LUẬN văn THẠC sĩ business strategy of clean rice for the 2016 2020 periodthe case of vietnamese rice research center vinafood1

Rationale of the study

Nowadays, the strong growth of the economy has contributed to the improvementpeople’s lives When the lives are improved, the demand for using high quality products is also raised (Ngoc Anh, 2015) In addition, food safety is one of the topical issues in the Vietnamese market due to the lack of strict standard control from the authorities as well as the problem of ethics in production and trading activities of part of enterprises This makes consumers anxious and worried when they usedaily products such as food and drinks As a result, the consumers’ demand for using high quality and safe products is urgently necessary (Nguyen Trong Khanh and Nguyen Van Hoan, 2015)

Like other food items, the rice in our country is facing "barriers" in quality This significantly influences the sales of rice ofenterprises in the domestic as well as export market According to the Vietnam Food Association (2016), our country currently ranked third in the world in rice export turnover with annual export target of 6.5 million tons

However, the export market of our country mainly includes countries such as Indonesia, the Philippines, and African countries, so our rice does not have a good price Therefore, the issue of improving the quality of rice and developing clean rice is a basic requirement to increase export turnover as well as serve the domestic market Moreover, it is also necessary to create a premise for our rice to be present in the fastidious markets such as Japan and European countries

In addition, according to the survey results of Nguyen Trong Khanh and Nguyen Van Hoan (2015), the current demand and market potential of clean and high quality rice products was increasing This was evidenced by the fact that all supermarkets in Hanoi, Hai Phong, Nam Dinh, Hai Duong, Thai Binh, Bac Ninh, etc were mainly selling clean and high quality rice such asTam Thơm Hai Hau, Nang Xuan and BT7 At the same time, when surveying customers using rice in Hanoi, the authors found out that more than 90% of consumers did not care about the size of the rice grain or white or silverbelly.What they prioritized when choosing rice was that the rice must be clean, flexible and fragrant This indicated that the demand for clean and high quality rice was increasing and consumers increasingly tended to buy rice from reputable brands to ensure quality standards of the rice

Facing that situation, Northern Food Corporation - one of the leading rice exporters with a lot of experience in the world’s rice market - has pioneered in looking for the development directions for in Vietnamese rice over the yearswith the research and production of clean rice with the Corporation’s brand, which meets the increasing demand of people Being concerned and assigned byThe Ministry of Agriculture and Rural Development, especially after the scheme on building the Vietnamese rice brand name was approved by the Prime Minister, the Northern Food Corporation decided to set up a specialized unit calledVietnam Rice Research and Development Center The center was established on 19 September, 2014 with the task of researching and organizing the production of rice products under a chain of phases from researching seeds, cultivating to processing and distributing products with the aim tocreate good quality rice products and ensure food hygiene and safety and gradually build an excellent brand name for Vietnamese rice products However, this center just focused on production but was not interested in building business strategy for the development of clean rice As a result, although the business strategy had been built, the implementation efficiency was not high

The annual rice consumption did not correspond to the size and potentials of the center

Being aware of the reality, as an employee working at Agro Processing and Market Development Authorityunder The Ministry of Agriculture and Rural Development and being responsible for seeking the consumption markets for agricultural products (including rice) and exporting high quality agricultural products to fastidious markets, the author decided to select the topic "Business Strategy forClean Rice in the stage of 2016-2020: The Case of Vietnam Rice Research and Development Center – Vinafood1" for his graduation thesis as well as for serving his current work.

Research overview

+ Bao Yen (2015) conducted a study on "Strategy of building clean rice brand name for Ninh Binh Seed Plants and Livestock Joint Stock Corporation" In this study, the author analyzed the company's strategy for cooperating with farmers to implement the closed rice production process with the motto of focusing on breeding, reducing losses and assuring quality under standards With this direction, the company was leading in the development of a brand name for clean andhigh quality rice in Ninh Binh and gradually changing the methods of producing low-grade rice of farmers in previous years Besides, the author also mentioned the difficulties in building a clean rice brand name for Vietnam in general and Ninh Binh in particular It was a fact that, Vietnamese exported rice had not been standardized.For example, the rice exported to international market was not homogeneous in breed and had three or even a dozen different kinds of rice in one bag.In fact, the branded rice must meet specific and tight standards of a grain of rice with high stability in length, diameter, clarity, gloss, moisture, impurities, content of substances, odor, etc.Therefore, the research made a great contribution tobuilding the brand name for clean rice in Ninh Binh However, the author had not analyzed the SWOT matrix and did not combine the strengths, weaknesses, opportunities and threats to buildthe business strategy for developing clean rice brand name suitable for Ninh Binh province

Trinh Thi Thanh Thuy (2008) carried out a research article entitled "Studying and proposing solutions to develop clean food trading when Vietnam is a member of the World Trade Organization" In the study, the author specified the theoretical framework on the development of clean food products when Vietnam is a member of the WTO including the concepts, role of clean food and meaning of developing clean food, factors affecting production, processing and circulation of clean food, legal provisions for the production, processing and circulating clean food, and pointed out experience in developing clean food in foreign countries In addition, the author also mentioned the reality of trading clean food in Vietnam from 2002 to 2007 including: the reality of food production and processing, reality of food circulation and legal provisions related to the production, processing andfood circulation in the country and food import and export Finally, theauthor proposed solutions to develop trading in clean food in Vietnam by 2015 and orientation to 2020 including solutions on clean food production and processing, solutions on transporting, preserving and distributing inland foodstuffs, solutions on importing and exporting clean food, solutions on finalizing legal bases related to domestic production, processing and circulation and import and export of clean food products, solutions on raising awareness of the whole society ofthe production, processing, distribution and consumption of clean food However, sincethe author focused on building strategy for clean food including clean vegetables, clean rice, clean seafood, and so on, the research problem was quite broad and general, the results of this research could not be applied particularly for the development of clean rice products

+ Peter Durman (2003) conducted a study on "Development of a clean food and water environmental policy in a third world city" The research focused on the policy of developing clean food and water environment in the city in the third world The third world consisted of countrieswhich used to be colonial countries in Africa, Latin America, Oceania and Asia In the study, the author pointed out that low-hygiene food was an accepted issue in many third-world cities A large percentage of people accepted this as an unavoidable fact of life due to pollution sources Therefore, in the study the author proposed a policy of developing clean food to reduce the incidence of foodborne diseases in third world cities The author’s research built a development model towards people's health and social infrastructure in Indonesia The author’s model of clean food development can be applied in Vietnam because our country also used to be a third world country and our economic conditions were relatively similar to Indonesia However, the results in Peter Durman's study did not have an update on time At the same time, the research issue was on general clean food but not specifically on clean rice

+ Another research was conducted by the United States Department of Agriculture

(2005) entitled "Guidance for School Food Authorities: Developing a School Food Safety Program Based on the Process Approach to HACCP Principles" The author researched the development of school food safety program based on HACCP principles with such contents as the purpose of the school food safety program, the requirements of the school food safety program and the development of the school food safety program with the following steps: (1) Preparingdocuments in writing, and implementing operational procedures, (2) Making documentation of all food safety items in accordance with the HACCP Compliance Process, (3) Identifying control documents and measures, (4) Establishing monitoring procedures, (5) Establishing corrective actions, (6) Keeping records, (7) Reviewing and revising the overall food safety program periodically This research contributed significantly to the development of clean food in schools in the United States However, the study was only conducted on a school scale but not widely applied In addition, the author conductedthe research on the development of clean food in general but had not gone deep into researching clean rice products

To sum up, there are many studies on business strategies for the development of clean food in general and high quality rice products in particular However, each author approached their study in a different direction, so the results of each study were different

Besides, no authors conducted a comprehensive research on business strategy for clean rice Therefore, to supplement the documentation for business strategy of clean and high quality rice, the author decided to carry out theresearch and selected Vietnam Rice Research and Development Center – Vinafood 1 (VRRDC) as the case study.

Research objectives

Overall objective

The purpose of the study was to contribute to improving the business strategy for VNF1 to become the leading producer and trader ingood and clean rice(safe food) in Vietnam.

Specific objectives

- Systematizing the theoretical framework on building and developing business strategies in the agricultural sector in general and clean rice in particular

- Applying strategictools tobuild and develop business strategies for VRRDC

- Suggesting solutions to improve the business strategy for clean rice products of VRRDC.

Research object

The object of the study was the business strategy for clean rice ofVietnam Northern Food Corporation - Vinafood 1.

Research scope

- Space: The study was conducted with staffs, experts and customers of VRRDC in

- Time: The research focused on the trading of clean rice (high quality) at Vietnam

Rice Research and Development Center – Vinafood 1 in the period of 2011 – 2015 for secondary data and from 11 th May, 2017 to 30 th May, 2017 for primary data

- Contents: Based on the theory of business development in the field of agriculture and agricultural productsin general and rice in particular,the author builtthe business strategy for clean rice at Vietnam Rice Research and Development Center – Vinafood 1 and proposed solutions and recommendations to perform the business strategy for clean rice at the corporation.

Thesis structure

Apart from the introduction and conclusion, the thesis consisted of 4 chapters

CHAPTER 1: Rationale of the study CHAPTER 2: Research Methodology CHAPTER 3: Reality of clean rice trading of Vietnam Rice Research and Development Center – Vinafood 1

CHAPTER 4: Building business strategy forclean rice of Vietnam Rice Research and Development Center – Vinafood 1 in the stage of 2016 – 2020

THEORETICAL FRAMEWORK

Basic concepts

Rice is a food product Rice is a popular food for people and is the main source of income for farmers all over the world (Le Xuan Tao, 2013)

Derived from the above concept of rice, there are many concepts of clean rice, namely:

Clean rice refers to the safety that this kind of rice brings to the health of people whoeatit (Nguyen Chi Trung, 2007)

Clean rice is a kind of food that is grown in the right procedure and looked after according to the proposed quality standard with no preservatives This kind of ricemust beconsumed in a period of time should not be stockedfor too long since the quality can be influenced (Huynh Van Thon, 2014)

Clean rice is a kind of rice which is produced in accordance with standards in a system of food inspection and supervision from the stage of cultivation to harvesting, processing and storage For example, the soil should be cleaned; the safety of the water source must be ensured; the rice seedsmustbe disease free because if the seeds are unsafe, they will affect the productivity and quality of the rice; the fertilizers and plant protection drugs must also be in the list allowedincluding organic medicines which are safe for users (Nguyen Cong Thanh, 2011)

1.1.2 Concept of business strategy for clean rice

The author approached the concept of business strategy for clean rice through the concepts of strategy and business strategy as follows:

According to Alfred Chandler (2013), strategy is the fixation of long-term fundamental goals of an organization, the choice of methods or courses ofactions and allocation of essential natural resources to accomplish these goals A business strategy should be defined as a general business plan that directs the organization to the desired goal

According to James B.Quynn (2014),strategy is the plan to combine the principal objectives, policies and series of actions of the unit into a cohesive whole

According to William F Glueck (2013),strategy is a united, comprehensive and coordinated plan which is designed to ensure that the basic goals of the enterprisewill be accomplished

Business strategy is a general action program aiming at achieving the goals of the enterprise The strategy is not intended to find outprecisely how to achieve these goals because it is the task of numerous support programs and functional strategies Business strategies only provide frameworks to guide thoughts in the direction of business and action (Huynh Thi Thien Chung, 2009)

