(TIỂU LUẬN) research the organizational chart and international business strategy vinamilk

NATIONAL ECONOMICS UNIVERSITY SCHOOL OF TRADE AND INTERNATIONAL ECONOMIC  TOPIC: Research the organizational chart and international business strategy Vinamilk Instructor: Tran Hoang Kien Group : Phạm Khánh Huyền Mai Phương Thảo Lê Hạnh Quỳnh Lê Thanh Phương 11182338 11186028 11184235 11184000 Class : International Economics 60B Hanoi - 2021 Contents Overview about Vinamilk 1.1 History of formation and development of the company .2 1.2 Vision and mission 1.2.1 Vision 1.2.2 Mission 1.2.3 Core values 1.3 Vinamilk – Vietnam's Billion Dollar Milk Brand The organizational chart of Vinamilk 2.1 Overall of the organizational structure 2.1.1 What Is an Organizational Structure? .4 2.1.2 Types of Organizational Structures 2.1.3 Importance of Organizational Structures 2.1.4 Elements of structure 2.2 The organizational structure of Vinamilk 2.2.1 The organization Chart of Vinamilk 2.2.2 Factors affecting organizational structure .11 2.2.3 Advantages and disadvantages of Organizational structure of VNM .12 Business strategy of Vinamilk 12 3.1 External environmental analysis of Vinamilk .12 3.1.1 PESTEL analysis of Vinamilk 12 3.1.2 Industry environment analysis 13 3.2 Internal environmental analysis of Vinamilk 16 3.2.1 Competitive advantages and specific competencies of the Company: 16 3.2.2 Analysis of the value chain of VINAMILK company .17 3.3 SWOT model of Vinamilk from external and internal environment 18 3.3.1 Strengths 18 3.3.2 Weakness 18 3.3.3 Opportunities 18 3.3.4 Threats .18 3.4 Business strategies of Vinamilk 19 3.4.1 Company-level strategy 19 3.4.2 Business-level strategy of Vinamilk 21 3.4.3 Vinamilk's global business strategy 22 3.4.4 Functional-level business strategy 23 Overview about Vinamilk 1.1 History of formation and development of the company Vietnam Dairy Products Joint Stock Company has the international transaction name: Vietnam dairy Products Joint Stock Company The company was established in 1976 on the basis of taking over dairy factories left by the old regime Head office is at No 10 Tan Trao Street, Tan Phu Ward, District 7, Ho Chi Minh City The organizational structure includes 17 affiliated units and one Office Total number of staff - employees: 4,500 people Main function: Producing milk and dairy products Over the years, with outstanding efforts, the Company has become one of the leading enterprises in Vietnam in all aspects The Company's achievements have actively contributed to the development of the Company's career Industrialization - Modernize the country The formation and development of Vietnam Dairy Products Joint Stock Company is summarized in main stages:  Period 1976-1986 Taking over Milk factories left by the old regime after 1975: Thong Nhat Dairy Factory (formerly Foremost factory); Truong Tho Dairy Factory (formerly Cosuvina Factory); and Dielac Powdered milk factory (Nestle)  Period 1987 –2005 The company restored the Dielac milk powder factory in 1988 at a cost of $200,000 In August 1993, Hanoi branch was established to deploy business network in Hanoi and Northern provinces and in June 1995, Da Nang dairy branch was established to serve consumers in Central - Western provinces Original In March 1994, Hanoi Dairy Factory was inaugurated and put into operation after years of construction Period 1996 –2005: The company has opened export markets to Middle East countries, Eastern European countries, European and North American markets In 2003, the company switched to operating under the equitization model to implement the State's policy to create a type of enterprise with many ownerships From 1996 to 2005: Production and business were constantly improved and developed, the annual growth rate was from 15-45%, the revenue increased from 1.5 to 2.6 times; payment to the state budget increased from 1.1 to 6.5 times; Vinamilk's market share accounts for 75-90% depending on the product category; exports increase year by year: from 28 million USD (1998) to 168 million USD (2002); The average annual production output is 220-250 million liters Several new factories were built: Can Tho Dairy Factory (May 2001); Binh Dinh Dairy Factory (May 2003); Saigon Dairy Factory (September 2003); Nghe An Dairy Factory (June 2005); Tien Son Dairy Factory (December 2005) Also in this period, the company established Saigon Logistics Enterprise (March 2003) to ensure transportation services, serving customers consuming Vinamilk products  Period 2005 – to present After years of reforming the management mechanism according to the equitization model, the company has achieved excellent results in production and business development The company researched and launched over 30 new products, approved many initiatives that benefit the State hundreds of billions of dong, typically Dielac Anpha 1,2,3 products; 100% fresh milk products The company has established raw material areas in the country by building dairy farms: Tuyen Quang Dairy Farm (2007); Nghe An Dairy Farm (2009); Thanh Hoa Dairy Farm (2010); Binh Dinh Dairy Farm (2010); Lam Dong dairy farm (2011); with a total herd of 5,900 cows In 2008-2009, dairy factories: Thong Nhat, Truong Tho, Saigon were awarded the Certificate of Merit "Green Enterprise" by the Ministry of Natural Resources and Environment for their achievements in environmental protection Vinamilk was listed on the Ho Chi Minh City Stock Exchange on January 19, 2006, then the capital of the State Capital Investment Corporation had a holding rate of 50.01% of the Company's charter capital The trading code on the Ho Chi Minh City Stock Exchange is VNM In years, the Company has invested about VND 4,500 billion to modernize machinery, equipment and technology for production and to build new processing factories and branches and factories: Lam Son Dairy Factory (Lam Son Dairy Factory) December 2005); Vietnam Beverage Factory (2010); 01 Can Tho Branch (1998); Hanoi Logistics Enterprise (2010), and is promoting the construction of modern fully automated Mega centers in the North (Tien Son) and the South (Binh Duong), 02 factories: Dielac2 powdered milk in Binh Duong and Da Nang Dairy Factory Overall, during the past 35 years, Vietnam Dairy Products Joint Stock Company with many generations has been