proposal to build a business strategy for vinamilk company after covid 19

Besides fresh milk andpowdered milk, Vinamilk also produces a range of dairy products such as yogurt, condensedmilk, baby formula and other diverse milk drinks.. Ice cream: Vinamilk cann

International School of Business

A report

on

PROPOSAL TO BUILD A BUSINESS STRATEGY FOR VINAMILK COMPANY

AFTER COVID-19

Course: Strategic Management

Teacher: Nguyen Phuong Anh

Class: CityU9B

Group members: Nguyen Ngoc Lan

Do Thanh Nam Thieu Nguyen Tri Thanh Dao Minh Quan Pham Huong Nhi Truong Phuong Hoa

Hanoi, 10/04/2024

A report

on

Proposal to build business strategy for Vinamilk company after Covid-19

byNguyen Ngoc Lan _ CA9-124

Do Thanh Nam _ CA9-139

Thieu Nguyen Tri Thanh _ CA9-065Dao Minh Quan _ CA9-149Pham Huong Nhi _ CA9-056

Truong Phuong Hoa _ CA9-218Class: CityU9B

Teacher: Nguyen Phuong Anh

Course: Strategic Management

Hanoi, 10/04/2024

TABLE OF CONTENTS

1 Introduction about the Vinamilk company 4

1.2 Vision and Mission of Vinamilk 4

1.3 Main business 4

1.4 Organizational structure 6

1.5 The current financial performance of the Vinamilk company 6

2 External environment analysis 8

2.1 PESTEL 8

2.1.1 Political 8

2.1.2 Economic 9

2.1.3 Social 10

2.1.4 Technological 11

2.1.5 Environment 11

2.1.6 Legal 12

2.2 The Five-Forces model of competition 13

2.2.1 Rivalry among comperting firms 13

2.2.2 Potential entry of new competitors 14

2.2.3 Potential development of substitute products 15

2.2.4 Bargaining power ofuppliers 15

2.2.5 Bargaining power of consumers 16

3 Internal environment analysis 17

3.1 Human Resources 17

3.2 Financial performance 18

3.3 Technology 21

3.4 Marketing 21

4 Strategic suggestions: using SWOT model or other model to give your suggestions 22

4.1 SWOT of Vinamilk 22

4.2 Strategy 24

References 26

1 Introduction about the Vinamilk company

Vinamilk is one of the leading enterprises in the field of manufacturing and trading milk anddairy products in Vietnam Established in 1976, Vinamilk has developed into a reputablebrand with the mission of providing high quality dairy products to consumers With modernproduction processes and clean raw materials from strictly managed farms, Vinamilk iscommitted to bringing the best safety and nutrition to consumers Besides fresh milk andpowdered milk, Vinamilk also produces a range of dairy products such as yogurt, condensedmilk, baby formula and other diverse milk drinks With commitment to quality and dedicatedservice, Vinamilk has affirmed its position not only in the domestic market but also in theinternational market

1.2 Vision and Mission of Vinamilk

Vision: To become a world grade brand in food and beverage industry, where peopleput all their trust in nutrient and health products

Mission: To deliver the valuable nutrition to community with our respect, love andresponsibility

Condensed milk: Ong Tho and Ngoi Sao Phuong Nam, Tai LocPlant milk: Fresh Soy Milk, double calcium Soy Milk, 9 types of nutmilk, Almond Soy Milk,

Ice cream: Vinamilk canned ice cream, Vinamilk Delight ice creamsticks, Vinamilk Delight ice cream cones,

CheeseDrinking yogurt and fruit milk: Probi raw milk, Vinamilk Hero fruitmilk, Vinamilk SuSu drinking yogurt, …

o Non-dairy product

SugarBeverages: Vfresh fruit juice (apple juice, grape juice, guava juice,peach juice, ), icy pure water, young coconut water, …

Main market for the company’s business activities: Vietnam - distribution systemreaches more than 250,000 points nationwide

Vinamilk's domestic distribution system has more than 430 "Vietnamese Milk Dream" storechains and more than 251,000 retail points, supermarkets and convenience stores across thecountry The e-commerce sales channel giacmosuaviet.com is also developing very well withonline consumption growing strongly in Vietnam Vinamilk has entered the markets of China,Korea, America, to establish a large system in foreign markets Regarding foreign markets,currently Vinamilk products also show viable and positive interest from many internationalusers By 2024, Vinamilk will be present in 54 countries, exploiting the potential worldmarket

(Vinamilk, 2024)

1.4 Organizational structure

1.5 The current financial performance of the Vinamilk company

Revenues sources

Vinamilk generates revenue from two main sources: Domestic sale and Export sale

Domestic sale: The Parent Company recorded a 0.2% increase YoY, amidst an

industry-wide decline, attributed to the positive performance of condensed milk andyogurt

