PRINCIPLE OF MANAGEMENT REPORT ANALYSIS CORPORATE LEVEL STRATEGY OF MASAN GROUP

Masan from 1996-2004 Masan Group was established in 1996 as a small trading company focused on food products.. -1.2 Vertical integration In 2002, Masan Industrial JSC was established a

FOREIGN TRADE UNIVERSITY FACULTY OF BUSINESS ADMINISTRATION

         

PRINCIPLE OF MANAGEMENT REPORT ANALYSIS CORPORATE LEVEL STRATEGY OF MASAN GROUP

Class: QTRE303(HK1-2324)1.2 Lecturer: Đỗ Hương Giang Group number: 13

CHAPTER 1: OVERVIEW OF MASAN GROUP 2

I Masan Consumer Company 2

II Business mission 2

III Business vision 2

CHAPTER 2: CORPORATE LEVEL STRATEGY THAT MASAN APPLY AT EACH STAGE 3

I Masan from 1996-2004 3

1 Growth Strategy 3

1.1 Concentration 3

1.2 Vertical integration 3

1.3 Diversification 4

II Masan from 2005-2008 4

1 Growth Strategy 4

1.1 Concentration 4

1.2 Vertical integration 4

III Masan from 2009-2011 4

1 Growth Strategy 5

1.1 Vertical integration 5

1.2 Horizontal integration 5

1.3 Diversification 5

2 Renewal strategy 5

IV Masan from 2012-2013: 6

1 Growth Strategy 6

1.1 Horizontal integration 6

1.2 Diversification 6

V Masan Group in 2014 6

1 Growth strategy 7

1.1 Vertical integration 7

1.2 Horizontal integration 7

1.3 Diversification 7

2 Renewal strategy 7

VI Masan in 2015 8

1 Growth strategy 8

1.1 Vertical integration 8

1.2 Diversification 8

VII Masan Group in 2016 8

1 Growth strategy 9

1.1 Vertical integration 9

1.2 Horizontal integration 9

1.3 Diversification 9

2 Renewal Strategy 10

VIII Masan Group from 2017-2019 10

1 Growth Strategy 10

1.1 Concentration strategy 10

1.2 Vertical integration 10

1.3 Diversification 11

IX Masan Group in 2020-2022 12

1 Growth strategy 12

1.1 Concentration 12

1.2 Horizontal integration 12

1.3 Diversification 12

2 Renewal strategy: 13

X Masan group in 2023 14

1 Growth Strategy 14

1.1 Concentration 14

CHAPTER 3: RISKS, SUCCESS AND FAILURES OF MASAN GROUP.14 I RISKS 14

1 Operational risks 14

2 Internal human resource factors 15

3 Ethical Risk 16

4 Market risk 16

II SUCCESS 17

1 Strong Market Position 17

2 Diversification and Synergies 17

3 Brand Recognition and Loyalty 17

4 Financial Performance 17

5 Market Expansion 17

6 Successful IPO 17

7 Industry Recognition 18

III FAILURE 18

1 Failed Market Entry 18

2 Integration Challenges 18

3 Product Launch Setbacks 18

4 Financial Performance Volatility 18

5 Regulatory and Compliance Issues 18

6 Execution Challenges 19

CONCLUSION 20

REFERENCES 21

Masan Group, a prominent company operating in Vietnam, hasestablished itself as a leading corporation with diverse business interests acrossvarious sectors The corporation aims to deliver outstanding products andservices that cater to the daily needs of millions of Vietnamese people whileensuring affordability and quality

This paper will focus on analyzing the corporate-level strategy of MasanGroup at different stages of its development to hopefully provide valuableinsights into the company's strategic evolution, adaptability, and growthtrajectory This also allows us to assess the associated risks, successes, andfailures of their strategies

During the early stages of Masan Group's development, the companyfocused on establishing a strong foundation and core competencies in its primarybusiness sectors The corporate-level strategy during this phase aimed at building

a solid market presence, developing robust supply chains, and fosteringoperational excellence Analyzing this stage provides insights into how MasanGroup laid the groundwork for future expansion and positioned itself as a keyplayer in its chosen industries

As Masan Group entered a phase of growth and diversification, itscorporate-level strategy shifted towards expanding its portfolio and entering newmarkets This stage involved strategic acquisitions, partnerships, and investments

to broaden the company's offerings and capture new growth opportunities

By investigating Masan Group's corporate-level strategy at different stages

of its development, we can gain valuable insights into the company's strategicdecision-making, risk management practices and responses to both successes andfailures

CHAPTER 1: OVERVIEW OF MASAN GROUP

I Masan Consumer Company

Masan Consumer, also called Consumer Goods Joint Stock CompanyMasan, is the 7th position in the list of top 50 most valuable brands in Vietnam

