(Tiểu luận) business report major international economicsfpt long chau report

FOREIGN TRADE UNIVERSITY HO CHI MINH CITY CAMPUS -*** BUSINESS REPORT Major: International Economics FPT LONG CHAU REPORT Name Student Code Contribution Trần Minh Khánh 2113153030 100% Lâm Khang Hy 2113153025 100% Nguyễn Lê Anh Tú 2113153056 100% Đinh Nguyễn Tài Phúc 2113153047 100% Phạm Xuân Tuấn 2112153152 100% Nguyễn Hoàng Khải 2113153028 100% Ho Chi Minh City, December 2023 TABLE OF ABBREVIATIONS OTC Over-the-counter FRT FPT Digital Retail Joint Stock Company BCG Matrix Boston Consulting group's product portfolio matrix SWOT Strengths, Weaknesses, Opportunities, Threats TABLE OF FIGURE Figure 1.1 FPT Long Chau Revenue and Growth Rate from 2021 to 2023 Figure 1.2 FPT Shop Revenue and Growth Rate from 2021 to 2023 Figure 1.3 FRT revenue allocation from 2021 to 2023 Figure 1.4 FRT BCG Matrix Figure 3.4.6.1 Liquidity Ratio 2020 - 2022 Figure 3.4.6.2 Solvency Ratio 2020 - 2022 Figure 3.4.6.3 Profitability 2020 - 2022 TABLE OF CONTENT Executive summary Introduction .1 2.1 Background 2.2 Problem and Scope 2.3 Purpose and Objectives .1 2.4 Theoretical Framework and Methodology 2.5 Limitations Findings and discussion 3.1 Overview of parent company - FRT 3.2 Vietnam Macroeconomics Landscape 3.2.1 Current situation and growth potential 3.2.2 Consumer purchasing power 3.3 The Pharmaceutical Industry Landscape 3.3.1 Post-pandemic Landscape 3.3.2 Driving Factors of Industry 3.3.3 Market potential remarks 3.4 Long Chau Understanding 3.4.1 Value proposition 3.4.2 Products and services .10 3.4.2.1 Fast Medication Consultation 10 3.4.2.2 30-Day Return Policy Support 10 3.4.2.3 Doorstep Delivery Services 11 3.4.3 Pricing strategies 11 3.4.4 Placing strategies 11 3.4.5 Promotion strategies .11 3.4.6 Financial performance 12 3.5 FPT Long Chau SWOT 14 3.5.1 Strengths 14 3.5.2 Weaknesses 14 3.5.3 Opportunities 15 3.5.4 Threats 15 3.6 FPT Long Chau’s Porter’s Forces analysis 15 3.6.1 Competitive Rivalry .15 3.6.2 Supplier Power .16 3.6.3 Bargaining Power of Buyers 16 3.6.4 Threat of Substitutes 17 3.6.5 Threat of New Entrants 17 Conclusion and recommendations 17 4.1 Conclusion 17 4.2 Recommendations 18 References 20 Executive summary FPT Long Chau, a subsidiary of FPT Retail, has emerged as a leading player in the Vietnamese pharmaceutical retail market, experiencing remarkable growth in recent years This report examines the key factors driving this success and evaluates the company's competitive landscape, providing insights into its future prospects It reveals that FRT Long Chau faces strong competition from established players like An Khang and Pharmacity, as well as new entrants Despite its star status in the BCG matrix, generating stable cash flow from its FPT Shop electronics chain, Long Chau struggles with thin margins due to aggressive expansion and low-end pricing While this report highlights their achievements, such as rapid store expansion and strong brand recognition, it also identifies areas like profitability improvement, product portfolio diversification, and customer segmentation as key to their future success Limited resources restrict a full analysis of all contributing factors, including human resources and a detailed business model canvas Overall, FRT Long Chau shows promising growth potential, but must address profitability concerns and refine its strategy to remain a leader in this dynamic market Introduction 2.1 Background The pharmaceutical retail industry in Vietnam has witnessed significant growth in recent years, particularly during the COVID-19 pandemic This growth has been driven by increased demand for healthcare products and services Notably, FPT Long Chau Pharmaceutical JSC (FRT Long Chau), formed through the 2018 acquisition of Long Chau pharmacy chain by FPT, has emerged as a key player, achieving a 53% year-on-year growth within three years and operating over 1,000 pharmacies nationwide 2.2 Problem and Scope This report aims to understand the factors behind FRT Long Chau's success and identify potential challenges and opportunities for its future growth It will analyze the market context, both internally and externally, and investigate the challenges and opportunities for further growth 2.3 Purpose and Objectives This report has two primary objectives Document continues below Discover more nguyên lý quản from: lý kinh tế DTU301 Trường Đại học… 517 documents Go to course Ma trận SWOT 65 VInfast chiến lược nguyên lý quản lý… 100% (26) Nlqlkt - phần 19 đầu nguyên lý quản lý… 100% (4) Ơn tập mơn ngun 19 36 lý quản lý kinh tế… nguyên lý quản lý… 100% (3) Tieu luan Phan tich moi truong kinh… nguyên lý quản lý… 100% (3) Yêu cầu cán QLKT - Yêu cầu về… nguyên lý quản lý… 100% (3) [123doc] - anhAnalyze: To gain a comprehensive understanding of the factors contributing to FRT Long Chau's huong-cua-van-… success and identify potential challenges and opportunities for future growth 22 Recommend: To provide practical recommendations to help FRT Long Chau navigate the nguyên lý 100% (2) competitive landscape and maintain its position as a leading player in the Vietnamese quản lý… pharmaceutical retail market 2.4 Theoretical Framework and Methodology This report utilizes a combination of theoretical frameworks and methodologies to analyze FRT Long Chau's success Theoretical frameworks include Porter's Five Forces and SWOT analysis, which are used to assess the competitive landscape and identify FRT Long Chau's strengths, weaknesses, opportunities, and threats The primary research methodology involves analyzing industry reports, company financial statements, and news articles Additionally, secondary research is conducted by reviewing scholarly articles and academic journals 2.5 Limitations Due to limited resources, it does not comprehensively examine all factors affecting FRT Long Chau's success, such as human resources and a detailed business model canvas Overall, this report aims to provide a comprehensive analysis of FRT Long Chau's success in the Vietnamese pharmaceutical retail market and offer practical recommendations for its future growth While acknowledging limitations, the report strives to provide valuable insights and contribute to FRT Long Chau's continued success in a dynamic and competitive market Findings and discussion 3.1 Overview of parent company - FRT The FPT Digital Retail Joint Stock Company (FRT) is an affiliate company of the FPT Group, operating in the retail distribution of mobile phones, laptops, tablets, accessories, electronic products, as well as pharmaceuticals, medical equipment, and functional foods FRT currently owns two retail chains: FPT Shop, F.Studio By FPT, and a subsidiary company named FPT Long Châu Pharmaceutical Joint Stock Company The FPT Shop retail chain specializes in mobile digital products and is the first retail system in Vietnam to be awarded ISO 9001:2000 certification for quality management according to international standards The F.Studio By FPT system is an officially authorized chain of Apple stores in Vietnam, dealing in premium, genuine Apple products Regarding the FPT Long Châu Pharmaceutical Joint Stock Company, it is considered a successful M&A deal beyond the expectations of the FRT retail system With competitive prices, standardized product quality, and a team of highly trained pharmacists, Long Châu pharmacies are recognized as trustworthy and reliable addresses for customer health FPT Retail officially adopted the joint-stock company model in 2012 FPT Retail was listed on the Ho Chi Minh City Stock Exchange (HOSE) at the end of April 2018, obtaining additional capital to expand its retail chains Comparing two main products of FRT, which are FPT Long Chau and FPT Shop, the revenue of FPT Long Chau has experienced remarkable growth in recent years, with an annual growth rate nearly three times higher from 2021 to 2022 In just the first nine months of 2022, the retail chain's revenue reached 6,500 billion VND, making it the highest in the industry despite being the second-largest in terms of the number of stores after Pharmacity However, within the same period this year, FPT Long Chau remained the top position in sales and has expanded to more than 1380 offline stores across Vietnam, surpassing Pharmacity in only one year Figure 1.1 FPT Long Chau Revenue and Growth Rate from 2021 to 2023 (Source: Group research) Furthermore, the pharmaceutical retail sector exhibits significant potential, given its fragmented nature, which has yet to be dominated by a few major players as seen in the electronics market Current statistics showed that the top three players in modern pharmaceutical sectors, which were Long Chau, Pharmacity and An Khang, had built around 3000 offline stores in 2023 This figure was only accounting for 5% of the total pharmacies in Vietnam with more than 60000 offline stores On the other hand, FPT Shop's electronics retail chain shows signs of slowing down due to substantial market saturation and intense competition