5 Promoting Personal selling: direct marketing approach to contractors, sales call visit frequency retailer and its customers Public relation: sponsor for sport, study, social activities 1.6 People Sales and marketing department is organized in matrix structure with four section combined in different regional operating units (ROU) with clear objectives and authorization The organization chart as in Figure 1-1 and 1-2 1.7 Sales performance of Holcim Vietnam Having seven years in business, Holcim Vietnam has developed rapidly The overall growth maintain above 12% No CUSTOMER PROVINCE 41 PHUOC HOA Dong Thap 42 Duc Toan Long An 43 Viet Trung Ben Tre 44 Misa Long An 45 Ngoc Mai Bac Lieu 46 Thanh Danh Vinh Long 47 Minh Hieu Tay Ninh 48 Tan Dan Ben Tre 49 Nghi Xuan HCM 50 Tam Giac HCM 51 Phuoc Nguyen Can Tho 52 Van Phat Tra Vinh 53 My Ngoc HCM 54 Huynh Gia - Bac LieBac Lieu 55 Nguyen Dinh Binh Phuoc 56 Minh Thanh Ben Tre 57 Long Phuoc HCM 58 Chau Hung Tra Vinh SCORE ATTRACTIVENESS POTENTIAL LOYALTY PERFORMANCE Competitiveness 64.8% 88% 80% 45% 41% 84.6% 63.2% 66% 33% 73% 41% 53.0% 62.5% 86% 72% 45% 33% 80.1% 62.5% 83% 92% 38% 58% 86.7% 62.2% 65% 47% 90% 32% 57.7% 61.5% 96% 80% 33% 32% 89.6% 61.2% 71% 52% 53% 49% 63.1% 60.6% 79% 72% 45% 34% 76.3% 60.4% 89% 55% 42% 50% 75.6% 59.9% 72% 42% 62% 57% 59.9% 59.2% 91% 47% 50% 38% 73.1% 58.8% 73% 72% 45% 30% 72.7% 57.8% 64% 53% 60% 50% 59.4% 56.3% 70% 47% 65% 32% 60.9% 55.9% 65% 52% 53% 36% 59.7% 55.8% 78% 50% 45% 34% 66.6% 55.7% 86% 42% 47% 38% 68.1% 52.8% 75% 72% 32% 49% 73.9% Total area : 329,560 km2 Land : 325,360 km2 Water: 4,200 km2 Coastline : 3,444 km Population : 80 mil Cement consumption :215kg/p Highway : 93,300km Paved: 23,418km Unpaved :69, 882km Ports & harbor : Airport : 17 paved runway; 17 unpaved runway Vietnam – General Information cement plants 40% 46% cement plants 14% North Central South cement plants Cement production Source : Int cement Review; Mar 2004 60,000 30% 40,000 4% -7% -15% 20,000 -9% 9% 8% 8% 0% -6% -15% 10% -10% -30% 2001 2002 2003 Production 2004 2005 2006 2007 Demand Vietnam cement consumption vs supply 2008 2009 2010 Suplus Source : Ministry of construction – General plan for cement production and supply Austria Canada Czech Republic Slovakia Russia Germany Switzerland Belgium France Italy Spain Dom.Rep Morocco Colombia USA Mexico Honduras El Salvador Costa Rica Nicaragua Ecuador Uzbekistan China Vietnam Thailand Venezuela Lebanon India Cyprus Egypt Sri Lanka Guinea Ivory Coast Burkina Faso Peru Brazil Argentina Position in Global Holcim Cambodia Philippines Malaysia New Caledonia La Réunion Madagascar Guayana Chile Estonia Croatia Hungary Rumania Bulgaria Macedonia Tanzania South Africa Australia New Zealand Position in all cement supplier in southern Vietnam CAMBODIA Phnom Penh Ho Chi Minh city HON CHONG PLANT CAT LAI CEMENT TERMINAL Thi Vai griding station in Vung Tau Rach Gia Can Tho XMAnGiang Bulk Cement Locations of Holcim Vietnam Holcim Vietnam plant Production of Cement by the Dry Process Feed Bins Sampling Station Quarry Raw Materials Storage Crushing Plant (s) Corrective Materials and Preblending Electrostatic Precipitator Homogenizing and Storage Silo Cooler Dedusting Coal Raw Meal Water Air-to-Air Cooler Coal Mill Cyclone Preheater Rotary Kiln Clinker Cooler Bulk Dispatch Cement Silo Cement Mill Kma 27.4.98 Raw Mill Filter Mineral Gypsum Components Clinker Storage Zement-trocken-englisch.dsf Conditioning Tower Packing Machine Cement Silo Bag Palletisation SCCC FORMAT – OD CLAASIFICATION In classifying official distributors, HVL will assess each of its customers based on criteria Attractiveness Evaluation Organization Setup Organization management – Structure?? / Empowerment?? / Successor?? Sales force – Structured sales force with routine market visit & sales follow-up Transportation – Ability to provide on-time service delivery Financial status – Ability to expand business and market penetration Warehouse & Inventory – Ability to provide prompt service Business Capabilities Market Expertise – Experience in business Potential growth – Any plan for business expansion?? Sales promotion – Ability to conduct their own promotion CRM – To enhance relationship with their channel Profitability Cost to Serve – Business transaction cost In classifying official distributors, HVL will assess each of its customers based on criteria (cont.) Potential Evaluation Market Penetration Coverage in retail channel within the designated area Relationship or Connection with the government / private construction Position in the local market Loyalty Assessment % Shares of Holcim volume in total sales Sensitivity to competitor offers Aligned with territory assigned Sales Performance Average Sales Volume during the certain period Sales growth compared to the certain period of previous year Payment Record 10% New Generation 50% Organization Setup 30% Market 15% Sales Force 10% Attractiveness 10% 5% 30% Business Capabilities 10% 20% Profitability 5% 5% HVL CLASSIFICATION 20% Potential Evaluation 30% Loyalty Assessment Sales 20% Performance 60% Transportation Financial Status Warehouse / INV Market Expertise Potential Growth Sales Promotion 10% CRM Retail Coverage 25% Relationship / Connection 15% Position in local mkt 60% % Shares of Holcim 20% Territory Management 75% 15% Sales Volume Volume Growth 10% Payment History HVL classification criteria & weighted ratio 20% Sensitivity to Competitor offer Source: SCCC Meeting schedule between Holcim and ODs General Director Deputy General Director Assistant Sales & Marketing Finance & accounting Thi Vai Grinding Plant Business development Production Cat Lai Terminal Organization chart of Holcim Vietnam Procurement Hon Chong plant HR Sales & Marketing Director Assistant to S&M Director Marketing Manager Channel Sales Manager Sales coordinator Industrial Sales Manager Customer Service Manager Organization chart of Sales & Marketing Department Technical Support Manager Sales Training Manager