Key takeaways:

o Products Innovation: Introduced and launched a total of 11 products, including the branding packaging for liquid milk in Q3/2023, Vinamilk launched a series of marketing

re-campaigns in Q4 to project the youthful and dynamic image of the new brand identity.Green Farm achieved an impressive 50% YoY revenue growth

o Distribution Network: Vinamilk introduced a completely new appearance for theflagship store and changed the name to “Vinamilk” so the consumers can remembermore easily In 2023, the store channel achieved a revenue growth of 13% YoY.Expanding presence on e-commerce platforms, Vinamilk’s online sales revenue doubledYoY in 2023

o MCM: maintained its Top-of-Mind recognition YoY while purchasing power inNorthern and North Central regions is facing challenges

International markets: Export delivered strong rebound, overseas subsidiaries

continued solid growth Net sales of overseas subsidiaries maintained resilient growthcompared to the high base last year In 2023, net revenue achieved VND 4,713 billion

in 2023, equivalent to 6.5 YoY growth rate

(Vinamilk, 2023)

Achievement of Vinamilk in 2023

In a significant milestone, Vinamilk was recognised as a leader in sustainability, rankingamong the top 5 globally in the dairy industry Its Sustainability Perceptions Value reached animpressive USD253 million Notably, Vinamilk is the sole Southeast Asian representativeamong the top five

Besides, Vinamilk also received multiple accolades in this year's ranking of global dairybrands:

Top 10 Most Valuable Dairy Brands: Vinamilk ranked 6th, underscoring its growinginfluence in the international dairy market

Top 10 Strongest Dairy Brands: Vinamilk's 2nd ranking signifies the brand'sresilience, favorability among stakeholders, and excellent brand perception and equity.Exceptional Value Growth: Vinamilk's brand value surged to 3 billion USD in 2023, aremarkable 6% increase from 2022, reaffirming its position as Vietnam's highest-valued food brand

(PR Newswie, 2023)

2 External environment analysis

2.1.1 Political

Stable Political Environment in Vietnam

Vietnam's political stability is crucial for economic growth, employment solutions, increasingincome, and boosting consumer demand This stability positively impacts Vinamilk's strategicimplementation The Vietnamese government's stable and consistent policies provide aconducive environment for businesses like Vinamilk to thrive, enabling long-term planningand investment in the dairy sector

International Market Expansion

As Vinamilk expands globally into countries like India, the USA, and Russia, it also benefitsfrom Vietnam's involvement in Free Trade Agreements like the EVFTA and CPTPP Theseagreements ease the process of importing dairy ingredients and exporting dairy products,enhancing Vinamilk's operational efficiency in international trade Each country's regulatoryframework, political stability, and government policies significantly influence Vinamilk'soperations and market strategies The FTAs not only facilitate smoother trade but also provideVinamilk with a competitive edge in these international markets The company must adapt todiverse legal systems and political climates, which affect everything from product standards

to marketing and sales practices

Impact of Host Country Politics on Business Operations

The political situation in countries where Vinamilk operates can have a significant impact.For instance, in markets where political instability is high, like Iraq, which constitutes a majorpart of Vinamilk's export revenue (90%), political turmoil can disrupt supply chains and affectsales In response, Vinamilk is diversifying its market presence into more politically stablecountries like Canada, the USA, Thailand, and Australia, reducing dependency on unstableregions

Influence of National Policies on Marketing Activities

Domestic financial, foreign, and monetary policies significantly affect Vinamilk's marketingstrategies Policies governing trade, tariffs, and currency exchange rates can influence pricingstrategies and market competitiveness

Supportive Government Policies for the Dairy Industry

The Vietnamese government's support for the dairy industry, including tax incentives andsubsidies, directly benefits companies like Vinamilk For example, according to the Law, milk

and the majority of medical and agricultural products serving society will only be subject to

an 8% tax The government has also issued numerous incentive policies, specificallyapproving 2,000 billion VND for projects to develop the dairy cattle industry With Vietnam'seconomy transitioning towards reducing trade barriers and encouraging foreign investment,these policies help in attracting investments and fostering growth in the dairy sector

2.1.2 Economic

Purchasing power is affected by Covid-19

According to the General Statistics Office, the country's liquid milk output in 2021 isestimated to reach more than 1,770 million liters, an increase of 4.5% over the same period in

2020 In the two years 2020-2021, despite difficulties due to the epidemic Vietnam's dairymarket revenue in 2020 is estimated to reach 113,700 billion VND and in 2021 is estimated toreach 119,300 billion VND Dairy industry revenue growth is mainly thanks to two mainsegments: powdered milk and liquid milk This growth is due to people increasing their use offresh milk and yogurt to increase immunity during the epidemic period However, it isimportant to note that a significant portion of this revenue comes from the domestic market(84,93% in Q3/2021) As highlighted by recent reports, Vinamilk exhibits a substantialdependence on the Vietnamese market, which, while beneficial during local market booms,also poses potential risks of market saturation and limited growth in periods of domesticmarket instability This over-reliance emphasizes the need for Vinamilk to expand anddiversify its market presence globally

