GRIGGS UNIVERSITY GLOBAL ADVANCED MASTER OF BUSINESS ADMINISTRATION PROGRAM CAPSTONE PROJECT REPORT
BUILDING BUSINESS STRATEGY FOR DOMESTIC MARKET OF MINH ANH GARMENT LIMITED COMPANY
IN PERIOD OF 2013-2017
Nguyen Thanh Phong
Trang 2MINH ANH GARMENT LIMITED COMPANY
Address: Pho Noi B Industrial Zone - Nghia Hiep Commune - Yen My District - Hung Yen Province
Tel: 0321.3972.569 Fax: 0321.3972.510
20" February 2013 CONFIRMATION LETTER
To: Master of Business Administration program
Center for ‘Education Technology and Career Development - Hanoi National University
Subject: Comments of Minh Anh Garment Limited Company on Capstone of Group 5 GaMBA.X0111, Griggs University
- Minh Anh Garment Limited Company has fully supported for Group 5
GaMBA X0111 when they conducted the capstone "Planning business
strategy for domestic market of Minh Anh Garment Limited Company during the period of 2013-2017"
- Members of group has worked hard with enthusiastic attitude Their subject was based on current statistics of company and received high appreciation from us for its practical applicability
DIRECTOR
fp
Trang 3ACKNOWLEDGEMENT
After a period of research and synthesis, with the hard work of the members of our group, we have completed the subject We guarantee the result presented in
this topic is true and has not been published in any other work The data published in
this article is taken from the research, and statements from the article of organizations and individuals consulted and used as prescribed
We would like to thank Griggs University, the Center for Education Technology and Career Development - Hanoi National University, dedicated professors, and staffs for your help during the Master of Administration course
We also would like to gratitude to staffs of Minh Anh Garment Limited Company who assisted us, providing data and useful information enabling us to complete this subject
Hanoi, February 20" 2013
Trang 4TABLE OF CONTENT ACKNOWLEDGEMENT .cccssssssssssssscsscsssssssssssssssusssscsasssusssssssssussasesuscsscossesceesess 2 TABLE OF CONTENT ccsssssssssssssessssesssssssssssssssecsuscssessssssssssssusesasecesscsescossccessees 3 LIST OF FIGURES ccccsssssssssscssssssssssssssssssssssssscsscssasessessssssssssessessusscessscesccesssesec 6 LIST OF TABLEG cccssssssssscssssccssssssssscsssssssssssssssssessssssssssssssssssassussessseccsessccessesses 7 INTRODUCTION .ssssssssssssscssscscssscssssesssssssasssssesssssssssscssssssssssssassssssssssccsssscsesecsses 8 1 Sigmificance Of Study .ssescssssssscssssssssssssscsescsssssuscsssssssssssssonsscsssscssccossccescsss, 8 2 Objectives of SỈUdyy ÓC 1911151159615 21 0010001110510 8 3 Scope Of StUAY ssecssssssssssssssesccsssesssecssseessscsssscesssecssusesssesssusesssesesnesesessccescccesces 9 4, Method Of Study sssssssssescssscssssssecsssesssssssesssssesussssessssssssussssesensscessssssesosecesses 9 S Limitation of study ssssssssssssssssssssssessssssassessssscsssssssssscsssssssssssssssscssscsosccssses 9 6 Structure Of Study .sessssssssssscsssssssscsssssssssssssssssssesssuecssussssssssssssssnssessecccesccoseee 9
CHAPTER 1 REVIEW OF LITERATURE 5.22109215002222 10
1.1 The concept of business strategy .c.ssssssssssssssssesssesssssssssssssessseccosecosecosses 10 DU ) MA 10 1.1.1 Levels Qƒ SIdf€gy 5c TH 11 2111021 10 1.2 Role of Business strategy .ss:.sssssssssssssssssssssssesssssessssssssssssssesesscccssccccsecses 12 1.3 Strategic management Process .sssssssssscsescsssssssscssssssssssscsscscsseccoseccceecoss 13 1.4, Analyze the firm’s external environment .c cssssssssssssssssosssesoossesscssceccesss 14 1.4.1 Macro-environment (PEST 7) S5 PA 1 14 1.4.2 Industry analysis (Porter’s Five Force I1OđêÌ) se csksksvsssssa 15 1.4.3 The External Factor Evaluation (EFE) tmA†FÌX so vv Sen: 17 1.4.4 The Competitive Profile Matrix (CPM) woececccccessessesessscsssssetetscscseseeacans 18 1.5 Internal environment analySis .sssssssssscsssscssesscsssscssssssssssesccsssessseccccesss 18
wr Global Advanced Master of Business Administration
Trang 51.9.2 The Internal Factor Evaluation (IFE) Matrix cocecccccccceccccccccceeesccceccccs , 19 1.5.3 Setting up long-term Objectives .ccccccccccccscsseersssssverestersssssesssssetessescececece 20 1.5.4 Strategy analysis And Selection .c.cccccccsescsssesssessessesessessessesesceceececcccecccen, 20 1.5.5 Strategy implementation ccccceccccscssscssserssssssestssessessessssssaresserseseeseesescesces 21
CHAPTER 2 ANALYSIS ON BUSINESS SITUATION FOR DOMESTIC MARKET OF MINH ANH GARMENT LIMITED COMPANY 23
2.1 Introduction of Minh Anh Garment COIDADV oG G552 23 2.1.1 General information on the COMJDđWJ tt 23 2.1.2 BUSineSS ÏÌHIÊS ST TH re 23 2.1.3 Organization Structure .eeccccsesssssssssssssssrssssessessssssssssssisesassisesiecesceseescccccc 23 2.1.5 Business results of Minh Anh Garment Ltd, Co in 2010-2012 26 2.2 External environment analysis .c.sssscsssssesssssscssssssssssssssscoseccosesecceeccess 28
2.2.1 Maco-environment analysis (PEST 117 (1 (1) 5 + csssessssss: 28 2.2.2 IndUstry anA]ÿSiS St HE 011211 11c 32 2.2.3 Summary on Opportunities and ThreafS neo 40 2.2.4 External Factor Evaluation (EFE) .cc.ccssscssssesssssssssssssssscssseseceosessecccccce 41 2.3 Internal environment amalySis .s.ssssscsscsescsesssesssesssessssssssoseccosccosssesesee, 42 2.3.1 Resource based Analysis .ccccessssssssssssssssssssessssssssssssussssssssesssesesseccecccceee 42 2.2.3 Internal Factor Evaluation (TELE) TriđFFỦX St SE St tre cersea 53
2.4 THE COMPETITIVE PROFILE MATRIX (THE CPM) 55 CHAPTER 3 STRATEGY SELECTION AND SOLUTIONS TO
IMPLEMENT SELECTED STRATEGY FOR DOMESTIC MARKET OF MINH ANH GARMENT LTD., CO DURING THE PERIOD OF 2013-2017 57
3.1 Long term objectives ssssssssssssssssssssssesssessssssecssessssssssesscssuscesscosscosssescs 57 3.2 Strategy Selection .ssssssssscssssssssessssssessessescusssessussssssessssssessssssscescescceseesc, ST
3.2.1 SWOT analÿsiS - 5 t1 0111211 Hee 57
3.2.2 The QSPM maHrix c2 tre 62 3.3 Solutions to implement product development strategy s 65
