Our company e Company name: Vina furniture e The company has established in 2018 in Vietnam, which is a start-up company in the home furniture industry.. Customer value proposition Custo
Trang 1Students: Duong Vi Nghia
Cao Phuong Anh Phó Quỳnh Trang
Nguyễn Giáng Hương
Phan Phương Trang
Class: IBM 59 B Supervisor: PhD Nguyén Anh Minh
Ha Noi, October 12, 2020
Trang 2CONTENTS
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I OUR COMPANY AND PRODUCT 1
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Trang 4PARTA
I OUR COMPANY AND PRODUCT
1 Our company
e Company name: Vina furniture
e The company has established in 2018 in Vietnam, which is a start-up company in the home furniture industry
e We are the initial company focusing on innovating home furniture to be smart and saving-space in Vietnam
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e Our company’s strategic vision is “ we aim to be one of the most innovative manufacturers of saving-space furniture with good design, functionality, high quality and expendable ”
The mission statement of our company:
e We aim to produce furniture which is saving-space by creating a functional and smart design We develop and manufacture furniture of high quality at affordable prices for retailers worldwide
e Besides, we try our best to deliver the best service to our customers
e Initially, we strive to be the most innovative manufacturer in Vietnam and further
on to be an approved furniture manufacturer in some selected markets
Customer value proposition Customers receive a high quality of saving-space furniture at an
The company guarantees the quality of furniture in long term The customer receives good customer service:
+ Delivery the furniture depending on customers’ requirements
+ Free install at home
+ Free supports/advice when customers need
affordable price The furniture has a good design and functionality
Trang 5Profit margin Profitability depends on the number of products sold to cover the
cost and provide attractive profits
2 Our product
e Product name: Transforming cabinet
e Material: pine wood
The advantage of pine wood are:
v¥ Pine is a renewable resource
o Because pine comes from plantations, it ensures that the impacts on the environment are kept to a minimum
o Lessens our demands on timber from our state forests, thus preserving the natural beauty of the forest
v It’s easy to work with
© Itis easier to cut, stain, and carve than other natural materials, which reduces
the number of time projects take to complete The biggest advantage of working with pine is its acceptance of nails Some materials are difficult to drive a nail through — some even require pre-drill holes
v Resistance against decay and rot
© Pine timber that we used is treated to resist decay and rot The longevity of the product is guaranteed
Trang 6
Y Aesthetic natural design
© When discussing the benefits of pine timber, it is hard to go past the fact that
it is naturally pleasing to the eye You won’t have to do much to the timber
to make it look beautiful Pine has natural patterns and grains in the wood that gives it an aesthetic appeal
The specific features of the product:
The product has a smart design: The differentiated features of our product is the transformation from the cabinet to the working table and chair It occupies small space for
a table, cabinet, and chair
Il THE INDUSTRY’S ENVIRONMENT
1 Macro Environment in Vietnam
11 Political factor
e Political stability, no risk of military invasion economic stability
Trang 7e The Government is not too interfering in the Home Furnishings & Fixtures industry
e Intellectual property protection
1.2 Economic factor
e Developing country with stable economic growth
e GDP growth is at 2.6% per year
e Low inflation (2.7%)
1.3 Social factor
e Vietnamese people like home decoration and wooden furniture
e densely populated and the majority of people have an average income
e Purchases were based on“needrather thanluxury” and_ environmental
consciousness
1.4 Technological factor
e Handicraft techniques are good but the technology is not advanced
e Outdated technology makes it impossible to optimize the product production line, it costs money to import foreign technology
1.5, Environmental factor
e A tropical climate country with rich vegetation, providing a variety of wood
e Regulations on environmental protection are not strict
1.6 Legal factor
e The legal system is relatively good
e Have Copyright, patents / Intellectual property law
e Consumer protection
e Employment law
2 Industry’s Environment in Vietnam
2.1 Suppliers
Our pinewood suppliers requirements are:
Y¥ Assurance of high-quality material
Trang 8vˆ_ Heated treatment and chemical treatment pine wood
vˆ Perfect finish in optimum strength and eye-catching performance
The main material suppliers are Minh Long Wood Company and An Viet Company These suppliers provide a large range of materials, which match the company requirements, at an affordable price
» Hoa Phat Group, Dai Loi furniture, .— Manufacturing bed tables
» Online trading market: Tiki, Lazada, .— Import from famous furniture companies
in other nations
High price: 400.000vnd — 550.000vnd
Unassured quality bed table:
» Vietnamese wood mill — manufacturing bed tables
» Store in the market — illegal import from China
Low price: 180.000vnd — 200.000vnd
2.3 Rival firm
Home furniture companies exist in the market for a long time, providing normal home
furniture products without clever innovation (Chair, Table, Drawers, .)