cultivated and grown; with the familiar VINAMILK brand, which is well-known at home and abroad, has excellently fulfilled the function of an economic unit for the State, becoming a very respectable bright spot in the time of WTO integration 1.2 Vision and mission 1.2.1 Vision To become the leading Vietnamese trusted brand on nutrient and healthy products for human life 1.2.2 Mission Vinamilk commits to bring best - quality nutrition to communities that reflects their respect, love and responsibility for the people, life and society 1.2.3 Core values - Integrity: Integrity and transparency in actions and transactions - Respect: To have self - respect and respecting colleagues Company, partners, to cooperate with respects - Fairness: To be fair with employees, customers, suppliers and other parties - Compliance: To comply with legal regulations and the Company’s Code of Conduct, regulation and policies - Ethics: To respect the established ethical standards and act accordingly 1.3 Vinamilk – Vietnam's Billion Dollar Milk Brand In 2016, Vinamilk company was ranked by Forbes as a billion-dollar enterprise in Vietnam with a brand value of more than $1.5 billion, In 2020, despite facing the Covid-19 pandemic, the company is still determined price increased by 200 million USD compared to 2019, reaching more than 2.4 billion USD According to the financial report of Vinamilk company in the second quarter of 2020, net sales of domestic business reached VND 25,456 billion Direct exports reached VND 2,451 billion, up 7.7% over the same period last year In the first months of 2020, Vinamilk's net revenue reached VND 29,648 billion, up 6.7% compared to 2019 Up to now, Vietnam Dairy Products Company has exported products to 54 countries and territories with a total turnover of more than 2.2 billion USD Vinamilk's stock is classified as a blue-chip stock in Vietnam, for businesses with stable growth and revenue The organizational chart of Vinamilk 2.1 Overall of the organizational structure 2.1.1 What Is an Organizational Structure? An organizational structure is a system that outlines how certain activities are directed in order to achieve the goals of an organization These activities can include rules, roles, and responsibilities The organizational structure also determines how information flows between levels within the company For example, in a centralized structure, decisions flow from the top down, while in a decentralized structure, decision-making power is distributed among various levels of the organization Having an organizational structure in place allows companies to remain efficient and focused 2.1.2 Types of Organizational Structures i Functional Organizational Structure One of the most common types of organizational structures, the functional structure departmentalizes an organization based on common job functions An organization with a functional org structure, for instance, would group all of the marketers together in one department, group all of the salespeople together in a separate department, and group all of the customer service people together in a third department Advantages The functional structure allows for a high degree of specialization for employees, and is easily scalable should the organization grow Also this structure is mechanistic in nature which has the potential to inhibit an employee's growth putting staff in skill-based departments can still allow them to delve deep into their field and find out what they're good at Disadvantages Functional structure also has the potential to create barriers between different functions and it can be inefficient if the organization has a variety of different products or target markets The barriers created between departments can also limit peoples' knowledge of and communication with other departments, especially those that depend on other departments to succeed ii Divisional or Multidivisional Structure The second type is common among large companies with many business units Called the divisional or multidivisional structure, a company that uses this method structures its leadership team based on the products, projects, or subsidiaries they operate Multidivisional Structure can be divided into various types:  Product-Based Divisional Structure  Market-Based Divisional Structure  Geographical Divisional Structure  Process-Based Structure iii Flat Structure While a more traditional organizational structure might look more like a pyramid -with multiple tiers of supervisors, managers and directors between staff and leadership, the flat structure limits the levels of management so all staff are only a few steps away from leadership It also might not always take the form or a pyramid, or any shape for that matter As we mentioned earlier, It's also a form of the "Organic Structure" we noted above Advantages This structure is probably one of the most detailed, It's also thought that employees can be more productive in an environment where there's less hierarchy-related pressures This structure might also make staff feel like the managers they have are more like equals or team members rather than intimidating superiors Disadvantages If there's a time when teams in a flat organization disagree on something, such as a project, it can be hard to get aligned and back on track without executive decisions from a leader or manager Because of how complicated the structure's design is, it can be tricky to determine which manager an employee should go to if they need approval or an executive decision for something So if you choose to have a flat organization, you should have a clearly marked tier of management or path that employers can refer to when they run into these scenarios iv Matrix Structure Unlike the other structures we've looked at so far, a matrix organizational structure doesn't follow the traditional, hierarchical model Instead, all employees (represented by the green boxes) have dual reporting relationships Typically, there is a functional reporting line (shown in blue) as well as a product- based reporting line (shown in yellow) When looking at a matrix structure org chart, solid lines represent strong, directreporting relationships, whereas dotted lines indicate that the relationship is secondary, or not as strong In our example below, it's clear that functional