KIJECBM/JUL-SEP15/VOL-2/ISS-3/A13 ISSN:2348-4969 IMPACT FACTOR(2015) - 3.9581 KAAV INTERNATIONAL JOURNAL OF ECONOMICS,COMMERCE & BUSINESS MANAGEMENT THE RESEARCHING OF THE DETERMINANT AFFECTING THE COMPETITIVENESS OF VIETNAMESE RETAIL SECTOR TRAN PHI HOANG et al Industrial University of Ho Chi Minh city, Vietnam ABSTRACT In this paper, the researchers were to conduct and to analyze the factors affecting the competitiveness of Vietnam's retail sector The researchers used the method of this study to be qualitative research methods and quantitative Besides, the researchers conducted a survey of 275 managers, professionals working in the retail sector in HCMC, Binh Duong, Da Nang and Hanoi This paper conducted during the period from July 2014 to June 2015 The Vietnam's retail sector of responses measured through an adapted questionnaire on a 5-point Likert scale and hard copy The method of the exploratory factor analysis (EFA) results showed that the intensity of competition on the retail market in Vietnam is affected by the following 05 elements: (1) The level of competition; (2) The power of the customer; (3) The risk of substitution; (4) The entry barrier; (5) the suppliers Those components affecting the competitiveness of Vietnam's retail sector with significance level % Based on the findings, the researchers proposed measures to enhance the competitiveness of Vietnam's retail business in the future Keywords: Competitiveness, Vietnam, retail sector and Vietnam's retail business Copyright © 2015 Published by kaav publications All rights reserved 128 www.kaavpublications.org KIJECBM/JUL-SEP15/VOL-2/ISS-3/A13 ISSN:2348-4969 IMPACT FACTOR(2015) - 3.9581 Introduction The year of 2013 marks an important milestone in the transition between the two decades of Vietnam’s socio-economic development The last ten years have witnessed the country’s robust economic growth, improved living standards of the population, and most significantly, the deep integration into the global economy, turning Vietnam into an emerging attractive business location Yet the economy is facing internally-rooted weaknesses and challenges, reflecting in its low competitiveness in different aspects Moreover, rapid and complex changes in the external environment are affecting Vietnam’s open economy in increasingly significant ways All of these conditions and factors remind of and emphasize the crucial importance of redefining strategic directions and a growth model for Vietnam in the new stage of development, with competitiveness of Vietnam's retail sector Like all businesses, Vietnam's retail sector is also an enterprise Therefore, the Vietnam's retail industry also finds out many measures to provide products and services with high quality to meet benefits for customers With the price and the best competition cost, besides ensuring the accuracy, reliability and the most convenient to attract customers as well as expand market share to achieve the highest profit as possible as The above mentioned issue is closely related to the topic “The researching of the determinant affecting the competitiveness of Vietnamese retail sector” as a paper applying in business administration Literature review According to Board & Dent (1982), the competitiveness of the enterprise depends on internal factors such as company resources, corporation strategy and capabilities; creativity, and other brand values Having the same point of view, Prahalad & Hamel scholars (1990); Grant (1991); Peteraf (1993); Ulrich (1993) emphasize the resources of the business They suppose that to improve competitiveness, enterprises must optimize the ability to deploy and develop its resources better than the competitors In order to increase customers’ satisfaction, more value is offered than their competitors; businesses must improve the production and service process, efficient operations, low costs, perfect quality and service In relation to Lee Wang (1995); McThy Cain (1997), competitiveness in business and retail are determined by the strength of scale and capital, the ability to understand the market and customers, supply capacity, creativity and business sense Although there are many similar studies, Gomezeljn & Mihalic (2008) emphasized the role of the supply chain; Meng, F., Tepanon, Y., & Uysal, M (2009) assessed the role of information technology and social networking; Xiang, Kothari (2009) suggested that the system and risk administration is extremely important Michael Porter is a master of research competitiveness He said that to build a sustainable competitive advantage is the most important in any businesses, in any environment and how the resources are He has published many valuable books, especially 02 famous books "Competive Strategy” in 1980" and "Competive Advantage of Nations” in 