Oriental development strategy of nam duoc joint stock company to 2018

THEORETICAL BASIS FOR DEVELOPINGCOMPANY’S

Role of a strategy and a business strategy

Concept of a strategy and strategic management is mentioned in different materials and under different perspectives In this thesis the author only mentions popular and easily accessible concepts.

According to Michael Porter, a strategy is to create a unique and valuable position, including differences and breakthrough choices to fully use of all resources, from which to create advantages for the company [3].

According to William J Glueck, a strategy is a consistent, comprehensive and combined plan which is designed to ensure that all basic objectives of a company shall be implemented [2]

According to Alfred Chandler, strategic management is the process of determining basic and long-term goals of a company, selecting methods or course of action and allocating necessary resources to implement those objectives [2].

According to Fred David, strategic management might be defined as an art to conduct and evaluate related decisions, allowing a company to achieve its set objectives [1].

Currently companies are using three most common strategic levels as followed [1]:

A corporate strategy is a long-term strategy related to its mission, comprehensive objectives and scale to meet expectations and will of the company’s owner and senior managers The corporate strategy is a long-term and comprehensive vision controlling other kinds of strategies, namely business or functional ones.

A business strategy is about how a company might successfully compete in a particular market, about strategic decisions on product selection to meet customer needs, find competitive advantages against competitors and creating new opportunities.

A functional strategy is about how departments and units of a company shall organize, operate and evaluate to implement their business strategy and strategy at company level The functional strategy aims at resources and implementation tactics including: strategies for marketing, finance, R&D, manufacturing and human resources.

1.1.2 Business strategy and its orientations

In reality particular business strategies might be classified into 14 types as shown in Table 1.1 [1].

Table 1.1 Definitions of particular strategies

Increase ownership or control over distributors and retailers.

Search for ownership or control of the company's suppliers.

Find out ownership or control of over competitors.

Market penetration Search for increasing market shares for available products and services in existing markets by greater marketing efforts.

Bring available products and services into new markets.

Increase sales by improving or modifying products and services.

Add new and related products or services.

Add new products or services without any connection.

Add products or services connected to existing clients.

10 Joint venture Two or more sponsoring firms merging into one independent company for purposes of collaboration.

11 Retrenchment Turnaround by cutting costs and assets to save declining turnover and profits.

12 Divestiture Sell a branch or a part of the company.

13 Liquidation Sell all assets partially, with visible values.

14 Synthesis Pursuing two or more strategies at the same time.

1.1.3 Role of business strategy for a company

Strategic management process helps a company to clearly see its purposes and direction It helps administrators to consider and determine their directions and time to reach a certain position Awareness of desired results and future objectives helps managers and their employees to master what to do to achieve success This will encourage the above subjects to gain short-term achievements, in order to better improve the company’s long-term interests.

The organization faces a changeable environment Quick changes often lead to opportunities and unexpected risks Managers might focus on future opportunities and risks by using strategic management, although the planning process does not exclude anticipation of managers for future environment conditions Meanwhile, the strategic management process forces managers to analyze and predict environmental conditions in near and far future This helps them to clearly see future environment and better seize opportunities, take advantage of opportunities and reduce risks related to environmental conditions.

Most research shows that companies that use strategic management achieve better results than companies that do not Strategic management also helps enterprises to avoid serious problems and increase their ability to take advantage of environmental opportunities.

Model for developing a company’s business strategy

1.2.1 Analysis and development process of a comprehensive strategy [1]

Strategy analysis and selection process aims at identifying optional activities as a base for the company to fulfill its responsibility and goals The company’s existing strategies, objectives and missions combined with internal and external controlling information shall be a foundation to establish and evaluate feasible strategies There are 3 stages to form a strategy which might be integrated into a decision-making process as shown in Table 1.2:

Table 1.2 Framework for strategy analysis

Matrix of external factors evaluation (EFE)

Matrix of internal factors evaluation (IFE)

Quantitative strategic planning matrix (QSPM)

Macro environment includes the factors which have comprehensive impacts on the company and its operation Each factor alone or in associated with other factors influence the company Analysis of external environment helps the company to answer the question: what it is facing now?

Economic factors often impact in a direct and dynamic manner Evolution of the economic environment always contains opportunities and threats to enterprises and poses potential impacts to their strategies Basic economic factors are as followed:

 Trend of Gross Domestic Products (GDP) and Gross National Products (GNP): Includes data on GDP and GNP annual growth, showing economic growth and increase of income per capita, from which helps us to predict market capacity and market share of each company

 Interest rate and interest rate trends in the economy affect trends of investment, savings and consumption, causing effects on operation of enteprises.

 Trend of exchange rate: exchange rates change business conditions in general, create opportunities and threats for companies.

 Inflation: high or low inflation rate affects investment in the economy Both hyperinflation and deflation put negative effects on the economy.

Political environment includes a system of opinions and government’s policies, trends of government’s politics and diplomatic and political changes in the country, region and in the world Changes of political environment shall create opportunities and risks for enterprises The state’s policies also affect these companies, leading to profits or challenges for them, including policies on commerce, sector development, economic development, tax, competitive adjustment and consumer protection.

Socio-cultural factors have slow but deep and broad impacts on enterprises.Population factor plays an important role during the process of strategy development It directly impacts on changes of socio-economic environment. Information on population provides managers with important data for strategy planning Following points must be considered when studying this issue:

- Changes in the priorities related to features of products and services

- Opinions on morality, aesthetics, lifestyle and career

- Changes in views on living and living standards

- Structure and trends of population change: age, gender, ethnicity, occupation, religion, income distribution.

- Trend of population movement among regions.

There are few industries and businesses that do not depend on modern technology There will be much technological advancement to come, creating opportunities and risks for all sectors Following points must be considered when studying this issue:

- Costs for research and development from state budget.

- Costs for research and development fromthe industry.

Environment includes: geographical location, climate, natural scenery, sea ports and resources Natural conditions are important inputs of many economic sectors and they might become strengths of a company Therefore it is necessary to focus on followings when developing a business strategy:

These factors influence all sectors of business in a territory Legal factors may threaten existence and development of any sector When trading on an administrative unit, the enterprises are obliged to follow all the regulations of that region For pharmaceutical industry, following laws are the most important ones: Laws on Investment, enterprises, pharmacy, labor, anti-monopoly, anti-dumping.