reporting takes precedence over product-based reporting Advantage The main appeal of the matrix structure is that it can provide both flexibility and more balanced decision-making (as there are two chains of command instead of just one) Having a single project overseen by more than one business line also creates opportunities for these business lines to share resources and communicate more openly with each other things they might not otherwise be able to regularly Disadvantages The primary pitfall of the matrix organizational structure? Complexity The more layers of approval employees have to go through, the more confused they can be about who they're supposed to answer to This confusion can ultimately cause frustration over who has authority over which decisions and products and who's responsible for those decisions when things go wrong 2.1.3 Importance of Organizational Structures The structure not only defines a company's hierarchy but also allows the firm to layout the pay structure for its employees By putting the organizational structure in place, the firm can decide salary grades and ranges for each position The structure also makes operations more efficient and much more effective By separating employees and functions into different departments, the company can perform different operations at once seamlessly In addition, a very clear organizational structure informs employees how best to get their jobs done For example, in a hierarchical organization, employees will have to work harder at buying favor or courting those with decision-making power In a decentralized organization, employees must take on more initiative and bring creative problem solving to the table This can also help set expectations for how employees can track their own growth within a company and emphasize a certain set of skills—as well as for potential employees to gauge if such a company would be a good fit with their own interests and work styles They define a specific hierarchy within an organization A successful organizational structure defines each employee's job and how it fits within the overall system Put simply, the organizational structure lays out who does what so the company can meet its objectives This structuring provides a company with a visual representation of how it is shaped and how it can best move forward in achieving its goals Organizational structures are normally illustrated in some sort of chart or diagram like a pyramid, where the most powerful members of the organization sit at the top, while those with the least amount of power are at the bottom Not having a formal structure in place may prove difficult for certain organizations For instance, employees may have difficulty knowing to whom they should report That can lead to uncertainty as to who is responsible for what in the organization Having a structure in place can help with efficiency and provide clarity for everyone at every level That also means each and every department can be more productive, as they are likely to be more focused on energy and time 2.1.4 Elements of structure The best structure for any organization will depend upon who its members are, what the setting is, and how far the organization has come in its development Governance The first element of structure is governance - some person or group has to make the decisions within the organization Rules by which the organization operates Another important part of structure is having rules by which the organization operates Many of these rules may be explicitly stated, while others may be implicit and unstated, though not necessarily any less powerful Distribution of work Inherent in any organizational structure also is a distribution of work The distribution can be formal or informal, temporary or enduring, but every organization will have some type of division of labor There are four tasks that are key to any group:  Envisioning desired changes The group needs someone who looks at the world in a slightly different way and believes he or she can make others look at things from the same point of view  Transforming the community The group needs people who will go out and the work that has been envisioned  Planning for integration Someone needs to take the vision and figure out how to accomplish it by breaking it up into strategies and goals  Supporting the efforts of those working to promote change The group needs support from the community to raise money for the organization, champion the initiative in the state legislature, and ensure that they continue working towards their vision 2.2 The organizational structure of Vinamilk 2.2.1 The organization Chart of Vinamilk The organization Chart of Vinamilk is shown in a professional manner in which departments are divided systematically and reasonably with specific hierarchy of responsibility for each member and function in the company This structure helps the company to operate in the most effective way and fosters the collaboration among departments, thus making a strong Vinamilk 10 i The General Meeting of Shareholders The General Meeting of Shareholders, consisting of all shareholders with voting rights (including ordinary shareholders and voting preference shareholders), is the highest decision-making body of a joint-stock company Shareholders being organizations have the right to appoint one or several authorized representatives to exercise their shareholder rights in accordance with law In case more than one authorized representative is appointed, the number of shares and votes of each representative must be specified ii Board of Directors The Board of Directors is the management body of a joint-stock company with full authority on behalf of the Company to decide on all issues related to the purposes and 11 interests of the company, except for matters falling under the authority of the General Meeting of Shareholders The Board of Directors has not less than members, not more than 11 members, unless otherwise provided for in the company's charter Board members are not necessarily shareholders of the company iii The director or general director of the company The director or general manager is the person who runs the day-to-day business of the company The director or general director of the company is appointed by the Board of Directors