Trang 63.3.1 Birth rate in Vietnam from 2009 and W/2424-3 NAa 65 3.3.2 Existing competitors in kid's fashion market 66 3.3.3 Market segment of kid's fASHION ocecceescessessssssssessesssesssssssssseseseceeececcccccc., 68 3.3.4 Solutions on organization Structure ccccccccscsessssssssssssssessseeeseeeceeecccccc 68 3.3.5 Solutions On Marketing ccccscccsscssssessisssssssiessissssssssssstisssieeseeeeseeceeccccecc 69 3.3.6 Solution of Research and Development Of Product ecccccsccccscsscssessseseseeens 74 3.3.7 Solutions on Humah rۤOWFC se 5t 22 111111111 75 3.3.8 Solutions on Technology eeccsescssissssssrssssssussssissssissssassssisesteeesseceeeseccccccce 75 3.3.9 Production management .scccsccsssssssssssssssssssissssissssisssiaestieeseeeeceececccccc 76 3.3.10 Solutions ON Finance .secsscsssssesssssssssssessssiisesssissssisssssssestsieeeseeeeceseecccc., 77 3.3.11 Budget planning for selected SIPQLORY srcsvessiissssacengsenanxsevenavenwsannavssvachsiaes 77
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[C2 Global Advanced Master of Business Administration
Trang 7LIST OF FIGURES
Figure 1.1.: Hierarchical levels of strategy
Figure 1.2 Strategic management Process
Figure 1.3.: PEST analysis
Figure 1.4.: Porter's Five Force Model
Figure 2.1 Structure of organization
Figure 2.2 Revenue structure in 2012
Figure 2.3 : GDP and CPI growth rate from 2000-2012
Figure 2.4 Demographic structure by ages from 2009-2049
Figure 2.5 Labor structure by ages
Figure 3.1 New structure organization in 2013 -2017
Trang 8LIST OF TABLES
lable 1.1.: SWOT matrix
Table 2.1.: Summarized Income statement of Minh Anh Garment Ltd.,Co in 2010-2012 Table 2.2 Revenue structure in 2012
Table 2.3 Competition of some criteria among Minh Anh and its competitors in
2012
Table 2.4 Summary of five forces of Minh Anh company
Table 2.5 External Factor Evaluation matrix
Table 2.6 Balance sheet of Minh Anh Co., Ltd from 2010 — 2012
Table 2.7 Income statement of domestic products
Table 2.8 Some financial ratios in 2010-2012
Table 2.9 Internal Factor Evaluation matrix
Table 2.10 Competitive Profile Matrix Table 3.1 SWOT matrix
Table 3.2 The QSPM matrix
Table 3.3 Forecast of some population criteria Table 3.4 Marketing plan in 2013-2014
Table 3.5 Forecast revenue in 2013 -2017
Table 3.6 Cost of implementing new strategy in 2013-2014 Table 3.7 Needs of raising capital in 2013
Table 3.8 Strategy implementation schedule
(C1 Global Advanced Master of Business Administration
Trang 9INTRODUCTION
1 Significance of study
Garment industry has long been a strength of export of Vietnam, with atundant labor resources and lower labor costs than other countries in the region Vietnamese textile industry was approved development Strategy up to 2015 and orientations to 2020 by the Government Vietnam aims to develop textile and garment industry to become one of the key industries; meet the increasing domestic demand; create more jobs for the society; improve competitiveness and strong regional and global economic integration Therefore, the development of garment industry in the future will be given priority
However, due to the impact of the world economic crisis, the European countries
fall into the state of sluggish economic growth, unemployment rate in the United States was reduced but still high, the world's leading economies cannot escape this
trend; strengthening the development of domestic economy is becoming popular in the world Therefore, export market of Vietnam's garment industry will gradually be reduced Companies in the industry will be more competitive to get orders Garment Co., Ltd Minh Anh is no exception in the garment industry However, the company's outsourcing customers mainly come from countries like the Czech Republic,
Germany, with the economic and political situation of Eastern Europe, it will not be
a source of sustainable long-term orders for the development of the company
Therefore, Minh Anh Co., Ltd needs to figure out a new business Strategy for its
development On that basis, our group decided to choose the study "Build business strategy for domestic marketof Minh Anh Garment Limited Company during the
period of 2013-2017" 2 Objectives of study
v Systematizing theoretical basis of business strategy and effective methods to select model analysis for business strategy
v Applying theoretical basis to focus on analyzing the situation and capacity of
Trang 10Minh Anh Garment Co.,Ltd
Y Proposing solutions and recommendations for the development of Minh Anh
Co.,Ltd
3.Scope of study
Subjects: Minh Anh Garment Co., Ltd has run business for overseas outsourcing products, products for the domestic market However, within the scope of this report, our group focuses on analysis of the domestic market and business strategy for the
domestic market of Minh Anh Co.Ltd
Time of study: Business strategy for Minh Anh Co.,Ltd until 2017
4 Method of study
- Using analysis tools as EFE, IFE, PEST, 5 forces of Micheal Porter, SWOT, QSPM
to select business strategy
- Source: Secondary materials as articles, report, books, and Internet resources
5 Limitation of study
Our group studies some major competitors of the company Financial statements from the years 2009-2012, the company's business data in 2012 are estimated and provided by the accounting department
6 Structure of study INTRODUCTION
Chapter 1: Review of Literature
Chapter 2: Analysis on Business situation and Business strategy for Domestic market of Minh Anh Garment Ltd., Co
Chapter 3: Strategy selection and Solutions to implement selected strategy for Domestic market ofMinh Anh Garment Ltd., Co during the period of 2013-2017
CONCLUSION
(C1 Global Advanced Master of Business Administration
Trang 11CHAPTER 1 REVIEW OF LITERATURE 1.1 The concept of business strategy
1.1 Definitions
Strategy is a popular phase used in both daily life and business In management, it is defined as actions taken by general managers to create the major intended and emergent initiatives This includes utilizing resources, enhancing the performance of companies in their external environment In the other words it can
be said as: “Strategy is a series of actions taken by an organization or individual in
order to achieve organizational goal.” (Slide from Grigg University)
Business strategy commonly relates to a business’s objectives, which is central
in implementing a strategy However, business strategy tends to focus on assessing
its Competitors and setting goals to meet all existing and potential competitors in the
market It relates to decisive choices such as product selection, customer satisfaction,
taking advantages over rivals and exploiting new opportunities, etc According to Fred R David: “ Strategic management relates to decision making of product Selection, meeting customer demand, taking advantages over rivals and exploiting new opportunities ” He also added: “Strategic management is a tool to achieve long term goals.”
