Solutions to improve distributors system of Holcim Vietnam

MINISTRY OF EDUCATION & TRAINING UNIVERSITEÙ LIBRE DE BRUXELLES HO CHI MINH CITY OPEN UNIVERSITY SOLVAY BUSINESS SCHOOL MBMM PROGRAM PHM VN TRÍ SOLUTIONS TO IMPROVE DISTRIBUTOR’S SYSTEM OF HOLCIM VIETNAM FINAL PROJECT MASTER IN BUSINESS & MARKETING MANAGEMENT Tutor: Trn Xuân Kiêm, DBA Ho Chi Minh City 2007 i WARRANT STATEMENT This is my original work. Any data result or quote in the work is clearly identified. Phm Vn Trí iii ACKNOWLEDGMENTS The author wishes to acknowledge to the following people for their support and assistance during the preparation of this thesis. Firstly, I would like to express my gratitude to the members of the MMVCFB program who, during the courses have delivered invaluable experience, knowledge and assistance. The extensive assistance, guidance, advice and encouragement of my tutor Mr. Tran Xuan Kiem-DBA throughout the thesis study are sincerely and gratefully acknowledged. My thanks also go to Ms. Tran and Mr. Serge as program coordinators, without their assistance; my work would not have been completed on time or with quality. Secondly, I would like to say thank you sales team of Holcim Vietnam who have given me invaluable assistance during my research. Special thanks must go to Mr. Suhard Amid – Special Project Manager - for his value advices and considerable assistance. Likewise, thanks are also extended to my customers from their kindly cooperation to participate in the interview and shared their opinion and perceptions. Finally, there is an important acknowledgment and gratitude to my family. They are the foundation of my professional career and my life. iv TABLE OF CONTENTS WARRANT STATEMENT i ACKNOWLEDGMENTS ii THE TUTOR EVALUATION ii TABLE OF CONTENT iv CHAPTER 1: INTRODUCTION 1 1.1 Background of project 1 1.2 Project objectives 1 1.3 Research methods 2 CHAPTER 2: HOLCIM VIETNAM OVERVIEW 3 1.1 Holcim Vietnam introduction: 3 1.2 Product 4 1.3 Price 4 1.4 Place 4 1.5 Promoting 5 1.6 People 5 1.7 Sales performance of Holcim Vietnam 5 CHAPTER 3: RESEARCH RESULTS 7 1.1 Finding from ODs 7 1.2 Findings from Holcim sales team 14 v CHAPTER 4: SOLUTIONS & IMLEMENTATION PLAN 15 1.1 SWOT analysis 15 1.2 Strategies suggestion & evaluation of experts 16 1.3 Solution for implementation 16 1.4 Implementation plan 21 1.5 Self evaluation about project 21 EXECUTIVE SUMMARY 22 REFERENCES 26 LIST OF APPENDICES AND ABBREVIATES 27 1 CHAPTER 1 INTRODUCTION 1.1 Background of project Viet Nam is a developing country with a relatively high annual rate growth for recent years. Construction industry in Vietnam is growing rapidly to foster the economic development, and the development of the economy will be greatly contribution to the growth of construction industry. Vietnam cement demand is increase incredibly, the growth rate have been more than 20%/year since the last 5 years, and promising for such high rate for the coming years. Holcim Vietnam has positioned itself as market leader in Vietnam cement market. In order to build and maintain that position, Holcim Vietnam target to develop distributors system which mainly deliver over 95% sales volume of Holcim to the southern market (form Nha Trang to Ca Mau) to be professional company in term of cement suppliers, services, resources… By studying ”Solutions to improve distributor’s system of Holcim Vietnam” I want to understand the current situations of OD system and explore the opportunities to propose solutions to improve it and strategy to develop this system to be professional one in market. 1.2 Project objectives ̇ To regain and further develop the trust and confidence of the Holcim Distributor channel ̇ To help our OD to better manage the business and increase it’s profitability through partnership with Holcim ̇ To create an open and a transparent business relationship to the future 2 1.3 Research methods ̇ Research method: qualitative research - exploratory research on the relationship between Holcim and its OD including individual dept interviews (OD) and 02 focus group (Sales team) ̇ The research objective defined as below: 6 To understand key challenges that ODs are facing in their business including internal challenges and challenges come out due to Holcim policy 6 To explore the opportunities for the Holcim to extend their help to ODs: what sectors that Holcim needs to provide support and what sectors that Holcim needs to amend its current support or policy. 