According to Nguyen Ngoc De (2012), business strategy of an enterprise is that in the context of market economy, based on objective and subjective conditions and resources,the enterprise can determine the schemes,ways, measures to ensure the survival, stable andlong-term development according to the development objectives set by the enterprise

Thus, based on the concept of strategy and business strategy which have been defined by the world's researchers, the author proposed concept of business strategy for clean rice as follows:

Business strategy for clean rice is a general and comprehensive plan which is set up based on objective and subjective conditions and internal resources of enterprises to ensure the implementation of revenue and profit targets in the trading of clean rice

1.1.3 Possible business strategies for clean rice

+ Company-level strategy: According to Fredr David (2006), the strategies that can be implemented are:

- Forward integration: refers to increasing ownership or control toward distributors or retailers

- Backward integration: is a strategy for seeking ownership or control of a company's suppliers

- Horizontal integration: is a strategy for seeking ownership or control toward a company’s competitors

Market penetration: refers to increasing market share for existing products or services in existing markets with greater marketing efforts

Market development: involves bringing existing products or services into new geographic areas

Product development: involves increasing revenue by improving or modifying existing products or services

- Strategies for expanding operations in practice:

Concentrated diversification: Add new products or services that are interrelated

Horizontal diversification: Add new products or services that are not interrelated for existing customers

Mixed diversification: Add new products or services which are not interrelated

Business-level strategy: According to Michael E Porter (1996), there are the following types of business-level strategy:

- Cost leadership The cost leadership strategy is an overall of actions to provide clean rice products with characteristics accepted by customers at the lowest cost in relation to competitors

The goal of an enterprise pursuing a cost leadership strategy is to outperform competitors by doing everything possible to produce goods or services at a lower cost than its competitors This strategy has two basic advantages:

First, the cost leader can offer a lower price than its competitors but still get the same profit margin due to lower costs If enterprises in the same industry offer a similar price for their products, the cost leader will still have better profit

Second, the cost leader can stay stronger than its competitors When the number of competitors in the industry increases, enterprises are forced to compete on prices

- Differentiation The goal of this strategy is to obtain a competitive advantage by creating rice items which are unique in terms of some important characteristics Enterprises make a difference to satisfy customers’ demand in ways that competitors can not do with the intention of asking for a price increase (a significant price above the average price of the industry)

The ability to generate income by asking for a higher price of difference makers is higher than the cost leaders The price increase of the differentitating enterprise is actually often higher than the price that the cost leader requires Customers are willing to pay for that because they believe that the quality of differentiated products has distinctive value

Therefore, the products are valued on the basis of what the market will tolerate

- Focus Focus strategy is the third business development strategy that clean rice trading enterprises can choose The main difference from the two strategies above is that it directly aims at the needs of the group or the limited customer segment A focus strategy will base on the gaps of a specific market to determine the geographic aspect, kinds of customer, or product segmentation

When an enterprise has chosen a market segment, it will pursue a focus strategy that uses a differentiated approach or a low cost approach Basically, a focused enterprise is a specialized difference maker or or a cost leader If an enterprise uses a focused cost leadership approach, it will compete with the cost leader in the market segments that this person is disadvantaged

If an enterprise uses a differentiation approach, it will use all the differentiation methods for different competitors The competitive point with differentiation makers is only in one or some segments of the market Moreover, the focus on a small range of products sometimes allows a person to develop faster than a differentiation maker

Focused enterprises often aim at creating market share on just one segment If it is successful, it can start serving more and more segments and gradually decrease the advantages of differentiation makers

Process of building business strategy for clean rice

Building a business strategy for clean rice is a thinking process that aims to create a strategy based on the research and forecast of basic information, ensuring the long-term implementation of important targets of the enterprise

The steps for building the business strategy for clean rice include: i Analyzing external environmental factors ii Analyzing internal environmental factors iii Building strategic options/alternatives iv Selecting strategies v Organizing conditions for strategy execution and revision The following sections will detail the tools and requirements of those steps

1.2.1Selecting and building strategic targets

The ultimate goal of the enterprise is its sustainable development in the market

However, there may be different specific levels andpriority orders depending on the conditions and in each period In general, the business strategy for clean rice includes the following elements:

- Market share of the enterprise;

- Distribution of resources and risks;

Strategy analysis is the analysis of business environment of rice enterprises in order to create the basis for building strategies Business environment is the whole institution, factors and pressures that can have direct or indirect impacts on the clean rice trading of enterprises Business environment analysis allows strategy managers to identify business opportunities or threats for business operations Business environment consists of macro environment and micro environment

1.2.2.1 Analyzing external environmental factors Macro environment - PEST model

Based on the PEST model, four affective factors can be identified including political- legal environment, economic environment, socio-cultural environment and technological environment (Thomas L Wheelen and J David H., 2002)

Source: Thomas L Wheelen and J David H 2002

- Economic environment: Economic development, economic recession, changes in the inflation rate, prices, unemployment, income, resources, credit policies all affect the

Political –legal environment Technological environment

PEST model operations of companies in general and clean rice trading companies in particular There are many rice companies that effectively do the planning but fail due to not anticipating or ignoring the changes of domestic and global economic conditions

- Technological environment: It can be seen that technology is the basis of competition in the market Technology has a great impact on the products in the market

Technology also decides the production of clean rice of enterprises

- Political-legal environment: Politics and law are two sides of a problem They are very closely related The companies in the market are directly influenced by these factors

Political factors at all levels of local government affect the operations of companies

However,the prominent factor is the role of the central government Political institutions have a great influence on a country's policies and guidelines on issues such as economy and society, and hence the rice trading companies are also affected In addition, legal factors are consideredthe standard for the performance of companies in general and rice companies in particular These factors have daily and hourly impacts and companies need to pay close attention to them

- Socio-cultural environment: Clean rice enterprises need to comprehensivelyanalyze the social factors in order to identify the opportunities and risks that may occur However, social factors (such as anthropological trends, entertainment preferences, ethical standards, and viewpoints of living standards) often change or develop slowly, so they are often difficult to be recognized When analyzing the influence of social factors on the strategy planning of enterprises, it is necessary to analyze the following factors:

Life quality of people, entertainment preferences of social classes Standards of ethicsand lifestyle

Situation of human resources such as female labor force, labor reserve Level of education and occupation of people and workers

Cultural traditions and social customs Religions and the role of religions in social life, religious conflicts Demographic situation: population growth rate, population structure

Micro environment - 5 competitive pressure model

Micro-environment includes sectorial factors and external factors for clean rice trading enterprises, deciding the nature and level of competition in the industry of rice production and trading According to M.Poter, there are five basic elements including competitors, customers, suppliers, potential new competitors and alternative products

These factors have interrelationship and the general impact of these factors is often a fact acceptable to all enterprises In order to devise a successful strategy, it is necessary to analyze each of these key factors Understanding about these factors helps enterprises recognize their strengths and weaknesses in relation to the opportunities and threats that the clean rice trading industry may face

Figure 1.2: Model of five competitive pressures

Current competitors are enterprises that are operating in the same riceindustry as thecompany, who are now looking for ways to increase sales and profits by policies and measures that create disadvantages for the company Due to the limited market size, enterprises "compete" for market share by offering discounts, advertising, promotion, persuading customer, improving product quality, creating the difference in the supply of rice products and creating value for customers

In the market of clean rice supply, there will be new competitors in the near future.Although they are not present, enterprise strategists must anticipatethis possibility.These competitors appear late, but often have abundant and experienced resources Once they appear, they will compete with the companyin three aspects:

- Win the clean rice consumption market by various tricks

- Collecting materials with flexible andmore attractive policies

- Attract qualified and skilled workforce with attractive incentive policies

Companies that provide production toolsfor clean rice enterprises such as machinery, equipment, spare parts and transportation services can also create pressures on price, methods of supply and methods of payment in business negotiation, which threaten the interests of the enterprises However,this also creates good business opportunities for the enterprises Creating competitive advantages in the supply process, creating strategic alliances and creating supply contracts are solutions to reduce the pressuresfrom this environmental factor

A product or service which satisfies a customer's needs in the marketis not unique and keeps that position forever but will bereplaced by another product someday Clean rice products are also like that.Other manufacturers can meet the current needs of customers who are using clean rice products of the enterprise Often, these new products will better satisfy customers’ demand thanks to theapplication of innovations and new achievements in science and technology and cheaper prices

The pressure from new alternative products limits the ability to make profitsof existing clean rice products and narrows the market share of enterprises To limit the impact of this threat, enterprises must also invest stronglyin research and development

Customers are the buyers of clean rice products and are an important factor in the business activities Clean rice trading enterprises must ensure the benefits of customers and find all measures to meet the highest satisfaction of customers toward the quality of the products

In addition, in order to achieve the highest efficiency ofbusiness strategy for clean rice, apart from paying attention to the quality of rice (plasticity, whiteness, gloss, etc.), meeting customers’ tastes and needs is extremely important To study the tastes and needs of customers, enterprises should consider the following issues:

- The kind of rice customers often choose(based on traditional channels, buying loose rice, being able to select and weight directly)

- The habit of using rice of customers (suitable for the taste and the budget)

- The awareness of customers in using clean and safe rice

Experience in implementing business strategies of some rice trading enterprises

1.3.1 Experience of Vinh Long Cereal and Food Import Export Corporation (Vinh Long Food)

In the development of the rice business strategy, Vinh Long Food attaches great importance to product strategy Accordingly, the company's product strategy is presented as follows:

- Regarding rice variety: The company promotes the research and application of many new rice varieties for high productivity, good quality and good resistance to weather conditions, natural disasters, pests such as IR 9729, IR 64, IR 59606, OM 132, and OM 997-6; C 70, C71, CR 203, Q5, IR1832

- Regarding post-harvest technology: After buying from the rice growing areas, the company will process the rice so that it can meet the export standards right at the mills

These mills are equipped with modern machinery which produces a variety of high quality rice The company’s types of export rice include all types of export rice that the country can produce Export rice mainly includes long grain rice with good quality, which is produced mostly from the Mekong Delta, short grain rice and specialty rice

- Regarding packaging: There are two popular types of packaging used by the company including PP bags or jute bags However, due to many outstanding features, PP bags are now more widely used Export rice packaging is used depending on the requirements of foreign customers They can provide samples or want to see samples to choose from Export rice is normally packed in bags of 50 kilos or 25 kilos while bags of

10 kilos and 5 kilos are only packed when customers request These customers will import the company's rice and keep the packaging to deliver to the consumers The ability to produce the packaging according to customers' requirements is one of the strengths of the rice trading companies

1.3.2 Experience of An Giang Import-Export Company (Angimex)

Currently, Angimex is trading the following types of rice: 5%, 10%, 15%, 16%, 35%, 55%, Jasmine rice, broken rice and sticky rice Thus, the company has used the product diversification strategy combining the "differentiation" strategy of each product

That is, the product created by the company will have better quality, be affordable for customers, bring profits to the company, and benefit the majority of customers The packaging is different in characteristics compared to the same products in the market, easy to attract buyers and not easily imitated by competitors

- In the purchasing phase: The company always ensures the correct and sufficient quantity by building its own material areas or signing contracts with cooperatives in the area, namely:

- Cho Moi District: Phu Quoi Cooperative, Tan Quoi Cooperative

- Thoai Son District: Vinh Thang Cooperative, Binh Thanh Cooperative, Nui Troc Cooperative, Tay Son Cooperative, Production associations of Trung Son Hamlet

- Chau Thanh District: Production associations 1 - 8 in Vinh Loi Commune - Phu Tan District: Hoa Phat Cooperative, Hoa Lac Cooperative

- Cooperatives in the company system: Son Hoa, Truong Thanh

The strategy of the company when signing the contract is applying adjustable contracts, i.e the price in the contract is the floor price; when the price is down, the floor price is used for the transaction; when the price is up, the floor price is adjusted by two sides At the same time, the company always builds close relationships with suppliers by selling shares to suppliers (after equitation); often organize programs to support farmers; pay attention to reliable suppliers; sell seeds on credit to farmers without interest to ensure the quality of rice

When packing the products, the company pays special attention to three issues: different characteristics, good impression and easy to attract buyers and difficult for competitors to replicate Accordingly, the company’s packaging and logistics factories have invested more machines to produce PP and PE plastic bags to pack products into small bags of 2 to 5 kilos On the packaging, there is the company name, company logo, product slogan, weight and quality indicators

Through the experience in rice trading of some Vietnamese rice export companies, the author drew the lesson for Vinafood 1 as follows:

- Pay special attention to the product quality

- Diversify products to meet the needs of customers

- Make a difference in the products offered

- Packaging design must be attractive and contain full information about the product as well as the weight, product standards

- Set up a close relation with suppliers to ensure sufficient input materials for the production process

- Set up separate material areas

- Pay attention to investing in modern production technologies to ensure the continuous business.