Strategic management is the “art and science of formulating, implementing,
and evaluating cross-functional decisions that enable an organization to achieve its objectives” (Fred R David, Strategic management -— Concepts and cases, 13'"
edition, Pearson)
1.1.1 Levels of strategy
In a large company, the business activities are unlikely run by one single individual A division of responsibility in strategic decision is therefore quite logical Management writers have split strategic decisions into three levels:
Trang 12A CORPORATE STRATEGY “Operational methods to implement the
Figure 1.1.: Hierarchical levels of Strategy
(Source: Fred R David, Strategic management — Concepts and cases, 13th edition, Pearson) Corporate strategy level: Strategy Definition Forward Gaining ownership or increased control over distributors or Integration retailers Backward Seeking ownership or increased control of a firm’s suppliers Integration Horizontal Seeking ownership or increased control over competitors Integration
Market Seeking increased market share for present products or Penetration services in present markets through greater marketing efforts
Trang 13Product Seeking increased sales by improving present products or
Development services or developing new ones
Related Adding new but related products or services Diversification
Unrelated Adding new, unrelated products or services Diversification
Retrenchment | Regrouping through cost and asset reduction to reverse
declining sales and profit
Divestiture Selling a division or part of an organization
Liquidation Selling all of a company’s assets, in parts, for their tangible worth
1.2 Role of Business strategy
According to Arnold Anderson, the business strategy has several roles such
as:
v Customer retention: One of the quickest ways to lose customers is to not have an effective business strategy in place for customer service Develop a program for following up on customers, and for staying in touch with repeat customers to make sure your products are working properly Have sales people contact customers at least once a month to discuss the customer’s business, and try to find new ways to help the customer with your product
v Resources: a good business strategy can assure that company resources are used efficiently Create business strategies that utilize all of your Company resources to help give your company a competitive advantage over the competition, develop new products that maintain or increase your market share in the industry and give you proprietary control over advancing technology in your
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v Company expansion: a good business strategy is the ability to explore business opportunities outside of your standard business practice to help inspire company expansion By promoting vigorous marketing and engineering research with business strategies focused on new company frontiers, you can help open up new ideas for your company that could be loosely related to your current business 1.3 Strategic management Process
Strategic planning is the process of setting overall organizational objectives and drafting strategic plans It is a process of long-term planning Setting ultimate
objectives for the firm is a necessary prelude to developing strategies for achieving
those objectives Strategic planning, also called long-term planning, covers periods from 1 to 20 years Strategic planning is somewhat difficult because of uncertainty about future conditions Thus, long-range plans are more general and exclude operational detail (for example, functional aspects such as departmental budget preparation, variance analysis, outsourcing decisions, material procurement, etc.) and short-term activity Therefore, top-level management participation is a crucial element of strategic planning Strategic planning follows a formal six-step process:
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Trang 15Formulate the 1 mission I 1 External Internal : ‘ environment <—_——————_—_> environment analysis Ỳ Setting up long- term objectives v Strategy analysis and selection Y Implement chosen strategy(ies) v Strategy evaluation }+ - Feedback Feedback www we wm wm wm wm ee ew ee eee ee
Figure 1.2 Strategic management Process
(Source: Fred R David, Strategic management — Concepts and cases, 13th edition, Pearson)
1.4 Analyze the firm’s external environment
Opportunities and threats (the external environment) are identified by considering macro-environment factors (economic, demographic, political, legal, social, cultural, and technical) and micro-environment factors (suppliers, customers, distributors, competitors, and other competitive factors in the industry)
1.4.1.Macro-environment (PEST analysis)
There are many factors in the macro-environment that will affect the decisions of the managers of any organization Tax changes, new laws, trade barriers, demographic change and government policy changes are all examples of macro change To help analyze these factors managers can categorize them using
Trang 16the PESTEL model: LST ANALY SI POLITICAL ® Government Legislation — Employment Law, Health & Safety, Environmental, Industry Specific, etc ¢ Political Pressure Groups SOCIAL ¢ Consumer Tastes /Preferenc es Pressure Groups JA » # ee ECONOMICAL ¢ State of National Economy State of Industry Sector — Decline/ Growth ¢ State of International Markets TECHNOLOGICAL se Pace of technological change? e New product development
Figure 1.3.: PEST analysis (Source: www.ecommerce-now com) 1.4.2 Industry analysis (Porter’s Five Force model)
Michael Porter provided a framework that models an industry as being influenced by five forces The Strategic business manager seeking to develop an
edge over rival firms can use this model to better understand the industry context in
which the firm operates
Porter reasoned that the stronger each factor becomes, the harder it is for firms
to negotiate a price increase to gain higher profit The influence of 5 factors varies over time together with the variation in industrial environment
CS Global Advanced Master of Business Administration
Trang 17A constantly competitive environment has a strong and direct effect to a firm’s production In the process of analyzing the environment, it is important to take note of the inter-relationship among the 5 factors in Figure 1.4 In this model,
there are 3 horizontal competitors, which threaten a firm with similar products or
close substitutes (current industrial competitors and potential entrant); and 2 vertical competitors which are consumers and suppliers, holding the power to bargain for a change respectively in price and supply cost Potential Entrants | Bargaining power thea of virus of suppliers currants Industry ‘Competitors hehe [Bargaining power of ne Buyers Threat of substitute products or services Substitutes ˆ
Figure 1.4.; Porter's Five Force Model
(Source: M.E Porter Competitive strategy, New York, Free Press 1980) According to Harvard Business Review’s summary of Michael E Porter’s 5 competitive factor model (issued in January, 2008, pg.86), the factors are described as followings:
(1) Threats of new entrants: Identify the difficulties encountering by the new entrants when entering the industries and the possible threats by these new entrants