6 To gauge the satisfaction of authorized dealers and Holcim in term of what they are satisfied or unsatisfied, strengths and weaknesses and points to maintain or area to improve 6 To understand Holcim sales staff in dealing with these authorized dealers 6 To identify potential value propositions ̇ Sample size: 42 ODs is chosen as sample for the research from 58 ODS of Holcim Vietnam (the chosen criteria are distributor attractiveness, potential evaluation, loyalty assessment and sales performance, SCCC format is used as a system for choosing sample (Pls. see in the list of appendices). 3 CHAPTER 2 HOLCIM VIETNAM OVERVIEW 1.1 Holcim Vietnam introduction: Name: Holcim Vietnam Ltd Logo: Address: 2A-4A Ton Duc Thang Street, district 1, HCMC Telephone: 84 8 8244101 Fax: 84 8 8243569 Website: www.holcim.com/vn Holcim (Vietnam) Ltd is a joint-venture company between Holcim Group from Switzerland, one of the world’s leading cement producer accounts for 65% of the share and Ha Tien 1 (35%) – a member of VNCC established on 25/02/1994 Holcim is one of the world largest cement group found in 1912 in Switzerland. It has presented in more than 70 countries with more than 50,000 employees Ha Tien 1 is a state own company established 40 years ago with strong brand in South of Vietnam Total investment of Holcim Vietnam recently reaches USD 500 million with total capacity 3.5 million tons. ̇ Honchong cement plant located in Kien Giang province with dispatch capacity of 0.5 million tons/year – commissioned in 1997 to supply for the Mekong region ̇ Catlai Terminal: District 2, HCMC with dispatch capacity of 1.76 million/years started operation 1998 supply for HCMC, and East. 4 ̇ Thivai Grinding Plant: Phu My IP, Ba Ria Vung Tau province with the first stage capacity of 1.3 million tons/year, first product was launched in November 2004 will share the workload for Catlai terminal by taking a part of East region. 1.2 Product Holcim Vietnam is the first Cement Company has different products for different application. However, the main product of Holcim is Holcim Top Standard. It takes 87% sales volume every year Product Portfolio of Holcim Vietnam Product band Application 1 Holcim Ready Flow Ready mix concrete 2 Holcim Quick Cast Precast concrete product 3 Holcim Extra Durable Concrete exposed to corrosive environment 4 Holcim Mass Pour Mass structure 5 Holcim Solid Road Concrete road, runway 6 Holcim Stable Soil Soft soil stabilization, soil improvement 7 Holcim Top Standard For concrete of small and medium projects 8 Holcim Easy Wall Plastering and rendering 1.3 Price: The objectives of Holcim Vietnam are becoming the price leader in the market. In order to achieve the target, Holcim Vietnam has invested in facilities and people to add value added services to make sure customers receive a high quality product and good services with best price. 1.4 Place Holcim Vietnam has two distributions channel which shows in the char below: 5 Distribution channel of Holcim Vietnam 1.5 Promoting ̇ Personal selling: direct marketing approach to contractors, sales call visit frequency retailer and its customers. ̇ Public relation: sponsor for sport, study, social activities 1.6 People Sales and marketing department is organized in matrix structure with four section combined in different regional operating units (ROU) with clear objectives and authorization. The organization chart as in Figure 1-1 and 1-2 1.7 Sales performance of Holcim Vietnam Having seven years in business, Holcim Vietnam has developed rapidly. The overall growth maintain above 12%. 80% 15% 5% 5% 95% Holcim Vietnam Direct sales Small and medium projects Large Projects Distributors 11% 4% RMC Contractors CPM Retail [...]