2016 and ranks 2nd in the consumer goods industry

Masan Consumer produces and distributes a variety of food and beverageproducts Its products include soy sauce, fish sauce, chili sauce, instant noodles,instant coffee, instant cereals, and bottled beverages The company exports itsproducts in the United States, Canada, France, the Russian Federation, the CzechRepublic, Poland, Germany, Japan, the Middle East, Asia, Laos, and Cambodia

It operates in the packaging technology, food processing, information andcommunication technology, construction, investment, and mining industries.Masan Consumer Corporation which was formerly known as Masan FoodCorporation changed its name in August 2011 The company was founded in

2000 and is headquartered in Ho Chi Minh City, Vietnam Masan ConsumerJoint Stock Company operates as a subsidiary of Masan Consumer HoldingsCompany Limited (MCH)

II Business mission

The Company’s mission is to provide better products and services to the

90 million people of Vietnam, so that they can pay less for their daily basicneeds Masan aims to achieve this by driving productivity with technologicalinnovations, trusted brands, and focusing on fewer but bigger opportunities thatimpact the most lives

Masan Group’s member companies and associates are industry leaders inbranded food and beverages, branded meat, value-added chemical processing,and financial services, altogether representing segments of Vietnam’s economythat are experiencing the most transformational growth

Masan’s vision is to be Vietnam’s leading consumer company by sales,profitability and brand recognition They also want to meet the daily needs of

Vietnam’s 90 million evolving consumers, as well as to be the symbol for qualityand a source of pride among Vietnamese Moreover, Masan want to be thedestination for top talent and to be recognized as the best workplace in Vietnam.

EACH STAGE

I Masan from 1996-2004

Masan Group was established in 1996 as a small trading company focused

on food products The company gradually expanded its operations, entering intodistribution, retail, and manufacturing sectors It established partnerships withinternational companies to enhance its capabilities and access to technology

1 Growth Strategy

1.1 Concentration

In 1996, Masan’s first predecessor company, Viet Tien Industry Technology - Trading JSC was established, specializing in food processing andfood seasoning In 2000, Minh Viet Industry Import - Export JSC wasestablished, specializing in trading foods During 2001, Minh Viet PackagingJSC was established, specializing in producing high-end plastic packaging andViet Tien Food Technology JSC was established, specializing in sauceprocessing Throughout the first 5 years, Masan focused on concentrationstrategy with an aim to expand the primary line of the business Apart from foodprocessing and seasoning, Masan produced packaged food and sauce to increasethe number of its products in the market

-1.2 Vertical integration

In 2002, Masan Industrial JSC was established as a manufacturing facility

to accommodate its sales growth in sauces and instant noodles This backwardvertical integration was applied to produce its own inputs to meet the increase inthe demand for sauces and instant noodles without hiring other intermediaries

1.3 Diversification

In 2003, Viet Tien Industry-Technology-Trading JSC merged with MinhViet Industry Import-Export JSC and changed its name to Masan TradingCorporation During this time, Masan applied related diversification by mergingtwo firms in related industries which trade products; these two firms’ operationand strategy are similar to a certain extent which facilitates the mergingprocedure

II Masan from 2005-2008

Masan Group strategically shifted its focus towards the food and beverageindustry In 2005, the company acquired controlling stakes in various leadingVietnamese food and beverage companies This move enabled Masan Group toconsolidate its position in the market and gain access to established brands

1 Growth Strategy

1.1 Concentration

In January 2007, “Nam Ngu” and “Tam Thai Tu” were introduced Masanoriginated from a company manufacturing food so the introduction of “NamNgu” and “Tam Thai Tu" is a way to raise the number of products it offers, thusincreasing the scale of its production This concentration strategy would increaseopportunities for Masan to approach potential customers having different buyingpurposes

1.2 Vertical integration

In 2007,Masan PQ JSC was established as a subsidiary, specializing intrading and producing raw fish sauce to improve the capacity to procure rawmaterials During this period, Masan applied backward vertical integration byfocusing on producing its own materials to gain control of inputs and becomeitself-supplier instead of buying raw materials from other companies

In 2009, Masan Group conducted an initial public offering (IPO) on the

Ho Chi Minh Stock Exchange, raising significant capital for future growth Thecompany began expanding its market presence and launched several popular

consumer brands Masan Group also formed strategic alliances with internationalpartners to leverage their expertise and expand into new markets.