within the industry According to Statista, the consumer electronics market in Vietnam is projected to grow 1,98% annually from 2023 to 2028 FPT Shop was experiencing a negative growth rate of -20% in the first months of 2023 compared with the same period last year Ultimately, the revenue ratio inside FRT is also rapidly transforming from FPT shop to FPT Long Chau Figure 1.2 FPT Shop Revenue and Growth Rate from 2021 to 2023 (Source: Group research) The pharmaceutical industry is one of the least affected by inflation The average input costs of most pharmaceutical companies are quite similar: 60% raw material costs, 20% labor costs, 10% advertising/marketing costs, 4% depreciation, 3% R&D costs, and 3% logistics & other costs Although raw material costs constitute the largest proportion, they are divided into various active ingredients and different pharmaceuticals, making production costs highly fragmented and less susceptible to inflation, unless there is a significant disruption in the supply chain 3.3.3 Market potential remarks In conclusion, the pharmaceutical market in Vietnam is expected to grow significantly, especially for modern pharmacy chains like FPT Long Chau Despite external challenges such as the pressure on the Vietnamese Dong due to the appreciation of the US Dollar, the overall economic momentum is positive, with a noteworthy GDP growth of 5.33 percent in Quarter of 2023 and a trade surplus exceeding $21 billion The pharmaceutical industry, specifically the healthcare and pharmacy sectors, has experienced robust growth during the pandemic, with a growth rate of approximately 11 percent The market is expected to reach $16.1 billion by 2026, and key players like FPT Long Chau are strategically expanding to capitalize on this potential Factors such as the burgeoning middle class, forecasted population aging, and the population's preference for traditional pharmacies contribute to the positive outlook Moreover, the fragmentation of the pharmaceutical market has created growth opportunities for FPT Long Chau in the upcoming years, with the market showing promising signs in the market growth rate and the market drivers Ultimately, FRT’s current strategy to focus on FPT Long Châu as their main product in the current context is a good tactic for the company's long-term success 3.4 Long Chau Understanding 3.4.1 Value proposition Affiliated with FPT Digital Retail Joint Stock Company – a member of FPT Group in 2017, the FPT Long Chau Pharmacy system is one of the reputable pharmaceutical retail chains in Vietnam With a dedicated mission to attend to and cater to the healthcare needs of the community by providing superior quality products at reasonable prices, Long Chau has strategically focused on two primary core values: high quality in a leading reputation, and a customer-centric approach 3.4.2 Products and services The product portfolios of Long Chau are diverse and pharmaceutically centered, particularly over 70% of its portfolio is medicine and health supplements, and the others are medical equipment and pharmaceutical cosmetics More importantly, Long Chau also offers vaccination services with a diverse range of vaccination packages and a clear immunization process Moreover, both pre-sales and after-sales services are also the primary focus of Long Chau’s investment, as the company is dedicated to its “Fast Medication Consultation”, “30-Day Return Policy Support”, and “Doorstep Delivery Services” 3.4.2.1 Fast Medication Consultation To specify, in order to provide customers with quick and quality medication service, pharmacists at Long Chau are consistently prioritized for professional training, undergoing over 100 training sessions each year in collaboration with leading global pharmaceutical partners These training sessions, accredited with national and international certifications, aim to enhance knowledge and keep abreast of medical advancements, enabling the pharmacists to proficiently provide accurate medication advice tailored to specific health conditions In August 2022, FPT Long Chau inaugurated a specialized training center for its pharmacist team in Hanoi and Ho Chi Minh City In addition, benefiting from its strategic partnerships with pharmaceutical companies such as AstraZeneca, GSK, Sanofi, Boehringer Ingelheim, among others, FPT Long Chau provides opportunities for pharmacists to participate in competitions to obtain national and international certifications In the first six months of 2022, FPT Long Chau