assignment business analysis project the case of thaco group subject business analysis ins3005

THACO currently operates in auto manufacture, assembly, and distribution; provides auto spare part and maintenance services, including manufacturing, trading, and distributing commercial

Ha Noi - 1/2021 FINAL PROJECT

DECLARATION: We declare that

No part of this project has been copied from any other person’s work except where the due acknowledgement is made in the text

We agree that the contributions of each member are as following:

Student name Percentage of Contribution

1 TRUONG VAN KHAI 18.5%

2 NGUYEN MẠNH HÙNG 25%

3 PHAM DUC KHOI 18.5%

4 CAO TIEN THANH 20%

5 BÙI ĐỨC MINH 18%

Signature (Group leader): .- co ceeceenseeenseees Date: 16/01/2021

Contents

1 OVERVEW OF THACO GROUP cm mm nà 4 1.1 IntrOdUCtỈON - cuc nh mm ni ni HH HH HINH BH BÌNH BI HH 4 1.2 POSÏtÏON cuc n nh nh HH HH HH HH HINH BI BH BH BỊ B BH HN B 5 1.3 The company”s organization Char: co nu nu n 6

2 BUSINESS ANALYSIS cuc nh ni n nu n ng BI GB BH BH BN 7 2.1 PESTEL analVSÌS: uc cm ni n HH GB HH BH B BN 7 2.2 Five forCes anaÏVSÏS - cuc ni min n BH BI BI TH 11 2.2.1 Intensity of rivalry amongst existing competitors: - 11 2.2.2 Threat of new ©entranS: cuc non nu n mm 11 2.2.3 Threat Of SubstÏtUt©S: uc non nh nh nh mà 12 2.2.4 Bargaining power of buyers (CustOmerS) co e« 12 2.2.5 Bargaining power Of SUDpPlÏ©FS: cm nu nn nen 12 2.3 7 SWOT analÌVSÏS - cuc non nọ nh nh nh BH BH HH B 13 2.4 Financial RatÏOS on n nu ni ni HH BI GB HD HINH 15 2.4.1 Profitability RatiOS uc cu nu mm mm mu mi 15 2.4.2 Liquidity RatiOS uc cuc nh nhàn n HH BH BH B BA 16 2.4.3 Efficiency RatiOS uc mm n nh HH BH BA 16 2.5 Human resources managemehẨ cuc on nen mm nu 17 2.5.1 Organization and Human ReSOUFCGS: - con nen: 17 2.5.2 Employee welfar© pOÌÏCV- - uc cuc nhàn nhà 17 2.5.3 Research and Developmern: uc cuc nn nhu n nn n hà 18 2.6 E-business MOdelL - cuc nh non n ni BH n HD BH Hi B 18 2.6.1 B2B (Business to BUSỈNSS) - uc mm nu nu n 18 2.6.2 B2C (Business to CustOmer) - cuc cu non nu mm 19 2.7 Information teChnỌOOV.- - - cuc mm mm nh ni mm 19

3 SOLUTIONS AND CONCLUSIONS - cu nu nu năn 20 3.1 SOlUẨÏON cu cu n n n nn n n nn nn n n eee eee eee eee 20

1 OVERVEW OF THACO GROUP

1.1 Introduction

Truong Hai Automobile Co., Ltd was established on 29 April 1997, headquartered at 19 Street No 2A, Bien Hoa II Industrial Zone, Dong Nai Province The founder is Mr Tran Ba Duong, who is now THACO”'s Chairman

In 2007, Truong Hai Automobile Co., Ltd changed to become Truong Hai Auto Corporation (THACO) Currently, the company has three administrative offices located in Ho Chi Minh City, Hanoi, and Chu Lai (Quang Nam) Particularly, Chu Lai - Truong Hai Auto Manufacture and Assembly Complex (Quang Nam) which was established in 2003 on an area of nearly 600 hectares, consists of 24 subsidiaries and affiliated factories

Main activities:

- Passenger Cars Trading & Manufacturing

- Commercial Vehicle Trading & Manufacturing

- Logistics

- Industrial Park Infrastructure

THACO currently operates in auto manufacture, assembly, and distribution; provides auto spare part and maintenance services, including manufacturing, trading, and distributing commercial vehicles (trucks and buses), manufacturing and trading passenger cars from the brands including Kia (South Korea), Mazda (Japan), and Peugeot (France -Europe) As to April 2016, the distribution system consists of

