master internship report improving distribution channels efficiency at quang ninh investment and import export joint stock company

UNIVERSITE DE NICE SOPHIA ANTIPOLIS Institut d’Administration des Entreprises THANG LONG UNIVERSITY Hanoi, Vietnam MASTER INTERNSHIP REPORT: IMPROVING DISTRIBUTION CHANNELS EFFICIENCY AT

UNIVERSITE DE NICE SOPHIA ANTIPOLIS Institut d’Administration des Entreprises

THANG LONG UNIVERSITY Hanoi, Vietnam

MASTER INTERNSHIP REPORT:

IMPROVING DISTRIBUTION CHANNELS EFFICIENCY

AT QUANG NINH INVESTMENT AND IMPORT-EXPORT JOINT STOCK COMPANY

Supervisor : Assoc Pr NGUYEN DINH TAI

Class : Master Affaires et Management International

ACKNOWLEDGEMENT

I sincerely thank Mr Mac Van Viet, manager of Hai Phong branch of Quang Ninh Investment and Export-Import Company has facilitated help me complete the internship and the project "Improving the efficiency of distribution channels at Quang Ninh Investment and Export-Import Joint Stock Company "

I would also like to thank my colleagues at the Quang Ninh Investment and Export-Import Joint Stock Company in Hai Phong for their help and cooperation during my internship

I also express my gratitude to Mr Nguyen Dinh Tai Because of his excellent guidance and advice, he has helped me a lot in the process of completing the project

ABSTRACT

This report presents a project to build and develop distribution channels at Quang Ninh Import Export Company The Intern worked at the company and realized that the company was not really interested in the development and management of distribution channels Therefore, the business results of the company has not been achieved Based on the knowledge learned in the Business & International Managemen course at Thang Long Univerity and the help of instructors and colleagues, the intern has developed a project to help Quang Ninh Investment and Export-Import company perfect its distribution channel After the implementation of the project, the company has acquired a more complete distribution channel system Sales of the company grew significantly The better distribution channel is improved the operating performance of the company.

TABLE OF CONTENTS

COMPANY BACKGROUND 2

1.1 MILESTONESINQUNIMEX'SDEVELOPMENTHISTORY 2

1.2 OUTSTANDINGPROJECTSOFQUNIMEX 3

1.3 FINALCIALDATAOFQUNIMEX 7

COMPANY STRUCTURE AND ORGANIZATION CHART 9

2.1 COMPANYSTRUCTUREOFQUNIMEX 9

2.2 DESCRIPTIONOFHAIPHONGBRANCH 11

THE MISSION: ASSIGNED TASKS & GOALS 12

3.1 TASKSASSIGNEDTOSALESMANPOSITIONINQUNIMEX 12

3.2 THELINKBETWEENTHESUBJECTMATTERANDINTERN’SMISSION 13

CHANNEL DESIGN 16

4.1 ANALYZETHETARGETMARKET 16

4.2 ANALYSISWITHINTHECOMPANY 19

4.3 SELECTIONOF DISTRIBUTIONCHANNEL STRUCTURE 21

4.4 RECRUITINGMEMBERSINTHECHANNEL 22

4.4.1 Criteria for selecting channel members 22

4.4.2 Search the list of potential members 23

4.5 CHANNELMANAGEMENT 24

4.5.1 Review the activities of the members of the channel 24

4.5.2 Relationship with channel members 24

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INTRODUCTION

Distribution of goods is a very important activity in the success of a company A company can produce or provide products or services of good quality, cheap, beautiful design but if not set up one or more suitable distribution channels, it is difficult to put these its products to customers

During the operation of the business, distribution activities are extremely important It not only performs the commodity circulation function but also helps the business to receive feedback from the market From there, the industry can make the right decisions

Distribution activities in the business always revolve around the distribution channel Distribution channel is a group of organizations and individuals involved in the process of bringing products from the manufacturer to the consumer Distribution channels make up the product flow from producer to end buyer All organizations and individuals involved in the distribution channel are referred to as channel members

Quang Ninh Import Export Company is a multidisciplinary company and one of the main businesses of the company is produce pyrophyllite kaolin The company owns the largest pyrophilite mine in Viet Nam However, the pyrophyllite sales activities of the company has not applied scientific knowledge to manage its distribution process This leads to the company's products are not widely available in the market and the company received little feedback from users