saw 300 pharmacists being awarded the national Certificate in Pharmacy Education (CPE) by Sanofi in collaboration with Pham Ngoc Thach University of Medicine (Ho Chi Minh City), and 10 pharmacists receiving international certifications in pharmacy education through a collaboration between AstraZeneca and the Royal Society for Public Health in the United Kingdom 3.4.2.2 30-Day Return Policy Support This represents the second distinguishing feature of FPT Long Chau compared to other brands currently in the market Simply by retaining the receipt or providing a phone number, customers can easily exchange or return a product at the original purchase price if any issues arise or if they no longer have a need for the item 10 3.4.2.3 Doorstep Delivery Services To serve large transaction volumes nationally, the FPT Long Chau pharmacy system has completed investments in two massive distribution centers in the North and the South These officially operational GDP and GSP-standard distribution centers cover an area of up to 35,000m² in Me Linh, Hanoi, and 45,000m² in Huu Thanh, Long An FPT Long Chau's distribution centers are considered the leading retail pharmaceutical warehouses in Vietnam in terms of both area and scale These distribution centers are categorized to meet all pharmaceutical standards such as GDP, GPP, FM, and comply with specialized cold storage conditions for pharmaceuticals according to GSP standards The average operational capacity of these centers is approximately 70,000 orders/day, with over 200 daily deliveries to the FPT Long Chau pharmacy system in the Southern region, ensuring timely doorstep delivery 3.4.3 Pricing strategies With the slogan "Quality Medicine - Good Price," Long Chau Pharmacy adopts an exceptionally attractive pricing policy for all its products compared to the market, especially evident in the pricing of common medicines and dietary supplements compared to other pharmacies 3.4.4 Placing strategies As of the end of June 2023, the total number of Long Chau stores reached 1,243 across all 63 provinces Implementing a highly strategic positioning approach, each store is strategically located in close proximity to large, traditional pharmacies in the local area Simultaneously, Long Chau Pharmacy prioritizes establishing its presence at central intersections, near markets, with prominent and distinctively vibrant green signage to attract customers from a distance 3.4.5 Promotion strategies FPT Long Chau has undertaken substantial investments in outdoor marketing campaigns and corporate social responsibility (CSR) activities, involving the deployment of Point of Sale Materials (POSM), prominent billboard displays, extensive roadshow programs, medical consultant activities These endeavors are meticulously designed to raise awareness and engage the locals More specifically, Long Chau orchestrated a series of Roadshow campaigns such as Cycloshow in Hue, Rivershow in Can Tho and Horse show in Da Lat This has embodied a profound cultural essence in which successfully create impressions and receive positive feedback from customers 11 More importantly, CSR activities are pivotal in enhancing the influence and awareness of brands, particularly in specialized industries such as the pharmaceutical sector Most recently, in conjunction with the launch of the "Lung Care" campaign by the Ministry of Health, organized in collaboration with the For a Bright Tomorrow Foundation and with the support of AstraZeneca Vietnam, primary oncology hospitals and FPT Long Chau conducted numerous early screening activities for individuals at high risk of lung disease directly at the event These activities included counseling sessions, screening examinations, chest X-rays, and were entirely free of charge In cases of suspicion, individuals were referred to specialized hospitals for complimentary chest CT scans to facilitate early detection of lung cancer In addition, the programs “ Long Chau shares" and "F0 Medicine Bag" provide financial assistance and distribute Covid treatment medications to those facing financial difficulties which have also proven to be highly effective in promotion 3.4.6 Financial performance At the end of 2022, the revenue of FPT Long Chau pharmacy chain reached an impressive figure of 9.596 trillion Vietnamese dong, marking a remarkable increase of 2.4 times compared to the year 2021 In the half of 2023, this company contributed nearly 7,000 billion Vietnamese dong in revenue to FPT Retail (FRT), representing a 