UNIVERSITE DE NICE SOPHIA ANTIPOLIS Institut d’Administration des Entreprises THANG LONG UNIVERSITY Hanoi, Vietnam MASTER INTERNSHIP REPORT: IMPROVING DISTRIBUTION CHANNELS EFFICIENCY AT
MILESTONES IN QUNIMEX'S DEVELOPMENT HISTORY
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 some services such as: transit, transshipment, temporary import and re-export, bonded warehouse
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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.
OUTSTANDING PROJECTS OF QUNIMEX
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
One of the outstanding activities of Qunimex in 2004 was investing in acquiring 2 mining companies in Hai Ha District, Quang Ninh Province
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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
FINALCIAL DATA OF QUNIMEX
For the Years Ending [Dec 31, 2015 and Dec 31, 2016]
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COMPANY 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
- 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
- Research and develop new feasible projects for the company
- Improving the efficiency of active projects
4 Finance - Advise the board of director about financial activities
- Planning for effective use of finance
- Manage cash flow in the company to ensure the company's operability
- Monitor the use and depreciation of equipment, assets
- Carry out the procurement, repair, construction
6 Ha Noi Branch - Represent the company in Hanoi
- Renting office at 182, Le Dai Hanh, Ha Noi
- 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
- Represent the company in Hai Phong city
- Sale pyrophyllite ore in Northern Vietnam
- Export pyrophyllite ore to Japan
9 Mineral exposes - Exploit pyrophyllite ore in Hai Ha, Quang Ninh
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11 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)
DESCRIPTION OF HAI PHONG BRANCH
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
Domestic Segment V.Director: Do Quyet Tien
Sales excecutive Bui Tuan Anh
Foriegn Segment V.Director: Dang Huu Dung
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 addition, weak transportation management also increases costs, thus affecting the profit of the Company
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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
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3.5 THEORETICAL KNOWLEDGE CAN PUT INTO PRACTICE DURING INTERNSHIP
In the "Distribution Channel" subject at the internationals business management course at Thang Long University, the intern has learned the basics of the distribution channel The subject provides him with helpful knowledge such as distribution channel structure, distribution channel forms, channel selection factors, channel maintenance, etc This helps also the intern design distribution channel scientifically and effectively
In addition, subjects such as international strategy provide the intern tools used to analyze the environment inside and outside the enterprise as PESTLE, Five Forces These tools help the analysis or more easily and key more accurate
It is possible to say that all the knowledge learned in the AMI course is highly applicable knowledge and the great help in this project
Figure 3-1: Map of Southern Vietnam
ANALYZE THE TARGET MARKET
Nam Bo is one of the three major regions of Vietnam (including the North, the Central and the South)
The South consists of 17 provinces from
Binh Phuoc southward and two cities Ho Chi
Minh City and Can Tho City
It consists of two subregions: South East, including Binh Phuoc, Binh Duong, Dong Nai,
Tay Ninh, Ba Ria - Vung Tau and Ho Chi Minh
Western South, including Long An, Tien
Giang, Ben Tre, Vinh Long, Tra Vinh, Dong
Thap, Hau Giang, Soc Trang, An Giang, Kien Giang, Bac Lieu, Ca Mau, and Can Tho
The terrain in the whole South is fairly flat, with the Gulf of Thailand in the east, the East and Southeast in the east by the East Sea, in the north with Cambodia in the north and northwest by the South Central
The South East has the height of 100 - 200m, the geological structure mainly the basalt red soil and ancient alluvial soil The river delta area covers an area of 6.130 million ha and over 4,000 canals with a total length of up to 5,700 km
The South West has an average elevation of nearly 2m, mainly the land of new alluvium There are some low mountains in the area adjacent to the Central Highlands, western Kien Giang and Cambodia
Due to the product, the target market of the company will be the industrial sector producing ceramic tiles and sanitary equipment
According to information obtained from the Viet Nam Ceramic Association, Southern Vietnam has 54 plants producing ceramic tiles, with an estimated production of more than 1 billion square meters of brick a year
1 Available at: https://www.google.com/maps/@11.8523002,106.6531156,7.42z [Accessed 03 July 2017, 08:05am]
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Figure 4-2: Distribution of industrial zones in
The industrial parks in southern
Vietnam are distributed mainly in four provinces: Dong Nai, Binh Duong, Ba
Ria Vung Tau, Phan Thiet (See the diagram above) 2
It can be said that the density of the industrial zone has not really focused Their location is usually within 200 km from Ho Chi Minh city
