distribution channel at bac a telecommunication electronic joint stock company

Bac A Telecommunication Electronic Joint Stock Company is a company specializing in production and sales of electronic products.. I have been working at the Company, and with my desire t

Distribution channel at Bac A Telecommunication Electronic

Joint Stock Company

Supervisor : Dr DO KIM SON

Class : Master Affaires et Management International

Student Code : 21313795

UNIVERSITE DE NICE SOPHIA ANTIPOLIS

Master Internship Report

Supervisor : Dr DO KIM SON

Class : Master Affaires et Management International

Student Code : 21313795

October 2016

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INTRODUCTION

Distribution is an element of Marketing Mix, which directly impacts business activities of enterprises The organization and management of distribution channel is one of the most important parts in business management Creating a complete distribution channel can help business obtain long-term competitive advantage; hence creating and developing distribution channel requires a lot of time, money and efforts

Bac A Telecommunication Electronic Joint Stock Company is a company specializing

in production and sales of electronic products Newly established, the Company has learned a lot of experiences from other seniors and based on that built a relatively completed and successful distribution channel for itself I have been working at the Company, and with my desire to contribute to the construction and completion its distribution channel, I have chosen

the topic of "Distribution channel at Bac A Telecommunication Electronic Joint Stock Company" for my graduation thesis

ABSTRACT

International Trade and Service Integration and liberalization is the common trend in recent years and in the future as well Every Business has to make its own efforts in the process of integration and obtain world market share, BAC A Jsc is not an exceptional The Integration process was started in BAC A Jsc from 1986 when BAC A Jsc started to transform its operations from a central-planning to an oriented market economy

Up to date, more than 30 years of renewal has passed, BAC A Jsc has gained much achievements not only in the economic development but also in social welfare and employment development BAC A Jsc can make a worthy contribution to the course of social and economic development in the context that Vietnam has moved a part from an imported rice country to the second largest rice exporter in ranking right after Thailand In the area of external relations, Vietnam Has developed trade relationship with more than 200 countries and was the 150th member of WTO and other international organizations concerned

However, along with these achievements, many constraints and limitations are paved ahead BAC A Jsc in the process of international integration Of which, trade and services are facing more difficulties and challenges in the years to come

This is an in depth study of trade and service restructuring in BAC A Jsc in particular

in and trade reform in Vietnam in general which aims at reviewing the achievements and also challenges ahead after 30 years of economic transformation in BAC A Jsc Policy implications are also made for policy makers and practitioners in the long run of the trade reform in the process of international integration and liberalization

This thesis consists of 5 chapters, specifically; Chapter 1 is entitled introduction –BAC A Jsc background Chapter 2 is entitled Company structure and organization chart Chapter 3: highlights the mission: assigned tasks and goals Chapter 4 Current state of distribution channel of Bac A Telecommunication Electronic Joint Stock Company (BAC

A JSC) and lastly chapter 5 entitled Main solutions for perfecting the distribution channel

system of Bac A Electronics and Telecommunication Joint Stock Company

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ACKNOWLEDGEMENTS

I profoundly thank my supervisor - Dr Do Kim Son in the Faculty of Economics and Management of the Thang Long University for his guidance and supervision and it is a matter of privilege to express my gratitude to him His encouragement is a constant source of inspiration to me in completing the work

I thank all my lecturers in the UNIVERSITE DE NICE SOPHIA

ANTIPOLIS and Thang Long University for their encouragement and

helpful suggestions I am much indebted to all my family members - my

parents my brother and sister for their love and affection I specially thank

my friends and classmates for their encouragement during my research

ABBREVIATIONS

Stock Company

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Table of content Chapter I: Overview of Bac A Telecommunication Electronic Joint Stock Company

Chapter II: Organizational structure and some development milestones of the company

I Organizational structure:

1 Organizational structure of Bac A Telecommunication Electronic Joint Stock Company

2 Advantages and disadvantages of Bac A Telecommunication Electronic Joint Stock Company

2.1 Advantages

2.2 Current main difficulties of the company

II Milestones of the company's development

Chapter III: My tasks and job at Bac A Telecommunication Electronic JSC

1 Assigned tasks

2 The goals to strive for in the next two years

3 Reasons why I joined in MBA course

Chapter IV: Current state of distribution channel of Bac A Telecommunication Electronic JSC

I Factors affecting the construction and management of the company's distribution channel

1 Characteristics of the products

2 Characteristics of the market

3 Characteristics of customers

II The state of construction and management of company's distribution channel

General Traditional Trade Channel (GT)