RESEARCH METHODS

Research procedure

Source: Synthesized by the author

Theory and researches on building business strategies for products Identifying research objectives and process of building strategies

Proposing evaluation criteria for EFE, IFE Matrices Group discussion

Proposing solutions to implement strategies

Collecting primary data Collecting secondary data

Building EFE, IFE MatricesAnalyzing secondary data

Data collection methods

+ Secondary data: The data sources included business result statements, balance sheet, financial statements, final reports of the center in the stage of 2013-2016,and other related documents from journals and statistics on the country's socio-economic situation announced by the General Statistics Office

+ Primary Data: The collection of primary data was conducted in three basic steps:

- Step 1: Develop a preliminary scale including factors affecting the business strategy forclean rice, consisting of two groups of internal and external factors The criteria were built based on the previous researches, materials, and textbooksrelated to strategic management and business strategy development

- Step 2: The preliminary criteria were discussed with the three leaders of the center

The results of group discussion aimed at adjusting the criteria so that they were consistent with the business practices and clean rice products The contents of group discussion were presented in Appendix 2 of the thesis where the criteria were presented in return for comments of the center's leaders Specifically, for the criteria of the external factors, the discussion group added some criteria including The demand for using safe and high quality rice products is increasing, and Consumers have not had the habit of choosing products based on clean and safe criteria, and revised the contents of two criteria including The status of the center has been gradually recognized in the hearts of consumers into Consumers are increasingly interested in prestige and brand name of the enterprise and The center has not completely controlled the quality of input materials intoIt is difficult to control the quality of input materials The external consisted of 14 criteria

In terms of internal factors, the discussion group has revised the criteriaThe investment in expansion of distribution system into The increase, expansion of distribution system of clean rice products through agents and retail stores For the convenience and comprehensibility of the respondents, a total of 11criteria of internal factors were discussed by the group

No Expected external factors Reference Agreed factors after group discussion Note External factors

1 Gross National Product GDP and per capita income increase Gross National Product

GDP and per capita Agreed3/3 rapidly income increase rapidly

The Government is interested in the implementation of the "four -subject" model

The Government is interested in the implementation of the

The amount of high quality materials offered under contracts is very low

The amount of high quality materials offered under contracts is very low

The strong development of clean rice production technology in the world

The strong development of clean rice production technology in the world

The investing budget for applying technology in producing and trading high quality rice is very large

The investing budget for applying technology in producing and trading high quality rice is very large

Competitors are strong with advantages in capital, technology, human resources, experience, etc

Competitors are strong with advantages in capital, technology, human resources, experience, etc

The State has issued many policies to support and promote agricultural development

The State has issued many policies to support and promote agricultural development Agreed3/3

A lot of alternative products have been produced and supplied in the market

A lot of alternative products have been produced and supplied in the market Agreed3/3

9 Rice is primary and indispensable food in daily life

Rice is primary and indispensable food in daily life

10 Budget for consumption is limited Budget for consumption is limited

The status of the center has been gradually recognized in the hearts of consumers

Consumers are increasingly interested in prestige and brand name of the enterprise Revised

The center has not completely controlled the quality of input materials

It is difficult to control the quality of input materials Revised

The demand for using safe and high quality rice products is increasing Added

Consumers have not had the habit of choosing products based on clean and safe criteria Added

1 Changes in the quantity and quality of human resources

Changes in the quantity and quality of human resources

Professionalism in recruitment with the participation of experienced professionals

Professionalism in recruitment with the participation of experienced professionals

3 Level of human resources, number of trained workers

Level of human resources, number of trained workers

The increase in the remuneration for employees at the center

The increase in the remuneration for employees at the center

5 Quality of recruitment Quality of recruitment Agreed

6 Salary policy Salary policy Agreed

7 Procedure of rice production according to HACCP standard

Procedure of rice production according to HACCP standard

8 The contribution of research and development of clean rice

The contribution of research and development of clean rice

Establish a specialized unit responsible for research and development

Establish a specialized unit responsible for research and development

10 The investment in expansion of distribution system

The increase, expansion of distribution system of clean rice products through agents and retail stores Revised

11 The meeting of market demand of the retail chain of the center

The meeting of market demand of the retail chain of the center

Source: Synthesized by the author

- Step 3: The official survey was conducted after the content of the criteria had been revised The survey was conducted with 20 experts including leaders, managers, deputy managers of functional departments, specialists in product research and development The purpose of the survey was to get the experts’ assessment on the internal and external factors affecting the strategy of the company in terms of the importance of factors The survey was conducted from 11 May, 2017 to 30 May, 2017 in the form of direct interaction between the author and each expert in the meeting room of the center (Appendix1 of list of experts interviewed).

Data analysis methods

Appropriate analytical methods will be used for specific as follows:

Content 1: Analyzing and evaluating the business results of the center in the period of 2013-2016 The analysis of the business results of the center will be analyzed through the indicators reflecting the center's business results including revenue, expenses, profit, etc

Comparison method was applied to accomplish this goal:

+ Comparing the fluctuation of indicators reflecting the business results to show the growth rate and the business performance of the center

+ Comparing with competitors in the same industry in terms of some indicators reflecting the business results, market share, and substitute products

Content 2: Analyzing the business environment of the center including macro environment, micro environment and internal environment

The analysis of the macro environment will show the impact of macro environment factors on the production and trading activities of enterprises The analysis of macro environment will be conducted through the analysis of the following contents:

+ Economic environment + Political-legal environment + Socio-cultural environment + Technological environment This method was implemented in combination of comparison method and synthetic and analytical method The elements of the macro environment were synthesized and analyzed to show its impact on business operations of the center

The analysis of micro environment was conducted to find out the pressures that the center was facing:

+ Pressure from competitors + Pressure from suppliers + Pressure from customers + Pressure from potential competitors + Pressure from alternative products

In conclusion, the author used the EFE matrix to reveal the influence of macro environment factors onthe production and trading activities of the center The EFE matrix analysis was described in detail in the theoretical content on this matrix

The analysis of internal environment was carried out through the analysis of the following contents:

+ Human resources + Production and operation + Product research and development + Facilities, business network

By collecting secondary data, the author would analyze these contents based on comparison method and descriptive statistics to get a whole picture of the center’s internal situation

In addition, the author also usedIFE matrix to have an overview of the internal factors of the center This result wouldbe used to look at the reaction ability as well as the strengths and weaknesses The identification ofstrengths and weaknesses wouldhelp the centertake advantage of its internal strengths to overcomeits weaknesses

Content 3: Planning the business strategy for clean rice and proposing solutions to implementthe strategy in the stage of 2016-2020 The thesis used a case study, forecasting methods to forecast the amount of clean rice consumed in the future; SWOT matrix method: analyzing the strengths, weaknesses, opportunities, and threats, then combining these elements to create SO, ST, WO, WT strategies and IE Matrix; Using QSPM matrix as the basis for selecting strategies

Using the synthetic and analytical methodsto analyze the results of research and proposing some solutions to implement the strategy

EXCEL 2010 software was used as a statistical tool and data processing.

Introduction of Vietnam Rice Research and Development Center – Vinafood 1

Vietnam Rice Research and Development Center – Vinafood 1,founded in 2014,is headquartered at No.6 Ngo Quyen Street, Ly Thai To Ward, Hoan Kiem District, Hanoi, Vietnam Since it is in the stage of formation and development, the operations of the center are facing many difficulties due to the impacts of many factors from internal and external environment However, the center has tried to improve itself and is gradually gaining market share and brand name in the Vietnamese rice market The rice sales of the center was still limited compared to itscompetitors partly because the center is newly established but partly because the center had not had a clear business strategy for clean rice products It is in the development of clean rice of the Center Therefore, the business results had not reached the targets

3.1.2 Organizational structure of the center

The organizational structure of Vietnam Rice Research and Development Center – Vinafood 1 in terms of direct functions is presented as follows:

Chart 3.1: Organizational structure of Vietnam Rice Research and

Source: Vietnam Rice Research and Development Center – Vinafood 1

As a center of rice research and development, the center has both research and trading functions However, the main activity of the center is trading in clean rice

In the field of research:

- Surveying, coordinating and receiving survey results of specialized departments the Corporation and member organizations on market demand for researching and developing suitable varieties

- Researching/coordinating with scientific organizations to experiment and create varieties to develop the rice brand name of Vinafood 1

Researching /coordinating the implementation of orderson demand of domestic and international customers

Building standards on production, harvesting, processing and storing of Vinafood1’s rice under the complete chain from the stage of production (good breed with certification, and maintenance of quality in a long time), production procedure (VietGap, Global Gap) combined with the system of processing and storing (harvesting, drying, storing, processing, packaging under HACCP, ISO standards)

Transferring the standard of branded rice and HACCP procedure to member and subordinate organizations of the Corporation for mass production

- Registering trademark protection in the country and in some export markets of the Corporation

In the field of production and trading:

- Cooperating to produce rice under the standards accepted by domestic and foreign markets

- Processing branded rice from high quality paddy produced from material areas which are invested or directlycooperated with farmers and other raw materials provided by member units / organizations outside the corporation

- Ordering member units/organizations outside the corporation to produce/supply paddy, raw rice for processing and consuming

- Consumingdomestically and exporting branded rice products; Promoting and developingthe brand name of Vinafood1’srice domestically and internationally

3.1.4Annual rice sales of the center

Under severely competitive conditions, the consumption market is crucial for production and trading In the business of clean rice, the annual rice sales of Vietnam Rice Research and Development Center – Vinafood 1was quite stable since the center had many traditional customers.The sales volume ranged from 100 - 130 thousand tons/year The specific salessituation in the period 2014-2016 is shown in the chart below:

Figure 3.1: Annual rice sales of the center

Source: Vietnam Rice Research and Development Center – Vinafood 1

It can be seen that the rice sales of rice in 2014, 2015 and 2016 at Vietnam Rice Research and Development Center – Vinafood 1 were 102,306,242 tons, 112,023,861 tons and 130,170,551 tons, respectively Malaysia, Philppine and Indonesia were the greatest consumers of the products However, the export to these markets would not be as favorable as before when the rice contracts to these countries reduced by about 10% At the same time, the world rice inventory was about 480 million tons of milled rice in the crop of 2016-2017, which was 1.6% higher than the previous crop (according to VFA, 2017)

These things caused great disadvantages for the rice export of our country in general and the rice sales of the center in particular in the coming time

In addition, with potential markets such as the US, Japan, and Europe, the rice sales of the center was very low because these are demanding and fastidious markets for quality and standards which the rice products of the center had not met It was also important that the rice products of Vietnam Rice Research and Development Center – Vinafood 1 was mainlyconsumed in the form of non-branded large bags, so it did not brought high value and confirm the level of occupying market share Therefore, the current requirement for

Sales the center was to improve the domestic market to maintain a high level of consumption and seek the export markets bringing high returns.