... Nha Trang to Ca Mau) to be professional company in term of cement suppliers, services, resources… By studying” Solutions to improve distributor’s system of Holcim Vietnam , the author wants to understand the current situations of OD system and explore the opportunities to propose solutions to improve it and strategy to develop this system to be professional one in market 2 Project objectives ̇ To regain... of research, OD can not be exclusive to Holcim or any other cement supplier in the market We have to provide our customers what they want in order to compete and earn more margins To better control customer system of OD and to develop Holcim share in retail shop, Holcim will establish a Holcim sales unit (including 01 retail sales, 01 technical sales) This unit belongs to OD, is controlled by ASE of. .. market, competitor by using template set 5.4.2 Retail Market investments: Holcim set system with standards to classify retailer system The objectives of doing this are: ̇ To better control retailer system of OD ̇ Basing on results of classification, Holcim sales staffs and Holcim sales unit of OD know well what retailers they pay much attention in term of frequency of sales visit, pushing Holcim sales... Cement production in Vietnam ̇ Vietnam cement consumption vs supply ̇ Position in Global Holcim ̇ Position of cement supplier in southern Vietnam ̇ Locations of Holcim Vietnam ̇ Holcim Vietnam plan ̇ Production of cement by the dry process ̇ SCCC format – OD classification ̇ Organization chart of Holcim Vietnam and Sales & Marketing department The purpose of this questionnaire is to gather information... Distributor Responsible ASE Accountable The Holcim Unit Territory Plan Marketing Operations Plan Distributor’s Sales Representative Market assigned Merchandiser Customer management Accountant Logistic 1.3.4.2 Retail Market investments: Aiming to “getting closer to retailers”, Holcim set system with standards to classify retailer system The objectives of doing this are: ̇ To better control retailer system of. .. ODs do not have enough time to adjust their strategy 6 Sales’ authority: Holcim sales are not sufficiently empowered with authority to make decision So they have to wait for management’s approval Moreover, complaint solving process of Holcim quite slow due to too complicated feedback process from sales rep to top managers Thus OD disappoint to unfair attitudes of Holcim toward their concern or complaint... results of classification, Holcim sales staffs and Holcim sales unit of OD know well what retailers they pay much attention in term of frequency of sales visit, pushing Holcim sales and having a special customer care for these retailers ̇ When Holcim or OD launch promotion program, they will focus on what retailers really to impact to the promotion ̇ This system can help OD to better control credit of retailer... qualification and passion to implement their tasks In addition, to take it easy to roll out all activities, I need more time to do action plan in detail (resource, timeline, budget…) so that the project implemented smooth and affectivity 22 EXECUTIVE SUMMARY 1 Background of project Holcim Vietnam target to develop distributors system which mainly deliver over 95% sales volume of Holcim to the southern market... services S5 Networking of Holcim global S6 Stable quality product and supply OPPORTUNITIES O1 The demand in the construction industry is growing, more investors coming to Vietnam after we become a member of WTO O2 Higher living standard generates higher need of house construction/ renovation O3 OD: Customer system availability O4 OD: Location advantage (customer system: retailer, contractor, project…) 05... want to invest into their region 5.2.2 Market Intelligence and Information Management: by monthly, quarterly market intelligence department of Holcim will share above information to them Moreover, Holcim suggests solutions and tactical promotion to help OD have more choice to react with market with many changes, attractive program of competitors 5.2.3 Distributor Involvement in Activity Planning: Holcim . system of Holcim Vietnam I want to understand the current situations of OD system and explore the opportunities to propose solutions to improve it and strategy to develop this system to be professional. volume of Holcim to the southern market (form Nha Trang to Ca Mau) to be professional company in term of cement suppliers, services, resources… By studying Solutions to improve distributor’s system. out due to Holcim policy 6 To explore the opportunities for the Holcim to extend their help to ODs: what sectors that Holcim needs to provide support and what sectors that Holcim needs to amend