1 Traditional distribution channel

1.1 Characteristics of GT channel that the company is setting up:

1.2 Operation of company's GT channel

1.3 Inspection and supervision

1.4 Activities for supporting and encouraging members in the channel

1.5 Description of company revenue

2 MT distribution channel (Modern Trade Channel)

3 Online channel

4 International Distribution channel

Chapter 5: Main solutions for perfecting the distribution channel system of Bac A Electronics and Telecommunication JSC

Chapter I Overview of Bac A Telecommunication Electronic Joint Stock Company

4 Headquarter and operating area of the Company

- Headquarter: 30-32 Tan Xuan Road, North Tu Liem District, Hanoi

8 Overview of Bac A Telecommunication Electronic Joint Stock Company

Established from 2004, for over 10 years of operation and development, Bac A

Telecommunication Electronic Joint Stock Company has constantly striven for MICROCOM

to become one of Vietnam's leading brands in the fields of electronic and telecommunication With the goal of always putting the customer at the center, and all is for customer satisfaction, MICROCOM brand is becoming more and more familiar to customers and consumers

Bac A Telecommunication Electronic Joint Stock Company is proud to have a workforce which is competent in their professions and devoted in providing services This workforce was formed from the dawn of the company and has been constantly accumulated experiences and knowledge throughout the development process of the Company

Its motto is always being innovative and creative, providing superior products to bring comfort and convenience to customers thanks to thoughtful and conscientious sales method and customer services

Bac A Telecommunication Electronic Joint Stock Company constantly strives for customers

to put in their trust Customer's trust is the element that helps MICROCOM continue to thrive, succeed and achieve greater accomplishments

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• VISION:

A leading company in Vietnam in the field of production and distribution of LED lighting

equipment and mobile accessories

• MISSION:

The company operates with the guideline of "Constantly evolving for customers" and

satisfying customers by creating added values as well as providing professional and prestigious products and services

3 Maintaining customer satisfaction and loyalty to MICROCOM brand; building the

Company into one of leading company in Vietnam with prestigious and professional service quality of customer's choice

4 Developing Bac A Telecommunication Electronic Joint Stock Company into one of Vietnam's leading companies in: good management, good working environment, business culture focusing on customers, promoting cooperation and creativity, and being flexible when business environment changes

• COMMITMENTS:

MICROCOM strives to complete the goal of sustainable development and to become the

leading brand in providing electronics and telecommunication products in Vietnam Based on our own inner strength and expanding cooperation with partners, we commit to:

Commitment to partners:

- Become partner on the basis of "sustainable cooperation and development", with long and comprehensive partnership in order to timely offer new products and services according to specific requirements of customers

- Always listen, analyze and learn from domestic and foreign markets Never be complacent with current success

- Always reflect ourselves to develop (ethics and professional knowledge) Each employee is

a personal brand Each staff member is a goodwill ambassador of MICROCOM to the world

• FUTURE OBJECTIVES:

Never cease to reach further, Bac A Telecommunication Electronic Joint Stock Company

will expand its distribution agents network to provinces and cities across the country with criteria of development, efficiency and sustainability The dramatic increases in resources, model and network of operation as well as human resource quality not only represents flourishes but also is an important milestones in the company's business operation

Anticipating and exerting advantages from every chance, Bac A Telecommunication

Electronic Joint Stock Company constantly researches and develops products and services with added value to efficiently meet customer demands, such as online sales, Call Center, warranty service, etc in order to ensure effectiveness as well as sustainable development both

in the present and the long run later on

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Chapter II Organizational structure and some Development milestones of the Company

I Organizational structure:

1 Organizational structure of Bac A Telecommunication Electronic Joint Stock Company

(Source: Organizational Department)

In the organizational structure of Bac A Telecommunication Electronic Joint Stock

Company, the highest level is the company's Board of Directors Below it is Board of

Management and Board of Supervisors in parallel, elected in annual general meeting of

shareholders in order to monitor activities of departments during operation Under the Board

of Management are Sales Manager and Technical Manager Sales Manager is in charge of

directing departments such as Administration Office, Planning and Facility Supplies

Department, Sales Department Technical Manager is in charge of directing Technical

Board of Directors

Board of Managegement

Supplies Departm ent

Organizational Department

Accounting and Finance Department

Technical Department

PX LED

PX accessories

Sales Department

Point

Department and production factories, other departments are under direction of Board of Directors

To manage factories, within these factories there is also a management unit including:

 Divisional manager who is in charge of general operation of factories

 Deputy divisional manager who is in charge of occupational safety, materials and equipment