or hires another person, is under the supervision of the Board of Directors and is responsible before the Board of Directors and the law for the perform assigned rights and duties If the company's charter does not stipulate that the chairman of the Board of Directors is the legal representative, the director or general director is the legal representative of the company iv The Supervisory Board For a joint-stock company with more than 11 individual shareholders or an organization shareholder holding more than 50% of the total shares of the company, there must be a supervisory board The Supervisory Board has from to members unless otherwise provided for in the company's charter; the term of the Supervisory Board shall not exceed years; members of the Supervisory Board may be re-elected for an unlimited number of terms The members of the Supervisory Board elect one of them to be the head of the Control Board determined The Supervisory Board must have more than half of its members permanently residing in Vietnam and at least one member must be an accountant or auditor This is a model showing that the structural model of a joint stock company has changed according to the requirements of modern management 2.2.2 Factors affecting organizational structure i Operating characteristics Specializes in providing milk and dairy products-operating environment  There are many milk and dairy products on the market with a variety of types and options for customers ii Scale of operations  Large production scale with many dairy factories across the country iii Development strategic goals  Build many factories in the country  In-depth investment, technology innovation, product diversification  Build a factory to produce new products 12 iv Capacity of resources  Modern machinery and equipment  Stable capital  Qualified personnel 2.2.3 Advantages and disadvantages of Organizational structure of VNM  Advantages - Working departments will receive orders directly from a direct superior leader - Facilitates the close inspection of the top level - To maximize he advantages of specialized industry according to the function of each unit - Retain the strength and prestige of the major functions - Simplify the training - Pay more attention to professional standards and employee behavior - High operational efficiency for daily repetitive tasks  Disadvantages - It is easy to lead to conflicts between functional units when setting goals or strategies - Responsibility for achieving the overall goals of the organization is often assigned to the top management - Lack of coordination between functional departments - Highly specialized => managers will have a narrow vision because they are only in their expertise, not good or not interested in other specialties - Limited development of the general management team Business strategy of Vinamilk 3.1 External environmental analysis of Vinamilk 3.1.1 Macro environment analysis PESTEL analysis of Vinamilk Political factor:  Vinamilk is a one of the largest in Vietnam But now Vinamilk is deveploy abroad to USA, Russia, India… so Vinamilk is not only local company but also international  Vietnam is agricultural So to milk producing, there are polities that gorverment encourage milk company developing Therefore vinamilk can be easily produce and sale their product According to the Law, milk and almost kind of produce from agricultural or heath for social have just paid 8% tax  Politcal is stable for the business of company 13  Government promulgated preferential policies (Approved 2000 billion for projects to develop dairy industry to 2020) Economic Factor  The economic is developing and increase that make positive impact on purchasing power in the country  The Vietnam’s GDP trend increased day, it is a great opportunity for business It’s means that the income and life will go up and the demand to spend money is high However, The inflation rates is also high that mean the cost of production will increase Social factor     People's living standards are increasing Up to improve health and beauty increasing The rate of malnourished children remains high Most people in Vietnam not have the habit of drinking milk Technology factor  Rapid high temperature sterilization technology  Technology of milk powder cans  New modern equipment in the field of product packaging diversification  Quality management technology product quality management according to ISO Environment factor  Hot and humid monsoon climate  Frequent flood disaster Legal factor  Vinamilk must ensure the production, which are safety and health for customer by using modern system Company should follow the rule of food safety not only in Vietnam but also others organization in global 3.1.2 Industry environment analysis Analysis of Forces Porter of Vinamilk  Competitive pressure on customers The final customer has the potential to put great pressure on companies about the quality of the product The brands of dairy products are very diverse and interchangeable, the price factor is no longer so important to consumers when choosing dairy products Companies compete with each other by quality, product variety, brand strength, etc., then price For dairy products, when the price of raw materials is high, the dairy company can raise the price of the product that customers still have to accept Therefore, the bargaining power of buyers is low 14 As for resellers, nutrition centers, the company will give discounts and commissions Distribution points such as nutrition centers, hospitals, pharmacies, etc can gain significant power over dairy brands, as they can influence the retail customers' decisions on which dairy products to buy/ finally through consulting, product introduction  Threat of substitute products In fact, dairy products always have a strong position in the market with very few other substitutes due to the characteristics of milk as an essential nutritional supplement For liquid milk, the substitute products that are likely to reduce the company's market share are nut milk, soy milk, cereal drinks or soft drinks with milk, etc The dairy industry is less vulnerable to substitute products  Barriers to entry into the industry In general, the barriers to entry of the dairy industry are quite high given the costs of entering the industry, product characterization and setting up appropriate distribution channels: – The cost of entering the industry, in general, is not high but must be large enough for advertising, research / development needs However, for liquid milk and yogurt products, it is quite high – Product characterization: The Vietnamese dairy market has so far present most of the major dairy companies in the world, in which the large dairy firms have owned a certain market share and have little change in recent times Therefore, new competitors who want to enter must have a strong investment to entice and change the market's loyalty to existing dairy firms - Distribution channels: The current product distribution channels of the dairy industry have been fully utilized by existing businesses Therefore, new entrants must convince these distribution channels by accepting high commission share Therefore, it can be concluded that the pressure from new competitors is not significant, but competition will mainly take place within the existing industry  Bargaining power of suppliers Vinamilk in particular and dairy enterprises in general have quite high bargaining power with suppliers In terms of the size of the dairy industry, 95% of dairy cows are raised in households, only 5% are raised in specialized farms with a scale of 100-200 heads or more (VEN, 2009) This shows that people raise cows spontaneously, not focusing on the process, so the quantity and quality are not stable, reducing the ability to negotiate with production companies The lack of management experience, the small farm size, the high rate of reproductive disorders and diseases of dairy cows… make dairy farmers very disadvantageous Therefore, domestic dairy companies take the initiative in negotiating the purchase price of input milk  Competition among industry competitors 15 Vinamilk is currently facing relatively high competition from domestic and foreign brands such as: TH True Milk, Nesle, Abbott, Mead Jonson, etc In the future, the dairy market will continue to expand and expand competition increases Not only growing in the domestic market, Vinamilk also constantly develops the export market Currently, Vinamilk has exported products to more than 31 countries and territories around the world with an annual export turnover of more than 200 million USD The main export markets are the Middle East and Asia Vinamilk is continuing to seek and expand markets to Europe, Africa, South America, etc Export revenue accounts for 8% - 24% of Vinamilk's total consolidated revenue The average growth rate of exports has been 17% per year over the past 10 years The main export products are powdered milk and condensed milk 3.2 Internal environmental analysis of Vinamilk 3.2.1 Competitive advantages and specific competencies of the Company: Position of the company in the industry: Vinamilk is the largest dairy company in the country with a market share of 37% The factory scale is also the largest in the country with a total capacity of 504 thousand tons/year, reaching 70% efficiency Company core values:  Respect: self-respect, equality and dedication to the development of the company are things we cherish  Willpower: dare to think, dare to do, dare to take responsibility to overcome all challenges to achieve committed goals  Open and honest discussion with a constructive spirit is the basis to help our team become more engaged and stronger  Integrity: whatever we is honest, transparent, and ethical physical  Harmonizing benefits: Vinamilk's interests are also the interests of employees, partners, and families country and society  Efficiency: always interested in adding value in all investment, business and work activities  Creativity: we respect passion, original discovery and cutting-edge solutions  Openness: frank communication with a constructive spirit is the basis to help us become closer and stronger Company strengths: - Advantage of scale created by large market share in most dairy and dairy product segments, with more than 45% market share in liquid milk market, over 85% market share in edible yogurt and milk market In which, the two main categories of liquid milk and edible yogurt have a continuous growth rate of more than 30% per year - Vinamilk is a famous brand - Ability to set the selling price in the market - Owning a strong and famous brand, Vinamilk is a clear leader in the level of trust and preference of Vietnamese consumers for nutritional products 16 - The proactive and nationwide distribution and sales network allows Vinamilk's key products to be present at over 141,000 large and small retail locations nationwide, over 220 distributors in all 63 provinces and cities of Vietnam country Branded products Vinamilk is also present in the US, Canada, France, Russia, Czech, Poland, Germany, China, Middle East, Asia, Laos, Cambodia - Having a sustainable strategic partnership with suppliers, ensuring a stable and reliable source of raw materials at the most competitive prices in the market As the largest milk collector in the country, it has the ability to bargain with farmers - Ability to research and develop new products according to market trends and consumer demands - Professional management systems and processes are operated by a team of managers with competence and experience proven through the company's sustainable business results - Experienced sales team of 1,787 salespeople across the country - Modern and advanced production equipment and technology according to international standards 3.2.2 Analysis of the value chain of VINAMILK company Input: domestic raw materials such as fresh milk, sugar, minerals, etc are mainly In addition, we also import materials from abroad when necessary Has a nationwide distribution system, The R&D team is heavily Closed production extensive mobile sales invested, many new products are line, standard: ISO staf , and many bo r n 2001 attractive promotions Th company infrastructure is well suited for production stable, customers update information quickly and efficiently High standard products such as: fresh milk, powdered milk, cheese, condensed milk, yogurt, The value of the product is recognized by everyone, since then, the VINAMILK brand has become famous at home rces are and abroad he ecially in the locality near the source of raw materials In addition, there