[GS Global Advanced Master of Business Administration
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Trang 18to other firms in the industry
(2) Threats of product substitutes: this implies the possibility in losing consumers to the similar products or services If together with a lower price, the cancel and transfer cost is relatively small, it will become a dangerous threat to the
firm
(3) Power of consumers: this is the power in price bargaining and putting pressure in lowering price of the consumers to a firm If the consumers’ influence is strong enough to fluctuate revenue and profit, they will hold a critical position ina Strategic implementation
(4) Power of suppliers: Similarly to the power of consumers, if supplier is
influential enough to a firm to fluctuate their revenue and profit, they will also be a
crucial factor
(5) Intensity of rivalry among the competitors: Questions to ask:is there an intense rivalry among the competitors? Is there an outstanding competitor or are they equally competitive to the firm?
1.4.3 The External Factor Evaluation (EFE) matrix
The EFE matrix allows strategists to summarize and evaluate economic,
social, cultural, demographic, environmental, political, governmental, legal, technological, and competitive information
Regardless of the number of key opportunities and threats included in EFE matrix, the highest possible total weighted score for an organization is 4.0, and the lowest possible weighted score is 1.0
A total weighted score of 4.0 indicates that an organization is responding in an outstanding way to existing opportunities and threats in its industry The
firm’s strategies effectively take advantage of existing opportunities and minimize
the potential adverse effects of external threats
[CGS Global Advanced Master of Business Administration
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Trang 19A total weighted score of 1.0 indicates that the firm’s strategies are not capitalizing on opportunities or avoiding external threats
1.4.4 The Competitive Profile Matrix ( CPM)
The CPM identifies a firm’s major competitors and its particular strengths and weaknesses in relation to a sample firm’s strategic position
The critical success factors in a CPM include both internal and external issues; therefore, the ratings refer to strengths and weaknesses, where 4 = major strength, 3 = minor strength, 2 = minor weakness, and | = major weakness The critical success factors in a CPM are not grouped into strengths and weaknesses as they are in an IFE
1.5 Internal environment analysis 1.5.1, Analysis on company resource
Analyzing internal environment defines Strength and weakness of an
organization by interpreting information of recent achievements and unresolving difficulties Comparing to the analysis of external environment, it is easier to acquire and there are more information relating to internal environment such as: statement of liabilities, revenues, costs, system organization and management model
As a matter of fact, it is impossible to acquire a comprehensive and complete
evaluation of a business Therefore, only a few major factors, which have the most
critical influence to the production of a firm, will be assessed In order to achieve
this, the first thing is to outline these major factors which will be the representatives
of the internal environment
- Financial capacity: Financial resource (cash, liabilities, bonds ) is the main source of a business Evaluating finance of a firm relies on economical standards such as: profit earned per dollar spent, liquidity of bonds, ability to pay liabilities comparing to competitors and within the industry By analysing these information,
Trang 20it will be possible to define the strength and weakness of a business in investment,
finance and market share
- Human resource capacity: Human resource is utmost important for company’s success Only effective people can contribute efficiency to the company, humane resource factor includes: Management board, profession and skills, experience as a leader; suitable Organization’s structure and management; skills, personality of employees and personnel, and effective, flexible policy for employees
- Technology capacity and Production capacity: This section will examine a firm’s facility in the research and development of product and technology The
examination will look at the conditions to search for innovation, the distribution of
human, financial and technology resources and achieved results
- Marketing capacity: it is necessary to analyse customer structure of the business, the consumer segments with quality controls and price flexibility, product Variation, corresponding marketing method and any other supportive tools Hence,
this report will compare the segments and provide instructions for implementing a
marketing strategy It is also important to be attentive at the potential consumptions, revenue, profit to revenue ratio, the variation of product quality, the popularity of products and services, the market share of the firm and the effectiveness of previous marketing campaign Afterward, this report will examine the stability of the firm’s supply to the market In combination with the life cycle of a product, it is necessary to manage researches and development of new products (new opportunities)
1.5.2 The Internal Factor Evaluation (IFE) matrix
The IFE matrix is a strategic management tool for auditing or evaluating major strengths and weaknesses in functional areas of a business IFE matrix also provides a basis for identifying and evaluating relationship among those areas
The IFE matrix together with EFE matrix is a strategy-formulation tool
[CS Global Advanced Master of Business Administration Program
Trang 21that can be utilized to evaluate how a company is performing in regards to identified internal strengths and weaknesses of a company
The creation of IFE Matrix is similar to EFE Matrix, which includes 5 steps
However, instead of listing opportunities and threats, IFE Matrix requires a list of
strengths and weaknesses The evaluation of IFE Matrix is also the same as EFE Matrix’s, with the average score of 2.5
1.5.3 Setting up long-term objectives
Based on the situation analysis, what should our new business be, in term of what products it will sell, where it will sell them, and how its products or services
will differ from its competitors? Long-term objectives represent the results
expected from pursuing certain strategies The time frame for objectives and Strategies should be consistent, usually from two to five years
1.5.4 Strategy analysis and selection
1.5.4.1 The SWOT matrix
The SWOT analysis provides information that is helpful in matching the
firm’s resources and capabilities to the competitive environment in which it
operates
The industrial environment of a firm is divided into 2 categories, external
factors and internal factors, which corresponding include Strength (S), Weakness
(W), Opportunities (O) and Threats (T).This is a very effective tool in interpreting a
business and making decisions There are 4 possible strategies, S-O; S-T; W-O; W-
T
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Table 1.1.: SWOT matrix
(Source: summary ofour group)
Opportunities (O) Threats (T) (List the (List the threats) Opportunities)