1980, however, the main theory of Michael Porter's competitiveness is competitive pressure He argued that any business is Copyright © 2015 Published by kaav publications All rights reserved 129 www.kaavpublications.org KIJECBM/JUL-SEP15/VOL-2/ISS-3/A13 ISSN:2348-4969 IMPACT FACTOR(2015) - 3.9581 affected by five factors: the power of buyers; the level of competition among businesses existing; threat of new competitors in the market; the risk of emergence of substitute products; the strength of the powerful suppliers First, today buyers have more and more power because there are too many suppliers They also have more opportunities to choose and bargain Therefore, suppliers have to study the buyer psychology, consumers to meet their maximum demands Second, the level of competition among businesses existing are more and more aggressively in capital size, price, promotion, advertising budgets, human resources, and others in order to keep upper hand in the market Third, the threat of new competitors in market makes organizations; alliences that unite and create market barriers aims at preventing new businesses participating in industry and also reduces the competitive pressure that is constantly rising Fourth, the development of new products, the replacement products of enterprises or industries creates competitive pressure for businesses or other industries Even many businesses or professions have been excluded from the market after the new product, the substitutionary product appear Finally, the suppliers, the retailers also have much competition but they may also have a similar power Research model: Based on the theoretical framework and the results of research of Michael Porter and other authors, ideas from experts in the retail sector are consulted and a formal model of study is proposed as following Research model for the determinant affecting the competitiveness of Vietnamese retail sector Buyer Power H1 The level of competition H2 H3 The risk of substitution Copyright © 2015 Published by kaav publications All rights reserved 130 THE COMPETITIVENESS OF VIETNAMESE RETAIL SECTOR www.kaavpublications.org KIJECBM/JUL-SEP15/VOL-2/ISS-3/A13 ISSN:2348-4969 IMPACT FACTOR(2015) - 3.9581 Supplier s H4 Entry Barrier H5 Figure 1: Research model for the determinant affecting the competitiveness of Vietnamese retail sector Hypothesis: H1: There is a positive relationship between buyer power and the competitiveness of Vietnam's retail sector H2: There is a positive relationship between the level of competition and the competitiveness of Vietnam's retail sector H3: There is a positive relationship between the risk of substitution and the competitiveness of Vietnam's retail sector H4: There is a positive relationship between the suppliers and the competitiveness of Vietnam's retail sector H5: There is a positive relationship between Entry Barrier and the competitiveness of Vietnam's retail sector Methods of Research The two major research methods, qualitative and quantitative research are focused, specifically; the research process has three stages: Stage 1: Based on theory and the related results mentioned the above, qualitative research method was used for group discussing and leading experts consultating to select the variables and observed variable groups Stage 2: Based on the factor groups affecting competitiveness of Vietnam's retail sector, survey questionnaires were designed to collect the opinions of 275 managers, experts in HCM city, Dong Nai province, Da Nang city and Hanoi capital The research model includes scales, 46 observed variables (items), using 5-point Likert scale, distance value = (Maximum Minimum)/n = (5 - 1)/5 = 0.8: Completely disagree; Disagree; No opinion/Normal; Agree; Completely agree Survey results were entered SPSS 20.0 and Cronbach's Alpha coefficient was used to test reliability of the scale Stage 3: the data were collected and analyzed using the statistical indicators with data processing software SPSS 20.0 (the targets include: descriptive statistics, reliability analysis, factor analysis explore).The reason is to test measurement models, model and test research hypotheses The Data collected were tested by the reliability index (excluding variables with correlation coefficients lower < 0.30 and variable coefficient Cronbach's alpha < 0.60), factor analysis explored (remove the variable low load factor < 0.50) And the above results were used Copyright © 2015 Published by kaav publications All rights reserved 131 www.kaavpublications.org KIJECBM/JUL-SEP15/VOL-2/ISS-3/A13 ISSN:2348-4969 IMPACT FACTOR(2015) - 3.9581 to analyze multiple linear regressions to test the assumptions of the model considering the impact level of these factors to the competitiveness of Vietnam's retail sector Research Results Cronbach’s