1 Growth Strategy

1.1 Vertical integration

In 2009, Masan HD JSC, a manufacturing facility in northern Vietnam,was established to increase its production capacity and optimize its distributionand logistics network During this time, Masan Food Corporation tried to gaincontrol of the increasing output by establishing new distribution channels todeliver their goods This forward vertical integration was successfully integrated

as Masan could expand its production capacity and its logistics services at thesame time

1.2 Horizontal integration

Masan Consumer acquired a 50.25% stake in Vinacafe in November 2011.During this time, Masan Consumer successfully applied a horizontal integrationstrategy by acquiring a stake of Vinacafe which used to be one of the main rivalsthat Masan Consumer dealt with in the beverage industry

1.3 Diversification

In August 2009, the Company was renamed Masan Group Corporation,holding 19.9% and 54.8% stakes in Techcombank and Masan Consumer,respectively In January 2011, Economic stake in Techcombank was increased to30.6% following the purchase of Techcombank’s convertible bonds This is thefirst time Masan Consumer acquired a stake in a bank instead of continuing toinvest in manufacturers in the food industry However, this unrelateddiversification strategy could be seen as a thoughtful step which might bringthem high financial returns because Techcombank is a reputable and highlytrusted bank, it is known as a reliable provider of financial products and services,especially for individual customers and small and medium enterprises (SMEs)

2 Renewal strategy

In Mar 2011, Masan Food Corporation changed its name to MasanConsumer Corporation as part of a corporate restructuring aimed at entering

other consumer product categories Masan applied retrenchment strategy torestructure the company’s operations, thus increasing productivity and generatingsales.

IV Masan from 2012-2013:

Masan Group continued to diversify its operations beyond food andbeverage It acquired stakes in various industries, including financial services,mining, and telecommunications The company aimed to capture synergiesbetween its diverse business units and create a more resilient and integratedconglomerate

1 Growth Strategy

1.1 Horizontal integration

In 2012, Masan Consumer increased its stake in Vinacafe to 53.2% FromFebruary to April 2013, Masan Consumer acquired a 24.9% stake in Vinh HaoMineral Water Corporation and increased its stake to 63.5% These are the twomain competitors of Masan Consumer in the beverage industry In this case,Masan Consumer applied the Horizontal integration strategy to increase itscompetitive strengths as a company manufacturing drinks and lower competitionamong industry rivals, eventually increasing its sales and profit

1.2 Diversification

In Oct 2012, Masan Consumer, acquired a 40% stake in French Cattles feed JSC which is the second largest livestock & aqua feedmanufacturer in Viet Nam This is the first time Masan Consumer penetrated inthe Cattle feed Market which is a completely different field compared to thosethat Masan Consumer invested in before This unrelated diversification strategywas applied by acquiring a considerable stake of a Cattle feed manufacturerwhich is a potential firm that may bring higher financial returns

Vietnamese-V Masan Group in 2014

The year 2014 was a difficult year for consumer companies, especially fornew brands since consumers remain cautious with expenditures and were lesslikely to explore new brands However, the Company’s increase in sales and

success in new product launches suggest that its investment in brand buildingwas sound and effective in 2014 In fact, Masan Consumer separated Vinacafeand Vinh Hao from Masan Food and put the two companies under control of anew subsidiary, Masan Beverage, in 2014

1 Growth strategy

1.1 Vertical integration

In July 2013, Masan used forward vertical integration Specifically, thecompany entered into a cooperation agreement with H.C.Stark of Germany toproduce high-value-added tungsten chemicals Via a joint venture between NuiPhao Mining (51 percent) and H.C.Starck (49 percent), 100 percent of NuiPhao’s tungsten concentrate output will be purchased and then processed totransform into higher value chemicals such as sodium tungstate (ST), ammoniumparatungstate (APT) and blue tungsten oxide (BTO)

1.2 Horizontal integration

In December 2014, Masan Consumer acquired a 32.8% stake in CholimexFood In September 2014, Masan acquired Phu Yen Beer and Beverage JSC,producer of the “Su Tu Trang” beer brand

1.3 Diversification

In May 2014, Masan Consumer established Masan Beverage as a whollyowned subsidiary, into which the company’s interest in Vinacafé Bien Hoa andVinh Hao was subsequently transferred This related diversification bring variousbenefits for Masan It has provided a platform to target the attractive USD2.5billion beverage market, which is growing at 20 percent To enable this, Masanhas used the platform to launch energy drinks and isotonic drinks such as Storm(energy drink) and Aktiva (isotonic drink) It is estimated that in three years,Masan Beverages may be as large as Masan Food

2 Renewal strategy

Masan Group also divested non-core businesses such as food packaging bythe disposal of Minh Viet Packaging One Member Company Limited and otherunits where the Company did not have a controlling interest This retrenchment

strategy is applied to eliminate underperforming business units and gatherresources to develop new products