75% increase compared to the same period The earnings before interest, taxes, depreciation, and amortization (EBITDA) reached 280 billion Vietnamese dong, surpassing the figure for the same period by more than times However, their unit contribution margin ratio was only approximately 0.8%, despite currently being the biggest retailer in the market This is partly due to the fact that a large portion of their budget is now dedicated to the expansion of stores, administration software and hardware, as well as compensating for the costs of training a larger number of pharmacists Moreover, their pricing strategy is more tailored towards the lower end of the spectrum, leading to a pretty low profit margin However, rapid expansion does not necessarily mean that FPT Long Chau are willing to take risks, and bear losses In fact, it is empirical that the company stays in the green in order to exert their dominance over their competitors who are not in a favorable position compared to FPT Long Chau A closer look into the financial performance of FPT Long Chau suggests the following: Overall, FPT Long Chau’s liquidity, solvency, as well as profitability are looking extremely healthy Their liquidity capability is great, with almost none of their credit sales falling into bad debt However, 12 due to their expansion endeavor, resulting in a huge capital investment, their free cash flow as well as current cash debt coverage ratio is not so great Despite that, the percentage of their current debts to assets are still below 1, meaning that they are still capable of paying all of their debts if default is inevitable Furthermore, with how FPT Long Chau has risen over the years, as has remained pretty dominant in the market, we are also witnessing a steady growth in their earnings per share, in spite of the fact that their profit margin are relatively low, which is due to their product and pricing strategy in order to compete with their competitors Liquidity Ratio 2022 2021 2020 Working Capital 298347.95 365421.93 279142.91 1.10 1.11 1.19 ratio -0.21 -0.18 0.21 Inventory turnover ratio 5.77 4.38 2.86 63.27 83.28 127.65 Receivables turnover ratio 103.61 113.14 55.10 Average Collection Period 3.52 3.23 6.62 Current Ratio Current cash debt coverage Days in inventory Figure 3.4.6.1 Liquidity Ratio 2020 - 2022 2022 2021 2020 Debt to total Assets ratio 0.81 0.84 0.77 Cash debt coverage ratio -0.22 -0.19 0.22 3.40 5.44 1.45 -722872.528 -516754.245 502572.7105 Solvency Ratio Times interest earned ratio Free Cash Flow Figure 3.4.6.2 Solvency Ratio 2020 - 2022 13 2022 2021 2020 2575.38 3256.99 -371.07 0.16 0.14 0.14 Profit margin ratio 0.013 0.020 0.002 Return on assets ratio 0.044 0.050 0.003 3.39 2.52 1.65 Profitability Ratio Earnings per share Gross profit rate Asset Turnover ratio Figure 3.4.6.3 Profitability 2020 - 2022 3.5 FPT Long Chau SWOT 3.5.1 Strengths FPT Long Châu possesses a solid set of capabilities that place it above the pharmaceutical retail sector The company's strong digital transformation, led by FPT Software, FPT Digital, and FPT Telecom, has improved overall management and operational efficiency dramatically Using artificial intelligence (AI) in real-time and mobile operations not only simplified procedures but also helped with creative logistics management, resulting in one-hour delivery in urban regions Furthermore, the firm has made significant investments in cutting-edge logistics infrastructure, such as large-scale distribution facilities, to ensure the efficient handling of a huge number of transactions The company's dedication to continuing training and growth, particularly for the 4T pharmacist team, contributes to its strengths Furthermore, strategic partnerships with famous pharmaceutical businesses enabled FPT Long Châu to distribute high-quality medications at competitive prices through an extensive network of 1,600 pharmacies and diverse online platforms in the 4.0 era 3.5.2 Weaknesses Despite its strengths, FPT Retail has several vulnerabilities that need to be addressed strategically Financial management issues, such as a reliance on location-based success, may stymie the company's growth trajectory Long Châu pharmacies' reliance on location, along with the fact that medications are not often purchased consumer items, makes identifying ideal places for expansion difficult Late market introduction and an aggressive system development phase may provide challenges in catching up with established rivals A high debt-to-equity ratio, 14