Strengths (S) Strategy S-O: Strategy S-T:
(List the strengths) Taking advantages Using strengths to of strengths to achieve the eliminate threats
opportunities
Weaknesses (W) Strategy W-T: Strategy W-T:
(list the weaknesses) Using the Eliminating
opportunities to overcome | weaknesses and avoiding
weaknesses threats
1.5.4.2 The decision stage
Other than ranking strategies to achieve the prioritized list, there is only
one analytical technique in the literature designed to determine the relative
attractiveness of feasible alternative actions — the Quantitative Strategic Planning
Matrix (QSPM),
QSPM is a high-level strategic management approach for evaluating possible strategies Quantitative Strategic Planning Matrix or a QSPM provides an analytical method for comparing feasible alternative actions
1.5.5 Strategy implementation
Often overlooked are the key components necessary to support implementation: people, resources, and culture All components must be in place in
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Trang 23order to move from creating the plan to activating the plan
People: The first stage of implementing your pian is to make sure to have the right people on board The right people include those folks with required competencies and skills that are needed to support the plan In the months following the planning process, expand employee skills through training, recruitment, or new hires to include new competencies required by the strategic plan
Resources: You need to have sufficient funds and enough time to support implementation Often, true costs are underestimated or not identified True costs can include a realistic time commitment from staff to achieve a goal, a clear identification of expenses associated with a tactic, or unexpected cost overruns by a vendor Additionally, employees must have enough time to implement what may be
additional activities that they aren’t currently performing
Culture: Create an environment that connects employees to the organization’s mission and that makes them feel comfortable To reinforce the importance of focusing on strategy and vision, reward success Develop some
creative positive and negative consequences for achieving or not achieving the
strategy The rewards may be big or small, as long as they lift the strategy above
Trang 24CHAPTER 2ANALYSIS ON BUSINESS SITUATION FOR DOMESTIC MARKET OF MINH ANH GARMENT LIMITED COMPANY 2.1 Introduction of Minh Anh Garment company
2.1.1 General information on the company
Name : Minh Anh Garment Limited Company
Director : Mr Vu Van Toan
Address: Pho Noi B industrial Zone- Nghia Hiep — Yen My — Hung Yen Tel: 0321.972.569 Fax: 0321.972.510 Number of business registration: 0502000077 Establishment: 24/04/2002 Tax code: 0900195432 Charter Capital: 30.000.000.000 VND 2.1.2 Business lines
- Purchase equipment, supplies and materials for the garment industry
- Domestic garment production - Garment outsourcing for export 2.1.3 Organization structure
The total number of officers and employees: 641 people, including:
Trang 25Director Deputy Director
Administra Accounting Import — Quality Technic tive export control al
r
Workshop Workshop 2
Figure 2.1 Structure of organization (Source: Minh Anh Co.,Ltd)
+ Administrative department: responsible for advising the Director on the
management of human resources such as: personnel, salaries, bonuses, training and
recruitment; administrative management, organize entertainment, ensuring the
material life and spiritual for officers and employees
+ Accounting department is responsible for managing all financial - accounting activities of the company, loan transactions, demand, deposits with banks
+ Technical departmentis responsible for advising the Director and implement as:manage technology, product quality, maintenance planning, technical safety and labor protection, building manufacturing strategy; applied research, developing technology production
GS Global Advanced Master of Business Administration
Trang 26+ Import - Export: is responsible to advise the Board of Directors in planning the business plan in the long term, short term or in specific business;; directly explore market, sources, domestic and foreign customers to trade promotion
+ Quality Control: Implement quality management system ISO 9001: 2008 2.1.5 Primary products
Minh Anh is operating in 2 fields:
In foreign market, Minh Anh is outsourcing products such as: Jean,jacket, waist coats for foreign countries such as: Germany, The Czech Republic, Japan With more than 10 year experience in garment sector, Minh Anh obtained the belief of its partner, the Company always receives orders from 10 familiar companies outsourcing
In domestic market, with branch name VSTYLE, Company specialize
in manufacturing order of uniform for primary, secondary school, high school and
uniform for Companies in Hung Yén and neighbouring province and cities such as
Ha Noi, Hai Phong, Nam Dinh and Ha Nam Besides, the company
alsoproducesfashionclothingmenandwomen for
work forthemajormarketsoftheneighboringprovinces ofHungYen
Therefore, the main products which bring almost revenue is manufacturing student uniforms for primary, secondary and high school, and uniforms for companies, offices in Hung Yen and neighbouring cities and provinces
Its target customers are students in primary, secondary, high schools and
companies, offices,
Because current revenue of domestic products is accounting for 80% of total
revenue, the domestic market is stil] potential in the context of the world economy
crisis, the declining of garment outsourcing orders Besides, our team has built the
Strategy for garment outsourcing , but in this report, we chose the domestic market as a subject to build its business strategy Hereby, all information below belongs to
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Trang 27domestic market
2.1.5 Business results of Minh Anh Garment Lta., Co in 2010-2012
Table 0.1.Summarized Income statement of Minh Anh Garment Ltd.,Co in
2010-2012
(Source: Minh Anh Co., Ltd)
Unit: Million dong N | Items 2010 2011 2012* | 2011/ | 2012/ | 2011/] 2012/ 2010 2011 2010 | 2011 Total assets | 128,991 | 179,020 | 228,668 50,029 | 49,648 | 39% | 28% Net revenue | 109,525 | 155,416 | 198,304 | 45.891 42,888 | 41.9 | 28% % 3 | Gross profit | 8,440 15,691 | 29,372 | 7,251 | 13,681 87% 4 | Profit before} 3,503 3,244 | 3,168 tax 6,747 9,915 93% | 47% 5 | Taxes 613 1,181 1,735 568 554 93% | 47% 6 | Profit after | 2,890 5,566 8,180 2,676 | 2,614 tax 93% | 47%
Revenuein 201 1wasup45 891 million dong(41.9%),revenuein 2012wasup42,888milliondong (28%)compared with 2011
In thelast period, production and businessactivitiesof enterprisescontinuouslypromote, goodssold well onthemarket, productionandsales continuouslyincreasedover the years The companycontinuouslypromoteproductsin the domestic markettoincrease sales, reducedependence onoutsourcingorders
Trang 28Table 2.2 Revenue structure in 2012
(Source: Minh Anh Ltd.,Co)
(Unit: million dong) Year 2010 2011 L_ 2012 _ Outsourcing | 32,857 30% | 41,962} 27%| 39,661} 20% Student’s uniform 43,810 40% | 62,166| 40%] 85,270] 43% Staff's uniform | 21,905 20% | 31,083 | 20%} 43,627| 22% Other 10,953 10% | 20205| 13%] 29,746| 15% Total | 109,525 | 100%| 155,416| 100%} 198,304} 100% | 90000 | 80000 | 70000 | 60000 50000 « 2010 2011 2012 40000 30000 20000 10000 Outsourcing Student's — Staff's uniform Other uniform