Masan Brewery Company Limited (formerly another investment holdingsubsidiary) was restructured to hold Masan’s beer interest and has beentransferred to MCH Under Masan’s management, the beer facility reached fullproduction capacity with a trial launch in the Mekong Delta region Phu YenBeer and Beverage JSC were then converted into a single member company in

2015 under the new name Masan Brewery PY One Member Company Limited

VI Masan in 2015

1 Growth strategy

1.1 Vertical integration

In January 2015, Masan Consumer applied backward vertical integration

by acquiring a 99.99% stake in Saigon Nutri Food, a processed meatmanufacturer, to go further into the animal-based protein sector In April 2015,Masan acquired Sam Kim Limited Liability Company, the controllingshareholder of Proconco and ANCO The acquired company was subsequentlyrenamed Masan Nutri-Science The acquisition of Masan NutriScienceimmediately made Masan Vietnam’s largest local animal feed player with aleadership position in the pig feed segment Masan Nutri-Science is theCompany’s first step to transform Vietnam’s animal protein industry andultimately reach consumers with branded meat products

1.2 Diversification

During 2015, Masan High-Tech Materials applied unrelateddiversification It has been increasingly recognized domestically andinternationally as a well-established mining and high-tech materials companybecause of its superior advantages in sustainable practices in mineral mining andrefining activities together with innovative recycling technologies to createadvanced high-tech materials, servicing critical industries globally

VII Masan Group in 2016

2016 marked the culmination of three years of investing andtransformation of Masan’s businesses to lay the foundation for the next phase ofgrowth Masan Consumer transformed from a food company into a food andbeverage company A minority interest in Proconco developed into MasanNutriScience, Vietnam’s largest animal feed business by external sales

1 Growth strategy

1.1 Vertical integration

The success of Masan Nutri-Science’s consumer-centric approach andinnovations to enhance productivity: Masan started with a mere minority stake inProconco in 2012 Masan transformed Masan Nutri-Science into an integratedbranded meat player with its “3F model” (feed-farm-food) Masan appliedbackward vertical integration through started construction on its first pig farmand entered into a strategic partnership with Vietnam’s largest branded meatcompany, VISSAN The 3F model is a must to make meat affordable(Vietnamese are paying nearly 2 times the price compared to US consumers), and

to meet the growing demand for hygienic and safe meat products

In November 2016, Masan Nutri-Farm (NA) broke ground on a high-techpig farm in Nghe An, completing their 3F (Feed - Farm –Food) business model

1.2 Horizontal integration

In January 2016, MCH increased its direct ownership in Masan Consumer

to 96.7%, Masan Beverage increased its direct ownership in Vinh Hao to 84.2%and MNS increased its ownership in Proconco to 75.2%

In February 2016, Masan Beverage increased its direct ownership inVinacafé Bien Hoa to 60.16%, which further increased to 68.5% in December2016

In March 2016, ANCO acquired a 14% stake in VISSAN to become itsstrategic partner

In June 2016, ANCO increased its stake in VISSAN to 24.94% In June

2016, Masan Nutri-Farm (N.A) was established

1.3 Diversification

In July 2016, Masan Consumer Thailand was established

In September 2016, Masan Consumer Thailand and its strategic partnerSingha introduced its first seasoning brand in Thailand, Chin-su Yod Thong fishsauce which is related diversification This is the first step in its In-land ASEANjourney to better serve the region’s 250 million consumers

2 Renewal Strategy

The “cleanup” of Techcombank and its “Consumer Tech Bank” strategy

-a turnover str-ategy: M-as-an m-ade -a very difficult -and unpopul-ar decision in 2012

to sacrifice growth In order to emerge as a winner out of the financial crisis, weonly had to do one thing: rebuild a healthy balance sheet

Throughout the market consolidation and optimization period spanningfrom 2016 to 2019, Masan Group dedicated its efforts to the streamlining ofoperations with a primary objective of maximizing profitability

1 Growth Strategy

1.1 Concentration strategy

In December 2018, Masan Nutri-Science successfully introduced the'MEATDeli' meat brand to the market In July 2019, Masan Nutri-Science shiftedits focus to the meat industry and announced a name change to 'MasanMEATLife.' The ultimate goal of Masan MEATLife is to provide delicious, safe,and reasonably priced meat products to Vietnamese consumers

1.2 Vertical integration

During 2019, Masan Group primarily focused its strategy on forwardvertical integration by acquiring distributors to gain control of its distributionchannel

In December 2019, Masan HPC, a subsidiary within the personal andhousehold care products sector, made a successful offer to acquire up to 60% ofNet Detergent Joint Stock Company ("NETCO") at a price of 48,000 VND pershare This acquisition marked the company's initial steps into the HPC (Home