 Technical staff who are responsible for technical procedures and production

technologies

 Statistical personnel who records data for consolidation in accounts department

2 Advantages and disadvantages of Bac A Telecommunication Electronic Joint Stock Company

2.1 Advantages

- Scale and location: The company's headquarter is located in Hanoi, the big commercial center of the country, convenient for transactions and distribution of products with smooth transportation

- Market: The market for the two fields of the company is still largely developing, population of Vietnam is crowded (90 million in 2013), income level of people is growing fast (USD 2,109 in 2014)

- Supplies: The company has many partners who specialize in supplying materials and are trusted companions, creating favorable conditions with preferential pricing and payment due date

2.2 Current main disadvantages of the company

In current situation and market trend in the future, the Company will have to face with many disadvantages and difficulties, namely:

- The price of supplies and materials in electronic production sector rapidly increases

- Production technologies in the field of electronics change quickly

- Harsh competition with existing rivals and potential domestic rivals - companies specializing in production of lighting equipment with tradition and reputation such as: Rang Dong, Dien Quang, etc., as well as products of Chinese origin such as: Mi, pisen, Arun, etc

- On the other hand, the company also must face with increasing counterfeits and pirated goods

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- At present the company's machinery and equipment are yet to be synchronized to exert full capacity

- With the integration trend of the country when joining international organization such

as AFTA or WTO, the company has to compete not only with domestic businesses, but also with foreign competitors with more potential and greater strength

II Milestones of the company's development

1 Established in 2004

2 From 2004 to 2005

Manufacturing central warning cabinet for Base Transceiver Station (BTS)

- Main product: Automatic Central Alert Cabinet for BTS (Base Transceiver Station for mobile signals)

- Effects: Alert Cabinet will automatically detect malfunctions of BTS (fire, smoke, stuck air-conditioner, door being opened, etc.) These signals will be transmitted directly to the center At the Center, the administrator can know exactly what problem is happening with BTS and hence provide timely solution At that time, it was very expensive to import central alert devices, and these devices are also not synchronized with those equipped for BTS

- Effectiveness: Reduce costs for telecommunication companies since there will be no payment needed for person on duty, alert accuracy is also improved

- Reason why the company did not develop the product further: Although the company had produced new product of good quality and affordable price, but since the business had only begun to operate at that time, the company was not qualified to participate in the bidding (for direct sales) and had to sell the product through intermediaries, leading to low profits and technology loss to direct competitors

Business lesson learned from this stage: The core of company's technology must be under the best governance and security protection

3 From 2005 to 2010

Manufacturing landline telephones with MICROCOM brand

- Strategy: Reasonable price, good quality, perfect warranty The company provides year warranty for each sold product If the product is defected, within 12 months, customer can change to a new product If the warranty period has expired, a similar phone model will

1-be returned to the customer with an additional service cost

Customers: Telecommunication companies in Vietnam

- Method of doing business: Selling in large batches through contracts signed with telecommunication companies in Vietnam At this stage, Vietnam Posts and

Telecommunications Group was rapidly developing, with the speed of developing landline telephone subscriber network as one of the fastest in the world Landline telephones of MICROCOM brand were presented in most of provinces across the country at this stage

- Starting from 2007, mobile phone growth has been at a breakneck speed, with cheap call rates and no monthly fee required Hence, consumers quickly stopped subscribing to landline telephones and switched to mobile phones, leading to a dramatic decline in landline telephone subscribers (since it requires a monthly fee called maintenance fee)

- Business lesson learned from this stage: The Company only developed landline telephones and had no other product lines, had not anticipated too quickly a change in technology; therefore, MICROCOM landline telephones couldn't develop with continuous sales decline

Changes happen very fast in technology-related fields, which is why the company must diversify its business lines within its capabilities and strength

4 From 2014 to present

- By the end of 2010, when landline telephones of MICROCOM brand can no longer be developed, the company has researched the market and studied products in order to replace old ones and find a chance to overcome difficulties and continue to grow After a period of market researching, the company has chosen products of replacement accessories for mobile phones and other products accompanying mobile phones

Reason for choosing replacement accessories for mobile phones:

- Machinery and equipment: Take advantage of the existing machinery and equipment that the company is using without needing new investment

- Staff: There is nearly no change in staff since the new products basically are of the same technology that the company has invested in

- After researching the market, the company decided to invest in producing some replacement accessories for mobile phones such as: chargers, connecting cables, backup batteries, etc