e Hoa Phat Group
e Vietnamese local wood mill
Trang 9e Office workers, Blue-collar workers, university students, They live alone in the
small apartment/room; as a result, they need to maximize space-saving
e The owner of dorm/mini apartment/room for rent, For renting at a higher price, they must equip full home furniture for their customers so that they have demand for the product combining many features
3 Five forces analysis
3.1 Firms in other industries offering substitute product
A bed table is the appropriate substitute product The bed table is convenient for the customer because it is small, easy to handle, and space-saving This product exists in the market for the long term; as a result, many people know about and use it The price of the
bed table is low because of the low cost to manufacture
The high-quality bed table
e The suppliers of high-quality bed tables in Vietnam are Hoa Phat Group, Dai Loi furniture, or in the online market trading, where customers can buy the bed table imported from Korea, Japan,
e Hoa Phat Group, Dai Loi furniture are the large furniture manufactures in Vietnam, they affirm their products’ quality
e The bed tables that are imported from big furniture manufacturers in Korea, Japan, can be easily found in the online market (Tiki, Lazada, ) with eye-catching performance
Trang 10e The price is high, around 400.000vnd — 550.000vnd The quality of products has been tested carefully before selling to the customer The products can be used in the long term
The unestimated quality bed table
The bed tables are supplied by a small Vietnamese wood mill or imported illegally from China and sold in the small market The quality of the products is not guaranteed, normally are low The price is cheap, around 180.000vnd — 200.000vnd The products can easily brake after using in the short term
& The competition from substitute products is high
«* Solution:
e Our production includes table, chair, and cabinet in the small space When comparing with our product, the bed table does not have enough function for the customers The special features of our product can be able to defeat the substitute product — the bed table
e Even when customers have a bed table, if the company can raise the demand for this group of customers, they might purchase our products
e The company might inform you about the products especially about the function to compare with a bed table, which aims to create the demand for the customer 3.2 Suppliers
Because of a start-up company, we are not able to establish the pine planting areas; as the result, we need to purchase wood from the wood suppliers in the market
Our main pinewood suppliers are Minh Long Wood Company and An Viet Company These suppliers have experience in providing pine wood Their process begins from planting pine to resistance against rot and decay, which are appraised by a competent authority The pine provided by these suppliers has high quality and good performance Their pinewood has an attractive price when comparing with other suppliers
Trang 11Our demand for supplier wood is high because the quality of wood supplied affects directly the quality of the products The company wants to manufacture high-quality home furniture so the requirements of suppliers are high
Furthermore, the suppliers are concentrated in selling to the large companies, who have cooperated with them in the long term
= The bargaining power of suppliers is strong
“7
*«* Solution
Our company strives to find other suppliers who can respond to the requirements Furthermore, we always buy materials from at least two suppliers In case one supplier is not able to supply wood on time, the company can ask the others
3.3 Potential new entrants
The product requires experience when manufacturing this product so it is very difficult to imitate The design of the product in detail, carefully estimated in each component of the products; as a result, when the product has done, every part can work smoothly
The capital requirement to establish the manufacturing process is high from the inputs to the finishing process There are many steps that a new entrant must establish, which raise the capital requirement
= The threat from the potential entrants is low
Trang 123.4 Buyers
The target customers are students, office workers who live in a mini apartment, renting a room, Their room’s space is small; as a result, they have demand for saving-space furniture Another group of target customers is the owners of the mini apartment, room for rent because they are required to equip full indoor furniture and household commodities in their rooms/ apartments for rent
The number of customers demanding these products raise because it is unique and differentiated in Vietnam and this type of product appears in the Vietnamese market for
the first time
Moreover, the increase of people moving to big cities especially Hanoi and HCM City leads to the growth of mini apartment, room for rent, which requires saving-space furniture It is estimated that 200.000 people are moving to HCM City each year In 2025, the HCM City population is forecasted at 10 million people In Hanoi, the annual increase
in population is 160.000 people
Instead of buying these products, customers can buy a separate chair and table, which total price might be higher The buyer's cost of switching to competing products is high
& The high demand for this product
¢* Maintain the bargaining power of buyers
The company continues upgrading not only the quality but also the function of the product
to differentiate from others
The company researches the demand of the customer frequently to manufacture a suitable amount of the products
3.5 Rivalry among competing sellers
Hoa Phat Group provides an eye-catching, high-quality product but the price is high The average price for Hoa Phat Group’s combo chair and table are 1.600.000 VND, which is higher than our product
Trang 13The local wood mill producing combo separated chairs and tables in the market announce the lower price, around 1.000.000vnd However, the quality is not guaranteed, and customers do not receive any free support from the sellers
The cost to switch from the combination of table and chair to the separated chair and table with the same quality is high
The product of our company is differentiated and specific because it is more functions than a separate chair and table and it is space-saving
“+ Maintain the low competitive pressure created by the rivalry among competing
Il COMPETITIVE STRATEGY
1 About the Best-Cost strategy
e The best-cost strategy is the strategy of increasing the quality of products while reducing costs This strategy is applied to give customers “more value for the money.”