Analysis of clean rice business environment of Vietnam Rice Research and

3.2 Analysis of clean rice business environment of Vietnam Rice Research and Development Center – Vinafood 1

Vietnam is in the process of deep and wide integration into the regional and global economy, which has opened up many opportunities and threats for rice producers and traders in general and for clean rice traders in particular The details are presented as follows:

In terms of GDP and per capita income

Figure 3.2: GDP and per capita income in the stage of 2012 -2016

Source: Annual reports of General Statistics Office of Vietnam

In recent years, along with the integration into the world economy, the GPD and per capita income of our country were constantly increasing, specifically in 2012, our country's GDP was 136 billion USD and the per capita income was 1,540 USD By 2016, the per capita income has risen to 2,215 USD and the GDPwas 217,000 billion USD

Năm 2012 Năm 2013 Năm 2014 Năm 2015 Năm 2016

Tổng sản phẩm quốc dân (Tỷ USD)

Thu nhập bình quân đầu người (USD)

Thus, with the growth in GDP and the per capita income of our country, a large consumption of high quality rice in the future can be expected

Combination of four subjects in macro environment

In terms of the implementation of the "four -subject" model (the State, businessmen, scientists and farmers), in recent years the signing of clean rice consumption contracts between farmers and enterprises hadmany satisfactory results This created more opportunities for clean rice traders in general and Vietnam Rice Research and Development Center – Vinafood 1 in particular

Figure 3.3: Area in contract and area of rice fields in the raw material regions of the factories

Source: Vietnam Northern Food Corporation– Vinafood 1

According to the statistics, in 2012, our country produced rice under contracts of 178 thousand hectares, accounting for 11.6% of the area of rice in the raw material regions of the factories By 2016, the rice area under e contract was 267 thousand hectares, accounting for 15.6% of the area of rice in the raw material regions This partnership opened up the right direction for rice traders in general and rice producers in particular, step by step creating opportunities for clean rice trading enterprises, including Vietnam Rice Research and Development Center – Vinafood 1, with the source of raw materials meeting the demand of consumers

Area of rice fields in the raw material regions of the factories (%)

However, according to the statistics, the rate of rice consumption under contracts between farmers and rice traders was very low Some contracts were just formal and not fully implemented The involvement of scientists and managers was still passive The cause of this situation was that many farmers and rice traders are the linkage partners but their financial capacity was limited and there was no network to collect rice from farmers

Many farmers still attached importance to their immediate benefits without considering long-term ones At the same time, inadequate awareness of the responsibility to comply with the law caused the low high linkage efficiency This sometimes affected the purchase of high quality rice of the center in particular and clean rice traders in general.

Currently, rice exporting countries in the world have applied technology in all stages of the production process to ensure that the rice productshave the highest quality which meets all of the standards of gloss, plasticity, whiteness, etc However, the technology applied to clean rice production in our country was just limited at the processing stage including drying and storing.The application of technology is presented as follows:

Table 3.1: Current technology of rice processing

Rice drying Large-scale circulating tower dryer replacing the static flat-bed dryer

Storing Rice storage silo combining with cooling equipment to replace sheltered warehouses

With the strong development of clean rice production technology in the world, in our country, post-harvest processing technology had developed strongly In the stage of rice drying, there was a large-scale circulating tower dryer with more advanced technology than a static flat-bed dryer Applying this technology helpedthe center save production premise, effectively control the drying process, ensure the quality and final moisture of the rice was equal, convenient for long-term storing In addition, in the storing stage, instead of storing rice in sheltered warehouses, the center used the silo storage system combined with cooling equipment to help control the environment and extending the storage time from 6 months to more than 1 year and save labor However, the investment budget for these technologies was very large while the loans to clean rice producers were limited due to the risks in agricultural prodction Therefore, the State should have policies to support capital or interest rates so that clean ricetrading and exporting enterprises will have the ability to apply technology to ensure highest quality of the products

In order to promote the development of agricultural production in general and rice production and trading in particular, the State have implemented many policies to support rice production and trading enterprises, namely:

Table 3.2: Some policies to support rice trading in Vietnam

Exempt taxes for the income of households and individuals working in the field of agricultural production

Value Added Tax is adjusted at lowest rate

All kinds of fees are reduced or exempted

Credit policy for agricultural development

Interest rate support, loan support to buy machinery and equipment

Insurance premium support for householdand agricultural production organizations

Source: Synthesized by the author

Over the past time, there was a variety of tax and feeexemptions with "Tam Nong"including the clean rice Thepolicies included: reduction of personal income tax, value added tax;all kinds of fees were reduced or exempted Regarding credit policy, government at various levels had coordinated with credit institutions to implement a number of trade credit policies, support credits and agricultural insurance to ensure the sustainable development of agriculture, making sure thatthe rice production industry had enough capital to invest in technology, machinery and equipment for production Apart from to thepolicies which were directly implemented to support rice production and trading, the government also encouraged economic sectors to involve in rice production and export by sharing economic contractswith large quantity, quota allocation, temporary storage At the same time, the rice production and trading enterprises were also concerned by the government at all levels in purchasing rice from farmers, promptly guiding the new regulations, amendments and supplements in the law All the supporting policies mentioned above had created favorable conditions for rice trading enterprises in general and the clean rice trading of Vietnam Rice Research and Development Center – Vinafood

For thousand years, Vietnam has been known for the wet rice civilization.Vietnamese people always considered rice products as the main and indispensable food in their daily life This was an opportunity for rice traders to develop their domestic market

In addition, the growing social division was a good opportunity for enterprises to develop clean rice products About 30% of our population livedin large urban areas and this rate was constantly increasing.This part of population had high income and was the main customer using high quality rice products At the same time, people's awareness of the importance of clean food to their health and the community had beenraised, whichwouldcreate opportunities for clean rice tradingenterprisesas well as Vietnam Rice Research and Development Center – Vinafood 1 to expand the domestic market

On the other hand, the population growth in some major export markets of Vietnam such as Indonesia(1.5%), the Philippines(1.3%), and African countries(1.7% - 2.4%)was a favorable condition for Vietnam Rice Research and Development Center – Vinafood 1 to expand rice export market in the world

Currently, Vietnam Rice Research and Development Center – Vinafood 1 has gradually defined its position in the market of high quality rice However, compared to the market, the market share of the company only accounted for 10-13% This figure showed the level of severe competition in the industry The main competitors of the center in the area were:

Table 3.3: Quantity of rice salesof competitors in Hanoi

Quantity of rice consumption in Hanoi (kg)

Vinh Binh Food One Member Co., Ltd 161,586,494 16,9% 170,001,123 17.3% 183,651,475 18.2%

Nam Binh Food Joint Stock Company 111,867,573 11,7% 119,885,185 12.2% 120,079,811 11.9%

Bao Minh Agricultural Product Processing Joint Stock Company

Ita-Ri Aromatic Rice Invesment, Research and Export Joint Stock Company

National Seed Joint Stock Company - Vinaseed

Vietnam Rice Research and Development Center – Vinafood 1

According to calculations, the total rice consumption in Hanoi in 2016 was 1,009,074,040 kg In particular, Vinh Binh Food One Member Co., Ltd accounted for the largest amount with 18.2% The company owns 5 rice milling and processing factories with modern machinery and equipment, skilled technical staffs and standard workshops, always ensuring the production, processing and storing products on customers’demand

BUILDING BUSINESS STRATEGY FOR CLEAN RICE FOR THE

Vision, mission, duties and strategic objectives of Vietnam Rice Research and

It can be said that Vietnam Rice Research and Development Center – Vinafood 1 was operating in a fiercelycompetitive market The center’s core product was high quality rice - a common commodity In that context, the company was determined to research and exploit the gaps and do business based on creating added value to the products

Accordingly, the Board of Directors had identified the vision, mission, duties and strategic objectives of the center in the coming time as follows:

Vietnam Rice Research and Development Center – Vinafood 1 always strives to become a leading company in the production and distribution of clean and safe food, specialty the rice products, in Vietnam Vietnam Rice Research and Development Center – Vinafood 1 is determined to successfully build a high quality distribution model of rice with professional and modern service, thereby enhancing the value of Vietnamese rice domestically and globally

Vietnam Rice Research and Development Center – Vinafood 1 always strives to produce and supply safe and clean food items through modern distribution channels to bring consumers best clean products, contributing to ensuring the quality of life

The duties of the center is not only toprovidecustomers with clean rice products through convenient and professional distribution channels, but also guide them to identify the factors that ensure the safety and nutrition of clean products

The short-term strategic objective is to maintain and develop business in a sustainable way; achieve sales targets and market coverage;initially orient consumers’ demand to high quality and safe rice products;focuson building and developing brand name so that the rice brand name of Vietnam Rice Research and Development Center – Vinafood

1 will become a symbol of high quality and safe in the market

With the target market of Hanoi and the provinces from Nghe An back to the North,Vietnam Rice Research and Development Center – Vinafood 1 builds a model of distributing high quality rice with a modern style - changing the image of "vendors”, honors the essential products of Vietnamese people, leads in experimenting, producing and distributing all kinds of rice which meet the food hygiene and safety standards (HACCP, BRC), cooperatetightly with leading scientists in Vietnam to create world-class rice, such as rice rich in protein, rice rich in vitaminsand rice for people with diabetes

In the long run, the company aims to become a modern, professional retailer and distributor,especially in the field of safe food in the domestic market, creating a solid basis for the export of clean rice to the world market, contributing to building the Green Trademark of the Northern Food Corporation on a world scale

Brand value of Vietnam Rice Research and Development Center – Vinafood 1

With the goal of leading the market, Vietnam Rice Research and Development Center – Vinafood 1 aims to build Vinafood1’s rice brand to become the leading Vietnamese brand in the field of clean rice production and distribution and become a green brand of Vietnam

It can be recognized thatthe vision, mission and duties of Vietnam Rice Research and Development Center – Vinafood 1 are clearly defined Clean food is a topical issue in society.The focus on existing resources, strengths and the determination to play a leading role in the market are completely consistent with the trend of an integration society

However, to fulfill its mission, Vietnam Rice Research and Development Center – Vinafood 1 will have to face many difficulties Therefore, in order to achieve the proposed objectives, the center must mainly depend on the internal factors The center must fully make use of the opportunities, resources as well as support of organizations and departments Most importantly, it must meet the needs of consumers on the basis of maintaining differences.