To solve this problem of the company, Intern has developed the project "Improving distribution channels efficiency” at Quang Ninh Investment and Export-Import Joint Stock Company This is a very practical and practical project After launched, the project has helped improve business performance of the company

The company was established under Decision No 128/BNGT/QD-TCCB dated March 27, 1964 by the Ministry of Foreign Trade on the basis of merging HQ EXIM CO., LTD and Hai Ninh Border Import-Export Company into Quang Ninh Import-Export and Goods Trade Company The company was structured into business centers specializing in procuring goods for export from all districts and townships in the Quang Ninh province

In 1980, the Company name was changed to “Quang Ninh Export Union Company” and it was restructured into foreign trade centers at districts and townships in the province, specialized goods centers and management committees under the Company's head office

In March 1982, the Company was renamed to: “ Quang Ninh Import-Export Union Company” and it became one of three enterprises located in the North of Vietnam which could do Import-export business directly in the foreign markets It is aimed at "Strengthening export to import" The company had a significant contribution to generation of foreign currency so that Quang Ninh province could develop many economic fields

Since 1990, the company has expanded its business to China Its bilateral trade developed strongly The company approached the market in a quick manner, establishing a very good bilateral trade relationship

In November 1993, the Company's named was changed to “Quang Ninh Import-Export Company” At that time, the Company mainly did direct import-export business and provided

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In 1999, the Company invested in building motorbike assembly and manufacturing line at Yen Giang Commune, Yen Hung District, Quang Ninh Province With such project, the Company got a big profit, helping it overcome financial difficulties at that time and provide many jobs for local workers in Yen Hung District

In 2001, the Company contributed capital to establish Tung Lam Co.,Ltd and participated in the cable car project for Yen Tu Attraction Area On Februar 20, 2002 , the cable car system was completed and put to use

In 2002, it successfully conducted the dairy cow raising project at Dong Trieu District, Quang Ninh Province With this project, Quang Ninh Import-Export Company aimed to helping local farmers to have better economy at their own hometown

In 2003, the Company invested in building an office for its Branch in Hanoi City (No 29, Le Dai Hanh, Hanoi) making it a lease office building

On January 01, 2004, the Company was equitized under Decision No 4221/QD-UB dated by People's Committee of Quang Ninh province and its name was changed to “Quang Ninh Investment and Import-Export JSC.”

In May 2004, the Company was acquired 911 Minerals Company and Quang Ninh Mineral Company which specialized in Pyrophyllite rock exploitation and trade

In September 2005, the Company contributed capital to establish Hai Au Hotel JSC and invested in building the Novotel Halong Bay Hotel at Bai Chay, Quang Ninh Province with 220 rooms as per international 4-star standard On October 13, 2008, NOVOTEL HALONG BAY was officially put in use

In 2008, the Company built a head office for its Branch in Ho Chi Minh City (No 28, Nguyen Thi Dieu, District 3, Ho Chi Minh City) making it an office building for lease

In 1999: The Motorbike assembly project

The motorbike assembly project was conducted in 1999 in Quang Yen Town, Yen Hung District, Quang Ninh Province as a big start, a turning point in operation model transformation from trade (sale) to commodity manufacturing of QUNIMEX With poor economic and social conditions at that time, motorbikes were still an expensive commodity for Vietnamese people The company invested in a Chinese motorbike assembly factory with motorbike price equal to one-third of Thai imported motorbike one at that time Chinese motorbikes were affordable for

Vietnamese people The Company got a big profit from the project which also helped Vietnamese people's travel and offered jobs for the local people in Yen Hung, Quang Ninh Province For many reasons, after some years, the project stopped

In 2000 - 2001: Yen Tu cable car project

With a quick vision and right assessment of big value of Yen Tu historical relic and landscape area at Uong Bi Commune, Dong Trieu District, Quang Ninh Province, the leadership of Quang Ninh Import-Export Company decided to invest in building Yen Tu cable car system from Giai Oan pagoda to Hoa Yen pagoda to serve tourists and visitors visiting Yen Tu, a famous historic site

The project was surveyed for design and approved by Quang Ninh authority, and then on June 18, 2001 Yen Tu cable car project was officially commenced During the construction, the project encountered many difficulties, including narrow and stiff terrain, the narrow site for material gathering, heavy and difficult-to-move machines, requiring an absolutely exact installation of machines With a high determination of the company's leadership, after only 8 months of construction, overcoming numerous difficulties, on February 20, 2002 the company was held completion ceremony and put the cable car system to use