- Vietnam is a developing country with young population, so the number of mobile phone user is huge (120 million subscribers in August 2016, according to data of Ministry of Information and Communications) With more than 120 million subscribers, the number of broken accessories is also huge, which is also the reason why the company pays attention to this business lines The fact is that, there is almost no provider of accessories accompanying mobile phones, and if there is any, their price is also very expensive Most of the remaining market shares are products of Chinese origin, counterfeiting famous brands such as Apple,

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Samsung, Sony, etc., which makes it difficult for consumers to distinguish between products

of good and bad qualities Almost all these counterfeited products are very cheap with quality not guaranteed, and no after-sales services

Reason why the company develops product line of LED lighting equipment

- Early in 2014, the Board of Management assigned Sales Department and Technical Department to research and develop new product line of lighting equipment using LED technology This is an advanced lighting technology which is power-saving, environment - friendly and especially highly durable

- The company took advantage of the distribution channel it was deploying, which saved cost of sales for new product line of LED equipment

- With a population of more than 90 million people and fast urbanization, the demand for lighting on the market is huge Therefore, the company decided to let sales department and technical department research and develop LED products

- By developing a new product line, the company can avoid risks when only focusing

on mobile phone accessories, since this is an alternative for mobile devices Mobile field is the field of technology that develops very quickly All brands want to establish an ecosystem

of their own (like Apple) However, technology for producing lighting equipment is slow to change, usually it takes a few decades (In recent 100 years, there has been only a few changes

in lighting technology: incandescent lamps, fluorescent lamps - compact lamps, LED lamps) Currently, compact light bulbs still account for 80% of lighting market in Vietnam (Source: Vietnam Electricity company - EVN in 2015)

- Being a new name in the field of lighting equipment, the company has to thoroughly research and find a direction for its products After 6 months of market research, the company

decided to invest in 3 major types of LED products, which are: E27 standard LED bulbs (3W, 5W, 7W, 9W, 12W, 18W) , T5 and T8 standard LED tube lamps (60cm and 120cm),

and downlight lamps (3W,5W,7W,9W,12W)

- These 3 types of product have the largest consumption on the market, are easiest to produce and make use of almost all machinery that the company invested in

Advantages and difficulties when investing in new products (LED)

Advantages:

- Basically, LED lamps are electronic devices, using many electronic components in production, which is the strength of the company since it has been operated primarily in the electronic field of Vietnam with more than 10 years of experience

- Vietnamese market has a large population and is in a period of development with rapid urbanization and high demand for lighting equipment LED lighting is less power-consuming and more durable than compact lamps The company determined that LED lighting is the lighting technology that consumers in Vietnam and all over the world are heading towards

- In Vietnamese market, domestic businesses account for a majority of civil lighting market (Dien Quang, Rang Dong, etc.) These businesses invest a lot in machinery for production of obsolete lighting equipment (compact lamps, fluorescent lamps) These technologies require large investment so that Vietnam's small businesses can hardly invest to compete However, LED lighting equipment requires a completely different technology that medium and small businesses can invest in to produce and compete with those long-standing brands

- Labor for production in Vietnam is generally of low price, import duties imposed on components serving LED lighting technology is also low, about 0%

- Counterfeits, smuggled goods are also a problem on the market

 Domestic market: Competitors are very large companies with potentials in finance, production technology, and brands famous for decades, such as: Rang Dong, Dien Quang, etc

 Lighting equipment imported from Europe: Imported from manufacturers with deep insights in technology, product quality and beautiful design For example: Philip, Lenser, Orsan

 Lamps imported from China: Very cheap prices, of many types and designs

Solutions and strategies to develop LED products with MICROCOM brand

- As a new brand that not many consumers are aware of, the company only focuses on investing in some key products in order to focus technology and resources in production

- Bring products with high quality and beautiful design to the market

- Improve after-sales service, customer care, (LED products of the company all receive warranty of 12 months, if product is defected, customer can exchange with a new one within warranty period)

- In April 2016, the company has started pilot deployment of LED lamps distribution in

4 central provinces: Thanh Hoa, Nghe An, Ha Tinh, Quang Binh After 8 months of market

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research in provinces, sales department has come up with an interesting assessment of LED lamp market In central provinces where income level is low, the level of interest in power-saving lighting equipment is higher than that of big cities such as Hanoi or Ho Chi Minh City

In these two big cities, LED lighting equipment is primarily installed at new constructions, with slow consumption in replacement lighting segment For new constructions, the company hasn't had a procurement division to provide equipment for those projects The objective of the Company is to develop traditional distribution channel in present