Figure 2.2 Revenue structure in 2012 (Source: Minh Anh Ltd.,Co)
From structure above we see that, the domestic product have higher and
higher proportion and become the key product Due to global economic recession,
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Trang 29the outsourcing orders decreasedinquantity, mean while, schooluniformbecomethesiginifantstrengths, accountingfor43% revenuein 2012 2.2 External environment analysis
2.2.1 Macro-environment analysis (PEST Model) 2.2.1.1.Political and legal environment
July 30, 2012, the Government issued Decree No 60/2012/ND-CP detailing
the implementation of the Resolution No 29/2012/QH13 of the National Assembly enacted a number of tax policy to remove difficult for organizations and individuals This Decree specifies the small and medium-sized enterprises in the field of production, processing and processing: Agriculture, forestry, fisheries, textiles, footwear, electronic components; businesses using many construction workers social and economic infrastructure) will receive a 30% reduction of corporate
income tax in 2012
Directive: 24/CT-TTg, the Prime Minister, dated 17/09/2012, on
strengthening the implementation of the campaign "Vietnamese give priority to use Vietnamese goods" Accordingly, the Directive states: After 3 years of
implementation, this campaign created strong initial movement in all classes of
people across the country and large trend selected goods in Vietnam The results of the campaign is not only contributing to the production and enhancing the prestige
of Vietnamese businesses but also has positive significance in the implementation
of measures to maintain stable production, ensure life of the people and maintain economic development, social stability of the country, in condition of the negative impact of the world economic crisis
On 09/11/2012, the Governor of State Bank issued Directive No 06/CT-
NHNN on the solutions of monetary, credit and banking activity in late 2012
Deposit rates and lending: Strictly regulated and directed by the State bank On interest rates; apply reasonable interest rates on the basis of interest rates and the
Trang 30level of risk of the loan; details cost, minimizing management cost, advertising, promotional and operating costs to have to cut interest rates in order to share problems with borrowers
2.2.1.2 Economic environment
Some impacts of global economy
According to the economists, the U.S., eurozone EU and China are three dominant economic resources of the world, is the driving force to bring the world economy out of recession In a wider look, world economy is in the period of instability, from political instability in the Middle East, to the natural disaster in Japan or the debt situation in the European countries and raising the ceilingdebt in the United States, high unemployment Therefore, the reduction of unnecessary costs is becoming the trend of countries, companies and people
European debt crisis more than two years are beginning to impact on the key
pillars of the countries usingeuro notes While the French press said the economic
of the German began to decline, the UK and Germany press said that the French economy is a ticking time bomb of Europe! Vietnam economy The growth rates ofGDP andCPlin recent year as the followings: Tốc độ GDP 2000-2012 CPI (2001-2012) 9.0% 20.0% 19.47% 3.40% 83.26% 8.50% 14.0% 28.23% C 16.0% 8.0% > 14.0% 7.39 : 12.73 " : 12.0%, 7.0% 10.0%, AC 6.5% 2.0%, 6.07 ? 2% 60m 4 oats 4.0% 2% 2.0% afi "5 Om OOF 2001, ` “ee Se ® xe S xs or 200 3 2005 ' 20G7 soạn ® “ 2011
Figure 2.3 : GDP and CPI growth rate from 2000-2012
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Trang 31(Source: General Statistics Organization)
The economy is still evidently not out of the declining growth trend that the starting point is from 2007 - the period of full international integration Even 2012 was a year of growth rate among the lowest in the last 13 years
Inflation significantlydecreased in 2012, similar to 2009, after an unusually high increase in the previous year This means that the economy is still not out of very strong tendency to oscillate amplitude of inflation over the years
"The year 2013 will continue to" hard "economic However, 2013 contain
also a great opportunity for economic shift, "Dr Tran Dinh Thien, director of the Vietnam Institute of Economics identified the development of the economy
Dramatically declining of interest
In recent days, interest rates, compared with the first year interest rates have fallen sharply Currently, interest rates on the market under 15%, 4-5% lower than a
earlier year Interest rates fell below 12%, lower than the 15-20% as the beginning
of the year
The decline rate is the reason that inflation expectations fell and the capital needs of the economy down This is reflected by the credit growth in the first 9
months of the year reached only 2.35%, the lowest level ever In addition, the
interest rate reduction by the State bank has sharply refinancing rate and rediscount Nguyen Hoang Minh, deputy director of the State Bank Branch Ho Chi
Minh City announced by the end of 2012, interest rates for five priority
manufacturing sector, including exports, small and medium enterprises, rural businesses, supporting industries and products containing high technology fell to 12% / year In 2013 the bank will continue to reduce interest rates and the 5 priority areas inherit priority This is an Opportunity for businesses to have access to capital to improve production quality
Income per capital:late 2011, the Ministry of Industry and Trade said that the
Trang 32country's GDP in 2011 is estimated at $ 119 billion and GDP per capita of $ 1,300 / person / year In 2012, GDP per capita has increased by $ 300 to $ 1,600 / person /
year So can see, people's income rises, the purchasing power of consumers will
tend to rise as demand of life
2.2.1.3 Socio-cultural environment
Population: Vietnam is the world's 13th largest population Currently
Vietnam is in the period of the golden population structure, this will be an
Opportunity for abundant labor resources and potential customers for large companies, especially the fashion and garment industry
According to the General Statistics Organization: Labour force aged 15 and older in 2011 is 51.39 million, up 1.97% over 2010 Labor force of working age was 46.48 million, up 0.12% 1000 ngươi ¢ Fi gure 2.4 Demographic structure by ages from 2009-2049(Source: General Statistics Organization)
Qualified labor will help our country to take advantage of opportunities
‘golden Di Gan According to figures from the General Statistics Organization,
Global Advanced Master of Business Administration
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Trang 33at present,every year there are about 1.4 - 1.6 million people added to the labor force This abundance force is indeed a golden opportunity for social development.Once this force is to make the most intellectual labor into production, it was inevitable to generate huge volume of wealth, create value-added for the future of the country, and ensuresocial security when our country entered the period of "aging population."
With golden population structure, the demand for apparel, fashion is great Moreover, the labor market will be the potential for the industry to serve the needs of people as services, apparel
Society: the popular items such as Chinese goods,which its quality, design eye-catching, rich in species diversity, cheap, previously occupied Vietnamese consumer market However, in recent years, many Chinese goods which does not guarantee quality, threaten the health of consumers has been informed the mass
media and quality test Thewidespread trend to boycott Chinese goods also affected
the psychology of the Vietnamese consumer Gradually, consumers are back to the buy domestic products, the brand made in Vietnam
2.2.1.4.Scientific, technical and technology environment
Lean production in the garment industry: Lean, a solution to increase the labor productivity,have been successfully applied in some businesses, to shorten
production time, delivery time, thereby saving the cost, value added to the
enterprise Applying Lean technology, workstations stage are connected through
continuous flow; strict quality control at each operation and processes in the
garment industry
2.2.2 Industry analysis
2.2.2.1, Overview on Domestic garment industry
Domestic consumers have many choices in front of clothing products available Fashion market is always rich in style, design, materials, etc., for all ages,
Trang 34gender, style of dress, suitable for many people in different works, because they can not only use domestic textile and apparel goods but also imported goods from many countries such as China, South Korea, Singapore, Thailand, and even Japan, the
United States, that Every year, the number of people who love Vietnam goods
increased clearly However, Vietnam products are still ranked behind in China goods in customer’s decision of purchasing
Many Vietnamese fashion products with prettily goodmaterial are divided
into different market segments The fashion for offices brand as NEM, Eva De Eva,
Yoshino get the trust as well as position in customer’s hearts by virtue of materials, designs which focused to detail by every sewing lines, meticulously
polished, simple patterns but elegant, ingenious blend, not too picky and suitable
with the seasonal climate in Vietnam In general, the products of these brands have
cost no less than 1 million / item, even 3 - 4 million / item Most clients find the
products at more reasonable cost However, they are difficultly satisfied when choosing the available products that are manufactured in the country to get the right price These products do not have eye-catching designs or samedesign, and unique though its material is fairly good
There are not many brands textile at average price as Ninomaxx, PT 2000, Blue Exchange, Focci But most of them for young people, very little office fashion Nha Be Garment Company, Viet Tien Garment Company, Phuong Dong, May 10 offer products from average to high-end to serve multiple market segments
For example, high-end men's shirts brand San Sciaro, Manhattan, Viet Tien
Garment Joint Stock Company is priced from 750,000 VND / item - 1,250,000 VND / item, usually for business users, office workers with high incomes, while, shirt namely Viettien Smart Casual style with acceptable materials, has from 220,000 VND / item - 370 000 VND/ item, for the average income Most of these companies focus on men's fashion and sports clothing
The items "Made in Vietnam" - (exports, also called the company product) is
[CS Global Advanced Master of Business Administration
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Trang 35gradually obtaining a position when consumers can be assured of quality Domestic fashion market can be divided as follows:
* The value of the product, the market divided into high-end, average and popular * The age of clients: children's clothing (from 1 - 12 years), teenager clothes, clothes for young, middle-aged and elderly in which children's clothing market, teens and young market is quite busy and competitive
« The purpose of using: sports clothes, school clothes, work clothes, casual clothes,
clothes at home
2.2.2.2 Porter’s Five Force Model
2.2.2.2.1 Analysis on competitive pressure from existing competitors
Uniform apparel market in particular, most companies are producing uniforms for work and school in orders, because the requirements of technical, the rnaterial and style are not too high, it also take advantage of sewing scale range Realizing that this is quite fertile market, and companies are actively looking for the demands of companies, schools to offer competitive price and good quality
Currently, there are a number of businesses operating in the field of garments such as: Viet Anh Co., Ltd; Thang Long Garment Co., Ltd.; Garments Hung Long Co., Ltd of Viet Long garment Co., Ltd., in Hung Yen There are, in nationwide, many famous brands are now recognized But the leadership team has experienced and qualified well-managed organization, the competitive risks is to be overcome
Therefore, Minh Anh recognizes its main competitors from the company in Hung Yen, operating in the area of northern Vietnam Also, due to the particular
mature of the apparel business and the size of the individual company, the
Company's current competitors are identified as medium-scale companies and employees under 800 people There are the following companies:
- Kido Hanoi Ltd.,Co:
Trang 36Headquarter : D1 Street, Block D, Pho Noi A Industrial Park, Van Lam District,
Hung Yen Province
Phone: (0321) 3972750
Charter capital: 42 billion VND
Main products: production of children's clothing (KIDO brands), men and women
fashion
Founded in 1990, the company has a market-oriented goals aimed at children under
12 years of age Thanks to the good quality and various designs at reasonable
prices, the company’s brand has been popular children's clothing market in the national market
- Pho Hien Grament Ltd.,Co.:
Headquarters: Cho Gao, Hien Nam, Town Hung Yen, Hung Yen Province
Phone: 0321.3556731
Charter capital: 20 billion VND
Business: Garment outsourcing, manufacturing clothes brand POHI
Company processed outsourcing manufacturers for European market In Vietnam, company serves the fashion clothing adult men and women, for those with average incomes, its market in Hung Yen province and neighboring provinces