is a team of highly qualified engineers and smart managers Attentive customer care service, with a health consultation website for customers costs of maintaining materials, products made with good quality to meet customer needsy The supporting activities 17 Looking at the value chain analysis of VINAMILK dairy company, we see that the added value due to factors from the main activities helped increase the product value but the product price did not fluctuate much 3.3 SWOT model of Vinamilk from external and internal environment 3.3.1 Strengths - Strong brand, accounting for a large market share (75%) - The distribution system combines modern and traditional Wide distribution network (64 provinces, 250 distributors, more than 125000 sales points nationwide) - Diversified products, product quality is not inferior to imported goods while the price is very competitive - Advanced production line - The Board of Directors has good management capacity - Diversified and strong product portfolio (150 product categories) - Sustainable relationships with partners - //// 3.3.2 Weakness - Mainly focus on products on the domestic market - Marketing activities are mainly concentrated in the South, while the North accounts for two-thirds of the country's population and has not been invested heavily, which may lead to Vinamilk losing the market to competitors paintings like Dutch Lady, Abbott - Domestic input materials are not enough, fresh milk can only meet 28% of domestic demand, the rest must be imported powdered milk As a result, input costs are strongly affected by world milk prices and exchange rate fluctuations 3.3.3 Opportunities - Government's preferential policies on dairy industry (approved for 2000 billion for dairy development projects until 2020) - Stable supply of raw materials (Vinamilk also actively invests, builds investment sources, builds raw materials to serve the needs of the business) - Although consumption is not high, domestic milk production only meets 30% of demand Therefore, Vinamilk has many opportunities to expand production to meet increasing demand - Besides, the fact that competitors (Dutch Lady) are losing consumers' trust in product quality creates favorable conditions for Vinamilk to develop its brand - The WTO accession will create favorable conditions for Vinamilk to expand its market, business, and learn from experience 3.3.4 Threats - Unstable economy (inflation, economic crisis ) - Vietnamese people's preference to use foreign goods is also a big challenge not only for Vinamilk but also for other businesses in the industry - A sensitive business field, which directly affects the health of consumers, requires businesses to always ensure product quality, any errors in product quality will strongly affect the brand - In 2012, if the Doha round is successful, developed countries will reduce or eliminate agricultural subsidies in general and the dairy industry in particular, leading to an increase in milk prices 18 - WTO accession: creating conditions for foreign companies to penetrate the domestic market, promoting high competitiveness 3.4 Business strategies of Vinamilk 3.4.1 Company-level strategy Vision: "Become the number belief symbol in Vietnam about nutrition and health products for human life" Mission: “Vinamilk is committed to providing the community with the best and highest quality nutrition with respect love and high responsibility for human life and society”  Analyzing Vinamilk's business strategy through the BCG model (Boston Consulting Group) of SBU (strategic business unit) A BCG matrix helps businesses analyze both the current and future competitive landscape of their industry, and then plan accordingly Step 1: Identify Vinamilk's SBU portfolios and assess their growth opportunities in the future The growth rate of sales in the industry (%) 21 23 Revenue ( million billions VND) 33 24 The relative market share in the industry (%) 1.52 1.25 25 3.00 10 4515.47 SBU Market share of SBU (%) Market share of competitors Liquid milk Powdered milk Densed milk 50 30 75 9296.55 7702.86 Source: Vinamilk 2009 Step 2: Sort Vinamilk's SBU portfolios into the matrix and determine the strategy ? Market sales growth High Low  SBUHigh powdered milk: Relative market share in the industry Low 19 Vinamilk's powdered milk accounts for 30% of the market share, but the market for Vinamilk's powdered milk products is mainly in rural areas In big cities, the market share of Vinamilk powdered milk faces great competition from foreign milk companies due to the consumer psychology of urban people preferring foreign products However, Vinamilk's powdered milk product group is increasingly diversified to meet the actual needs of customer segments and target customers, not only limited to children but also expanded to many subjects such as pregnant women, the elderly, people with diabetes, overweight and obese people Therefore, this will still be a significant advantage to help Vinamilk continue to hold market share → Solution: Vinamilk should continue to invest in powdered milk SBU portfolio, promote marketing activities for powdered milk SBU, develop new product lines, especially positioning product lines in low price segment  SBU liquid milk (ready-to-drink milk) SBU liquid milk continues to be a key product, accounting for the largest proportion of Vinamilk's total revenue In 2012, the liquid milk market (ready-to-drink milk) was still held by Vinamilk and Friesland Campina With the advantage of 100% pasteurized fresh milk product line, which is produced in a closed cycle from breeding, purchasing, processing and packaging; Liquid milk is still a segment that brings many opportunities and profits for Vinamilk → Solution: Vinamilk should focus on investing in milk production capacity: expanding farms, developing cows, building factories with new technology… Besides, promoting marketing and advertising strategies in order to maintain the image and expand the customer base  SBU condensed milk Vinamilk's condensed milk SBU appeared quite early and until now still has a certain position in the market SBU condensed milk is a product line with high market share but low growth, so appropriate investment policy is required → Solution: Vinamilk should continue to maintain investment, promote products aimed