Alpha for factors affecting the competitiveness of Vietnam's retail sector Table 1: Cronbach’s Alpha for factors affecting the competitiveness of Vietnam's retail sector Cronbach’s Code Observed variables Name Alpha SMKH03 The products are diversified SMKH02 Product quality Requirements for the quality products of customers are SMKH06 Buyer Power 0.734 increasing SMKH05 There are multiple partners supplying goods and services SMKH04 Many products are unique and different The accessibility to Vietanese market of foreign RCGN04 enterprises Government policies create favorable conditions for RCGN02 foreign businesses, after VN joining WTO 0.764 Government policies create more favorable conditions Entry RCGN01 for Vietnamese enterprises Barrier Foreign enterprises have deep understanding of VN RCGN05 market Vietnamese enterprises are better awareness and assess RCGN06 exactly their competitors Vietnamese enterprises limit the dependence from NCTT06 foreign suppliers Trends of franchising and commercial location (location NCTT02 seller) The risk of substitution The association, cooperation form a of supply chain NCTT05 0.752 among Vietnamese businesses Extension of the foreign enterprise networks are good NCTT03 and happen strictly Table 1: continued NCTT04 Constructing Strategy of supply chain of foreign businesses in VN Copyright © 2015 Published by kaav publications All rights reserved 132 www.kaavpublications.org KIJECBM/JUL-SEP15/VOL-2/ISS-3/A13 ISSN:2348-4969 IMPACT FACTOR(2015) - 3.9581 It’s easy to build production and supply chain of goods and predominate better 0.752 NCC04 Capacity to develop new products Suppliers NCC02 Sales promotion and market expansion NCC05 Capacity to supply good service Facilities (such as offices, sales offices, stalls and others) MĐCT04 are good, nice, polite, modern The layout and interior of supermarket are pretty neat The level of MĐCT05 0.738 and logic competition MĐCT02 Competitiveness and predominating are better MĐCT03 Prices of commodities are competitively high (Source: The researcher’s collecting data and SPSS) Table showed that the test results of scale had good accuracy with Cronbach's alpha coefficient > 0.7 and the correlation coefficients of the total variables of measurement variables meet the allowed standard (> 0.6) Exploratory Factor Analysis (EFA) for factors affecting the competitiveness of Vietnam's retail sector Table 2: Exploratory Factor Analysis for the competitiveness of Vietnam's retail sector NCC07 Com 10 11 12 13 14 15 16 17 18 19 20 21 22 23 Total 4.619 2.690 2.032 1.739 1.397 935 910 895 812 725 675 643 617 566 543 490 470 433 415 402 344 340 308 Initial Eigenvalues % of Variance Cumulative % 20.083 20.083 11.694 31.777 8.834 40.610 7.561 48.172 6.074 54.246 4.064 58.310 3.957 62.267 3.892 66.159 3.531 69.690 3.153 72.843 2.935 75.778 2.797 78.575 2.684 81.259 2.460 83.718 2.361 86.079 2.132 88.211 2.043 90.254 1.883 92.137 1.803 93.941 1.746 95.687 1.497 97.184 1.477 98.661 1.339 100.000 Extraction Sums of Squared Loadings % of Variance Total Cumulative % 4.619 20.083 20.083 2.690 11.694 31.777 2.032 8.834 40.610 1.739 7.561 48.172 1.397 6.074 54.246 Copyright © 2015 Published by kaav publications All rights reserved 133 www.kaavpublications.org KIJECBM/JUL-SEP15/VOL-2/ISS-3/A13 ISSN:2348-4969 IMPACT FACTOR(2015) - 3.9581 (Source: The researcher’s collecting data and SPSS) Table showed that the results of EFA (Exploratory Factor Analysis) of the total variance extracted were 54.24% greater than 50% This meaned that the withdrawing factors would explain 54.24% for model, 45.75% is explained by other factors Extraction ratio factor (Eigenvalue) is greater than that is kept Table 3: The results of Rotated Component Matrix for the factors affecting the competitiveness of Vietnam's retail sector Contents Code SMKH03 766 SMKH02 746 SMKH06 640 SMKH05 627 SMKH04 548 RCGN04 762 RCGN02 755 RCGN01 751 RCGN05 720 RCGN06 569 NCTT06 727 NCTT02 713 NCTT05 693 NCTT03 611 NCTT04 590 NCC07 785 NCC04 779 NCC02 739 NCC05 626 MĐCT04 768 MĐCT05 759 MĐCT02 758 MĐCT03 585 (Source: The researcher’s collecting data and SPSS) The table results showed that the model of EFA (Exploratory Factor Analysis) is consistent with the data, calculated into groups of factors and these results may be used for a multiple regression analysis Regression analysis for the factors affecting the competitiveness of Vietnam's retail sector Regression analysis method is to study level of influence of one or more independent variables (independent variables) to one dependent variable (dependent variables) to predict Copyright © 2015 Published by kaav publications All rights reserved 134 www.kaavpublications.org KIJECBM/JUL-SEP15/VOL-2/ISS-3/A13 ISSN:2348-4969 IMPACT FACTOR(2015) - 3.9581 outcome variables based on