According to market research and information through partners, the company received the results of 60% of materials which are bought by the ceramic company directly from manufacturers The remaining 40% are collected via different channel intermediaries
As ceramic tile production raw materials are often large in volume and cheap in price, ceramic tile companies usually place large quantities of orders By historical transaction history of the company and collect data from partners, the volume for each order will be from 1500 to
The Southern Vietnam has very few minerals which may serve for manufacturing ceramic tiles and sanitary ware So almost production materials are bought from the North Vietnam Because of the impact of long distances with high transportation costs or fluctuations, to avoid increased costs and work to do, the companies in the South are often contracted with spot prices at the factory warehouse
Direct competitors: pyrophylite mines in the country and abroad
It is to state that the distribution of pyrophyllite mines in Vietnam are only located in Hai
Ha, Quang Ninh In the world, the distribution of pyrophyllite is mainly in countries such as
2 Available at: http://www.lahistoriaconmapas.com/atlas/country-map15/vietnam-industrial-zones-map.htm [Accessed 03 July 2017, 09:35am]
Japan, China, India These are countries are located far away from Vietnam and domestic needs are greater capacity to produce
It can be said that Qunimex's direct competitor in the pyrophyllite business in Viet Nam is also the same mineral mining company in Hai Ha, Quang Ninh The table below provides information on Qunimex's direct competitors in the pyrophyllite business
Table 4-1: List of Qunimex direct competitors
Mines name Address Reserves (Ton) Annual output (Ton)
Price of the product(dong) Qunimex Quang Son Ha Long,
It can be said that for direct competitors Qunimex has an absolute advantage Due to the highest reserves of Qunimex mines, it makes it easier to exploit other mines From that, it has advantages in terms of cost and price compared to its competitors
Besides the direct competition, the competitors of the company are those companies whose products substitute pyrophyllite as kaolin, felspat, clay In Vietnam, these types of mineral deposits are quite abundant and have high reserves, but the location of mines is still concentrated in North Vietnam
Due to the fragmentation of competitors, we only can analyze indirect competitors through the price of the products offered in the target market in the following table
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Table 4-2: List and price of substitutes goods of pyrophyllite in Southern VietNam
Source: Sales Department The price of most substitutes is higher than Qunimex's pyrophyllite price This is an advantage for the company when the effect of pyrophyllite is equivalent.
ANALYSIS WITHIN THE COMPANY
- Characteristics of goods to distribute:
Pyrophyllite is aluminum silicate hydroxide mineral with the chemical formula is Al2Si4O10 (OH) 2 3
Pyrophyllite is one of less expansion under the influence of temperature Therefore, Pyrophyllite is commonly used in the manufacture of ceramic tiles, granite tiles and sanitary wares Incorporating Pyrophillte with the right amount of product will help prevent cracks in heating and maintaining the original appearance of the product
Pyrophyllite is also used in the glass industry and provincial veterinary fiber When the iron in the ore is processed and maintained at a low rate (affects transparency), this is a better source of material than quartz
In addition, due to its stability, pyrophyllite can also be used as an additive in construction with the aim of increasing structural durability
Reserves of the company’s mine are over 300 million tons This is the largest mine in Vietnam licensed However, the distribution of ore in the mine is not concentrated, so more resources are needed for the planning of the mine In addition, the infrastructure of the mines is quite outdated, making it necessary for the company to invest in the construction of the mine's transportation and infrastructure
Pyrophyllite products of the company are the raw ore which is crushed to a size approximate 10mm or large crude ore weighing 2-3 tons
3 Available at: http://www.trinityresources.ca/the-company/about-pyrophyllite/ [Accessed 15 July 2017, 10:40am]
The company's capacity is 120,000 MT/year with maximum capacity
The company is adopting quality standards ISO 9001: 2015 for manufacture process and follows certified standards The standards help the company control operating system Thereby, it is capable of providing a stable product and meet customer requirements,
In addition, the company also applies the 5S system of Japan ( in English as "SORT",
"SET IN ORDER", "STANDARDIZE", "SUSTAINT" and "SELF-DISCIPLINE") to improve the quality of the work environment in the company
The company now has 345 employees in the minerals sector The level of human resources is shown in the table below:
Table 4-3: Human resources of Qunimex
To ensure operations and improve efficiency, the company's personnel have both short- term and long-term plans to increase their workload
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SELECTION OF DISTRIBUTION CHANNEL STRUCTURE