Shift in consumer habits

Consumers are increasingly turning to online shopping and prioritizing healthy products.According to a recent report by Ninja Van, Vietnam currently accounts for 15% of the totalonline shopping market in Southeast Asia, second only to Thailand at 16% and on par withthe Philippines The report shows that Vietnamese people love online shopping and areleading the region in many indicators In 2022, the number of Vietnamese people shoppingonline will reach more than 51 million, an increase of 13.5% compared to the previous year,total spending on online shopping will reach 12.42 billion USD 73% of consumers said theyregularly shop on e-commerce platforms and 59% said they have repeatedly ordered orshopped on international websites In addition, consumers prioritize buying healthy itemssuch as immune-boosting foods, vegetables, organic products and nutritious foods, while

staying away from products with high sugar and fat This reflects their need to maintain healthand fight disease

Fluctuations in commodity prices

Global disruptions in the milk supply chain caused by the pandemic have led to fluctuatingmilk powder prices The price of input materials has increased and many domestic dairyproducts have changed to new prices VnExpress's survey shows that yogurt, liquid milk,domestic and imported powdered milk all increased by 5-10% during the Covid-19 epidemic.The fluctuating milk price situation has affected products such as yogurt, liquid milk, andpowdered milk, both domestic and imported, causing consumers to face increased milk prices

2.1.3 Social

Population Growth Rate

The average population of Vietnam in 2023 was 100.3 million, with urban areas accountingfor 38.2 million people, or 38.1%, and rural areas for 62.1 million people, or 61.9% Thisdemographic trend is seen as essential and advantageous for the dairy farming industry,showing significant potential with an annual increase in consumption volume of up to 30%.Additionally, increasing living standards also provide opportunities for many dairy businesses

to grow With a large population, high birth rates, and improving incomes, health issues arebecoming more focused upon Campaigns for developing and promoting free milk by manybusinesses also help expand the potential market for the Vietnamese dairy sector in generaland Vinamilk in particular

Emphasis on Health and Nutrition

Awareness of the benefits of dairy products has increased, as well as awareness of health andbeauty needs According to Nielsen's report in early 2020, Vietnamese consumers prioritizehealth as their top concern, the highest globally at 48%, an increase of 4% from the fourthquarter of 2019 After disease outbreaks, individuals have reassessed the importance of healthprotection, immune enhancement, and effective nutritional solutions for themselves and theirfamilies However, over 60% of rural residents still do not have the habit of drinking milk.Easier access to information via the internet and media also contributes to increasingconsumer demand Vinamilk has capitalized on this opportunity by producing advertisementsthat resonate with user psychology and habits, which greatly facilitates their advertising,marketing, and product distribution efforts to customers

2.1.4 Technological

Currently, Vietnam is in the process of industrialization and modernization, so productionlines and high technology are increasingly invested and developed In addition, our country'seducation is focusing on training a team of scientific engineers who are able to quickly absorbtoday's advanced technology Vinamilk is applying production equipment and technology thatmeets international standards

In addition, Vinamilk also uses many advanced technologies in raising cows such asBluetooth wireless connection technology, remote radio wave identification technology,Ethernet network, biological sensor system, and surveillance cameras (Vinamilk, 2024).Vinamilk is the only enterprise in Asia that owns an automatic milking system thatmeets G.A

Modern powdered milk canning technology

High temperature sterilization technology is safe and fast

Modern equipment diversifies product packaging

Product quality management technology according to ISO standards

Vinamilk uses modern production and packaging technology at all factories In addition, thecompany also imports technology from European countries such as Germany, Italy andSwitzerland to apply to the production line Vinamilk is the only company in Vietnam thatowns a machinery system using spray drying technology produced by Denmark's Niro, theworld leader in industrial drying technology Companies such as Dutch Lady (a subsidiary ofFriesland Foods), Nestle and New Zealand Milk also use this technology and productionprocess In addition, Vinamilk also uses international standard production lines provided byTetra Pak to produce milk products and other added value products

2.1.5 Environment

Vietnam's tropical monsoon climate is a huge challenge for dairy farms because cows willproduce the most milk between 5-21 degrees Celsius However, there are places withtemperate climates such as in Sa Pa, Lao Cai province, Da Lat, Lam Dong province.According to Vũ (2021), there are places with continental climates such as Lai Chau and Son

La that are suitable for growing quality tall grass Although the climate is hot and humid, ingeneral the natural conditions are quite favorable, suitable for the development of the dairyindustry, especially in the provinces of Tuyen Quang, Lam Dong, Ba Vi, Nghe An, Son La,

…