the value of explanatory variables in advance To measure the extent of the impact of the factors groups to competitiveness, analysis and multiple linear regression were analyzed to test the hypotheses of model with factors groups are independent variables to measure competitiveness for Vietnam's retail sector The results showed that the influence degree of these factors reflected through multiple regression coefficients To compare the effects of the factors, regression coefficients were normalized for this coefficient did not depend on the scale (Nguyen Dinh Tho - Nguyen Thi Mai Trang, 2009, page 126) Thus, the regression equation was standardized to analyze the influence degree of the elements to competitiveness for Vietnam's retail sector We can see the results: Table 4: Summary results for the factors affecting the competitiveness of Vietnam's retail sector Adjusted R Std Error of DurbinModel R R Square Square the Estimate Watson 805a 647 640 288 1.894 ANOVA Sum of Model df Mean Square F Sig Squares Regression 37.188 7.438 89.537 000b Residual 20.268 244 083 Total 57.456 249 Coefficients Unstandardized Standardized Collinearity Statistics Influenced t Sig Coefficients Coefficients factors (Beta) B Std.Error Tolerance VIF (Constant) 168 163 1.036 301 X1 (SMKH) 239 032 315 7.419 000 803 1.245 X2 (RCGN) 108 027 155 4.035 000 985 1.015 X3 (NCTT) 197 033 261 5.950 000 749 1.335 X4 (NCC) 133 037 148 3.612 000 865 1.156 X5 (MĐCT) 293 031 394 9.432 000 828 1.208 (Source: The researcher’s collecting data and SPSS) Table showed that the coefficient of adjustment R2 = 0.640 (verification F = 89.537, sig < 0.05); which means 64% of the variable Y shift is explained by the six independent variables (Xi) Besides, the coefficient Durbin - Watson (d) = 1.894; some observers n = 275, parameter k = 5, the level of significance of 0.01 (99%), in the statistical tables Durbin - Watson, dL (less statistical value) = 1.623 and dU (statistical value over) = 1,725 So (dL = 1.623) < (d = 1.894) < [4 - (dU = 1.725) = 2.275] proved that the model has no autocorrelation In addition, the ANOVA from table was to assess the relevance of the theoretical regression model The test results F = 89.537 value and Sig = 0.000 < 0.05 showed the building model is consistent with the data set and the variables included in the model are related to the Copyright © 2015 Published by kaav publications All rights reserved 135 www.kaavpublications.org KIJECBM/JUL-SEP15/VOL-2/ISS-3/A13 ISSN:2348-4969 IMPACT FACTOR(2015) - 3.9581 dependent variable Generally, regression analysis is 99% reliability, corresponding to the selected variables with statistically significant at the p < 0.01; the results also showed that all variables satisfy the demand Verification of conformity of the model showed that multicollinearity phenomenon does not violate (VIF < 10) The table results of regression analysis showed that five factors affecting the competitiveness of the retail sector The results of this research are the basis of the recommendations proposed to enhance competitiveness for Vietnam's retail sector Conclusions and recommendations Conclusions The research results showed that there are five factors affecting competitiveness to Vietnam retail industry with significance level 5% and the influence level of each factor is different According to the analysis, five factors are correlated to impact competitiveness for Vietnam's retail sector respectively (1) The level of competition; (2) customer power; (3) the risk of substitution; (4) entry barriers; (5) suppliers This is an important reason for the retail business to consider their business developing strategies We had conclusions following: There is a positive relationship between buyer power and the competitiveness of Vietnam's retail sector with significance level 5% There is a positive relationship between the level of competition and the competitiveness of Vietnam's retail sector with significance level 5% There is a positive relationship between the risk of substitution and the competitiveness of Vietnam's retail sector with significance level 5% There is a positive relationship between the suppliers and the competitiveness of Vietnam's retail sector with significance level 5% There is a positive relationship between Entry Barrier and the competitiveness of Vietnam's retail sector with significance level 5% Based on study results, the following suggestions and proposals are presented to enhance the competitiveness for Vietnam's retail sector Recommendations Recommendation for the level of competition: Together with the recovery of the world economy and the sustainable development of Vietnam's economy, almost the largest retail group in the world have been in Vietnam They dominate the capital scale, retail experience, experience