In 2002: Success of the Dairy cow raising project at Dong Trieu

The dairy cow raising project at Dong Trieu District, Quang Ninh province was a social project in which Quang Ninh Import-Export Company aimed at helping local farmers to have better economy in their own hometown This project had a meaningful social significance and highly appreciated by the society

It was successful as the company applied the method which was suitable for farmers, in which the cow had a real owner, i.e a farmer, not an enterprise This persuaded farmers It was a thinking revolution that changed the perception of people about agricultural commodity manufacturing It also enhanced the relationship between the Company and local people Tens of QUNIMEX officers and staffs did efforts to share difficulties with farmers They overcame many challenges during the project, gave advice on raising technique, breeding, product consumption, etc and shared the success of the project with Dong Trieu’s farmers

In 2004: Success of investing in mining

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Right at the beginning of the 1990s when it was still a state-owned enterprise under Ministry of Trade and Industry, Quang Ninh Import-Export Company had many pyrophyllite ore mining operations to export to Japan market With the hope to take the most advantage of natural resources and local advantages, the Company submitted a plan to People's Committee of Quang Ninh Province to acquire Quang Ninh Mineral Company and Minerals Company 911 These were two biggest pyrophyllite ore mining companies at that time which encountered difficulties in manufacturing and finance due to problematic management

After thoroughly investigating about the situation of the two companies, Qunimex set big merger orientations in reality A specific convincing plan was submitted to the Provincial People's Committee which dealt with financial problems, jobs for labors Manufacturing and business at the above-mentioned unite were quickly arranged and stabilized

At present, the company's mineral export has developed sustainably Its market has been expanded not only to Japan but also to Indonesia, Malaysia that contributed to the overall performance of the enterprise

In 2007: Stage II of Yen Tu cable car project

With big successes from Stage I of Yen Tu cable car project and seeing the increasing demand of visitors to Yen Tu, in 2006, the Company surveyed for design and submitted the plan to build Yen Tu II cable car system from Mot Mai Pagoda to An Ky Sinh statute in Yen Tu

After completing required procedures and being approved by authorities , on May 24, 2007, Yen Tu II cable car project was commenced officially During the construction, there were many difficulties due to stiff and high terrain while the Company had to comply strictly with environmental conservation policy to protect the trees that the cable car route passes After 9 months of construction, on February 16, 2008, the Company held completion ceremony and put cable car II system to use right on the occasion of Yen Tu Spring Festival

In 2005 - 2008: Success of conducting NOVOTEL HALONG BAY Hotel Project (International 4 stars)

Quang Ninh Province has many potentials and advantages for tourism, especially Ha Long Bay which has been recognized twice by UNESCO as the world's natural heritage With such strengths, the Company had strong intention to invest in tourism and services, especially high-class hotels After being approved by authorities, at the beginning of 2006, Quang Ninh

Investment and Import-Export JSC initiated the construction of NOVOTEL HALONG BAY hotel - as per International 4-star standard to serve local and international tourists of Ha Long

NOVOTEL Ha Long Bay is a 4-star hotel as per International standard, located on the side of the natural heritage Ha Long Bay It was designed using the idea of a seagull flying on Ha Long sky and spectacular nature The hotel is located in a favorable site, has unique and modern architecture, and luxurious interior Novotel Ha Long Bay has 214 rooms including 144 superior rooms, 44 executive rooms, 24 junior suites, and 2 suites Novotel provides facilities such as outdoors swimming pool, fitness area, Disco and Karaoke club, Spa and Massage services

With the luxurious interior, Novotel has a 350-seat hall, one trade center, and luxurious conference and meeting rooms Especially, Novotel has a buffet room with 200 seats serving Western-Asian cuisine for tourists and Quang Ninh people from 6 a.m to 24 p.m Hotel clients may enjoy coffee, seeing the spectacular landscape of Ha Long Bay

On October 13, 2008, NOVOTEL Ha Long Bay was officially opened to welcome visitors and has quickly become a selected destination of many local and international visitors

In 2009: Stage I of Yen Tu cable car system upgrade project

The Stage I of Yen Tu cable car system was invested and put to use at the beginning of 2002 Although it was put into operation for only 8 years, it showed many limitations, such as low transportation capacity while the number of Yen Tu visitors increases from year to year On “peak” days, due to numerous visitors, the waiting time for the cable was up to 1 hour It made the visit to Yen Tu uncomfortable Recognizing such limitation, right at the beginning of 2008, the company's leadership decided to replace the cable car I system with a new one having a triple transportation capacity This decision was approved by the company's general meeting of shareholders On March 29, 2008, the Company signed an official contract with POMA Group (France) to “Upgrade the Stage I cable car system” It is an advanced visitor transportation system of high safety standards