89 showrooms and 53 dealers nationwide and the company now has 14,900 employees

At the present time, THACO is the only enterprise in Vietnam that manufactures and assembles all 3 car lines including passenger cars, trucks, and buses with the localization rate from 16%-36%, providing Vietnamese people with diversified, quality, and affordable cars In

2018 and 2019, THACO has topped the sales chart of Vietnam Automobile Manufacturers' Association (VAMA)

As the leading auto manufacture, assembly, and distribution company

in Vietnam, THACO aims to maintain its position and expand its market

to the ASEAN region, enhance international cooperation to select appropriate technology, increase the local content, and join the global value chain creating platform to become a multi-industry conglomerate

in the region

1.2 Position

Mission: Being orientate to become an Enterprise having a fast and steady growth speed, bringing the most effective results to the investors and the pride to the Vietnamese with the Vietnamese trademark car products, Thaco itself sets its mission including:

- Creating products with THACO trademark to enrich customers’ life quality

- Attempting to make THACO trademark become one of the Vietnamese trademarks well-known in AFTA and in the world

- Based on the unshakeable foundation, THACO produces human and material resources contributing to process of economic, cultural, and social development and of the development of Vietnam motor-car mechanic industry the future

Vision:

- Create products to improve the quality of life of users to become a well-known brand in the AFTA and the world

- Sustainable development brings the greatest benefits to shareholders and partners, and creates a favorable environment for employees to develop in their personal and professional life

« Core value: THACO's core values are formed around 5 pillars:

- Value philosophy

- Different strategies

- Distinctive management

- Suitable employees

- Civil and convenient working environment

1.3 The company’s organization chart:

Chairman of the board

Trần Bá Dương

Permanent Vice Chairman of the

Board

Member of Member of

- The export target in 2020 is to be over 1,200 vehicles of all kinds with the total export value of cars reaching over 50 million USD

e Business model

- Step by step implementing the strategy of developing into a multidisciplinary industrial corporation Automotive and mechanics are key, two main areas: agriculture and construction investment, 2 supporting areas: logistics and trade and services

of the company Vietnam is membership of 63 international organizations, including United Nations, Association of Southeast Asian Nations, World Trade Organization, International Monetary Fund Until 2010, Vietnam had established diplomatic relations with 178 countries The President stressed that one of our outstanding strengths is a stable political environment and national defense to attract investment and economic development Vietnam also maintains a good relationship with almost countries in global This is the premise for Vietnamese companies in general and THACO in particular to develop production and business

¢ The most influential political factor for Vietnam's automobile industry in recent times is the conflict between Vietnam and China in the East Sea At present, China is the second largest supplier of components to Vietnam, therefore the conflict will greatly affect the domestic manufacturers

- Economic factors :

« Vietnam's economic growth rate increased for recent years : + GDP increased from 475.8 billion USD in 2013 to 647.4 billion USD in 2019)

+ Average 5 years, GDP per capita increased by 6,7% / year and GDP growth rate increased by 5.8% / year

+ Unemployment decreased from 2.8% in 2015 to 2.2% in 2019

« Economic growth entails the development of the middle class, who have demand for car consumption In addition, a large urbanization rate also contributes to high demand for automobiles

« However, Vietnam's economy is also facing many challenges of Policy Although monetary devaluation has positive impacts on

the trade balance, however, for the automobile industry, which is heavily dependent on imported components, will create disadvantages in input costs Although inflation has been controlled, the economic recovery rate is still slow Credit growth

is generally low

Nonetheless, the material production sector tends to increase gradually This poses opportunities to develop and also challenges to compete for automobile manufacturing and assembly enterprises in general and Thaco in particular

- Socio-Cultural Factors:

Vietnam with more than 90 million people, there is 67% of working age with the demand for transportation and road freight transport with growth rate of over 10% per year; in which passenger transport accounts for 91.4%

Rate of urbanization: 2.98% annual rate of change (2015-2020 est.) that can increase the demand of purchasing cars

The advantage is that as an local business, Thaco understands the needs of domestic customers and understands the topography, thereby continuously improving the design models, changing the design for the cars to bring out the lines convenient products to meet the high demand for consumers It is not too difficult to explain why the models like Newmorning and Thaco's family cars -Kia are so popular with Vietnamese people (compact, fuel-efficient, suitable for the terrain and shape)