at popular customers and product distribution channels 3.4.2 Business-level strategy of Vinamilk 20 i "Low Cost" Strategy Vinamilk's goal when pursuing a low-cost strategy is to outperform competitors by creating products that are lower than foreign companies in the context that there are more than 40 operating enterprises, hundreds of dairy brands, and more With many types of products, including many multinational corporations, fierce competition, Vinamilk still stands firm and affirms its leading position in Vietnam's dairy market In previous years, Vinamilk's market share was only 17%, in 2010 it was 25% and continues to grow The company's milk and dairy products account for about 50% of the national market share Vinamilk's product portfolio includes: main products are fresh milk, powdered milk and value-added products such as condensed milk, edible yoghurt and drinking yoghurt, ice cream and cheese ii The "differentiation" strategy The goal of the strategy is to gain a competitive advantage through creating products that are unique to customers, satisfying customer needs in a way that competitors cannot With Vinamilk, high quality, reasonable price, and the customer must be the center, this is also the secret to the success of this leading dairy brand in Vietnam “Product quality is the best PR” In 2008, while many milk manufacturers struggled because of the "melamine storm", Vinamilk remained firm and affirmed its position and quality Vinamilk actively sent all samples of its input materials and finished products for testing and the results showed that none of the samples were contaminated with melamine "Success" is the most concise statement when referring to Vinamilk's milk brand-building work over the past time The image of a Vietnamese dairy cow on Vinamilk's milk packaging has become very familiar to Vietnamese people, especially children Nearly any child can hum "We are happy cows" in the company's milk ad As it turned out, thanks to the "Melamine storm", Vinamilk took advantage of this opportunity to raise the company's milk quality to a new level, trusted by consumers Currently, Vinamilk has over 220 distributors on its product distribution system, plus over 140,000 sales points covering all 63 provinces Vinamilk branded products are also present in the US, Canada, France, Russia, Czech Republic, Poland, Germany, China, Middle East, Asia, Laos, Cambodia The wide distribution system is also one of them leverage to help the company introduce new products such as juices, soy milk, bottled water, and coffee to the market From the very beginning, Vinamilk has determined that a stable and quality raw milk supply is especially important Therefore, Vinamilk has built sustainable relationships with suppliers through the company's evaluation policy Vinamilk provides financial support to farmers to buy dairy cows and buy good quality milk at high prices The company also signs annual contracts with dairy suppliers and currently, 40% of raw milk is purchased from domestic sources Manufacturing plants are located at strategic locations near dairy farms, allowing Vinamilk to maintain and strengthen relationships with suppliers At the same time, Vinamilk also carefully selected the location of the milk collection center to ensure fresh milk and good quality In addition, Vinamilk also imports powdered milk from Australia and New Zealand to meet production needs in both quantity and quality 21 Besides, Vinamilk has top ads in the list of 10 most successful TV commercials based on the opinions of 22,000 participants Vinamilk's ad topped the list with a bubble image with the message of drinking Vinamilk milk to contribute million glasses of milk to children across Vietnam The second ad uses the image of dancing cows to promote Vinamilk's pure fresh milk Not only that, but Vinamilk also participates in many charity activities, actively participates in activities for the community towards the benefit of customers iii Strategy "focus on differentiation" The goal is only to meet the needs of a certain market segment determined through geographical factors, customer objects or product characteristics With a long history in the Vietnamese market, Vinamilk has the ability to identify and understand consumer trends and tastes This helps Vinamilk focus its efforts on developing products for market segments that can bring high success Currently, Vinamilk will urgently rebuild the marketing department, short-term and long-term marketing strategies with clear criteria, aiming to build a strong brand system first To implement the business strategy on the company has proposed the following measures The company pays great attention to the design of new and appropriate packaging designs Use media channels to promote your image The company focuses on improving product quality, diversifying product types and researching new product lines to fully meet customers' consumption needs and contribute to spreading risks for the company company The company has over 200 dairy products and dairy products: condensed milk, powdered milk, nutritional powder, fresh milk, ice cream, yogurt, cheese And other products such as: soy milk, fruit juice, cake, Instant coffee, bottled water, tea, instant chocolate The company also constantly improves production technology, the cooperation with the National Institute of Nutrition also creates more consumer confidence in the product 3.4.3 Vinamilk's global business strategy In 1998, Vinamilk started exporting its first powdered milk products to the Middle East, with the main market being Iraq under the United Nations oil-for-food program This marks the company's first activity in the world market Since then, through many years of efforts to find markets and participate in trade promotion activities, Vinamilk's products have been exported to 43 countries around the world with a wide range of products, such as: : powdered milk, nutritional powder, condensed milk, liquid milk, soy milk, yogurt, juice, ice cream Vinamilk's products are present in a wide range of countries, such as Cambodia, Thailand, and Korea , Japan, China, Turkey, Russia, Canada, USA, Australia In addition, the Company is continuing to seek and expand markets to Europe, Africa, and South America In 2010, after being licensed to invest abroad by