After acquiring the above information, based on the knowledge learned in “Manage distribution channel” course, the intern has implemented a project to expand distribution channel for Quang Ninh Import Export Company, which was accepted by the company
In the distribution channel, the members work together through the channel structure to determine the structure of distribution channels appropriate to note the length of the channel, the width of the channel and the type of intermediary distribution channel necessary The length of the distribution channel is expressed through numbers of individuals and organizations participating in the distribution channel The width of the distribution channel is shown through distribution channels by the number of companies using
Currently, Qunimex are using only direct distribution channel from the seller to the buyer The advantage of this form of distribution is the fast flow of goods in fast channels, communication between manufacturers and consumers is passed in time and accuracy This helps the company take more initiative in producing and inventory control Moreover, direct sales to customers will help the company reduce commission or rebate costs for intermediaries However, a drawback of this distribution channel which the company will have is to invest more resources to meet customer need and market expansion Moreover, the efficiency of the distribution channel will greatly depend on the salesman's ability This creates another drawback to the channel's delivery capacity
Figure 4-3: List of distribution channels
To increase efficiency in the distribution channels of the company, the Intern decided to keep direct distribution channels in addition to expanded forms of indirect distribution channels depicted in the image below
Figure 4-4: Distribution channels of Qunimex
This distribution channel form is selected in compliance with the analysis done above In this distribution channel, only intermediaries are wholesaler Channels are short in length so channel management is easier The wholesaler is the source outside the company Expanding the width of the channel still meets the need to expand the market when limited by the resources of the company itself
We do not choose distribution channels through agents because according to a research in Vietnam, at present, there are no agents being intermediaries for raw materials for the ceramic industry.We do not choose the distribution channel through retailers because the characteristics of the goods are raw materials for industrial use in large quantities.
RECRUITING MEMBERS IN THE CHANNEL
Criteria for selecting channel members
To select the right distribution channel members, Qunimex needs to have criteria for selecting members in its distribution channel These standards also make Qunimex easier to manage after the channel is put into operation
Criteria for direct distribution channels: Because in the direct distribution business work only employees of the company, So this is the standard for the company's sales staff when recruited
- Ability to communicate and negotiate,
- Having in-depth knowledge of the company's products,
- Ability to bear pressure on turnover targets and under pressure from customers
The market of the company will be divided into geographic regions Each sales man will be assigned responsibility for each identified market
Criteria for indirect distribution channels: These are the requirements for Wholesaler when joining the distribution channel of Qunimex::
- There must be a legitimate registered business, consistent with the laws of Vietnam;
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- Have good financial capability, ensuring its solvency;
- Have a good reputation in the market;
- Have warehouses to ensure the storage capacity of Qunimex
Search the list of potential members
Through the Association of Ceramic Tiles in Vietnam and information sources such as fairs and information from customers, listed below are the companies that are capable meet the requirements of Qunimex for becoming distribution channel members
Table 4-4: Potential members of the distribution channel
Company name Address Business Area
Lot 9, Go Dau Industrial Zone, Long Thanh District, Dong Nai Province
15 / 15C Chu Van An, Ward 12, Binh Thanh District, Ho Chi Minh City
Address: My Xuan A Industrial Park, Tan Thanh, Ba Ria - Vung Tau
Taicera Enterprise Address: Go Dau Industrial Zone, Phuoc
Thai Commune, Long Thanh District, Dong Nai Province
Address: N1 Street, Binh Chuan Industrial Park, Binh Chuan, Thuan An, Binh Duong
Address: Phu Hoa Commune, Thu Dau Mot Town, Binh Duong
Address: Street No 9, Hoa Khanh Architecture, Lien Chieu District, Da Nang City
Y Mi Brick Company Tam Phuoc Industrial Park, Highway 51,
Tam Phuoc Commune, Bien Hoa City, Dong Nai Province
Sanitary ware production / ceramic tile production
Source: Sales Department Based on the potential intermediary list above, the company staff will contact and work with candidates to find out if they want to be a member of the distribution channel
In addition, information on recruitment for intermediary distribution will also be posted to the mass media such as radio, newspapers, journals This can help information reach all potential candidates When there are other applicants, we shall be based on the distribution criteria to determine whether the candidate is suitable or not.
CHANNEL MANAGEMENT
Review the activities of the members of the channel
Evaluating the channel member is one necessary action to obtain accurate information on distribution channels Thus, channel management is more effectively implemented
For direct distribution channel, turnover is the key indicator to evaluate the effective of the channel Sales result of each sales staff will be evaluated monthly and compared with the targets set out in the company's plan In addition, because the sale staff is employees of the company, factors such as working attitude and corporate regulations will be part of the direct channel evaluation
For indirect distribution channels, turnover is also indicative but it will be evaluated quarterly Another factor to consider is the timing of the payment, the attitude of cooperation, the ability to promote the brand, feedback from customers
Based on these evaluations, the company will determine the incentives or penalties that members of the distribution channel will incur.
Relationship with channel members
Encourage members of the channel Encouragement and motivation make sales result better when the members are more motivated to complete the objectives given to the channel For members of the direct distribution channel: For sales men of the company, in addition to the contracted salary, sales staff will receive additional commissions when sales targets are met Sales staff will receive a commission of 1% when the turnover in the month exceeds VND 1.5 billion; When revenue in the month exceeds VND 4 billion, sales staff will receive a commission of 2% on sales revenue
For intermediaries, in addition to discount rates greater than the 10% direct customer, the intermediary will receive a discount based on the quantity of orders placed Below is the discount proposal for intermediaries in the distribution channel:
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Table 4-5: Discount for distribution channel members
EVALUATION OF PROJECT RESULTS
Expansion of Qunimex distribution channel has been implemented from March, 2017 to now After launching the project , the project has achieved some initial success
The table below shows turnover in 3 months after the project is put into operation, and compared with the same period in 2016
Table 5-1: Turnover of direct distribution channels by month
Source: Sales Department Turnover of 3 months after project put into operation has good growth compared to the previous year Especially in June, sales of direct distribution channel increased more than 11%
In the process of expanding the distribution channel, the company's salesman was recruited by 30%, equivalent to 7 staff They all graduated from university and have more than 2 years of experience in the position of salesman with ceramic goods This is guaranteed against the requirements set out by Qunimex sales staff
This is the new distribution channel put into operation After 3 months of implementation, on June 2017 the company sought and signed distribution contracts with 3 companies Below is a list of intermediaries and revenue from them
Table 5-2: Turnover of indirect distribution channels by month
VTC tiles and brick Joint stock company
It can be seen that the indirect distribution channel of the company has come into operation and is on the growth Due to the initial time to penetrate the market, the results of indirect channel sales are not really high Moreover, the number of intermediaries distributing the company is still quite small
Below is a summary of the cost of transportation and the quantity of goods sold in April to June after the project put into operation and data in the same period last year
Table 5-3: Transport costs of Qunimex
Quantity( Metric tons) Transportation costs per unit (Dong)
REVIEWS
It can be said that the project to increase the efficiency of distribution channels Qunimex has been successful in initially establishing a distribution channel Turnover of the company has
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27 grown over time The products of the company are introduced to more customers, that increases the brand value of Qunimex
Besides the project construction, the Intern is the salesman of Qunimex so also is a member in the distribution channel The success of the project also helps the intern accomplish the tasks assigned to a salesman
This is made possible by a number of factors:
- First, in the process of project implementation, the intern has applied the knowledge learned in the course of AMI This is a comprehensive and highly applicable knowledge This knowledge helps intern in the whole process of project construction It makes the project to be more accurate and scientific Thus increasing the feasibility of the project