- Viet Anh Co., Ltd
Headquarters:Thi Trung, Dinh Du, Van Lam District, Hung Yen Province
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Trang 37Phone Number: (0321) 3945427 Charter Capital: 30 billion VND
Main activities: manufacture of clothing office fashion
Fashion brand K & K is always enthusiastic and makes efforts to bring fashion product withhighly modern, dynamic, applications and consistent with the cultural tastes of the Vietnamese people
With a clear strategic orientation on scale and especially the criteria of customer service, the staff and employees of the company are qualified, highly skilled Professional working environment, modern equipment, strict quality control processes to each product, K & K has gradually asserted its position in the fashion
market work Until now, the fashion brand K & K has been on the market in the North
Table 2.3 Competition of some criteria among Minh Anh and its competitors
in 2012
(Source: Accounting Department, Minh Anh Co.,Ltd)
Trang 38Profit/ revenue(%) 4.] 6.3 4.4 4.1 Current liquidity a 1 ratio(%) 1.011 1.3 1.1 0.53 Staffs (people) 17 30 17 12 J Trained workers mi 404 530 301 170
Total workers (People) 622 762 545 324
- ISO certificate Yes Yes No No
- Production scale: Through the target of total assets, number of employees,
we can see KIDO Company is a large-scale company, followed by Minh Anh
- Finance: total capital of KIDO is the largest, the second of four companies
is Minh Anh But the debt ratio of Minh Anh is largest with 84%, followed by Viet
Anh, KIDO and Pho Hien ThoughViet Anh Ltd., Co and Pho Hien Ltd.,Cohave
smaller scale, they are more financially stable than Minh Anh with a smaller loan
- Business capabilities: the rate of profit on sales, Four companies have no significant difference Leading by KIDO, followed by Viet Anh, Minh Anh, and Pho
Hien Although Minh Anh’s revenue and profit is higher than Viet Anh but in terms
off business performance, Viet Anh higher,
- In terms of human resources: based on the number of professional staff,
Minh Anh owns the proportion of high-skilled workers trained more thanViet Anh
and Pho Hien, lower than KIDO, but not significantly This can also be seen as
strengths of Minh Anh
- In terms of process technology, operation: Minh Anh and KIDO certified ISO 9001:2008 in the stability of the technological process quality and professional
work
Sốc 20622: 2n đốn Analysis on threats from potential competitors
[GS Global Advanced Master of Business Administration
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Trang 39Due to the characteristics of the textile industry: high investment cosis and maintaining production: factory, production line, machinery, labor, inputs of raw materials and machinery which depends foreignsuppliers
Pham Xuan Hong, deputy chairman of the Vietnam Textile and Apparel Association (Vitas), showed 3 difficulties of the industry in 2012: "First is small
order, fierce competitive prices Second is all of the increased costs from the price
of electricity, transportation, raw materials, to the social insurance costs Third isthe
hard life of labor, enterpriseshad to try not to reduce salaries to retain them "
With these reasons, the economic recession, the export market is declining of
the order, the thought Vietnam use Vietnamese goodsis rising in society so apparel companies that were previously mainly processing and exporting products tend to
return to the domestic market with more than 80 million people
Therefore, the threats from the potential rivals to the industry are quite large 2.2.2.2.3 Analysis on bargaining power of customers
- Customers in the domestic market of the company are the corporates and individual customers Minh Anh is receiving orders of uniforms in Hung ~’en, as
Vinh Tuong Industrial Jsc, Kwangjin Vietnam, Ba Sao Trading and Services
company, Hai Phong paint Co, TASCO Nam Dinh, Youngone Nam Dinh, Mercury Ltd., Co (Hanoi),
- With school uniform product, its customers are Khoai Chau Primary School,
Phung Hung A, Phung Hung B, Dai Hung Thuan Hung, Thanh Cong, Co Nhue region,Nguyen Thi Sieu secondary school,Chau, Chu Van An secondary school (Ha Nam), Tran Dang Ninh (Nam Dinh), a total of 30 schools
Furthermore, in recent years the company developed men and women fashion te but mostly only for individual customers in Hung Yen
Trang 40However, the intense competition on prices of domestic companies make
consumers have more choices, so Minh Anh need to evolve further to meet the
tastes of the consumers
For these reasons, we can say, the power of customers in general and Minh Anh in particular is big
2.2.2.2.4 Analysis on bargaining power of suppliers
Over the years, the company's relationship with suppliers has been confirmed and prestige, the company's raw materials mainly are: fabric, yarn, buttons, zipper is produced of the leading domestic companies Material resources are relatively abundant, competitive price in which fabric materials are
imported from China The supplier is committed to delivery on time so the lack of
raw materials has nothappened
Moreover, the production of garment accessories is been developing in country, there are many cotton-growing project in the provinces, typically last July 2012, Vinatex joint-stock company (under the Vietnam Textile and Garment group) has implemented two projects of cotton growing industrialization in Ea Sup in Dak Lak province, including: "Project on the irrigated cotton industry "in Ya Ya To Mét commune to nearly 192.5 hectares and" associated cotton investment project"in the youth village in La Lop, with 200 hectares
Thus, the raw fabric materials have to be imported from China with competitive pricing without price stability, raw materials accessories to be purchased in Vietnam In summary, the source material is dependent on providers with relatively stable levels,
26w v30 Šu Analysis on threats from substitutes
For the apparel and fashion industry, the alternative here is understood as a change in product materials, design
Customer tastes change from durable wearing to a brand and standards {CS om Anh Company does not meet the other requirements of the
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