the Ministry of Planning and Investment, Vinamilk bought 19.3% of shares of Miraka Limited Company in New Zealand This can be said to be Vinamilk's first factory investment project in the world market 22 Buying back shares of a company in the market to be attacked was one of the classic international business strategies applied by Vinamilk at that time By acquiring 19.3% of shares of Miraka Company and will increase investment capital if business situation is stable One of the reasons Miraka was chosen by Vinamilk is because this powdered milk processing factory is located in the center of the North Island - New Zealand where there is a famous high-quality raw material area in the world Vinamilk's initial goal when investing in this market is not revenue and profit However, the brand and position of Vinamilk's business have been raised to a new level, paving the way for a business to come with foreign investment capital And this has been proved by the fact that Vinamilk entered the Forbes rankings with high ranks for both the company and Vinamilk's leadership It was the investment moves in Vinamilk's international business strategy that made this brand become a "phenomenon" of business boom in the crisis period at that time Vinamilk has taken the right steps from the beginning, making a brand right in the "granary" of dairy ingredients around the world to position quality products from the very beginning The $90 million deal in New Zealand was carefully calculated, becoming Vinamilk's first international investment "hit" In May 2013, with the first successes as a stepping stone for Vinamilk's international business strategy, the brand took the next step - choosing Vinamilk's commercial representative in the US with the name Driftwood specializing in international business manufactures products such as butter, juice, ice cream and bread The United States is considered the world's largest consumption and growth market with 314 million people, a high-end dairy market but not too strict and fastidious The step from the "granary" of ingredients to the dairy market in the US is not surprising to strategic planners In the US market, Vinamilk chooses a key account distribution channel and a supermarket channel in the form of a short channel to save costs, distributing directly to schools, hotels, hospitals, supermarkets, restaurants, etc Vinamilk's international business strategy is now more specific: Producing products with high added value, forming a closed chain of "upstream" supply to consumers 3.4.4 Functional-level business strategy i Human resource strategy Vinamilk has training programs to help employees develop and achieve their career goals Therefore, as an employee of Vinamilk, you will have the opportunity to be trained to perfect the skills and knowledge to meet the requirements and challenges at work Professional and skill training courses as well as practical training sessions are regularly organized by Vinamilk at home and abroad 23 Decent salary and treatment: Working at Vinamilk, you will receive a salary commensurate with your ability and competitive with the market A culture that inspires work and creativity: Vinamilk believes that: “Our value and success depend a lot on your creativity and excitement in your work That's why we always strive to create a professional but equally friendly and open working environment so that each individual can freely promote their creativity and unleash their potential make a difference.” ii Marketing and sales strategy Vinamilk always brings you international quality nutritional solutions, meeting the needs of all consumers with delicious, nutritious and healthy products associated with leading brands in the market Popular products such as Vinamilk liquid milk, Vinamilk yogurt, Ong Tho and Phuong Nam Star Condensed Milk, Dielac Powdered Milk, Vfresh Fruit Juice Vinamilk is very active in marketing and promoting products through mass media such as television, newspapers, magazines, internet or banners and posters… Vinamilk's promotional videos are aimed at children’s love of animation that achieve certain successes This is an extremely important step of Vinamilk with competitors Promotion is also a form of advertising Vinamilk's products such as buying milk block get mini jigsaw or buying milk bottles giving lanterns on the occasion of the last Mid-Autumn Festival… Vinamilk's distribution system is very well organized Currently, Vinamilk's distribution system has expanded to provinces, cities, towns, towns, districts and communes of 23 northern provinces and cities, with more than 13,000 sales points and distributors throughout the North For Vinamilk's retail outlets as well as in other direct distribution channels, when the price of raw materials is high, companies can sell at a high price that customers still have to accept Therefore, Vinamilk can transfer disadvantages from suppliers to customers For agents, Vinamilk always has incentives for them to become close friends and loyal to their products If the contract is violated, the company will resolutely cut it off to set an example for other agents The subsidiary Vinamilk stipulates the sales and bonus for agents depending on the business results achieved monthly or quarterly Vinamilk regularly has charity programs, programs with high social responsibility such as: "Standing Vietnam" Milk Fund to poor children in Co To island district, Golden Turtle - Plan a summer with Vinamil meaningful, Red scarf - Enjoy a fun and meaningful summer with Vinamilk, awarding scholarships "Vinamilk - Nurturing young Vietnamese talents" and awarding the final round of the "Vinamilk - Find" playground Vietnamese talent search" 24 ... legislature, and ensure that they continue working towards their vision 2.2 The organizational structure of Vinamilk 2.2.1 The organization Chart of Vinamilk The organization Chart of Vinamilk is shown... proved by the fact that Vinamilk entered the Forbes rankings with high ranks for both the company and Vinamilk'' s leadership It was the investment moves in Vinamilk'' s international business strategy. .. with the first successes as a stepping stone for Vinamilk'' s international business strategy, the brand took the next step - choosing Vinamilk'' s commercial representative in the US with the name