- After 3 months of deployment, almost all stores in 4 pilot provinces have accepted MICROCOM LED lamps This is an important first step before the company deploys nationwide product distribution

Reason for choosing 4 central provinces for pilot deployment: These are 4 provinces at the Central of Vietnam With large population and relatively low income, people in these provinces are diligent with a clear sense of thrift They are more interested in the application

of energy-saving lighting technology than people in other areas Many LED lamp brands are focusing on developing in this market segment If the company succeeds in this segment, distributors across the country will know of MICROCOM lighting equipment The development in other markets hence will be easier

Chapter III

My tasks and job at Bac A Telecommunication Electronic Joint Stock Company

1 Assigned tasks: Support and assist Sales Manager

- As a person who loves doing business, I feel very lucky to be able to work at Bac A Telecommunication Electronic Joint Stock Company Although the company is not very large, and there are still issues needed to be addressed and resolved in its management apparatus, but I feel this business model is right for me Working in a small company, I have a chance to take part in many different tasks After 2 years at the company, I feel myself becoming more and more mature in working

- As assistant for Sales Manager, I am able to participate in almost all tasks related to business activities and contribute my ideas to the company's overall operation, from production, product development to after-sales services and human resource policy, etc

- Prior to working at the company, I had a course of working at different companies In general, all company I have worked for are inclined to technology field, such as: Computers, electronics I myself was trained in engineering with bachelor degree in electronics; however, after graduation, I found that I'm very interested in doing business

- I was selected for the position because the Board of Management and Sales Manager need someone who is technical-savvy, passionate about doing business and especially wants

to build a company with strong brand in Vietnam before reaching out to regional and international markets

2 The goals to strive for in the next two years

- Initially, when applying for the position of assistant to Sales Manager, I was a bit concerned because I haven't had any professional knowledge of doing business in a company, although I have participated in many business activities Meanwhile, the vacant position was assistant to Sales Manager, who must be knowledgeable of distribution channel network and have good relationship with distribution networks in Vietnam When I was called for interview, I boldly presented my business model of distribution channel This is a business model that I find interesting and spend a lot of time studying about it

- As I was hired, I asked the Sales Manager of why I was chosen, my strengths and my weaknesses, as well as necessary knowledge I need to supplement The answer I got from the Sales Manager is as follows:

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- I understand techniques and customer taste with products that the company is producing and selling These products are largely related to fields of Electronics and Informatics

- The company is also keen to change the way of bringing products to consumers

- I had participated in business activities (I use to be in charge of sales in a small business after graduating from University in 1995)

- Reference of two friends who I spent time doing business with: 1 Mr Mai Tuan Anh, Director of Phuc Anh Computer Company Phuc Anh Company specializes in providing

products related to the IT sector The company is owning large computer supermarket

networks in Hanoi and neighboring provinces; 2 Mr Tran Xuan Kien, Chairman of the

Board of Administration and General Director of Tran Anh Digital World Company This is a large retail company in Vietnam, with a lot of supermarkets in many cities and provinces, main products are computers, electrical equipment and household appliances

With the experiences that I have accumulated, the Board of Management really wants that after some time of working, I can become Sales Manager and promote MICROCOM to

be a big brand in Vietnam After 2 years of working, I have built my reputation at the company to a certain degree As the person who offers plans and puts a lot of efforts in transforming business model, from a company only sells to wholesalers to a company with its own distribution channel With this own distribution channels, what I want the most for the company is to get information from customers, to be more active in product development and more stable in capital flow

3 Reasons why I joined in MBA course

- Being eager to learn, I have read a lot of books on businesses and researched many different business models to study success and failure of companies in the country and all over the world However, when really embarking on the work of constructing distribution channel with Sales Managers, I realized that there are still much to do, still many contradictions that I haven't been able to figure out despite my self-study from predecessors For these reasons, I decided to enroll in an MBA course with hope that after finishing the course, I can solve problems I have encountered I also do not expect myself to become an excellent CEO after completing the course But one thing I am convinced of is that through this course, what I learned from reality and studied from business-related materials will be systematized in a more scientific way One thing I also hope to gain from this course is relationships with those who also love doing business and participate in the course with me

- There are many subjects that can help systematize my knowledge such as: International Strategy, International Trade Payment Options, International Distribution Channel, etc However, the subject that I find the most interesting with practical nature is Business Game/Roleplay I think business enthusiasts can learn a lot from this subject, from financial management, policy of choice for product line, investment in advertisement, etc., especially vision of a CEO on competition strategy to deal with other rivals