in building supply chain, developing markets that have upended Vietnamese retail market recently Many transfers, mergers and acquisitions among Vietnamese retail businesses and great retailers from abroad that have been happening extremely strong, however, the domination is on the foreign businesses To gain a competitive advantage compared with competitors, Vietnamese enterprises need alliances, cooperation, collaboration to increase the size of capital; to build a sustainable supply chain; to enhance sharing and exchange of practical experience, management Copyright © 2015 Published by kaav publications All rights reserved 136 www.kaavpublications.org KIJECBM/JUL-SEP15/VOL-2/ISS-3/A13 ISSN:2348-4969 IMPACT FACTOR(2015) - 3.9581 experience; to improve the quality of human resources; to build professional working style; to innovative thinking and adapt to changing business environment in order to improve competitiveness Recommendation for the buyer - customer: The retail of Vietnamese enterprises need to improve the performance of market research to get more information about the buyers; to study the needs and motivations of customers; to focus on the need of consumers to satisfy their maximum demands over their competitors Namely, in Vietnamese retail sector, businesses need to build customer loyalty, to accelerate the process of interaction with customers, to create more added values for customers such as shopping entertainment, shopping experiences and others Recommendation for the risk alternative: Today, there are too many suppliers and the development of new products The replacement products appear fast, even every day, every hour so buyers have more choices and bargaining, and they also have more power If the Vietnam retail businesses are slow adaption and slow innovation, it will hardly exist and may be eliminated from the market in the coming years Recommendation for entry barriers: The benefit tax incentives and other preferential policies after Vietnam joined the WTO and TPP that have opened the opportunity for foreign retail businesses That also means Vietnam retail businesses are under more competitive pressures than before Therefore, the Vietnam retail businesses need alliances, links, cooperation and proposals to government agencies to take the advice, support and help in terms of capital, technology and marketing to enhance the competitiveness and counter the entry barriers for new competitors In addition, the Vietnam retail business should have a strategy to exploit overseas market as well Recommendation for the suppliers: The Vietnamese distributors need alliances, links and cooperation to win-win; to avoid strict competitions to eliminate each other as it has been happening actually in Vietnamese market place lately; to avoid concentrating too considerably in a market instead of diversifying markets Besides, the implementing diversification strategy, Vietnam enterprises need to apply differentiated strategies for products and services; to improve operational efficiency, to reduce cost of inputs and others to increase efficiency compared to their competitors REFERENCES: Benn, A (2001) Competitiveness in the retail industry Special Issue on Competitiveness in retail sector Crouch, G., & Ritchie, J B R (1994) Retail competitiveness: exploring foundations for a long-term research program In Proceedings of the Administrative Sciences Association of Canada annual conference David Kok (2011) Competitiveness in the retail industry: price and quality The Journal of the American Statistical Association Denscombe, M (1998) The Good Research Guide Buckingham, Open University Press Copyright © 2015 Published by kaav publications All rights reserved 137 www.kaavpublications.org KIJECBM/JUL-SEP15/VOL-2/ISS-3/A13 ISSN:2348-4969 IMPACT FACTOR(2015) - 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3.9581 27 Zellner, A (1962) Competitiveness: market forces and policy options Youth Publishing House Abstract Kết nghiên cứu cho thấy cường độ cạnh tranh thị trường bán lẻ Việt Nam chịu tác động 05 yếu tố sau: (1) Mức độ cạnh tranh; (2) Quyền lực khách hàng; (3) Nguy thay thế; (4) Rào cản gia nhập ngành; (5) Nhà cung cấp 139 ... discussing and leading experts consultating to select the variables and observed variable groups Stage 2: Based on the factor groups affecting competitiveness of Vietnam's retail sector, survey questionnaires... there are five factors affecting competitiveness to Vietnam retail industry with significance level 5% and the influence level of each factor is different According to the analysis, five factors... level 5% There is a positive relationship between the level of competition and the competitiveness of Vietnam's retail sector with significance level 5% There is a positive relationship between