e Itis achieved by satisfying customers’ expectations on key attributes of products
At the same time, prices are charged lower than that of the competitors
e The best-cost strategy is a hybrid It balances a strategic emphasis on low-cost against a strategic emphasis on differentiation It is considered as the most powerful competitive strategy of all
Trang 142 Reasons to use best-cost provider strategy (Combination of Low-cost provider and differentiation strategy):
2.1 Buyer diversity:
The best-cost strategy will work very well in a market where product differentiation becomes the norm because of buyer diversity, and also a substantial number of buyers are sensitive to price and quality
As from the previous part, according to the 5 forces model for the industry’s environment analysis, it is already stated that the Vietnamese market is large which increased the diversity in demand for different types of products Specifically, as the need for space- saving furniture raised recently, it is likely to be an opportunity for Vina furniture In this case, according to the research, the company’s product is also differentiated from the other
rivals with smart attributes, which is little to be seen in the market at the moment
Moreover, as the company’s product is average-priced, this has contributed to the price and quality sensitivity of the customers in the market
2.2 Positioning advantage
A company with a best-cost strategy can position itself near the middle of the market — with a medium- quality product at a below-average price, or with a very good product at a medium price Many buyers may prefer mid-range products They avoid cheap, basic products of low-cost producers They also avoid expensive products of top quality Despite there already have been many incumbents in the industry, these companies tend to target exporting markets or with high-end, luxurious furniture (Model 1) Other rivals, while account for a large market share domestically, do not have out-standing attributes, otherwise due to the lack of brand recognition Moreover, Wood furniture in the Vietnam market is mainly dominated by foreign companies (about 80%) Therefore, the domestic market for wood products for Vietnamese enterprises like Vina furniture is huge This is also a part of Vina furniture strategy, as the company focused directly on a specific segment of the market Vina furniture expects its product to be used widely at apartments,
mini-apartments, rented houses, dormitories, In other words, it can be concluded that
Vina furniture target customers should be the people from the age of 21-40, as most of
11
Trang 15them are young people, newly wedded couples, students who look for small and convenient houses with smart and modern furniture This group has an average salary of just under 10 million VND/month, and they tend to buy goods with an average price yet having decent quality Therefore, Vina furniture with a differentiated product at the above- average price with medium quality is among the best choices of the customers of its segmentation
2.3 Resources and capabilities
The best-cost strategy will work best when the company has the resources, know-how, and capabilities to incorporate upscale product attributes at a lower cost
This strategy is ill-advised if the resources and capabilities do not permit the company to manage costs down and product caliber up
According to the previous reports, the amount of legalized wood suppliers in Vietnam is moderately small, which might cause difficulties for any company in the industry to find a stable wood supply source This might result in the strengthening of the supplier bargaining power, therefore the suppliers hold the right to decide the prices, usually have
to be high to benefit their business Moreover, as the forest area is gradually decreasing recently, the logging process is under the strict control of the government as well as other kinds of taxes increased in this specific business segment to protect the forest have also contributed to the high price of the wood suppliers
However, Vina furniture has its attention on the suppliers outside Vietnam, where there is
a plentiful supply of wood Specifically Alternatively, Vina furniture can switch its suppliers to those in Cambodia and Laos, where the forest area is larger and the supplier price is lower This helps the company to lower the cost to achieve a competitive advantage over the rivals yet remain the quality of the product Besides, based on the outstanding attributes of the product, it takes Vina furniture significantly less effort and resources to produce a complete set of chairs and table together in comparison with the other company’s process with the individual set where the chair and the table are separated
Trang 16Additionally, Vina furniture also aimed to conduct different types of advertising methods
to enhance the company’s image as well as innovate the product’s features with diversity
in models to match with the purposed of the customers By achieving these objectives, it should be able for the company to manage the costs down as well as enhancing the product’s recognition
Minh Duong furniture
Woodnet Vina furniture
Domestic Market Coverage International
Figure 2: Strategic Group Map of Vina furniture in the Home Furniture Industry