Formation and selection of business strategy for clean rice at Vietnam Rice Research

4.2.1 Formation of strategy through the analysis of SWOT Matrix

The analysis of SWOT matrix helped the management as well as planners have an overview of the company's current situation, as well as the situation of products in the market The analysis ofexternal factors through the External Factor Evaluation Matrix (EFE) showed the opportunities and threats for the center and the analysis of Internal

Factor Evaluation Matrix (IFE) revealed the strengths and weaknesses The author incorporated these elements into the SWOT matrix to find out strategies to help Vietnam Rice Research and Development Center – Vinafood 1 develop the strengths and minimize weaknesses in the coming time The SWOT matrix was synthesized as follows:

(O1) The economic integration helped increase the rapid growth of GDP and per capita over the years

This helped improve the consumption of high quality rice

"four - subject" linkage model (State, businessmen, scientists and farmers) created favorable conditions for Vietnam Rice Research and Development Center – Vinafood 1 to purchase standard raw materials, ensuring high quality

(O3) The strong development of clean rice production technology in the world created a premise for the application of technology in clean rice production and trading of Vietnam Rice Research and Development Center – Vinafood 1, especially in post-harvest processing stage

(O4) The State issued many policies to support and promote agricultural development in which clean rice trading is prioritized for development

(O5) Vietnam has been known for its wet rice civilization Vietnamese people always considered rice as a main and indispensable food in

(T1) The four-subject linkage in rice production was still limited

The rate of rice supply under contracts was very low

(T2) The funding for investment in applying technology in production and trading of high quality rice was very high whereas the loans of enterprises were limited due to the risks in agricultural sector

(T3) Current competitors of Vietnam Rice Research and Development Center – Vinafood

1 were strong competitors with advantages of capital, technology, human resources, experience in the market, etc causing many threats to the business operations of the center

(T4) In order to increase the value of rice, domestic enterprises produced and developed many products from rice These products became the main alternative products for rice products and became a threat for clean rice trading enterprises including Vietnam Rice Research and Development Center – Vinafood 1

(T5) Customers’ awareness of daily life

(O6) The population living in large urban areas increased rapidly This was the main consumer of safe and clean products

(O7) Vietnam Rice Research and Development Center – Vinafood 1 had gradually defined its position in the market Therefore, more and more customers were interested in purchasing products from prestigious, branded suppliers

Creating trust for customers was a good opportunity for the center safe and clean products was still limited Consumers had not focused on selecting products in terms of clean and safe criteria

(T6) The selection of clean rice products was heavily dependent on the budget Low-income people could not afford the products of Vietnam Rice Research and Development Center – Vinafood 1

(T7) The number of contracts signed with households was low, so there were not enough raw materials to buy As a result, the center would directly purchase products from other households, traders, mill factories, so the supply could not be controlled

Strengths (S) : (S1) The human resources at the center were constantly increasing in both quantity and quality

(S2) The recruitment of the center was professionalized with the participation of experienced HR professionals

(S3) The incentive policy for employees at the center was constantly increasing in terms of material and spirituality

(S4) The rice production process of the center applied quality control standards of the industry, ensuring the food hygiene and safety

(S5) The center had a specialized department responsible for product research and development, so the production process was constantly improved

(S6) The distribution system of the

Combining S-O S1,S5,S6+O1O5O6O7: Market penetration strategy (SO1) S1,S2,S4+O1,O6: Strategy of improving product quality and develop new market (SO2)

Combining S-T S1,S4,S5+T3,T4,T5,T6: Taking advantage of human resources, standard production process and market research divisions to promote new products, ensuring quality, enhancing competitive advantages and attracting customers - Horizontal diversification strategy(ST1) S1,S2,S3+T1,T5,T7:Taking advantage of human resources to expand distribution channels of supplying products and buying systems to buy standard input materials - Forward integration(ST2) center was constantly expanded both in the number of partners, customers and the system of retail stores

(W1) The human resources at the center were not very competent; the number of employees trained in professional schools was low Most employees were high school graduates working based on their own experience

(W2) The staff recruitment experience the center was mainly acquired from experts, so the quality of recruitment did not meet the requirements

(W3) The salary policy at the center was still low and did not motivate the employees

(W4) The product research and development of the center had not made much contribution to the business activities at the center

(W5) The system of retail stores had not met the demand of customers and not corresponded to the size of the corporation

Combining W-O W5+O5,O6: Improve the service capacity of retail stores to better meet the needs of customers - Forward integration strategy(WO1)

W4 +O4,O7: Strengthen investment in research and production of rice products with superior quality - Differentiation strategy (WO2)

Combining W-T W4,W5+T1,T7: Managing input costs;signing contracts of raw material collectionto controlthe quality of input materials - Backward integration strategy (WT1)

W5+T3,T4,T5,T6: Develop sales policies to attract customers;Retailers focusing on target customers –Focus strategy (WT2)

Source: Synthesized by the author

From the results of the SWOT matrix, it can be seen that there were four main groups of strategies and eight business strategies for Vietnam Rice Research and Development Center – Vinafood 1 to choose and apply These strategic groups included:

+ S-O strategy group (using strengths to capture opportunities) SO1: Market penetration strategy

+ S-T strategy group team (using strengths to overcome threats) ST1: Horizontal diversification strategy

ST2: Forward integration strategy + W-O strategy group (taking advantage of opportunities to overcome weaknesses) WO1: Forward integration strategy

+ W-T strategy group (overcoming weaknesses to minimizethreats) WT1: Backward integration strategy

The strategies formed through the SWOT matrix above could not exist independently but they had a mutually interacting relationship depending on the extent If Vietnam Rice Research and Development Center – Vinafood 1 only applied one of the above strategies, it would not be able to achieve its objectives On the other hand, due to limited resources, the center could not simultaneously implement all the strategies To solve this problem, in the context of the thesis, the author used the Quantitative Strategic Planning Matrix (QSPM) through collecting experts’ opinions to select the main strategies in accordance with the real situation of Vietnam Rice Research and Development Center – Vinafood 1

4.2.2 Selection of clean rice trading strategies for Vietnam Rice Research and Development Center – Vinafood 1 byQSPM

Through the analysis of QSPM, the authorwould select the best business strategies in the formed strategies For each strategy group, the author would build a summary table of QSPM to select the appropriate strategy, namely:

Table 4.2 QSPM of S-O strategy group

Gross National Product GDP and per capita income increase rapidly 0.11 4 0.44 4 0.44 The Government is interested in the implementation of the "four -subject" model 0.08 4 0.32 4 0.32 The amount of high quality materials offered under contracts is very low 0.05 2 0,10 2 0.10 The strong development of clean rice production technology in the world 0.10 3 0.30 3 0.30 The investing budget for applying 0.06 1 0.06 2 0.12 technology in producing and trading high quality rice is very large

Competitors are strong with advantages in capital, technology, human resources, experience, etc 0.10 2 0.20 2 0.20

The State has issued many policies to support and promote agricultural development 0.06 3 0.18 4 0.24

A lot of alternative products have been produced and supplied in the market 0.07 2 0,14 2 0.14 Rice is primary and indispensable food in daily life 0.05 3 0.15 3 0.15

The demand for using safe and high quality rice products is increasing 0.10 3 0.30 4 0.40 Consumers have not had the habit of choosing products based on clean and safe criteria 0.03 2 0.06 2 0.06

Budget for consumption is limited 0.04 2 0.08 2 0.08 The status of the center has been gradually recognized in the hearts of consumers 0.09 4 0.36 3 0.27 The center has not completely controlled the quality of input materials 0.06 2 0.12 1 0.06

Changes in the quantity and quality of human resources 0.09 3 0.27 3 0.27

Professionalism in recruitment with the participation of experienced professionals 0.12 3 0.36 3 0.36 Level of human resources, number of trained workers 0.11 1 0.11 2 0.22

The increase in the remuneration for employees at the center 0.08 3 0.24 3 0.24 Quality of recruitment 0.08 1 0.08 1 0.08

Procedure of rice production according to

The contribution of research and development of clean rice 0.10 2 0.20 2 0.20 Establish a specialized unit responsible for research and development 0.11 4 0.44 4 0.44 The increase, expansion of distribution system of clean rice products through agents and retail stores 0.10 3 0.30 3 0.30 The meeting of market demand of the retail chain of the center 0.06 2 0.12 2 0.12

The analysis of the QSPM for the S-O strategy group showed that the market development strategy (SO2) was selectedas it had a higher total attractiveness score (TAS

Solutions to implement selected strategies

According to the analysis, the author has selected four appropriate strategies for VNF1 including: Market development strategy, forward integration strategy, product differentiation strategy, and backward integration strategy

However, the implementation of all these four strategies at the same time is difficult for the center given the limited resources Base on the analysis of the current situation of VNF1 and the center, the author has prioritized the “forward integration strategy” This is due to one of the most significant challenges of VNF1 that is shortage of qualified input material The center needs to ensure the stable input flow of material, ensure the quality and required criteria to serve for more effective production

The priority of the strategies is as following: product differentiation, market development, and lastly backward integration strategy The implementation of each strategy is explained in detail in the below section

4.3.1 Solutions to implement the forward integration strategy

In order to implement the forward integration strategy, Vietnam Rice Research and Development Center – Vinafood 1 needs to expand its distribution channels and retail stores to supply clean rice products to consumers with the aim to its image as a professional food producer; develop market; increase market share and coverage at traditional channels The center needs to organize a distribution network as follows:

1 Direct channel: Vietnam Rice Research and Development Center – Vinafood 1 needs to set up a direct distribution channel under the model of specialized convenient shops and supermarket system of the center This channel is the first basis for the center to enter the high quality rice market where it will receive feedback from customers to gradually standardize the products as well as enhance the professionalism of the center’s staff

2 Restaurant/ Hotel Channel: The rice products of Vietnam Rice Research and

Development Center – Vinafood 1 should be distributed in the chain of restaurants, luxury hotels, to raise the brand name the center as a safe, reliable and dynamic rice producer (customers are high-income people and the rice products of Vietnam Rice Research and Development Center – Vinafood 1 will be evaluated by skilled chefs)

3 Factory channel: These are factories using high quality rice of Vietnam Rice

Research and Development Center – Vinafood 1 as raw materials for producing high quality food and beverage items They often have strict requirements on product quality, production process (which must be in accordance with international standards), professional service, accuracy, long-term vision These are people who evaluate the most accurate capacity of the center

4 Indirect channel: The rice products of Vietnam Rice Research and Development

Center – Vinafood 1 must be distributed through one or more intermediary levels before they reach the consumers, in which:

A Distributors: This is the channel that creates sales and coverage for Vietnam Rice Research and Development Center – Vinafood 1 They are professional distributors who are sticking to the market

- Supermarket: Targeting people with the habit of shopping through modern channels This is also the channel that Vietnam Rice Research and Development Center – Vinafood 1 should pursue to serve its long-term goals

- Metro: This is both the retailer and the most professional distributor They are the customers that can help Vietnam Rice Research and Development Center – Vinafood 1 improve its sales and production output at a reasonable profit level Through this channel, Vietnam Rice Research and Development Center – Vinafood 1 shows the great retailers in the world when they enter Vietnamese market that it is a professional manufacture in Vietnam