At the beginning of 2009, after finishing the festival time, the Company removed the old cable car system and stored it In May 2009, the Company built and upgraded the cable car I system With a lot of experience in investment in big projects of related fields, including 2 Yen Tu cable car projects, the Company completed the project on time On December 16, 2009, the

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the past years, the Company has served hundreds of thousand visitors of Yen Tu for Buddhist ceremonies safely and conveniently

Table 1-1: QUNIMEX's Income Statement

For the Years Ending [Dec 31, 2015 and Dec 31, 2016] Unit: VND

Research and development 4,392,158,000 4,213,589,000

181,482,525,000 169,678,925,100

Net Income Before Taxes 12,160,387,000 30,765,986,900

Income from Continuing Operations 10,944,348,300 27,689,388,210

Below-the-Line Items

Source: Accounting Department

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Source: Human Resources Department Figure 2-1: Structure of Qunimex

Table 2-1: The functional description of departments in Qunimex

- Advise the board of director about labor arrangement

- Planning training, recruiting labor according to the needs of the company

- Build a fair system of job evaluation

2 Administration

- Ensuring the needs of the company's office operations - Ensure the company's regulations are implemented - Build and maintain corporate culture within the company - Connect organization with outside environment

- Renting office at 182, Le Dai Hanh, Ha Noi

Branch

- Represent the company in Ho Chi Minh city

- Renting office at 28 Nguyen Thi Dieu, Ho Chi Minh - Sale Pyrophyllite ore in Southern Vietnam

- Export pyrophyllite ore to Indonesia, Malaysia

8 Hai Phong Branch

- Represent the company in Hai Phong city - Sale pyrophyllite ore in Northern Vietnam - Export pyrophyllite ore to Japan

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Figure 2-2: Structure of Hai Phong Branch

- Control quality of exploited ore - Seeking for new mineral deposits

10 Mineral Crush - Crush pyrophyllite ore for customer's request

11 Tung Lam Joint stock company

- Serving passengers transport services by cable car cabin, tours and other auxiliary services in the tourist area at Yentu pagoda in Uong Bi, Quang Ninh

12 Hai Au Hotel Joint stock company

- Operate Novotel Halong Bay hotel (4-star international hotel in Bai Chay - Ha Long, Quang Ninh)

Source: Human Resources Department

Hai Phong branch was established on December 29, 2008, its branch office is located at 182, Phan Boi Chau, Hai Phong, Vietnam

The main task of the Hai Phong branch when it established is sales pyrophyllite ore, which exploited by the company in Hai Ha, Quang Ninh In addition, the branch also has the function of representing the company in Hai Phong city

By 2016, the branch has successful fulfill its assigned tasks when dominating more than 80% of the pyrophyllite ores market in Northern Vietnam Not only that, the branch also actively looking for foreign customers and has successful penetrated the Japanese market with the export quantity more than 10,000 tons in 2016

In 2016, Haiphong Branch contributed 36.5 billion into total revenue of the company, accounting for 20% of total revenue

DirectorMac Van Viet

Domestic SegmentV.Director: Do Quyet Tien

Sales excecutiveBui Tuan Anh

Sale excecutiveDo Ba Lung

Foriegn SegmentV.Director: Dang Huu Dung

Sale excecutiveDo Quang Dung

Sale excecutiveLe Van Hung

OfficesTran Hoai Quang

THE MISSION: ASSIGNED TASKS & GOALS

3.1 TASKS ASSIGNED TO SALESMAN POSITION IN QUNIMEX

The position of the intern in Qunimex is salesman and the following is the task assigned to the intern at Qunimex

Looking for customers: The first task of a salesman at Quang Ninh Import Export Company is to find new customers who have the demand to use pyrophyllite kaolin in North Vietnam and international markets To complete the task, it is to perform the following tasks:

- Target customer information: Customer information can be obtained in many ways, such as through Trade Promotion Department, from Qunimex's current partners, and information on the internet The target customers of pyrophyllite kaolin products are usually companies producing granite and ceramic tiles for low-grade kaolin or companies producing glass, and fiberglass for the high-grade kaolin

- Planning to reach customers: After acquiring customer information, the salesman will plan to approach customers When approaching customers, the salesman must be aware of the position of individuals approached in the target organization Individuals approached should be those who have the power to make decisions about product use such as procurement managers, purchasing managers, etc and also the method approach must fit the business culture of the customer

- Taking care of the current customers: This task requires the salesman to follow the order process and consumption of the current customers From that, it is to forecast future customer needs When there is any change in the customer's consumption, the salesman needs to find its causes and solve In addition, the salesman also receives customer feedback on the process of using the product Salespeople need to create effective communication between the Company and the customer

- Delivering goods: After reaching a contract or an order of the customer, the salesman plans to transport goods to the customer The transportation of goods should ensure the elements such as the right kind of goods, transport on time and safety of goods during transportation This process if done badly will affect the reputation of the Company When the goods are not delivered to the request, it will cause the Company losing faith and loyalty of customers In

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3.2 THE LINK BETWEEN THE SUBJECT MATTER AND INTERN’S MISSION A distribution channel is a collection of interdependent individuals and organizations that take goods from the producer to the consumer The mission of a salesman at Qunimex is to find, contact and bring products to customers So, the salesman is a member of the distribution channel However, the form of this distribution channel is still the simplest form, which is directly from the seller to the consumer

In addition, the duty of the salesman is to take care and connect customers with the Company This will be accomplished with a good distribution channel The distribution channel system will help the company reach customers faster and wider The company's good will be shipped faster and safer

It can be said that helping Qunimex build a good distribution channel is the best way a salesman can accomplish his task

3.3 GOALS ARE ASKED TO TO BE REACHED

Expanding market: Qunimex now occupies more than 80% of the pyrophyllite market in North Vietnam Next goal of Qunimex is to expand the market to overseas markets, especially rare or none-pyrophyllite similar market like Japan, Malaysia But because of the limited resources, in order to reach the target, the Company plans to build a new distribution system, which is more efficient than direct delivery from the seller to the buyer

Reducing freight costs: Transportation costs are one of the biggest expenses in the business process, especially for items that are ordered and used in large quantities such as minerals Moreover, transportation costs often fluctuate, making it difficult for producers to calculate appropriate costs when selling goods Reducing and increasing stability of the cost of sales is extremely necessary It helps the Company maximize operating profits and accurately predicting its financial needs When the financial needs are accurately predicted, it will help the company take the initiative in using financial resources in other projects

Raising business safety level: Risk management is very important in business because the business environment is dynamic and there are many unpredictable factors that can affect the whole processes For Qunimex's expansion plan into a new market, unexpected or unforeseeable factors will increase When risk is well managed, it will help the company avoiding risk or have effective ways to handle it when it happens

3.4 WHAT THE INTERN CAN BRING TO THE COMPANY

The plan of the intern is to implement the project of building and developing distribution channels for Qunimex Here are some benefits the project can bring to the company when it completed

First, Qunimex's next goal is to expand its business to new markets These are completely new markets with Qunimex, so the company needs to accomplish a lot of work to be able to penetrate the market in the best way, such as customer research, competitor research, political situation, environment This requires a great resource and long time to complete Further, the company may not have the resources to do it themselves But when distribution channels are set up, research work to penetrate the market is no longer only Qunimex's own, but distributed to all members of the distribution channel Each member of the distribution channel to ensure the benefits they receive will perform the above activities in order to find customers and sell goods Since the resources required by the company to penetrate the market are reduced, this gives the company more resources to carry out other activities Moreover, resources from many sources will come from a single source so that the company's goods will be distributed and reach the wider customers This increases the company's sales effectiveness and contributes to increased turnover

Second, when moving in the distribution channel, merchandise will not need to go directly from seller to buyer The transportation process will be divided into segments for the distribution channel members As distributors in the distribution channel are not end users but intermediaries, the trip of goods is more focus and stable, the volume of goods being transported in one time will be larger, which will help to reduce costs and increase the stability of shipping costs From then on, it will be easier for the company to plan and use its resources

To increase the safety when doing business, companies usually buy insurance But insurance only has the effect of overcoming the consequences when the problem has occurred rather than preventing the risk But for some forms of distribution, the movement of goods also is the transfer of ownership When ownership is transferred, it means that the related risks are also transferred Distribution channels help to transfer ownership faster and more stable So it reduces the risk to the company