- Technological factors :

The processing and transfer of knowledge and information takes place quickly and widely thanks to the development of a modern

tool system, in which information technology plays a decisive role

« The above development has really created favorable conditions for international trade in terms of time as well as costs

« However, in Vietnam at present, the state of technology is still very outdated , has not been invested much innovation, lack of modern refinement equipment, so the product quality is not evenly and low productivity, leads to high costs which reduce the competitiveness of products

e With the car industry's special characteristics, science and technology are a very important factor in the production process, improving production efficiency, export, scale up output, and optimize costs However, with integration trend, strong globalization process brings THACO many opportunities to access the new and advanced technology

- Environmental factors

« Environmental factors include the ecological environment that exists around the environment in which the company operates, for its inputs, on the transport of its inputs , fuel such as electricity, gas, petroleum

« Some of the factors affecting the company's production through natural factors include:

+ The air and environmental pollution

+ Industrial waste

+ Disaster situation

« While Vietnam is a country with a more unstable climate than other countries

¢ Natural factors are quite important, with the natural advantages

of the country, the State has created large-scale planning zones

and industrial centers, which has enabled Thaco to build a production complex modern, the largest scale in the country Besides, natural factors that contribute to product orientation must be consistent with the terrain, climate and weather of the product National natural factors with quite rich resources, providing large sources of fuel, low prices bring many advantages for the company in production, orienting the localization process from the production of spare parts to assembling and distributing products instead of importing from suppliers

up strategies and bold decisions to enter Chu Lai open economic zone, building Chu Lai - Truong Hai automobile production and assembly factory, specializing in trucks and passenger cars However, the over-preservation of the current automotive industry is often easy to make the price of domestic cars too high, creating inertia for businesses The current tax policy is still highly protective so the price of cars is still high Automotive parts’ s tax is not reasonable, domestic parts cannot be produced but still remain at high tax rates

2.2 Five forces analysis

2.2.1 Intensity of rivalry amongst existing competitors:

se Businesses in the industry will compete directly with each other, creating pressure on the industry to create a competitive intensity For foreign competitors, the biggest competition of Vietnamese enterprises in ASEAN region is with Thailand and Indonesia Competitors with Truong Hai such as _ Toyota, Mercedes-Benz, Audi .’S promotion and attracting customers are not strong However, at the time of the current market economy development, the current competitive companies always create new things such as: new products, beautiful, different models and bring some outstanding features, and especially the price, the companies compete with each other very high in price, the rear models have more fashionable models, suitable for more consumers, and prices will be more favorable Meanwhile, current consumers are very much in need of changing their vehicles according to the trend of higher development first, pursuing and gaining strong market share

=> Rivalry competition in the industry is high

2.2.2 Threat of new entrants:

« The number of companies that are not currently competing in the industry but are capable of doing so in the future, enterprises in the industry in the process of integration with the gender card economy, the number of foreign enterprises, foreign joint ventures investing in real estate and automobile assembly increasing that creates a high competitive strength in the industry About barriers to entry or withdrawal It will be very difficult to participate in the automotive market, with large investment costs for production, a strong distribution system is

needed, while industry has too many strong brands with the advantage of reputation of brand, Loyalty of customers and advantage of experience in the market customers The industry has a high growth rate and also creates a great competition among competitors In cost advantages: Existing companies can easily produce and offer its products and/or services at a lower cost/price than that of new entrants About government policy and protection tariffs, car has very high tax rate coupled with excise duty tax In addition, THACO are striving to become the largest automobile supplier in Vietnam

=> High barriers to entry into the industry

=> Asa result, pressure from new entrants is low

2.2.3 Threat of substitutes:

Substitute products of the industry are products of another industry but serve customers similar to the analyzing industry For automobile manufacturing and assembly industry, the company's replacement products such as ships, motorbikes, bicycles, etc Because of the size of the consumer market, there

is also a majority of consumers, medium and low income, so the demand for these products will not be as high as other means

=> Threat of substitutes is medium

2.2.4 Bargaining power of buyers (customers)

The buyer is the basic force that determines the potential profitability of the industry as well as the ability of the company, the buyer can be individual or organization, business The number of customers participating in buying a lot of products, and the number of diverse automobile companies, many well- known brands compete and create conditions for buyers to choose between these suppliers: TOYOTA, FORD , HUYNDAI,