The organization of distribution channel above will facilitate the channels complement each other and each distribution channel is the premise to support the development of resources and experience for the center, helping the center gradually improve its brand name, creating a solid step for Vietnam Rice Research and Development Center – Vinafood 1

The distribution channel is presented as follows:

Figure 4.1: Distribution channel of Vietnam Rice Research and Development

Source: Designed by the author

4.3.2 Solution to implement product differentiation strategy

Improving product quality, making differences

Product quality strategy is a core issue that requires strict control at all stages of the rice production process from raw material purchasing to storing and processing More importantly, the purchasing, processing and storing of rice at Vietnam Rice Research and Development Center – Vinafood 1 must be conducted in accordance with HACCP

Super market s outside VNF1 system

Consumers – Restaurant chain (KS) – Factory standards - a system of international standards for ensuring hygiene and safety of food production and processing Vietnam Rice Research and Development Center – Vinafood 1 was proud to be the first rice producer and processor in Vietnam applying the HACCP standards With modern technology and processing procedures under international standards, the rice of Vinafood 1 met the requirements of safety for health such as no residues of plant protection, no toxic preservatives, and no mold

For rice products, the quality is closely related to the taste With the goal of providing rice products which were not only safe for health but also delicious to consumers, Vietnam Rice Research and Development Center – Vinafood 1 linked with the specialty rice cultivation areas in the planning of cultivating areas to ensure to bring customers specialty rice which was not hybrid but still remained the natural flavor In addition, Vietnam Rice Research and Development Center – Vinafood 1 had also been collaborating with leading experts and rice research institutes in conducting breeding projects to produce high quality rice varieties with all characteristics of the famous specialty rice of Vietnam and the world However, to meet the increasing demand for quality standards of consumers, the center needs to synchronously implement the following strategies:

In terms of rice varieties

The cultivated rice varieties are considered one of the most fundamental factors directly influencing the quality of rice products However, due to the characteristics of quality rice requiring pure cultivating, if Vietnam Rice Research and Development Center – Vinafood 1 builds its own laboratory, this will be very costly but not achieve high efficiency However, if the center is too dependent on the research of varieties of research institutes, it will not have the standard varieties under customers’ requirements To overcome this situation, the close coordination between the center and research institutes is indispensable Based on the experience of product supply and market survey results of the specialized market research division, Vietnam Rice Research and Development Center – Vinafood 1 will decide whether to order rice varieties at research institutes

Along with having the new rice varieties, Vietnam Rice Research and Development Center – Vinafood 1 will also need to coordinate with farmers to organize models combining the three subjects including "farmers – enterprises - scientists" Vietnam Rice Research and Development Center – Vinafood 1 receives seeds from research institutes and then cooperates with local farmers and cooperatives to sign contracts for product consumption Making orders of purchase rice in terms of quality and types will make the farmers more confident in cultivating Thus, the center will have a stable supply as well as get the right kinds of rice as required

Apart from concentrating on the "country" product line, Vietnam Rice Research and Development Center – Vinafood 1 should focus on developing the "integrated" line including specialty foreign rice varieties grown in Vietnam, bringing new perspectives on cereals (Cross-cultivating: Cooperate with scientists to select and hybridize new varieties of rice under Vinafood 1 brand name) The main product lines that the center needs to focus on are:

1 Country product lines: exploit and honor the specialty rice in the regions of

Vietnam including:Nep Cai Hoa Vang; Tam Dien Bien; Tam Xoan Hai Hau; Bac Huong;

2 Integrated product lines: introduce and promote products with hybrid varieties and foreign varieties

- Lai Sua: Cultivating area: Long An (South), originated from Cambodia

Characteristics: soft, sticky, aromatic, white; rice remaining sticky and soft when being cool); Thom Thai; Thom Dai Loan

In terms of post-harvest storing and processing

Recommendations

From the analysis and strategies mentioned above, the author made a number of recommendations to the Departments and the Northern Food Corporation in order to help the business strategy for clean rice of Vietnam Rice Research and Development Center – Vinafood 1 achieve higher efficiency

Support policy for rice production input

- Provide financial support and guide farmers to use scientific and technological advances in the application of new rice varieties; modernizeand industrialize rice cultivation through encouraging agricultural expansion; carry out on-the-job training for rural youth

- Reduce input costs such as reducing costs on chemical fertilizers, pesticides, herbicides, electricity for pumping water at night, compensation for electricity for pumping consumption water

- Offer timely credit with preferential interest rates, simple procedures, reasonable scale and relatively long term; expand the network of people's credit funds in rural areas;operatethe credit system under the mechanism of commercial loans for projects

Reduce shipping and storing costs in the domestic market

- First, upgrade and repair the existing fleet to meet national and international safety standards in shipping;do not use unsafe ships

- Second, purchase some modern and good quality ships for shipments of long distance and large quantity;However, the upgraded or repaired ships can be used for shipments of short distance and small quantity

- Third, invest in constructing and and improving the port system as well as the modern loading and unloading means with high capacity to both release the goods quickly and reduce costs

4.4.2 To the Ministry of Agriculture and Rural Development

- Prioritize the formation of gene fund of high-quality rice seedsfor export which are selected from the best quality rice varieties and local aromatic varieties

- It is necessary to create distinctive and unique varieties of the country; increase productivity and improve the quality of traditional varieties; select and multiply some traditional specialties for export

- Create a network of multiplying suitable rice seeds to regularly replace the hybrid and degraded varieties;specialize and modernize theseed multiplicationwith modern means and techniques

- Research and import the most famous aromatic rice varieties in the world and domesticatethem to suit the production conditions in Vietnam in order to produce special kinds of rice for themarket with high requirements

Clean and high quality rice has become one of the key food items of Vietnam in the past few years and has maintained a sustanable position in the world market In addition to the efforts of all levels, the attempts of enterprises participating in the process of supplying clean rice in the market such as Vietnam Rice Research and Development Center – Vinafood 1 was undeniable

Currently, the trading of clean rice Vietnam Rice Research and Development Center – Vinafood 1 had opportunities from many sides but also facednumerousthreats Therefore, in order to take advantage of the opportunities as well as overcome the threats, the enterprise needs to have long-term strategies

Within the scope of the study, the author systematized the theoretical framework on business strategy for clean rice and the steps of building business strategy for clean rice trading enterprises

In chapter 3 of the thesis, the author focused on evaluating internal environment, macro environment and micro environment and their impacts on the supply of clean rice of Vietnam Rice Research and Development Center – Vinafood 1 The author aslo analyzed matrices of internal factorsand external factors to demonstrate the strengths, weaknesses, opportunities and threats in the business activities of the center

From the mentioned contents, in Chapter 4, the author analyzed the SWOT matrix to develop strategies and analyzes the QSPM matrix to select the optimal strategy for the trading of clean rice of the center, helpingVietnam Rice Research and Development Center – Vinafood 1 improve the efficiency of clean rice trading to maximize the profis of the center With the selected strategies, the author proposed solutions to carry out these strategies Finally, to ensure the high feasibility of the proposed strategy, the thesis proposed a number of recommendations to the State and related departments to improve the position of Vietnam Rice Research and Development Center – Vinafood 1 in the market of clean rice supply in the country and in other countries

1 Bao Yen (2015), Strategy of building clean rice brand name for Ninh Binh Seed Plants and Livestock Joint Stock Corporation, Ninh Binh Economic Newspaper No 67

2 Trinh Thi Thanh Thuy (2008), Studying and proposing solutions to develop clean food tradingwhen Vietnam is a member of the World Trade Organization, Research article

3 Peter Durman (2003), Development of a clean food and water environmental policy in a third world city, Journal of Rural and Remote Environmental Health 2(1): 20-22

4 United States Department of Agriculture (2005), Guidance for School Food Authorities: Developing a School Food Safety Program Based on the Process Approach to HACCP Principles, http://fsis.usda.gov/OA/pubs/haccpkit.htm, accessed 20/Oct/05

5 Le Xuan Tao (2013), Rice export in the Mekong Delta when Vietnam is a member of the WTO, Doctoral Thesis

6 Nguyen Chi Trung (2007), Impacts of international economic integration on production, processing and consumption of some agricultural products in Vietnam:

Research on tea, coffeeand cashew, National Political Publishing House, Hanoi

7 Huynh Van Thon (2014), Large field model –The Breakthrough in rice production of An Giang Plant Protection Joint Stock Company, Journal of Economics and Society, June, 2014

8 Nguyen Cong Thanh (2011), Referring to the rice export strategy of Thailand, Saigon Times dated 24 February, 2011

9 Alfred Chandler (2013), Strategy and Structure, Cambridge: M.I.T Press

10 James B.Quynn (2014), The strategy process, Science and Technics Publishing House

11 William F.Glueck (2013), Business Policy and Strategic Management,McGraw- Hill Companies

12 Nguyen Ngoc De (2012), Rice production and impact of climate change in the Mekong Delta, Ho Chi Minh City General Publishing House

13 Thomas L Wheelen & J David H., (2002),Concepts of strategic management, Statistical Publishing House

14 Micheal E.Porter (1996), Competitive strategy, Science and Technics Publishing House

15 Dao Duy Huan(2015),Strategic management, Science and Technics Publishing House

16 Le Thi Ngoc Mai (2013), Analysis of the supply and consumption of commercial rice at retail stores in Ninh Kieu District - Can Tho City, The Economic JournalNo 38

17 Fred David (2006), Concepts of strategic management, Statistical Publishing House

18 Nguyen Thi Lien Diep (2006), Business strategy and policy, Labour and Social Publishing House.

List of survey experts

STT Họ và tên Chức danh Số điện thoại

1 Nguyễn Xuân Hồng Giám đốc TT 0913048713

2 Lục Văn Anh Phó giám đốc 0902058885

3 Nguyễn Thị Hoài Thu Phó giám đốc 0904596989

BỘ PHẬN KẾ TOÁN - VĂN PHÒNG

4 Nguyễn Hà Tuyên Kế toán trưởng 0946539898

5 Bùi Thị Thu Hiền Kế toán 0915389286

6 Nguyễn Thị Bích Vân Tổ chức Hành chính 0964945466

BỘ PHẬN SẢN XUẤT - QUẢN LÝ CHẤT LƢỢNG

7 Đỗ Anh Tuấn Trưởng BP 0904555915

8 Hoàng Thị Mai Liên Chuyên viên - Quản lý Hợp đồng 0903476558

9 Nguyễn Hoàng Minh Nhân viên Xuất nhập hàng 0983416426

BỘ PHẬN KINH DOANH XUẤT NHẬP KHẨU

10 Nguyễn Thị Thùy Trang Trưởng bộ phận 0983528885

11 Cao Thị Thanh Hiếu Nhân viên Kinh doanh 0906171166

12 Nguyễn Bá Lộc Nhân viên Kinh doanh 0916933669

BỘ PHẬN KINH DOANH THƯƠNG HIỆU

13 Phạm Thanh Hạt Trưởng bộ phận 0966689039

14 Nguyễn Ngọc Khánh Linh Trợ lý Marketing 01236626969

15 Phan Thu Thủy Trợ lý Kinh doanh 01647894555

16 Nguyễn lê hải Trưởng kênh GT 0915568366

17 Nguyễn Thành Tuấn Nhân viên Kinh doanh 0963196423

18 Nguyễn Anh Dũng Nhân viên Kinh doanh 0919830492

19 Lục Duy Khiên Nhân viên Kinh doanh 01669288931

20 Nguyễn Thị Bích Trưởng kênh Vin+ 0962544228

21 Khúc Thị Yến Bán hàng online 0985032313

Outline of group discussion

My name is Nguyen Thanh Phuong, a master candidate of Ha Noi School of Business(HSB) –Vietnam National University (VNU) I am conducting a research entitled

"Business Strategy for Clean Rice in the stage of 2016-2020: The Case of Vietnam Rice Research Center – Vinafood 1 "

First of all, thank you very much for taking the time to discuss this topic In this discussion, there will be no right/ wrong viewpoints and all viewpoints will be useful information This information will not only contribute to the success of the research but also contribute to the improvement of services of Imart supermarket chain Your commentswill be a valuable resource for my research

In your own experience and opinion, do you think that the following factors will affect the center's business strategy for clean rice? What is the significancelevel of each factor? Why? Are the contents of the questionnaire relevant and easy to understand? If not, how should they be edited? Should they be removed or supplemented with items?