- Qunimex is a company operating in the field of mineral business for a long time, so it has a lot of experience and information about the market This allows the analysis of the project to produce faster and more accurate results
- Qunimex has a stable and professional management system This also helps to make the project smoother and more accurate
- The company has major business advantages from having the largest reserves deposits compared to rivals This reduces production costs and creates competitive advantage The low price makes the company's products more easily accepted by customers and compete with products both direct and indirect better
- The company has never developed a good distribution channel is also a factor to help projects succeed when the market is still a lot of space to companies entry
But still one of the problems exist in the project that should be completed:
- Due to limited time, it is difficult to know the project is really successful or not Once the distribution channel is established, there is still much to do to maintain and develop the distribution channel
- Information analysis project information has not been updated yet This is due to limited resources of the company
SUGGESTIONS FOR QUNIMEX
Product distribution is an important stage in business processes and business operations Businesses can produce good commodities or have good financial management but if your distribution is not good you will not survive Therefore the Company Qunimex should focus more on the development and management of distribution channels
In order accomplish this, Qunimex needs to complete the following:
- Increase knowledge of the entire company on the distribution channel Human resources are the core values of the company So the company needs to organize training courses of distribution channels This makes the company have a better human resource Ensuring the human resource needs of the distribution channel at the present and in the future
- Increase in collecting information and management information Managed information will increase the accuracy of decision making in the course of a company's operations In addition, the information is updated promptly to help the company identify opportunities and difficulties earlier, giving the company more time to make decisions
- Increase investment in research and development The company currently has a competitive edge on price This makes it easier for the company to build a distribution channel Investments in research and development help the company maintain and expand the competitive advantage there
- Apply technology to the operation process The company should apply the ERP software into the operation of the company The ERP software will help the operation of the company in a more efficient and scientific way More than half the ERP software can reduce the resources needed in such activities
- Expand relations with partners Good relationships with partners help the company have more benefits from those partners
The above suggestions of the Intern for Qunimex is entirely feasible When these suggestions are made to help the company develop better in terms of both activity and especially in the development and construction of distribution system
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Robert; L Virta; 2004; US Geological Survey Minerals Yearbook
U.S Geological Survey; 2016; Mineral commodity summaries 2016: U.S Geological Survey; Virginia
British Geological Survey; 2017; Word Mineral Production 2011-15; Notthinghan
Charles; W L Hill; 2008; International Business: Competing In The Global Marketplace;
7 th ; The McGraw-Hill Companies; New York
Thanh; C.T.M; 2010; Quan Tri Kenh Phan Phoi; Academy of Finance ; Ha Noi
Website: http://qunimex.vn http://vnceramic.org.vn/
Table 2-1: The functional description of departments in Qunimex 10
Table 4-1: List of Qunimex direct competitors 18
Table 4-2: List and price of substitutes goods of pyrophyllite in Southern VietNam 19
Table 4-3: Human resources of Qunimex 20
Table 4-4: Potential members of the distribution channel 23
Table 4-5: Discount for distribution channel members 25
Table 5-1: Turnover of direct distribution channels by month 25
Table 5-2: Turnover of indirect distribution channels by month 26
Table 5-3: Transport costs of Qunimex 26
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Figure 2-2: Structure of Hai Phong Branch 11
Figure 3-1: Map of Southern Vietnam 16
Figure 4-2: Distribution of industrial zones in Southern VietNam 17
Figure 4-3: List of distribution channels 21
Figure 4-4: Distribution channels of Qunimex 22