1.2.2.2 Industry analysis (Porter Five Forces) [3],[4]

Industry environment is a part of macro-environment and directly impacts on enterprises An enterprise should not mechanically apply experiences of other companies and they must study in conditions corresponding to their actual situations It is necessary to carefully analyze industry factors to develop a successful strategy Understanding of these factors helps enterprises realize their strengths and weaknesses It involves opportunities and risks facing these enterprises Industry environment include factors of: competitors, customers, suppliers, potential competitors, substitute products See Appendix 1 for Five

Competitors are companies who share customers with a company Study of competitors helps a company to identify extent and nature of their competition, taking appropriate measures to maintain its position and increase pressure on competitors Followings are key contents when studying competitors:

- Impacts on competition in the industry.

- Strengths and weaknesses of competitors.

- Ability to shift and redirect strategies of competitors.

- Results of current business of competitors. b) Customers

Customers are people who consume and use products of a company In order to survive, companies needs to attract more customers and customer loyalty is a business advantage.

To get it, companies must increasingly satisfy needs and desires of customers Customer research is very important to help companies get more closely with customers Points to be considered in customer research:

- Why do customers buy or not buy products?

- What demands of customers need to be considered?

- What are key differences between different groups of customers?

- How do customers buy products? When and how many? c) Suppliers

Suppliers are people who provide inputs for enterprises: equipment, materials, finance or labors Suppliers might put pressures on enterprises in following cases:

- If there is only some few supplies

- If substitute products are not available.

- If buyers order a small amount of suppliers’ products

- If suppliers’ products have special features and get higher appreciation from buyers’ customers

- Buyers have to bear high cost due to changes of suppliers

- If suppliers threaten forward integration

Due to suppliers’ pressures, enterprises have to study and understand their suppliers, which help them to develop a combined strategy suitable with suppliers to reduce input pressures. d) Potential rivals

Potential rivals are not dangerous in current time but very dangerous in future Although these rivals have not yet had strengths in the industry, they do have engineering or development advantages Therefore, enterprises must study to watch for these rivals Once they enter the industry, market share or profits of enterprises might be declined, and their strategies might be influenced Enterprises need to develop a barrier to prevent external penetration with following measures:

- High cost of shifting products.

- Limited ability to penetrate consume channels.

- Price advantages that other rivals can not make. e) Substitute products

Substitute products are results of the technology boom and this factor often threats to increase operation cost and reduce profits of a company Substitute products put pressures to limit profits of each sector by giving a maximum threshold of prices for enterprises to be profitable Managers need to identify substitute products by searching for products with the same functions as the industry’s products.

Of all the events and environmental trends that might affect strategic position of a company, impacts of competition are often considered the most important. Competitive image matrix identifies key competitive advantages and disadvantages. Total evaluated marks of competitors are compared to a sampled company Ratings of competitors might be taken for comparison to ratings of the sampled company as shown in Table 1.3.

No External factors Sampled company

1.2.2.2 Industry Analysis - Matrix of external factors evaluation

Matrix of external factors evaluation allows strategists to summarize and evaluate external information There are five steps in Matrix of external factors evaluation [1], [4].

Business strategy selection model

1.3.1 Analysis model of Threats - Opportunities - Weaknesses - Strengths Matrix

Firstly, to develop a TOWS Matrix, it is necessary to analyze strengths, weaknesses, opportunities and threats in corresponding columns Then, in combination with the abover factors to develop a strategy and systematically compare pairs of corresponding factors TOWS Matrix is shown in Table 1.6.

Strengths – S Strategies – SO Strategies – ST

3 Use strengths to take advantage of opportunities.

3 Overcome uncertainties and take advantage of strengths.

Weaknesses – W Strategies – WO Strategies – WT

3 Limit weakness to take advantage of opportunities 4.

3 Minimize weaknesses and avoid threats

Combination of key internal and external factors is the most difficult task ofTOWS Matrix development It requires strategic managers to have good judgment and no combination is considered the best The best combination should be selected depending on specific situation of each company.

1.3.2 Strategic Position and Action Evaluation Matrix (SPACE)

Strategic Position and Action Evaluation Matrix (SPACE) is another important tool as described in Appendix 2 The Matrix’s corners show whether strategies for taking actions, caution, defense or competition is the most suitable to a company The axis of SPACE Matrix represents two internal factors of the company (Financial strength [FS] and competitive advantage [CA] and 2 external factors (environmental stability [ES] and Industry strength [IS].) These four factors are the most important ones for the company’s comprehensive strategy Below are the steps to develop a SPACE matrix [1], [2], [4].

1) Select a set of variables for financial strength (FS), competitive advantage (CA), environmental stability (ES), and Industry strength (IS)

2) Set ratings from +1 (worst) to +6 (best) for each variables of the FS and

IS Set ratings from -1 (best) to -6 (worst) for each variable of ES and CA.

3) Calculate averaged score for FS, ES, IS, CA by adding the set ratings for variables of each factors and then divide them variables of corresponding factors.

4) Plot the average of FS, ES, IS, CA on appropriate axis of SPACE Matrix.

5) Add 2 points of axis x and plot the result on X Add two points of axis y and plot the result on Y The new co-ordinate xy is plotted.

6) Draw a directional vector from the origin of the SPACE Matrix through the new co-ordinate This vector represents types of strategies: action, competition, defense, or caution.

1.3.3 Quantitative Strategic Planning Matrix(QSPM)

In addition to classify strategies to develop a priority list, all the documents show that there is only one established technique to determine attractiveness of alternative feasible strategies This technique is the Quantitative Strategic PlanningMatrix (QSPM) and it is the third stage of analysis framework for strategy development The technique shall objectively a show which is the best substitute strategy QSPM matrix uses inputs based on analysis in stage 1 and combined results of stage 2 to objectively determine substitute strategies, including EFE matrix, competitive image matrix, IFE matrix of stage 1 with TOWS matrix, SPACE matrix of stage 2, providing necessary information to establish QSPM matrix (stage 3) QSPM Matrix is the tool allowing strategists to objectively evaluate substitute strategies, based on key internal and external factors for success and identified factors Table 1.7 is an example for QSPM Matrix [1], [4].

QSPM Matrix determines attractiveness of different strategies by using or improving key internal and external factors for success The attractiveness of each strategy of the alternatives might replace calculation by determining cumulative effects of each key internal and external factor for success.

Chapter 1 Summary: Chapter 1 is a theoretical basis for strategy development of the company mentioned in this thesis In the next chapter, the theory shall be applied in reality of Nam Duoc joint stock company, from internal and external environment analysis to identify strengths, weaknesses, opportunities and challenges to develop a real strategy for this company.

ANALYSIS OF ENVIRONMENT AND BUSINESS

Introduction of Nam Duoc joint stock company

2.1.1 Overview of establishment and development history

- Trading name: NAMDUOC JOINT STOCK COMPANY

- Address: 30 M2 Yen Hoa New Urban Area, Yen Hoa Ward, Cau Giay District, Hanoi.

(Nguồn: Báo cáo thường niên Công ty cổ phần Nam Dược, tháng 4/2013)

2.1.1.2 The process of formation and development

- Nam Duoc was established on 1 st January 2004 and granted with Business Registration Certificate dated 04/03/2004 by Hanoi Department of Planning and Investment with charter capital of 3,500,000,000 (three billion and five hundred million) and with 23 founding shareholders.

- In September 2006, the Company completed the construction ofPhamaceutical Manufacturing Factory in accordance with standards of GMP -WHO, GSP and GLP and this is one of the first enterprises in the North to satisfy these requirements.

- In May 2007, the Company changed its Business Registration Certificate for the fourth time with a charter capital of VND 41.688 billion (Forty-one billion, six hundred and eighty- eight million) On 25 th June 2007, the company officially became a public company.

- After completing its GMP factory, Nam Duoc focused on producing a variety of products and herbal medicines to enter markets for hospital insurance. However, after its products began to penetrate into almost insurance-based systems nationwide, the country experienced a financial crisis which reached a peak in late 2008.

- In June 2009: General Shareholders Meeting decided to only focus on traditional pharmaceuticals, abandon production of pharmaceutical products. The company started to build a completely new system, starting from the north and gradually improve the distribution system and at the same time increased its charter capital to VND 56.8 billion (fifty-six billion, eight hundred million).

- From 11/2009 to 07/2012, Nam Duoc witnessed strong growth and outstanding production and on the market Some of the company’s products has become leading ones in the line Nam Duoc brand was strongly developed and prestigous in community and professionals.

- From July 2012 to June 2013 the company’s development stopped, especially in the first 6 months of 2013 turnover began declining, market share decreased, signs of internal instability emerged This is the time for the Board of Directors to revise its strategies and redevelop its 5-year strategy (2013- 2018).

 Business pharmaceutical, cosmetic, functional food.

 Sales agents, deposit pharmaceutical, cosmetic, food and medical equipment.

 Consulting, training and technology transfer services pharmaceutical, cosmetic.

 Growing, buying and processing medicinal and pharmaceutical business.

 Production of pharmaceutical, cosmetic, food and medical equipment.

- Business Places: On the entire territory of Vietnam.

2.1.1.4 Long-term goals, medium was proposed in 2009

- Mission:Nam Duoc is committed to preserve and develop traditional medicine elite Vietnam, always gives the users at home and abroad with quality products and treatment rooms which are safe, convenient, benefit for the community Nam Duoc always motive pharmaceutical loved and used by Vietnamese herbal medicine.

- Vision:Becoming pharmaceutical company reputation, professional, first-class

Vietnam on herbal medicine and functional foods eastern medicine originated.

- The main objective of the company:

 Pioneer standardized herbal clean and in Vietnam with some pharmaceuticals such as soy sprouts, wire tablespoon, Cobra.

 Product Strategy: Develop a minimum of 05 market-leading products are high quality, nice design at hand, be present in every home in Vietnam, the Vietnamese people know to use and reliable.

 Strategic HR: Team leaders have faith thick, breakfast, high- level, professional, there live the mission and lofty ideals, values and lifestyles are ethical, reputable, exemplary, pioneer.

 The objective of environmental, social and community:Nam Duoc exist as an entity with social roles but also moral In addition to the goal of bringing real benefits to customers, officers and employees, the company will always be the responsibility of the community and social activities consistent with the direction of their development.

Comment: Nam Duoc has the correct orientation, with beautiful and noble mission that helped Nam Duocto have achievements in the last 4 years However, the long term goal of Nam Duoc is still crazy dream, missing detail That is why the plan and annual targets of Nam Duoc and normally do not watch regularly adjusted.

2.1.2 Structure of Nam Duoc joint stock company

Appendix 3 is the organizational structure of the Nam Duoc nowaday.

- Subsidiaries, associated companies are shown in Table 2.1

Table 2.1 Subsidiaries, associated companies of Nam Duoc

Name of subsidiary Address of head office Percentage of voting rights / ownership

Lot M13 (C4-9), Hoa Xa Industrial Zone, Nam Dinh City

140/55 Su Van Hanh Street, Ward 12, District 10, Ho Chi Minh City

(Nguồn: Báo cáo thường niên Công ty cổ phần Nam Dược, tháng 4/2013)

2.1.3 Functionally, the basic task of the management department

- Order of production, distribution and rational control of goods.

- Survey to assess and care plans, potential mining customers.

- Implement customer care program Addressing these questions, complaints from customers.

- Improving the operation of the Business Department.

2.1.3.2 Functions and tasks of marketing

- Product Positioning, image building for the procedure.

- Develop ideas, messages and content for media publications: Print ad, advertising scripts, etc

- Develop annual marketing strategy, quarterly, monthly.

- Implement communication plan, organize media events.

- Product knowledge raining for sales and room staff and employees in the company.

- Product consulting by phone and via the company's website.

- Implementation of brand marketing Nam Duoc.

2.1.3.3 Functions and duties of the administrative offices

- Develop and implement recruitment plans in the process.

- Organize and coordinate with other units made training and re- training.

- Implementation of wage labor and health insurance business and society.

- Coordinate system of building regulations, procedures, and regulations of the department in the company.

- Manage and be responsible for all general administrative activities of the department

2.1.3.4 Function for research and development department

- Research and preparation of new product development is producing products.

- Product Quality Management: Monitoring manufacturing processes for new products and production processes were handed over to the factory was built by room Stability studies and quality control room.

- Handling issues relating to agency management on issues of product quality.

2.1.3.5 Functions and duties of Financial Accounting Department

- Promoting financial mobilization and management of the use of financial resources have been mobilized.

- Monitor and supervise the implementation of financial regulations and other rules applicable to costs in the company.

- Establish, promote balance & financial plans to suit the operations of the Company from time to time.

- Management of all revenues - expenses, buying - selling goods and services, make deductions for full and timely payments of budget, tax obligations and other obligations of the State under the law.

2.1.4 Status of activities Nam Duoc joint stock company period 2010 - 2012

After a period of serious crisis in 2006 - 2008, 2009 Shareholders' Meeting decided on a new strategic direction, key investors and depth on the potential product and quality at the source herbs Nam Duoc has quickly organized a distribution network throughout the country, factory with stable, active research and development with focus on marketing activities Thereby have certain results as shown in table 2.2 andtable 2.3.

2.1.4.1 The structure and structural changes in capital assets in 2010 - 2012

Table 2.2 Balance Sheet of Nam Duoc in 2010-2012

(Source: Financial statements have been audited from 2010 to 2012 of Nam Duoc)

Comment: Typical of the pharmaceutical industry is capital-intensive sectors, property mainly machinery and equipment, technological lines and capital intensive high fixed costs Besides, with the goal of sustainable development and long-term,Nam Duoc has been a major investment in the development of quality standards through the maintenance of active pharmaceutical factory GMP - WHO,GSP, GLP and complete integration of IMS standards (ISO 9001, ISO 14000,WHO-GMP, HACCP, SA8000) That's why the proportion of companies with fixed assets accounted for a large proportion of total assets in general.

2.1.4.2 Operating results in 2010 - 2012 and the first 6 months of 2013

Table 2.3 Business Results of Nam Duoc 2010-2012

(Source: Financial statements have been audited from 2010 to 2012 in Nam Duoc)

Comment:Revenue grows very well in 2011 and 2012 Growth rate lower cost revenue growth showed the ability to control costs in 2011 had better signal than before The company completed the good state obligations Financial expense of the company has performed well, reducing the short-term debt and payables to financial costs were greatly reduced.

Table 2.4 Business Results of Nam Duocfirst 6 months of 2013 compared to the same period of 2012

ITEMS 30 th June 2012 30 th June 2013 2013/2012

(Source: Finance and Accounting Department of Nam Duoc, July 2013)

Analysis of the macro environment and industry environment of the company

company to identify threatss and opportunities

2.2.1 Analysis of the macro environment (PESTEL)

As reported by the World Bank (WB), May 2013, the global economy gradually recovered, although the pace of recovery remains uncertain and uneven. Global GDP is expected to grow 2.2 % in 2013, slightly lower than in 2012 As expected, the recovery process will continue to be strengthened, with the global economy to grow by 3.0% in 2014 and 3.3 % in 2015, however, the prospects of individual countries and regions will vary together.See Appendix 4 for GDP growth in 2010-2012 and forecast in 2013-2015.

With moderate inflation, exchange rate stability, increased reserves and the country risk is minimized, Vietnam is trying to end a cycle of economic instability began in 2007 Inflation rate (comparison same period of the previous year) was reduced from 23 % to peak to 6.7 % in T6/2013 T8/2011 In 2012, real GDP rose by

5 %, the lowest increase since 1998 Slow growth extends into the first quarter and the second quarter in 2013 growth rate was 4.9% in the first quarter and the second quarter is 5 % This is the first time Vietnam experienced two consecutive years of growth below 5 % in the first half of Nam Duoc since Vietnam began to publish quarterly GDP.See Appendix 5 about Vietnamese economic growth in comparison with the past and other countries in the region.

Vietnam is now one of the country’s pharmaceutical market with low growth, per capita spending for health care sector accounted for only 6.7 % of GDP (2009).See Appendix 6 for information related to population health sector in

Commenting on the economic environment:

 Trends in bank interest rates may bring advantages in access to capital coming.

 Vietnam is now one of the countries with low spending on pharmaceuticals, but is expected to increase in the future, especially when the economy recovers, and this is an opportunity for businesses to prepare resources to catch up.

 Economic growth is low and slow recovery affects purchasing power, especially for pharmaceutical spending in general and especially the functional food market.

 High inflation and unstable in the last stages leading to fluctuating interest rates and high levels affect the ability to access capital of the pharmaceutical companies to expand production.

- Commitment of the Government's policy on medical assistance. Especially Generic drug market by the government encourage maximum growth In 2012, the Minister Nguyen Thi Kim Tien out campaign program “The Vietnamese use Vietnamese goods".

- However, the confusion and embarrassment of policy distinction between prescription drugs (ETC) and non-prescription (OTC) drugs for an individual.

- Policy distribution channel management in the pharmaceutical industry: According to WTO regulations, pharmaceutical distribution channel than by domestic pharmaceutical companies hold The foreign pharmaceutical companies import only, not direct distribution.However, many foreign companies have taken legal risk by hiding in the water business.

- The new policy of insurance reduces access to and use of patient medication.

Commenting on the political environment:

 Government's commitment to support policies on health Especially Generic drug market by the government to encourage maximum growth.

 The domestic firms benefit from corporate policy prohibits direct foreign distributors in Vietnam market.

 Pharmaceutical industry management Policy lacks transparency, fairness (quality management, advertising costs, price, advertising, distribution, circulation).

The growth potential of population will increase90 million people in 2013 and 100 million people by 2019 Vietnam Population over 88.5 million people, is aging rapidly In particular, the urban population 28.5 million (up 32.3 %) and male population is 43.7 million (49.5 % of the population) In Southeast Asia, Vietnam has a high population density after the Philippines and Singapore Because fertility decreases significantly when the average life expectancy is increasing, the GeneralStatistics Office said that Vietnam’s population is aging trend evident with reduced rates and a young population of elderly people is increasing Proportion of population under 15 years of Vietnam in 1999 was at 33.1 % is only 23.9 % in 2012(down more than 10 %) The population is aging trend suggests potential drug targets for the pharmaceutical market of middle-aged and elderly bigger in the future Conversely, due to the number of children born to one day should reduce psychological care for children and investors increasingly focus Thus, the market for children's medicines is also potential towards better products, more reliable [9], [10].

The population is mainly scattered in rural areas than urban areas should prevent the entry of drugs to support new and heavily dependent on traditional medicine [9].

Psychology is like taking a heavy exchange of mental patients, doctors and pharmacies Drug use rate production in Vietnam (as a share of drug costs) at the central level of about 10 %, 40 % provincial and district levels highest at 50 % See Figure 2.1 for the structure of Vietnam’s population [10].

Figure 2.1 Structure of Vietnam's population

With respect to herbal and traditional medicines market, psychological fears of imported raw materials from China are growing, while the active ingredients from herbal companies in the country are not good Because, in all stages of cultivation, harvesting, preparation, preservation to ensure sufficient pharmaceutical standards: true, good, clean, pure and herbal finished products are satisfactory there are very strict requirements, including technology issues herbal extracts.

Commenting on the social and cultural environment:

 Trends in consumption of natural products increased in Viet Nam and around the world.

 Demand in the group of children, middle-aged and elderly people (up to the first person, about spending / capita, disease model).

 Communications created the negative image of herbal medicine, the consumer boycott attitude / outlook negative for functional foods.

The pharmaceutical industry, especially the pharmaceutical industry requires very high in terms of technology The focus on promoting the development of new technologies, develop drugs with potential to reach a large market share in the country in OTC direction to promote more widespread use of drugs.

However, so far the majority of raw material imports and outsourcing companies usually products, lack of a supply processes and continuous pharmaceutical manufacturing This easy drug affects the price fluctuations of the exchange rate from foreign countries.

For products derived from herbs, you can tell whether extraction technology is extremely important role in determining the quality, safety and efficacy of medicinal products In fact, the extraction industry we have developed, almost no large plants extracts according to its meaning The basis for building self- extracting small workshop catere to their own needs The method extracts mostly higher cooking, her high -pressure direct regular air and temperature conditions are not accurate This leads to the chemical, pharmaceutical activity has accidentally lost during the cooking process,waterout, drying treatment effects diminished.

 The technological level extraction and preparation (including basic research)is low, difficult to reach.

 Material supply industry (pharmaceuticals)developspoorly, ensuring quality and high costs, many counterfeit and shoddy goods.

Our Vietnam is blessed with pristine forests along the country They have over 5,000 kinds of medicinal plants, including many endemic plants However, due to low literacy levels and poor understanding has led to many consequences, such as currency deforestation, slash and burn People just run economic benefits that do not think ahead to the long term consequences When deforestation, flooding consequences, the natural environment is modified, arable land is shrinking, they are subject to the most directly bear the burden If the former, they are mainly logging today, when wood was exhausted, they turn to, destruction of plants have medicinal uses to sell the business, the recruiter purchase underground.

Status and environmental by changing eating habits, a number of metabolic diseases such as diabetes increased, blood pressure, gout [9].

Commenting on the natural environment:

 Opportunities: Implementation of drugs and preparations for market conditions and needs of the times such as diabetes, hypertension, gout.

 Threats: resource depletion leads to difficulty controlling the quality and price of supplies.

- Pharmaceutical price and price management o Pharmaceutical prices in Vietnam increased sharply in recent years due to the increase in the CPI and the devaluation of the VND Retail prices of drugs are priced very high in comparison to the world: 7 A survey of WHO popular drugs, drug prices in Vietnam are priced 5-40 times higher than the world average. o Pharmaceutical retail price in Vietnam is a big difference between 10- 38% of the drug from the pharmacy retail price in the lower provincial city.

=>The above result is due to the role of law in the management of drug prices is not to promote efficiency.

- Advertising in the pharmaceutical industry

Analysis to identify the strengths and weaknesses of Nam Duoc

2.3.1.1 Market research and grasp customer needs

Market research is a weakness common to enterprises in Vietnam in general and Pharmaceutical companies in Vietnam in particular From 2011 onwards,Nam Duoc little market research organizations should all operations are carried out spontaneously and subjective wills of leadership and management By 2012 and 2013,Nam Duoc has implemented many pharmaceutical market research phase in order to deploy solutions or leasing companies specializing in market research, such as FTA, Cimigo,TNS.See Appendix 8 for the aggregate level of investment to deploy and market research of Nam Duoc in 2010-2012.

Nam Duoc brand is well recognized in the professional world as well as in the community Some brands dominate the No.1, No.2 in the market, such as Thong xoang tan, Bao xuan(as a result of market research conducted by FTA 2012) Table 2.8 is an example of a health brand of Nam Duoc Thong xoang tan.

Table 2.8 Revenue and market share of the mainherbal brands in the market of sinusitis

(Source: The survey of market research firm FTA,January 2013) 2.3.1.3 Distribution System

From 2009 to 2012,Nam Duoc deploy only a single channel system sales in drugstores nationwide The company does not have a traditional sales as hospitals, clinics, and no new sales channels such as supermarkets and online sales Except for the baby some provinces such as Lai Chau, Ha Giang, Bac Kan, Hau Giang is to use collaborators, the remaining provinces have from 1to 2 full-time employees.

Table 2.9 Number of personnel in distribution system of Nam Duoc from 2010

No 2010 2011 2012 The first 6 months of 2013

(Source: Human Resources Department,Nam Duoc, July 2013)

Nam Duoc has invested continuously in order to increase the number of sales staff to help the product directly to retailers rather than just focusing on wholesale channel The direct approach helps retailers increase sales effectiveness, client counseling, as well as enhance customer care However, due to the sales decline to 6 months of 2013 there have been many changes in personnel In particular, many managers and sales staff is gone or replaced.

2.3.1.4 Customer service and customer care

According to the results of market research in June 2013 by Nam Duoc,Nam Duoc made the 4th assessment of domestic enterprises, and No 8 in total pharmaceutical firms Figure 2.3.

Figure 2.3 The sequence of the pharmaceutical companiesare high appreciated for the customer care service

Comments on Marketing capability:Nam Duoc with a focus on investment in building distribution systems and sales force as well as focus on building strong brands for each label should soon obtain more positive results However, due to delays in investment in market research and forecasting should make long-term development strategy is limited Customer relationship management implementation was weak This can lead to confusion about the orientation and confusion in the annual plan.

2.3.2.1 Managing the production process and technology lines

Line technology is available lines have been installed, drug manufacturing standards of the world health organization In particular, special emphasis on modern lines extracted to obtain the highest levels of active ingredients from the herbs However, this chain has invested since 2009, up until 2013, has started technologies obsolete and should continue to be invested.

Nam Duoc Quality Management System according to basic standards of quality management system of TQM, ISO9001 and GMP - WHO These are advanced management standards.Nam Duoc is the pioneer in the application of quality management standards.

Capacity is determined based on the output power of the product Currently two lines are extracted 25 million capsules per month and manufactured high-yield synthesis than 45 million capsules per month Currently only general capacity to 20 million capsules per month (50 %).

Where is the production factory is located in Hoa Xa Industrial Zone (Nam Dinh city, the capital, Hanoi, 100 km) Due to the Pharmaceutical industry is low transport costs and high profit margins (if stable operation going on), so Nam Duoc factory located in Nam Dinh to enjoy preferential tax policies Also Nam Dinh has traditionally do well, there are many university students specialized medicine and in addition have 2 university medical specialty pharmacy in the province so abundant human resources.See Appendix 9 for factory image.

Operation capacity and operations of the Nam Duoc are pretty good and is pioneering, creating competitive advantage for Nam Duoc in recent years The early application of modern management standards of Japan and EU has helped stabilize the company product quality and maintain the confidence of our customers.

Table 2.10 Profitability indicators of Nam Duoc in 2010-2012

(Source:Finance Department, Nam Duoc, July 2013)

Through the data in the table 2.10 we can see indicators of growth companies a good way over Nam Duoc However, compared with 2011, the 2012 growth targets lower and tend to go into more stable In addition, in 2011 and 2012, the index is 31.9 % ROE and 39.9 % is a very good indicator for investors.

2.3.3.2 The possibility indexof asset management

Looking at the volatility of the index represents the ability of the asset management business through our three- year evaluation as Table 2.11

Table 2.11 Indicator assessment asset management capability in 2010-2012

Inventory turnover has increased by 2.1 and 1.2 times over two years, which shows the efficiency of using assets Nam Duoc greatly improved Debt collection period also decreased rapidly, instead of 200 days to collect the debt is now only 97 days (in 2011) and 44.3 days (2012) Fall down debt in the context of better sales, higher sales even more for businesses that are better managed.

Fixed asset turnover and improving mobility are better able to effectively use assets also improved very positive However, it needs further improvement because this index is low and not much cash flow, proven management of inventories and accounts receivable need to do better.

Current solvency in 2011 and in 2012 were improved over the period And it is very good and very encouraging that despite revenue increase and the time bank loan interest rates are very high, the company has reduced short -term loans from 56 billion to 38 billion (2011) and only 12 billion (in 2012) showed the ability to take initiative in the company's capital was much better, see Table 2.12.

Table 2.12 Indicators of the solvency in 2010-2012

Solvency rapidly increased nearly 1.5 times and 1.4 times over two years As such, the company is not less than the financial risk, less dependent than the loan but also manage inventory better If in the future, the company continues to manage inventory better, this factor further.

Summary of analysis of opportunities,threatss, strengths, weaknesses

- Sales force and professional articles.

- Capacity innovative marketing strategies and consistent market.

- Production: The early application of modern management standards of Japan, the EU has helped stabilize the company product quality and maintain the confidence of our customers.

- Ability to manage the financial operations of Nam Duoc and always improving transparency.

- Enterprises are actively funding and reduce reliance on loans.

- Having good relationships with research institutes, medical colleges in Vietnam. Điểm yếu

- Only deploy OTC sales channels should be unsustainable.

- Operating and caring customer service is not good.

- Production capacity dosage forms was not diversity.

- Research capacity and weak development of isolated and purified, active groups demonstrated.

- System capacity is weak basic information, particularly information management system internally.

- The organizational structure, functions, decentralized authorization is not good.

- Mode evaluation and remuneration is not clear, it is difficult to recruit and retain good staff, especially senior staff.

- Trends in consumption of natural products increased in Vietnam and around the world.

- Demand for group of children, middle-aged and elderly people,

- Competition between domestic enterprises and foreign large increase.

- High quality employees provide pharmaceutical enterprises limited.

- The technology of extraction and the demand for metabolic products

(up to the first person, about spending / capita, disease model).

- Management of pharmaceutical policy being tightened, creating technical barriers.

- Manufacturing herbal dispersed, no business leading the industry. preparation (including basic research) low, difficult to reach.

- Raw material supply industry poorly developed, ensuring quality and high costs, many counterfeit and shoddy goods.

- Policy management pharmaceutical industry lacks transparency and fairness. Enforcement of intellectual property protection is poor, counterfeit / fake drugs more.

- Communication to create negative image of herbal medicine.

CONCLUSIONS AND SOLUTIONS

Strategy selection

3.1.1 Model analysis of threats, opportunities, weaknesses, strengths (TOWS)

From the analysis of external factors, Nam Duoc’s competitive capability and its response to external environment, strengths, weaknesses, opportunities, threats and conclusions drawn from the competitive competence matrix, EFE matrix, IFE matrix in Chapter 2, it is possible for us establish TOWS matrix as shown in Table 3.1 for details of Nam Duoc’s combined strategies.

O Strategy No 1 - "Strategy for sustainable development and stability based on available capacity"

1) Nam Duoc has determined to spend the most intensive OTC-oriented investment on herbal medicines and functional foods It is identified to invest in turn to have 2 to 3 strategic products leading the OTC market.

2) Buy or invest in construction of local branches to position the brand and let products penetrate deeply into key markets.

3) Rely on the company’s internal funds and bank loan in safe limits.

1) Cooperate with other research institutes or plants to support production of different pharmaceutical forms.

2) Develop ETC sales channels including medicine introduction into insurance- based medicine allocation system and prescription in hospitals and clinics.

3) Develop modern sales channels such as e- commerce, supermarket for functional foods.

4) Enhance market research capacity to be a core one.

T Strategy No 2 - "Strategy for rapid speed based on external resources."

1) Increase investment costs on media and advertising up 50% compared to current level Take advantage of innovative marketing capabilities to quickly propaganda the company’s standardization, creating community’s trust in Nam Duoc brand.

2) Buy some herbal brands to occupy more market shares.

3) Share capital for foreign investment funds to have a big source of capital and management capacity of partners to rapidly develop, occupying a leading position in the industry.

4) Coordinate with research centers and institutes to develop raw materials zones which meet requirements for standardization For example, cooperate with National Institute of Medicinal

Materials to stabilize some key varieties of medicinal materials as inputs for the company.

1) Fully invest in development of personnel for research and development.

2) Cooperate with other production units which have a large scale of medicine extraction and preparation but not fully explored.

3) Cooperate with other production units to determine key ingredients for ordering at the same time, creating advantages for negotiation process.

4) Better care of existing customers and customer retention to maintain stable turnovers in coming years.

3.1.2 SPACE model of strategic options for the operations of Nam Duoc

Table 3.2 Model selection strategies SPACE in Nam Duoc

4.1 Role of the pharmaceutical industry to society

From the results of SPACE matrix shown in the above table, it is possible for us to draw following conclusions:

Based on results drawn from TOWS and SPACE matrixes, it is likely to affirm that the most appropriate strategy for Nam Duoc in coming time is to “speed up” based on promoting its strengths, limiting its weaknesses, taking advantages of opportunities and overcoming challenges Besides, during “speed up” process, Nam Duoc might use external resources by cooperating with local or international partners In summary, the basic strategy of Nam Duoc in the future is as followed:

Strategy No 1: “ Strategy for sustainable development and stability based on available capacity ” Key features of this strategy are as followed:

1) Nam Duoc has determined to spend the most intensive OTC-oriented investment on herbal drug and functional foods It is identified to invest in turn to have 2 to 3 strategic products leading the OTC field.

2) Buy or invest in construction of local branches to position the brand and let products penetrate deep into key markets.

3) Rely on the company’s internal funds and bank loan in safe limits, or share issuance to existing shareholders.

Strategy No 2: " Strategy for rapid speed based on external resources."

1) Increase investment costs for media and advertising up 50% compared to current level Take advantage of innovative marketing capabilities to quickly propaganda the company’s standardization, creating community’s trust in Nam Duoc brand.

2) Buy some herbal brands to occupy more market shares, becoming a leading enterprise in OTC-market for herbal products locally.

3) Share capital for foreign investment funds to have a big source of capital and management capacity of partners to rapidly develop, occupying the leading position in the industry.

4) Coordinate with research centers and institutes to develop raw materials zones which meet requirements for standardization For example, cooperate with

National Institute of Medicinal Materials or Centre for Medicinal Materials in the Middle to stabilize some key varieties of medicinal materials as inputs for the company.

From the above features, it can be seen that the speed-up strategy based on external resources might further enhance Nam Duoc’s speed-up process, improve its competitive capacity with competitors In terms of feasibility, the two mentioned strategies might be applied and each has its own advantages and disadvantages. however, in order to determine the most optimum strategy for implementation and an alternative prevention strategy, it is necessary to analyze key and alternative strategies by QSPM matrix.

Apply Quantitative Strategic Planning Matrix (QSPM) for strategy selection 70 3.3 Proposed corporate strategy

Table 3.3 QSPM for Nam Duoc’s strategy selection The external factors

Strategy capable of replacing Strategy 1 Strategy 2

1) Consumption trend of natural products in Vietnam and in the world increased.

2) Demand of children, the middle- aged and the elderly (per capita, spending/capita, diseases)

3) Policies on pharmaceutics management are tightened, causing technical barriers.

4) Herbal manufacturing industry is dispersed, without any company to lead the industry.

5) Competition between domestic and foreign companies strongly increased 2 4 4 8 2

6) High-quality human resources for pharmaceutical enterprises is limited

7) Standard of technology for medicine extraction and preparation (including basic research) is low, difficult to get access.

(medicinal materials) is poorly developed, unassured quality, high costs, lots of counterfeits and low- quality goods.

9) Policies on pharmaceutics management lack transparency and fairness (quality management, advertising costs, price, advertising, distribution system, circulation).

10) Implementation of intellectual property protection is badly done, causing lots of counterfeit/fake drugs.

11) The media caused a negative image 2 6 4 12 2 of oritental medicine, consumers have boycott attitude/negative perception of functional foods.

12) Economic recession lasted long (in

Vietnam and in the world) 4 12 2 6 4

18) Capacity of medicine extraction – preparation 2 6 3 9 2

3.3.1 The objective of the main targets

QSPM results showed that strategy No 2 “Rapid speed-up based on external resources ” is the most optimal strategy to be implemented to achieve Nam

Duoc’s set goals and accomplish its mission Alternative strategy is strategy No 1

“ Careful speed-up based on internal resources”

From 2013 to 2018 Nam Duoc’s annual turnover growth reached at least 40%/year Return on equity (ROE) was of at least 20% Specific targets are indicated in Table 3.4.

Table 3.4 Oriented targets of Nam Duoc by 2018

Growth In 2013 In 2018 Minimum target

3.3.2 Strategy for Market and Product

Develop 10 leading brands in following segments:

Table 3.5 Proposed strategic product groups

Product Groups Pathology segment Age segment Income

Physiology Male physiology, Female physiology

Diabetes, Blood Pressure, Gout 40-60 years old

3.3.3.1 Solutions related to human resources

No later than January 2014, strategies for human resources reinforcement and development of Nam Duoc by 2018 must be completed and implemented At the same time, followings must be conducted immediately:

 Hire a consulting company for human resources to develop a capacity framework and re-access skills of management team as a base for training and cultivation, develop a pay-sheet for junior and senior administrative team to pay on their capacity and efficiency, avoid leveling phenomenon and completely end payment by seniority.

 Immediately appoint key administrative personnel and personnel listed in the planning project to participate in courses for language and professional improvement, so that they shall be equipped with sufficient knowledge for strong development and pressure in coming time.

 Recruit talents for key positions to create a breakthrough for the company’s development.

3.3.3.2 Solutions related to research and development

 Develop personnel for research by attracting Ph.D of research and development, at the same time, sign contracts of cooperation with experts for research and development.

 Equip modern technological and pilot-scale machines of medicine extraction and preparation to focus on research and development of new products, as well as perfect and standardize existing products.

3.3.3.3 Solutions related to manufacture & supply

 Cooperate with National Institute of Medicinal Materials to study medicinal materials supplying models, ensuring quality and process of the materials.

 Attend Biotrade commercial projects organized by Swiss Bank in cooperation with National Institute of Medicinal Materials and Helvetas.

3.3.3.4 Solutions related to financial capability

 No later than 01/2014 a financial strategy for Nam Duoc by 2018 must be made available and implemented At the same time, it is necessary to complete regulations on financial management for the whole system to be applied in 01/2014.

 Establish a qualified team to issue shares to partners of investment funds, immediately sell shares to other partners to increase charter capital.

3.3.3.5 Solutions related to Marketing and Sales

 Focus on building a strong team for market research to actively study market trends and changes relating to customers and competitors, from which to develop long-term strategies for key brands as well as timely response to market fluctuations.

 Review and search for potential products with large market and suitable with Nam Duoc’s capacity for manufacturing and marketing.

 Enhance capacity for launching new products/improvements (synchronous, creativeness) with market orientation to ensure Nam Duoc brand to be synchronously and creatively associated with a brand label.

 Increase investment for customer services.

3.3.4 Recommendations for implementation and strategic management

For good implementation of the speed-up strategy in coming time, together with the above solutions, I would like to give following recommendations:

 Review regulations on investment costs for advertising The cost is now regulated to be limitted at 10%, which is causing difficulties for almost all enterprises who want to invest to fully develop their brands.

 It is necessary for Ministry of Health and Ministry of Industry and Trade to strongly inspect and treat counterfeits Ministry of Health needs to closely check and strictly punish companies with untruthful advertisement of their products, causing people to misunderstand brands of functional foods and traditional pharmaceuticals medicine of Vietnam.

3.3.4.2 Recommendations to General Council of Shareholders

 Allow Nam Duoc to have a minimum cost of 5 % of annual profits (if minimum financial targets are achieved) to implement policies on rewarding for management units and excellent specialist and officers.

 Support management units and Board of Directors with policies on long-term investment to upgrade manufacturing technology, research development and training.

 Support management units and Board of Directors with policies on increasing charter capital, which requires to accept the trend of moderate dividends in the first years of the strategy implementation.

After studying theories of strategy, strategic management, business environment, business situation, proposed business strategy for Nam Duoc by 2018, main conclusions are as followed:

1 The economy of the country and in the world is declining However, thanks to features of pharmaceutics industry, this industry still maintains it’s rather stable growth rate and estimated as one of potentiality Traditional pharmaceuticals and functional foods are growing well and promising lots of opportunities in the future.

2 The trend of international integration and the industry’s potentiality promises to bring a fierce competition with local and international enterprises. Many famous pharmaceutics companies in the world have continued to strongly invest in Vietnam In this competitive environment, Nam Duoc have lots of opportunities to develop and confront challenges.

3 Although Nam Duoc has made good development stages for the past 4 years, it is embarrassed by development directions and signs of unsustainable growth Therefore, development and implementation of long-term strategy by 2018

“Speed-up strategy based on external resources” as mentioned abover is necessary and suitable with current situation.

4 With a clear mission and development orientation based on solid internal resources, we can fully trust in the success and sustainability of Nam Duoc NamDuoc is set to become one of the leading companies who manufacture and distribute herbal medicine and functional products in Vietnam in 2018, contributing to bringVietnam medical brand into international community.

1 Fred R.David (2000), Outline of Strategic Management, Statistics Publishing House, Ho Chi Minh City.

2 Prof Dao Duy Huan (2007), Strategic Management, Statistics Publishing House, Ho Chi Minh City.

3 Michael E Porter (1996), Competitive Strategy, Science and Technology Publishing House, Hanoi

4 Document and syllabus of all subjects in Program of Ie.MBA, PGSM

5 Report of the World Bank - Meeting of group of donors for Vietnam (2011),

"Vietnam Development Report 2012", the market economy - when Vietnam becomes a middle-income country average, p.12-18.

6 Report of the World Bank - Meeting of group of donors for Vietnam (2013), Review the situation of Vietnam's economic development, p 2-17.

7 Price Water House (2012), Pharma 2020: Marketing the future - Which path will you take? P.4-10

8 Price Water House (2012), Pharma 2020: The Vision - Which path will you take?, P.4-10, P 27 – 38

9 IMS health Vietnam (2012), Vietnam Pharma Market Outlook

10 Bussiness Monitor International (2012), Vietnam pharmaceutical & healthcare report, ISSN 1748-2305 Published by:Business Monitor

11 OPC Pharmacy Joint Stock Company (2013), The consolidated financial statements in financial year ended 31th December, 2012. http://www.opcpharma.com/quan-he-co-dong/, Date 25 th January, 2013.

12 Traphaco J.S.C(2012), The consolidated financial statements which have been audited in financial year ended 31th December, 2012. http://www.traphaco.com.vn/quan-he-co-dong/bao-cao-tai-chinh-hop-nhat- da-kiem-toan-nam-2012, Date 25 th January, 2013.

Model 5 competitive forces of Michael E Porter [3]

Appears competition supply pressure bargaining pressure

Example of strategic position and action evaluation matrix (SPACE)

Marketing Department Research &Development Department Sales Department Finance – Accounting Department Personnel &Adminsitration Department

SOUTH NAM DUOC LIMITED COMPANY

Sales Personnel - Administration Board of Directors

Appendix 3: Structure of Nam Duoc joint stock company

(Source: Human Resources Department, Nam Duoc provided in July 2013)

Appendix 4: GDP growth in 2010-2012 & forecast 2013-2015

(Source: Report of the World Bank - Meeting of group of donors for Vietnam in

Appendix 5: Comparison of Vietnamese economic growth with the past and in comparison with other countries in the area

GDP growth in 2010-2012 & forecast 2013-2015

(Source: Report of the World Bank - Meeting of group of donors for Vietnam in

Comparison of Vietnamese economic growth with the past and in

comparison with other countries in the area

Information of population concerning to health sector in Vietnam

7: Value and growth of the pharmaceutical industry market segments in Vietnam

Appendix 8: Summary of implementation and investment in market research of Nam Duoc in 2010-2012

Year The number of qualitative research

The number of quantitative research

The number of outsourced research

The number of self- research

(Source: Marketing Department, provided in July, 2013)

Appendix 9: Images of the factory and line production of Nam Duoc

(Source: Photo by Nam Duoc Co., Ltd provided in July, 2013)

Appendix 10: Personnel structure and staffing levels of Nam Duoc at 31th

(Source: Human Resources Department, Nam Duoc provided in July, 2013)

Appendix 11: Movements in key personnel in the first 6 months of 2013

Resignation Transfers to other businesses Deputy Branch Manager Resignation Transfers to other businesses Marketing Director Resignation Transfers to other businesses

7 business staffs Dismissed from company due to violation of labor discipline

6 business staffs Resignation No information

(Source: Human Resources Department, Nam DuocProvided in July, 2013)

Appendix 12: The question of Drugstore and agent research in July, 2013

Questionnaire Code ND-S2013 Code of respondents.

The number of questions Reference Code

Date: _/ /2013 Length Interview: _(minutes) from _to _

Hello I am _ (GIVE NAME CARD, STUDENT CARD) from the Hanoi University of Pharmacy Currently we are conducting a market research on herbal products We are looking forward to getting your help by answering the following questions Thank you.

Province The South The North The Middle

Would you please tell me that you or someone in your family worked in the fields below

Newspaper / Radio / TV 2 KT Public Relations / Advertising 3 KT Self-pharmaceutical production 4 KT

Do not work in the fields above 5

Q3 THE INTERVIEWER recorded gender of respondents Code Path

Q4 Could you please let me know your Year of birth?

Q5 THE INTERVIEWER age group Code Path

18-27 years old 2 28-35 years old 3 36-45 years old 4 Over 45 years old 5

Q6 THE INTERVIEWER TAKE NAMECARD OF RESPONDENT

OR DRUGSTORE (IF YOU CAN)

Drugstore owners 1 Manager / Deputy Director 2 Manager / Head of Department 3 Other (Detail): 4

Now, I start reading some of the comments that the agent like you usually consider when choosing herbal brands For each statement, please tell me how important each factor is when you choose herbal brands Please use a scale:

5 - Extremely important First level of importance with: (read attribute names)

Q7b Firstly, which level you agree with (read the first statement) refers to brand

THE INTERVIEW TURNS HORIZONTAL QUESTION ALL BRAND FOR EACH COMMENT

Q8 (R1) Could you please tell me which point do you satisfied with Nam Duoc?

Probe: : Is there any other points

(R2)) Could you please tell me which point do you dissatisfied with Nam Duoc?

Probe: Is there any other points?

Q9 (R1) Could you please tell me which point do you satisfied with Thai Duong?

(R2)) Could you please tell me which point do you dissatisfied with Thai Duong?

Q10 (R1) Could you please tell me which point do you satisfied with OPC?

(R2)) Could you please tell me which point do you dissatisfied with OPC?

Q11 (R1) Could you please tell me which point do you satisfied with Traphaco?

(R2)) Could you please tell me which point do you dissatisfied with Traphaco?

Q12 (R1) Could you please tell me which point do you satisfied with ECO?

(R2)) Could you please tell me which point do you dissatisfied with ECO?

Could you please tell me 5 Pharmacy companies that in your opinion they have the best customer service and reasons for this? [OA]

Note: The Interviewer note to sort from the best (1) to less better

THE INTERVIEWER NEED TO ASK NAME CARD OF DRUGSTORE OR AGENCY

Summary of implementation and investment in market research of