Opinion on revised and added items

Opinion on level of significance

1 Gross National Product GDP and per capita income increase rapidly

2 The Government is interested in the implementation of the "four -subject" model

3 The amount of high quality materials offered under contracts is very low

4 The strong development of clean rice production technology in the world

The investing budget for applying technology in producing and trading high quality rice is very large

Competitors are strong with advantages in capital, technology, human resources, experience, etc

7 The State has issued many policies to support and promote agricultural development

8 A lot of alternative products have been produced and supplied in the market

9 Rice is primary and indispensable food in daily life

10 Budget for consumption is limited

11 The status of the center has been gradually recognized in the hearts of consumers

12 The center has not completely controlled the quality of input materials

Opinion on revised and added items

Opinion on level of significance

1 Changes in the quantity and quality of human resources

2 Professionalism in recruitment with the participation of experienced professionals

3 Level of human resources, number of trained workers

4 The increase in the remuneration for employees at the center

7 Procedure of rice production under HACCP standard

8 The contribution of research and development of clean rice

9 Establish a specialized unit responsible for research and development

10 The investment in expansion of distribution system

11 The meeting of market demand of the retail chain of the center

In your opinion, are there any other factors affecting the business strategy for clean rice of the center in addition to the above factors? What is the level of significance? Why?

Thank you for your contributive comments.

CHIẾN LƢỢC KINH DOANH GẠO SẠCH

TRƯỜNG HỢP TRUNG TÂM NGHIÊN CỨU GẠO VIỆT – VINAFOOD1

LUẬN VĂN THẠC SĨ QUẢN TRỊ KINH DOANH

Hà Nội – 2017 ĐẠI HỌC QUỐC GIA HÀ NỘI KHOA QUẢN TRỊ VÀ KINH DOANH

BUSINESS STRATEGY OF CLEAN RICE

THE CASE OF VIETNAMESE RICE RESEARCH CENTER-

CHIẾN LƢỢC KINH DOANH GẠO SẠCH

TRƯỜNG HỢP TRUNG TÂM NGHIÊN CỨU GẠO VIỆT – VINAFOOD1

Chuyên ngành: Quản trị kinh doanh

Mã số: 60 34 01 02 LUẬN VĂN THẠC SĨ QUẢN TRỊ KINH DOANH

NGƯỜI HƯỚNG DẪN KHOA HỌC: TS NGÔ VI DŨNG

The author confirms that the research outcome in the thesis is the result of author’s independent work during study and research period and it is not yet published in other’s research and article

The other’s research result and documentation (extraction, table, figure, formula,and other document) used in the thesis are cited properly and the permission (if required) is given

The author is responsible in front of the Thesis Assessment Committee, Hanoi School of Business and Management, and the laws for above-mentioned declaration

I have gained huge knowledge, skill and insights from my MBA course The course raises my capacity of administration and management up to the next level I am now very confident in my position of management I would like to extend my sincerest thanks and appreciation to all those who have made this Thesis to be possible

I woud like to express my great gratitude to my supervisor,Assist.Prof.Dr Ngô Vi Dũng, for him useful comments, remarks and engagement during my process of doing this master thesis I would also like to thank the leaders and staff of Vietnam Rice Research and Development Center – Vinafood 1 who enthusiastically participated in the survey and provided me with valuable advice and comments during my thesis completion

Sincere thanks are extended to the Faculty of International Training - Vietnam National University, Hanoi for equipping me with huge knowledge and skills through various interesting and practical subjects I also would like to thanks my classmates for their friendship and reciprocal encouragement to make our class time to be unforgettable time

Lastly, I would like to give my great thanks to my wife, my kids, and my family who always standby me during the past two years and encourages me to keep moving from the beginning of my study

Business Strategy for Clean Rice in the stage of 2016-2020: The Case of Vietnam

Rice Research and Development Center – Vinafood 1

The thesis has systematized theories and studies on business strategy for rice products from related studies and proposed the process of developing strategies for developing clean rice products at Vietnam Rice Research and Development Center - Vinafood 1 including identifying objectives, analyzing internal, external and sectorial environment, setting up Internal Factor Evaluation and External Factor Evaluation That way, the author built the business strategy for clean rice products of the center using SWOT matrix, QSPM and found out the opportunities and challenges such as the strong development of technology of clean rice production in the world, strong current competitors with advantages in capital, technology, human resources and experience in the market which created many challenges and threats for the business activities of the center; or the strengths and weaknesses such as the ensurance of quality management standards, failure to meet customer needs of retail stores This helped select the optimal strategy for clean rice trading of the center, helping Vietnam Rice Research and Development Center - Vinafood 1 improve its business efficiency and maximize its the profits

The strategies proposed in the study will have a high applicability in practice since they were drawn from specific strengths and weaknesses of the enterprise and results of the survey with experts and managers Moreover, the opportunities and challenges were also analyzed in line with the market situation and technology development of the economy in the country and in the world In addition, the basis for proposing strategies was stable with a full process of building contents

In order to complete this study, it is possible to add important elements in the process of building the internal and external matrix of the enterprise in order to increase the possibility of developing and proposing strategies

LIST OF FIGURES AND CHARTS v

1.1.2 Concept of business strategy for clean rice 6

1.1.3 Possible business strategies for clean rice 7

1.2 Process of building business strategy for clean rice 9

1.2.1Selecting and building strategic targets 9

1.2.5 Organizing conditions for strategy execution 19

1.3 Experience in implementing business strategies of some rice trading enterprises 20

1.3.1 Experience of Vinh Long Cereal and Food Import Export Corporation (Vinh Long Food)20

1.3.2 Experience of An Giang Import-Export Company (Angimex) 21

CHAPTER 3: STRATEGIC ANALYSES OF CLEAN RICE TRADING OF VIETNAM

RICE RESEARCH AND DEVELOPMENT CENTER – VINAFOOD 1 30

3.1 Introduction of Vietnam Rice Research and Development Center – Vinafood 1 30

3.1.1 History of foundation and development of Vietnam Rice Research and Development

3.1.2 Organizational structure of the center 30

3.1.4 Annual rice sales of the center 31

3.2 Analysis of clean rice business environment of Vietnam Rice Research and

3.2.3 Analysis of internal environment of the enterprise 46

CHAPTER 4: BUILDING BUSINESS STRATEGY FOR CLEAN RICE FOR THE

VIETNAM RICE RESEARCH AND DEVELOPMENT CENTER - VNF1 TO 2020 55

4.1 Vision, mission, duties and strategic objectives of Vietnam Rice Research and

4.2 Formation and selection of business strategy for clean rice at Vietnam Rice Research and Development Center – Vinafood 1 56

4.2.1 Formation of strategy through the analysis of SWOT Matrix 56

4.2.2 Selection of clean rice trading strategies for Vietnam Rice Research and

Development Center – Vinafood 1 by QSPM 60

4.3 Solutions to implement selected strategies 69

4.3.1 Solutions to implement the forward integration strategy 69

4.3.2 Solution to implement product differentiation strategy 71

4.3.3 Solutions to implement the market development strategy 75

4.3.4 Solutions to implement the backward integration strategy 79

4.4.2 To the Ministry of Agriculture and Rural Development 80

Appendix 1: List of survey experts 83

Appendix 2: Outline of group discussion 84

Phụ lục 02: Dàn bài thảo luận nhóm 89

Phụ lục 03: Phiếu khảo sát 92

Table 1.1: Summary of EFE Matrix 14

Table 1.2: Summary of IFE Matrix 16

Table 1.4: Summary of QSPM Matrix 19

Table 3.1: Current technology of rice processing 35

Table 3.2: Some policies to support rice trading in Vietnam 36

Table 3.3: Quantity of rice sales of competitors in Hanoi 38

Table 3.5: Survey results on customers’ habits of buying rice 41

Table 3.6 External Factor Evaluation Matrix (EFE) 43

Table 3.7: Human reources at Vietnam Rice Research and Development Center – Vinafood 1 46

Table 3.8: Structure of human resources in terms of level of education 47

Table 3.9: Average salary of the employees at the center 48

Table 3.10 Internal Factor Evaluation Matrix (IFE) 52

Table4.1: Synthesis of SWOT matrix 57

Table 4.2 QSPM of S-O strategy group 60

Table 4.3 QSPM of S-T strategy group 62

Table 4.4 QSPM of W-O strategy group 64

Table 4.5 QSPM of W-T strategy group 67

LIST OF FIGURES AND CHARTS

Chart 3.1: Organizational structure of Vietnam Rice Research and Development Center –

Figure 3.1: Annual rice sales of the center 32

Figure 3.2: GDP and per capita income in the stage of 2012 -2016 33

Figure 3.3: Area in contract and area of rice fields in the raw material regions of the factories 34

Chart 3.2: Process of production and operation of clean rice at Vietnam Rice Research and

Figure 3.4: System of facilities and business locations 51

Figure 3.5: System of retailers of the center 52

Figure 4.1: Distribution channel of Vietnam Rice Research and Development Center –

1 VNF1 Vinafood1 – Vietnam Northern Food Corporation

2 VRRDC Vietnam Rice Research and Development Center

3 EFE External Factor Evaluation Matrix

5 QSPM Quantitative Strategic Planning Matrix

6 IFE Internal Factor Evaluation Matrix

7 SWOT Strengths, weaknesses, opportunities and threats

9 HACCP Hazard Analysis and Critical Control Point System

Nowadays, the strong growth of the economy has contributed to the improvementpeople’s lives When the lives are improved, the demand for using high quality products is also raised (Ngoc Anh, 2015) In addition, food safety is one of the topical issues in the Vietnamese market due to the lack of strict standard control from the authorities as well as the problem of ethics in production and trading activities of part of enterprises This makes consumers anxious and worried when they usedaily products such as food and drinks As a result, the consumers’ demand for using high quality and safe products is urgently necessary (Nguyen Trong Khanh and Nguyen Van Hoan, 2015)

Like other food items, the rice in our country is facing "barriers" in quality This significantly influences the sales of rice ofenterprises in the domestic as well as export market According to the Vietnam Food Association (2016), our country currently ranked third in the world in rice export turnover with annual export target of 6.5 million tons

However, the export market of our country mainly includes countries such as Indonesia, the Philippines, and African countries, so our rice does not have a good price Therefore, the issue of improving the quality of rice and developing clean rice is a basic requirement to increase export turnover as well as serve the domestic market Moreover, it is also necessary to create a premise for our rice to be present in the fastidious markets such as Japan and European countries

In addition, according to the survey results of Nguyen Trong Khanh and Nguyen Van Hoan (2015), the current demand and market potential of clean and high quality rice products was increasing This was evidenced by the fact that all supermarkets in Hanoi, Hai Phong, Nam Dinh, Hai Duong, Thai Binh, Bac Ninh, etc were mainly selling clean and high quality rice such asTam Thơm Hai Hau, Nang Xuan and BT7 At the same time, when surveying customers using rice in Hanoi, the authors found out that more than 90% of consumers did not care about the size of the rice grain or white or silverbelly.What they prioritized when choosing rice was that the rice must be clean, flexible and fragrant This indicated that the demand for clean and high quality rice was increasing and consumers increasingly tended to buy rice from reputable brands to ensure quality standards of the rice

Facing that situation, Northern Food Corporation - one of the leading rice exporters with a lot of experience in the world’s rice market - has pioneered in looking for the development directions for in Vietnamese rice over the yearswith the research and production of clean rice with the Corporation’s brand, which meets the increasing demand of people Being concerned and assigned byThe Ministry of Agriculture and Rural Development, especially after the scheme on building the Vietnamese rice brand name was approved by the Prime Minister, the Northern Food Corporation decided to set up a specialized unit calledVietnam Rice Research and Development Center The center was established on 19 September, 2014 with the task of researching and organizing the production of rice products under a chain of phases from researching seeds, cultivating to processing and distributing products with the aim tocreate good quality rice products and ensure food hygiene and safety and gradually build an excellent brand name for Vietnamese rice products However, this center just focused on production but was not interested in building business strategy for the development of clean rice As a result, although the business strategy had been built, the implementation efficiency was not high

The annual rice consumption did not correspond to the size and potentials of the center

Being aware of the reality, as an employee working at Agro Processing and Market Development Authorityunder The Ministry of Agriculture and Rural Development and being responsible for seeking the consumption markets for agricultural products (including rice) and exporting high quality agricultural products to fastidious markets, the author decided to select the topic "Business Strategy forClean Rice in the stage of 2016-2020: The Case of Vietnam Rice Research and Development Center – Vinafood1" for his graduation thesis as well as for serving his current work

+ Bao Yen (2015) conducted a study on "Strategy of building clean rice brand name for Ninh Binh Seed Plants and Livestock Joint Stock Corporation" In this study, the author analyzed the company's strategy for cooperating with farmers to implement the closed rice production process with the motto of focusing on breeding, reducing losses and assuring quality under standards With this direction, the company was leading in the development of a brand name for clean andhigh quality rice in Ninh Binh and gradually changing the methods of producing low-grade rice of farmers in previous years Besides, the author also mentioned the difficulties in building a clean rice brand name for Vietnam in general and Ninh Binh in particular It was a fact that, Vietnamese exported rice had not been standardized.For example, the rice exported to international market was not homogeneous in breed and had three or even a dozen different kinds of rice in one bag.In fact, the branded rice must meet specific and tight standards of a grain of rice with high stability in length, diameter, clarity, gloss, moisture, impurities, content of substances, odor, etc.Therefore, the research made a great contribution tobuilding the brand name for clean rice in Ninh Binh However, the author had not analyzed the SWOT matrix and did not combine the strengths, weaknesses, opportunities and threats to buildthe business strategy for developing clean rice brand name suitable for Ninh Binh province

Process of production and operation of clean rice at Vietnam Rice Research and

Research and Development Center – Vinafood 1

Source: Vietnam Rice Research and Development Center – Vinafood 1 Step 1: Selecting raw material areas

The raw materialareas are currently being surveyed and scientifically planned in order to exploit the strengths of each specialty area, high quality rice area in all three regions: North - Central - South This is considered a key concern in the business strategy of the center

Step 2: Selecting seeds:The experts select seeds and collaborate closely to select special varieties

Step 3: Preparing soil and cultivating: Guide farmers to clean the fields; limit the use of pesticides; make use of waste from previous crops for micro-fertilizers

Cultivating: Guide farmers to soak and sprout and transplant in time

Step 4: Looking after and controlling pests: The center testfertilizer products then guide farmers how and when to apply fertilizers and make the most use of organic fertilizers

The prevention of diseases is carried out under the strict guidelines of the center in terms of pesticide kinds and dose

Step 5: Harvesting: 2-3 hours after harvested, rice will be transferred to the center in

Hung Yen and put into drying

Step 6: Drying:Rice is dried with the most modern horizontal dryers with the capacity of 100 tons/day This is the fastest way to ensure the optimal nutrition of rice grains

Step 1: Selecting raw material areas

Step 2: Selecting seeds Step 3: Preparing soil and cultivating

Step 4: Looking after and controlling pests

Step 6: Drying rice Step 7: Storing Step 8: Processing

Step 7:Storing: After the rice is dried in accordance with the standard, the entire rice will be transferred to the storage silo to minimize the intrusion of insects and keep the natural taste and kept there until being sold

Step 8: Processing: The processing is conducted strictly without usingaromatic spices, anti-insect and anti-mold chemicals The rice mustn’t be milled too white to maintain nutrition

The process of producing rice products of the center applies the quality controlstandard for the industry according to TCVN and HACCP standards Vietnam Rice Research and Development Center – Vinafood 1 is one of the leading centers in applying the quality controlunder standards, aiming at supplying high quality rice products to the market, ensuring the safety and hygiene of food Therefore, the center has the ability to process independently, actively in the inspection of product quality

The research and development at Vietnam Rice Research and Development Center – Vinafood 1 were responsible by the Product Research and Development Department

These activities aimed at improving the technologies of drying, processing and storing and the technology of using rice husk and straw to increase the quality and value of rice The details of research and development activities at the center are as follows:

+ Studying and improving the process of rice drying, processing and storing to reduce post-harvest losses and improve the quality and added value of rice products

+ Researching technology of using rice husk and straw to increase the added value of rice

+ Building pilot production projects, demonstration models and transferring new technical advances to the post-harvest stage

However, due to the limited human resources, the research and development of Vietnam Rice Research and Development Center – Vinafood 1 had not improved the plant protection systemaiming at improving production efficiency, product quality and ensuring food hygiene and safety At the same time, the research work at the center had not created good rice varieties for the development of Vietnamese rice products with high quality, productivity and commercial value

Currently, the main trading partners of Vietnam Rice Research and Development Center – Vinafood 1 were the restaurants, hotels, supermarkets,food enterprises, and rice agencies These partners directlytook rice from the center's warehouse in Hung Yen

Although the business location was fixed, the number of center’s customers was constantly increasing The details are shown in the chart below:

Figure 3.4: System of facilities and business locations

Source: Vietnam Rice Research and Development Center – Vinafood 1

According to the statistics, by 2016, the center had business relationship with 93 rice agencies, 39 food enterprises, 29 supermarkets and 27 restaurants and hotels These numbers changed in the increasing directioncompared to 2014 and 2015 This shows that the business operations of the center are constantly developing and expanding in size and network of partners

Besides, to develop the business, the expansion of retail stores was very necessary

However, according to the survey, it can be seen that the system of retailers distributing products of Vietnam Rice Research and Development Center – Vinafood 1 had not been develop, namely:

Restaurants, hotelsSupermarketsFood enterprisesRice agencies

Figure 3.5: System of retailers of the center

Source: Vietnam Rice Research and Development Center – Vinafood 1

At present, Vietnam Rice Research and Development Center – Vinafood 1 had a system of retail stores in all three regions of the North, the Central and the South

However, the number of distribution shops of the center had not met the consumption demand of customers and not corresponded to the size of the corporation This would affect the production of and trading of clean rice at the center in the coming time

3.2.3.5 Internal Factor Evaluation Matrix(IFE)

The final step in analyzing internal environmental is to build an internal factor evaluationmatrix (IFE) Thistool summarizes and evaluates the strengths and weaknesses of the clean rice trading of Vietnam Rice Research and Development Center – Vinafood 1

From the analysis of internal factors combined with expert method, the author formed the matrix of internal factors as follows:

Table 3.10 Internal Factor Evaluation Matrix(IFE)

No Internal factors Level of significance Classification Rating Note

1 Changes in the quantity and quality of human resources 0,09 3 0,27 Strong

Professionalism in recruitment with the participation of experienced professionals

3 Level of human resources, number of 0,11 2 0,22 Weak

The NorthThe CentralThe South trained workers

4 The increase in the remuneration for employees at the center 0,08 3 0,24 Strong

7 Procedure of rice production according to HACCP standard 0,06 4 0,24 Strong

8 The contribution of research and development of clean rice 0,10 2 0,20 Weak

9 Establish a specialized unit responsible for research and development 0,11 3 0,33 Strong

The increase, expansion of distribution system of clean rice products through agents and retail stores

11 The meeting of market demand of the retail chain of the center 0,06 2 0,12 Weak

Through the above matrix, it can be found that Vietnam Rice Research and Development Center – Vinafood 1 had a number of factors to overcome such as quality of human resources, level of employees, quality of recruitment, and clean rice supply of retail store

The table shows that the total score of internal factors was 2.62,which was higher than the average score of 2.50 This indicated that the internal factors of Vietnam Rice Research and Development Center – Vinafood 1 were quite strong The center had advantages such as product quality thanks to the application of HACCP production process, a specialized department responsible for market research,and constantly increasing quantity and quality of human resources

The analysis of the internal environment of Vietnam Rice Research and Development Center – Vinafood 1 and the synthesis in the IFE matrix helped the author to draw the strengths and weaknesses in the business operations of the center as follows:

(S1) The human resources at the center were constantly increasing in both quantity and quality

(S2) The recruitment of the center was professionalized with the participation of experienced HR professionals

(S3) The incentive policy for employees at the center was constantly increasing in terms of material and spirituality

(S4) The rice production process of the center applied quality control standards of the industry, ensuring the food hygiene and safety

(S5) The center had a specialized department responsible for product research and development, so the production process was constantly improved

(S6) The distribution system of the center was constantly expanded both in the number of partners, customers and the system of retail stores

* Weaknesses (W1) The human resources at the center were not very competent; the number of employeestrained in professional schools was low Most employees were high school graduates working based on their own experience

(W2) The staff recruitment experience the center was mainly acquired from experts, so the quality of recruitment did not meet the requirements

(W3) The salary policy at the center was still low and did not motivate the employees

(W4) The product research and development of the center had not made much contribution to the business activities at the center

(W5) The system of retail stores had not met the demand of customers and not corresponded to the size of the corporation

CHAPTER 4: BUILDING BUSINESS STRATEGY FOR CLEAN RICE FOR THE VIETNAM RICE RESEARCH AND DEVELOPMENT CENTER - VNF1 TO

4.1 Vision, mission, duties and strategic objectives of Vietnam Rice Research and Development Center – Vinafood 1

It can be said that Vietnam Rice Research and Development Center – Vinafood 1 was operating in a fiercelycompetitive market The center’s core product was high quality rice - a common commodity In that context, the company was determined to research and exploit the gaps and do business based on creating added value to the products

Accordingly, the Board of Directors had identified the vision, mission, duties and strategic objectives of the center in the coming time as follows: