GRIGG UNIVERSITY
GRIGGS UNIVERSITY
GLOBAL ADVANCED MASTER OF BUSINESS ADMINISTRATION PROGRAM
CAPSTONE PROJECT REPORT
THE STRATEGY OF REINFORCING THE DISTRIBUTION ACTIVITIES
OF SAIGON SPECIAL BEER IN HOCHIMINH CITY
FROM 2011 TO 2016 Group Number: 07
Student’s name:
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Capstone Project THE STRATEGY OF REINFORCING THE
DISTRIBUTION ACTIVITIES OF THE SAIGON SPECIAL BEER IN HOCHIMINH CITY
FROM 2011 TO 2016
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G Global Advanced ' Mi i Capstone Project OUTLINES # PREFACCE co on 9n g0 095.000090596000090006009060000000986000000000000009994 7
CHAPTERI: THE THEORY OF STRATEGY, TRATEGY
MENAGEMENT AND ~ DISTRIBUTION CHANNEL
ANAGEMENT cac "— "= 6N
1.1 THEORY OEF CORPORATE SFRATEGY ĂẰĂẶ 999999999 re 10
1.1.1 Concepts of corporate s(raf€ØV ts ees 10 1.1.2 The purpose and role of a strategy 14 11.2.1 The pur pOse Of G SITOLCZY un ores sans khán LAI S12 HHUÀ1 003411600561 098800/830 9273 14 Ld Dk The VOLES OF GO SÚPHÌGIPTP gan tran tang tHANH G994 1 1H0101 TRE P902 PEDRS YPete xem meen enn 18188 15 1.1.3 Distinguishing types oÝ strafegy cĂĂẰĂĂ HH H000 8088 15 Ì.1.3.Ì Cĩorfiordlê SIF GLCBY ce ccvin cones aennes vanind susinsi Kis L1AkE NA RESIS XD ` 15 }.ĩ 3.2 SHU- Stralepy Of Business CAL ae caasusaea trassttraersoxetr nan ke kơcoee rerse neeee kem 16 1.1.3.3 Strategy oƒfunctional deDaFtI€HfS .- tte e stent aes 16
1.2 STRATEGY MANAGEMENT uu cccscscsscsssscnccrerecceseceesescsessssscsconeoeees 16
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1.2.3 THE PROCESS OF PLANNING STRATEG Y . <<<<<< 19
1.2.3.1 The concept of pÏlanning s(raf€ØyY 55555 S*nnHnỊỊ H11 1 58 19 1.2.3.2 The successful competencies Of COTIDQHI)' s55 555 SSSeeeeeeeesee 20 1.2.4 The requirements and foundation ưoŸ planning strafegy - 21 1.2.4.1 The necessary requiremeHnts OƒÏaHHIHg SIFd[€&Y ằ cà: 2Ï 1.242 The foundations of Plaunin® SIP ATER .02- 10 seasiae.ss sacar ae re osamecne se ne bud
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1.2.5 THE TOOLS OF THE EVALUATION AND STRATEGY
EST ABLISHMENT 445256 0888.284642, bá 3ưnh 2z 8a8/55a800805468/785-0/500g1088540L0000:00N000aA5/0N850048100/170150058008 24
1.2.5.1 The extemal tacter evaluation migtrix = BPE oc: cscs ss css cress sem suns memes ems: me 24 1.2.5.2 The Iinternal factor evaluatton matrix - [FE ch na 25
I.2.5.3 The SWOT matrIX 22222222 222222222 hea 26
I2 5.4 The QSPM matriX 22222222222 eee 28
I.3 THE CONCEPTS OF THE DISTRIBUTION CHANNELS 28
1.3.1 The concepts of the distribution in Marketing 28
1.3.2 Definitions 00000 bbb bee ttetetttreneeeeeeetees 28 {,3.3 1 Thờ TGllalos (GÌ FTOKNGS cong vc (ha tì ng BH 2 Seem eames A me 2 ney ar 2 30 1.3.2.2 The poli€Ies OŸ DFIC€S 2.22220202020222 2 nhe 30 1.3.2.3 The methods of sales promotIonS ào 30 1.3.2.4 The importance of the distribution syStemS àààà chê 32 1.3.3 The features and functions of marketing channelÌs - 32
1.3.3.1 The features of the marketing channels 32
1.3.3.2 The reason of using the Intermediary marketing 32
1.3.3.3 The distributing intermediaries for the cost savings 33
1.3.3.4 The kinds of marketing channels 33
1.3.3.5 The functions of marketing channeÌs ẰSẶSe 34 1.3.4 THE ORGANIZATION OF THE DISTRIBUTION ACTIVITIES 35
1.3.4.1 The activities of the distribution actIVIEI€S àì ào Ằ 35 1.3.4.2 The organization of the activities 000.000 nhe 36 1.3.5 THE DISTRIBUTION CHANNEL MANAGEMENT - 37
1.3.5.1 The establishment of the objectives and their duties 37
1.3.5.2 The selection of the channel members ccc 222222222222 38 I.3.5.3 The stimulation of the channel members 39
1.3.5.4 The evaluation of the channel members 40
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CHAPTER 2: THE ANALYSIS OF THE COMPANY SITUATION AND THE DISTRIBUTION ACTIVITIES OF THE SAIGON SPECIAL BEER IN HOCHIMINH
CITY SHSHSSSHSSSHSHSHSSHSHSSHSHSHHSSSHSSHSHSHSHSHSHHSHHSHSHSHSHSHSHSSHSSHSSSHSHSHHHSESEHEESE eeoeeeeoeoeoeeeeee e@eeoeee 41
2.1 THE INTRODUCTION OF THE BEER, WINE & BEVERAGE CORPORATION (SA BECO ccssscsosssscessssensscoresscsseascassasasessswancassws scnsnennerennamnnaean 41
2.1.1 The general information of SABECO , cccccccssecsssssceereneeeeeceeseseeeeereenenes 41
2.1.1.1 The history of company establishment and development 42
2.1.1.2 The target missions and VISION 222cc hhhheeeesee 45 2.1.2 The beer brands of the COMPANY scssessscssscesessssessceeeseeeeeeseeeeseseeeeees 47 2.1.3 The main market shares and COMpetitOrs cssssecsseessseeeeeeseceseneeeeees 48 2.1.3.1The market shares of the beer manufacturers of Vietnam 48
2.1.3.2The main competItOFS be bebe bbb eee ee heo 50 2.1.4 The business situation of the company ïn r€C€nf Y€4AFS -«<<<< 52 2.2 THE DISTRIBUTION ACTIVITIES OF THE SABECO IN GENERAL AND THE SAIGON SPECLAL, BEER IN PARTICULA R - - 54
2.2.1 The distribution activitites of SABECO 54
2.2.1.1 The structures of thre distribution Channels «sis « sas « nacre sacs» exane cee exae 1 ae 8 54 2.2.1.2 The types of the distribution channeÌs 55
2.2.1.3 The distribution poÏICl€S 2222222222222 hhrrreeee 58 2.2.1.4 The standards of the selection of the distributors 58
2.2.1.5 The profit policies of the stimulation for the distributor 59
2.2.2 The management of the distribution channels 60
2.2.3 The strategy of the attack on the distribution channels 62
2.2.3.1 The strategy of the market share devision and making profit 62
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2.2.4 The trade mark of the Saigon Special beer ee 63 2.2.4.1 The introduction of the Saigon Special beer 63 2.2.4.2 The business status of the Saigon Special beer in 2010 64 2.2.5 The analysIs of the beer market ĐƠ 2.2.5.1 The market segmentation các cá cà cà cĩ cà 66 2.2.5.2 The market scale Ĩ8 2.2.5.3 The growth of the market share nhà 70 2.2.5.4 The Analysis of the results of the distribution channel research 70 2.3 Using the analytical tools to evaluate the company situation and the current distribution activities of the Saigon Special beer in Hochiminh city 78
2.3.1 The external factor evaluation mAfFIX 2c 022020 chà 78 2.3.2 The internal factor evaluation mafrIX ccc che 79
2.3.3 The SWOT analysis of the current distribution channels of the Saigon
DOT iso ees tu cà 0, (bu o4 60-15 GB 5 meni tend tine GH § SIRS RIE 1 ON BEES LR 86000: 4 Se TNE 3 81 2.3.4 The Boston Consulting Group portfolio model 91
2.3.5 The competitive alternatIve map che 93
2.3.6 The evaluation of the current distribution channels of the main 95
CHAPTER 3: BUILDING THE CORPORATE
STRATEGIES AND MAKING SOME SOLUTIONS AND SUGGESTIONS OF REINFORCING THE DISTRIBUTION ACTIVITIES OF THE SAIGON SPECIAL BEER IN HOCHIMINE CITY scsssssssvecscasssesosssseseses "_—¬ M23.4665106401991/06/⁄594/13E0067 F
3.1 The Quantitive Stragic Planning Matrix 97 3.2 _ Making some solutions and suggesStlons cành 100
3.2.1 The targets of SOlUutIONS 2.22222222222222 eea 100
3.2.2 The foundation of soÏutIOPS 2262666211111 HH se 101
3.3 ThE SOLUTIONS na aẼẽ lÚi
3.3.1 For the sales forces (Sales staff, “Promotion girls”, PGs 102
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3.3.2 The distribution channels 0000s 102 3.3.2.1 For the traditional distribution channels 102 3.3.2.2 For the modern distribution emanmels occa: ccs vance v csmwsa s canes somes ewes avames ony 104 3.3.2.3 For the cOnSUM€FS 222 22222222 nhe 106
3.4 THE SUGGESTIONS 1.0.0 cc ceececessssesesseseeeeceececesceceseeseseecsseseeeseseeeeeseesenees 106
3.4.1 The suggestions for the COMPANY oo eect eee 106 3.4.2 The suggestions for the governmental authorifties 107
@ IN CONCLUSION sssssccscnenarconmennsmarssenmecnoeceCnnnreEe Teme eneneen 109 GB ANN EM 0 0 0 0 0 0 0000000000000000110088800109000060000 110 ? RE.E E.RENC E e ccescceeeresiseriisbek1444055258882131764860084.08865828158650004630505504835/0040080/68 115
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PREFACE
The reason of choosing this topic:
In Vietnam there are more than 85 million people nowaday Nearly half of them are the male with friendship meetings, entertainments at pobs, bars and so on And beer is a drink which 1s not missed in such meetings In fact, Vietnam 1s a very potential market for beer manufacturers to focus on
As talking about the beer market in Vietnam, the harsh competition of
portfollio among beer manufacturers is often mentioned endlessly It is as same as a cake of portfolio being shared into many small pieces when there are more and more foreign beer manufacturers participate into the boiling Vietnam market
of beer The beer industry of Vietnam is highly concentrated on There are more than 60 percent of market shares that belong to the three following big companies:
The first is SABECO, Saigon Beer, Wine & Beverage Joint Stock Company, occupying 35%
The second is VBL, Vietnam Beer Company Limited, occupying 20%
And the third is HABECO, Beer — Wine — Beverage Joint Stock Company, occupying 10%
Saigon Beer, Wine & Beverage Joint Stock Company, SABECO, 1s a
company which is doing business of food, has good advantages of modern
machines and well-experienced people It was established long time ago for the
products of traditional value and familiar Vietnamese tastes At the present, SABECO is a leading company in the beer market which is suffering a very harsh competition from the large beer companies such as, Heineken, Tiger,
Budweiser, Zoro and so forth Among such beer brands, Saigon Special, a
product of SABECO was marketed in 1999 and positioned as a high class beer for the active and suecessful people At the beginning, It was positioning at restaurants and hotels mainly And in the mind of beer consumers, it is still a
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normal class brand beer The Saigon Special has not yet escaped from the normal
class features of the big family of Saigon beer One of the key chains of elements that the beer manufacturers care most Is the distribution
Its brand is for a high class beer range of the successful but the current
appearance of Saigon Special is located at normal class places The big question
for the Saigon Special is that whether or not it 1s capable to penetrate into the market shares of the high class segment that Heineken and Tiger are occupying almost The most important care is that how SABECO can do it The functions of marketing of building and developing its distribution channels will play a decisive role
Basing on the reality of the company SABECO and the important role of its
unmissable distribution channels of the present beer market, we decide to build
“The Strategy of Reinforcing The Distribution Activities of The Saigon Special Beer in HCM City from 2011 to 2016”
The purposes of study:
To study and analyze the beer market, the activities of the Saigon Special distribution and at the same time to understand the activities of the competitors’ distribution channel design in Ho Chi Minh City
To evaluate the activities of the corporation’s current distribution in general and its brand Saigon Special in particular in order to recognize the advantages and difficulty as well as the weakness and strength of the current distribution system
Through the study, analysis and evaluation above, to make some suggestions, solutions to contribute to the impacts on the distribution channels of Saigon Special when it is more penetrated into the high class segment in Hochiminh
city
The methods of implementation:
- Collecting FIGURES and information data
- Generating the data of sales during the last five year
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2 Global Advanced !/: ›: f \ ' Capstone Project - Researching and interviewing the end users under the designed questionnaires (100 forms)
Besides collecting and practically observing the secondary data, analyzing the sales FIGUREs generally: studying the information from books, magazines, Internet and so on
Solving the FIGURES
> Analyzing the report of the 2010 consumption basing on the sales FIGUREs of the company
> Using some methods of comparing, evaluating some important FIGUREs monthly and quarter The yearly should be compared to the monthly, quarter or last year or the same quarter or month of last year
> Using the methods of statistics, forcast to suggest some solutions of improving the company’s activities
> Using the functions of Excel in statistics
The contents of the topic:
There are three chapters totally as follows:
Chapter |: The theory of strategy, strategy management and distribution
management
Chapter 2: The analysis of the current status of the company and Saigon Special Beer distribution in Hochiminh city
Chapter 3: Building the corportate strategies and making some suggestions and solutions of reinforcing the distribution activities of the Saigon
Special beer in Hochiminh city
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CHAPTER I:
THE BASIC THEORY OF STRATEGY, STRATEGY
MANAGEMENT AND DISTRIBUTION CHANNEL
MANAGEMENT
Lt GENERAL THEORY OF CORPORATE STRATEGY
1.1.1 Concepts of corporate strategy
The term “strategy” originated from the army As for Webster's New World, Strategy is the science of researching plans and instructing the large scale of military operations and practicing and training the forces who participate into the battles with the most advantageous position before they face the enemy
This term “Strategy” has been very popularly used in life and even in the micro and macro economy
In corporate business operations, the corporate resources are always limited The business environment is usually changed while the firm has to face the high competition So, doing business in market is not different from fighting in battles Thus, the art of running business, as for many particular factors, 1s
quite similar to operating the military
Therefore, the concept of “business strategy” is made from the following
concepts:
Alfred Chandler said: “Strategy is included with the basically long term corporate targets At the same time, the proper processes, methods and essential resources must be used and distributed to achieve these targets According to William J’.Glueck, strategy is a united, coordinated and general plan which is designed in order to make sure that the basic corporate targets will be completed
As for the concept of competition advantages, Stuart well said: “a real strategy is positioning the competitive advantages in future.” According to this author any of strategic thinking also reflects the effort of the building of the competitive advantages That is the purpose of running strategy And an tdeal
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G Global Advanced !/ : f ` i Capstone Project strategy has to provide the better value to the client and create a sustainable competitive advantage According to Michael Porter, strategy 1s understood as per the three following aspects:
Firstly, strategy 1s a creation of valuable and distinct position including
different activities In other words, strategy is a creation of difference which must make economic values The difference may be included with selecting
activities Or various ways of carrying out activities compared to the competitors Secondly, strategy is a selection and exchange in competition During the time when the strategy is built and carried out, we always have to choose and
find the ways of harmonizing and exchanging what is needed to do and what is not needed to do
Thirdly, strategy is a creation of harmony among corporate business
activities Building and carrying out strategy require us to coordinate all
activities, departments and strategic levels in a company at the same time The success of a strategy depends on how well we carry out the activities of the company with a form tightly united and linked
Michael Porter said: “the business strategy is a development of competitive position through developing competitive advantages
In creative combination of ideas of strategy, Allaire and Fursirotu developed a general and enough definition of strategy as follows:
“A corporate strategy may be understood gernally that the total of options tightly engages together with necessary methods in order to implement the corporate vision and to create a sustainable economic value in a particular situation”
This definition impresses four important portraits of a strategy:
First, a strategy is “the total of options tightly engages together” Each strategy 1S an option between advantages and risks of different options which the company can implement It refers to the exchange between purpose and resource
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between what we want and what we can do These options need to be engaged
together and with the purpose of creating sustainable economic value
Second a strategy includes “necessary methods to implement the corporate vision” A strategy needs to include main directions and important methods as a basis for the options of a company These options as well as methods must be led to the vision and core values that are affirmed in order to achieve a particularly competitive position in the potential market
Third, the strategy must create a sustainable economic value The
company needs to create a particular profit rate enough to cover the costs
according to the prices that are quoted by all suppliers of intellectual goods and capital A profit rate that is not enough will lead to losing the core competencies and impact on the operation performance as well as the survival of the company
Forth, a strategy is built and implemented in a particular market surrounding A company always develops in a surrounding of three distinguishing markets such as, product and service, intellectual and capital markets The product and service market always requests the company to face a harsh competition The intellectual market is often rare and active under the frame of justice, socio-politics and culture Mean while, the capital market often make the company’s direction and strategy pressured And it is also related to the company’s shareholders, staffs and society more or less
In theory of strategy management, almost of its authors used to
distinguish it between planned strategies and implemented ones
A planned strategy of an organization often includes some activities that it is following, implementing It is also policies of rules and guides of implementing tasks that are planned
In reality of doing business, a planned strategy is quite different from
what the company implements This difference is as for the following reasons: First there are so many strategies that have been built but not implemented This often happens because of many reasons At first, though the
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strategy 1s calculated and considered carefully, it is just the human product
When the factors which might influence the development of the organization considered at all, the planned strategy will not be able to exist under the harsh challenge of the highly competitive environment
Second, the management reality has ever shown that many organizations care of their strategy planning trom which they make very nice strategies consume them energy, time and money but they do not care of implementing them
Third, because there are no effective plans of implementation, many
strategies are planned very well but they are not implemented in the reality; or
they failed to implement Making the nice plans and beautiful thinking become
particular actions are very difficult tasks
The management reality also shows that it is quite difficult to have
strategies implemented as same as their planning in the conditions of fast changing environment as nowadays
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CG Global Advanced Maui) 0! 6 Ms Capstone Project FIGURE 1.1: Planned and implemented strategy Implementing strategy > > » | Imple- Case | Planning St —j —> — —— >» menting St TỤC ⁄ Harmonizing with the environment changes ————— seni ~”” y unplementing Case 2 Planning St 7 , { > Changing environment Case 3 Making decisions not following , | Implementing the strategy St > —— sy
Remark: St is abbreviated for Strategy
(Sourcing: The Concept of Strategic Management by Fredr David.)
In the corporate business operation, the opportunities which are probably
realized are accidentally given to the company by the environment or the human
innovation to become strategies, also called appeared strategies These appeared strategies will be implemented and become implemented strategies
1.1.2 The purpose and role of a strategy
In the market structure, building and implementing a strategy is very important to the existence and development of a company It 1s performed through the purpose and roles of a strategy
1.1.2.1 The purpose of a strategy
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- Through a system of purposes, main methods and policies, a business
Strategy creates a general picture of what business type the company wants to reach
- A strategy also creates the company’s potential, business scale, position and future pictures
- A strategy also outlines a frame to lead managers to thinking and actions
- With a strategy, a company doing business will get the fastest chances of approaching the peak strength in the market
1.1.2.2 The roles of a strategy
In a market economy with harsh competition, a company who wants to
succeed needs its own strategy It means the company managers must understand
the changing trends of the market They have to find key factors of success and
know how to exploit the strength and weakness of the company Also, they need to realize their competitors, the needs of the clients and know how to approach the market Then, they need to make creative decisions to increase or reduce their activities at a certain time and particular places
The efforts above refer to creating a perfect strategy which affects on the
basic function of doing business such as:
- Providing the company a particularly effective business direction which
orientates all of the company’s operational functions
- Supporting the company to improve its competitive advantages to
enhance its strength as well as to develop its market-share
- Affording the company to minimize its risk, contingency to make its business developed sustainably and continuously for a long time
1.1.3 Distinguishing the types of strategy 1.1.3.1 Corporate strategy
A corporate strategy has to guarantee that the company will lead its activities into attractive market shares in which it can build or keep its
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competitive position smoothly Therefore the corporate strategy has to identify
all trends and long-term development of the company’s activities 1.1.3.2 SBU- Strategy of Business Unit
A Business Unit Strategy 1s choosing particular products with the same target market for a separate business of the company The Strategy of Business Unit also determines how SBU will compete to the current competitive position of its competitors The strategy of Business Unit creates SBUs so that these SBUs will achieve their target of contribution to completing the corportate target If the company is a single industrial one, its strategy of business unit is a
corporate strategy
1.1.3.3 Strategy of functional departments
A strategy of functions will always help the corporate strategy and
strategy of business unit The strategy of functions is the strategy of departments
of a company such as, human resource strategy, production strategy, marketing Strategy, financial strategy and so on
1.2 STRATEGY MANAGEMENT
1.2.1 The concept of strategy management
The strategy management might be defined as an art and science of establishment, implementation and evaluation of decisions related to many functions that allow an orgamization to achieve its planned targets
The strategy management is a continuous process including three periods: planning strategy, implementing strategy and controlling stragtegy
1.2.2 The periods of strategy management
The strategy management may be considered a management system includes three sub-systems that are planning strategy, implementing strategy and controlling strategy These three missions may be understood as three periods of the only process
1.2.2.1, Planning strategy
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Planning strategy 1s a process of building business missions, analyzing
and researching business environment in order to identify the difficulty and advantages from the external environment and the strength, weakness from the internal environment, to make strategic targets and to choose the optimized solutions to implement strategic targets
Because of limited resources, the corporate strategists have to choose the best strategy Those are the decisions of products markets, using resources and technology during the time of compromising the strategy
FIGURE 1.2: Three sub-systems of strategy management Strategy Planning management Strategy a —S >/ Controlling Strategy Implementin Strategy
—* = Mainly depended parts Managing activities —* = Other depended parts Daily business
Sourcing: The Concept of Strategic Management by Fredr David)
The planned strategy must specially care about making an advantageous and competitive position for the company In market
The period of planning strategy is the most important
At this period, the managers must carry out the following tasks: - Establishing business assignments or missions
-Researching, tealizing the thieats and opportunities irom the external
environment
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- Researching and identifying the weakness and strength of the internal
environment of the company
- Building the long term targets
- Making and choosing the strategies to implement them in which:
+ The managers must combine their experiences, minds and analyzing them to make workable strategic solutions through using the tools such as,
SWOT martrix, BCG martrix, GE martrix, IE martrix and so forth
+ The managers must make a decision of choosing a strategy that is suitable for the resource, market, product and technology of the company by using QSPM matrix
1.2.2.2 Implementing strategy
This is the period with actions of the strategy management To walk the planned strategy, it is necessary to have a related organization to take charge of new missions and to consolidate the management members, staffs to do the assignments
At this period, the managers must do the following jobs: - Establishing the yearly targets
- Making policies and distributing the resources in order to develop the capitals, programmes, cultural environment for serving the strategy At the same time, they have to combine them with encouraging, stimulating and rewarding the staff to achieve the yearly and long term targets
This is the most difficult period of the strategy management process It requires keeping high disciplinary, dedication and scarification of each person
To know how successful implementing the strategy 1s depends on pushing the staff that seems to be artist rather than it is scientific If the strategy 1s planned but it is not implemented, it 1s non-sense
1.2.2.3 Evaluating and controlling strategy
This is the last period of strategy The three main activities of this period
are as follows:
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- Considering all factors as the basis of the current strategies
- Measuring and evaluating the results
- Carrying out the necessary and enough activities of adjustment
Controlling strategy is the last period of the strategy management but it does not mean that it is done lastly in the strategy management but it should be done usually and continuously to create feedbacks that make the assignments of the previous periods to be adjusted on time
Although the three periods of the strategy management are made into the only process, they do not take place in succession but they do discontinuously It is especially for time as the periods of two and three are implementing and
controlling strategy obviously take place at the same time The overlap of time is
synonymous with influencing one and others among three deliberate missions It
means one mission will impact on two others
To distinguish the strategy management from the daily business management ts a difficult issue While planning strategy has its specific methods and is able to be clearly differentiated from short-term and long term planning, the two rest periods may not be distinguished clearly Except for early warning systems, there is no separate method of the missions of implementing and controlling strategy
Among three periods of the strategy management, planning strategy
places a key role Planning strategy is a process of independent activities of daily business operation but it is identified with these activities Mean while, the two
other missions, implementing and controlling strategy are the parts of the management process of the daily business
1.2.3 THE PROCESS OF PLANNING STRATEGY
1.2.3.1 The concept of planning strategy
Planning strategy is a systematic process in order to identify the direction and to garauntee the achievement of the assigned targets and the main purposes of a company
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This is the first period of the process of the strategy management
The process of planning strategy needs to focus on the decisions of necessary investment to maintain the current resources and achievements and to build new resources more It guarantees the future success during the time of planning strategy as well as after this So, building resources successfully 1s the main purpose of planning strategy
1.2.3.2 The successful competencies of a company - The competitive position:
The competitive position reflects the position of a company in a market in
which it serves A strong position means that the company must occupy some remarkable market share in the market in which it serves or some market shares
of niche market The attraction of the market depends on its scale, growth rates and competition intensity
- The competitive advantages in marketing mix:
Marketing Mix is a group of methods of product, price, distribution (place, promotion) and tele-communication (people, process, physical environment and so on) In the marketing, these terms implicitly refer to the marketing mix
A strong marketing position may be achieved in accord of many ways such as, better quality product, better services, stronger advertising policy, long- term pricing advantage, strong promotion and so forth
- The advantages of resources:
The resource is not only including the tangible factors such as, factory, technology chains, human resource, information system and finance but also other intangible factors such as, culture and company pictures, copyright as well as other complicated competencies such as, renewing, cooperative compentencies, changeable ability
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Many economists say that the competitive advantages start from the
tangible or intangible resources that the company owns are unique, difficult to be copied and valuable At the same time, the company is able to exploit and use these resources effectively The company only has normal resources but it has some special ability which its competitors cannot combine and use these resources in some unique ways to get the highest benefit On the other hands, the company has its unique resources but if its ability is normal, its competitive advantage becomes also fade and less sustainable Of course, the competitive advantage of the company will be the strongest if the company has both unique resources that is difficult to be copied and also special competency to be exploited in order to make better products, services to the customer’s demand If the advantage of the company starts from owning its tangible resources that are easily copied, its advantage will exist temporarily because the competitors will find and own the same resources easily that make the company lost its
advantages If the company builds its advantages based on the intangible
resources such as, trusted brand, marketing arts and so on, these are the strength
of the company that will not be easy for its competitors to be familiar with or
make copies is also called the special compentencies Building the competitive
advantages needs to be taken advantage of these abilities
The competitive advantage is determined by the specific features of the marketing mix or resources of the company that are quite positive when they are compared to its competitors The strategic pricing of the competitive advantage
in marketing mix is determined by the importance of the relevantly successful
factors The strategic importance of the resources depends on the limit, ability of creating values to the client and their sustainability
1.2.4 The requirements and foundation of planning strategy 1.2.4.1 The necessary requirements of planning strategy
- To identify the reasonable scale and level for the department of planning
Strategy
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- To develop the general strategy effectively, the department chosen to
planning strategy has to get full rights of other relevantly basic functions that are related to the three parts of strategy
- To establish the accurate information
+ Evaluating the correct current situation and forecast the future situation Well
+ Evaluating the external business environment correctly to realize the
Opportunities and the threats This depends on the ability of the thinking and forcasting of the strategist much
- To choose the perfect strategy:
Having to choose the good target, to find many different methods are to
increase the ability of choosing the best strategy Using many different
techniques to analyse strategy makes some results that modify one and another help us match these requirements well
- To have the plans of provisions and plans of withdrawing:
In future there are many changes that are difficult to be forecast Also, there is no only one strategy that can be applied well for all situations Therefore, there should be provisional strategy to deal with unexpected changes in future
1.2.4.2 The foundations of planning strategy
1.2.4.3 Basing on the customer
The company should segment a market into many groups of customers to choose one or some groups of customers to concentrate its effort on matching their demands the best The strategist needs to know the company’s clients well to establish positive differentiation
- The company should segment its market according to the client’s using purposes The problems which need to be solved are that the client 1s segmented Into enough large scales to make sure that the company or the competitors make different products or services to serve their customers or not The scale of the client may influence the prices of the products and services that the client may
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receive The company needs to research the psychology of the client based on their demand that the company should have appropriate strategies
- Segmenting the market according to the compnay’s ability of meeting the customer’s needs The competitive ability of the company ts so limited that it cannot cover all of customer groups
- Resegmenting the market
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3 Building business strategy
- Determining the segments of targeted industries and general business strategy -Determining the competitive advantages at the level of marketing mix
-Determining the advantages at the level of resources — * q 4 Determining the methods of implementing strategy 4 5 Evaluating the strategy and solutions of implementing strategy Ỷ 6 Forming and verifying the strategy documents
—> The normal procedures of steps
—* The overlaped lines may be ordered
V = Start
1-6 = Main Steps
1.2.5 THE TOOLS ARE USED FOR EVALUATING AND ESTABLISHING THE BUSINESS STRATEGY:
To establish the strategy, we can apply a variety of methods and tools of planning strategy In this assignment, the tools that are helpful for
planning the strategy of improving the distribution activities of the Saigon Special beer at SABECO group are selected and mentioned below
1.2.5.1 The martrix of external factor evaluation - EFE:
Che martrix of external factor evaluation 1s a tool that ailows us co evaluate
the main impact of the external environment on the company The external
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factor evaluation martrix is implemented under the five following steps:
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* Step J: Establish the items of the key external factors
* Step 2: Assess their importance from 0.0 (the least importance) to 1.0 (the most importance) for each factor The assessment shows the relevant importance of factors The weight column reveals how important the respective factors are to being successful in the industry The weight column must sum to 1.0 regardless of the number of the factors
° Step 3 In contrast of the weights, the ratings reveal how well the firm is performing in regards to that factor, where a 4 = the response Is superior, 3 = the response is above average, 2 = the response is average, and | = the response is below average Each factor will decide the success so that the methods of which the current strategies of the company are
reacting to these factors
° Step 4 Multiply the weight of each factor with its relevant rating to assess
its weighted score
e Step 5: Make a sum of the weighted scores of the factors in the industry The average score is 2.5 If the total weighted score is less than 2.5, it reveals the weak response to the environment If the total weighted score 1s more than 2.5, it shows the positive and good response
e For good points, using this external factor evaluation matrix will make a general picture of the external factors that may influence on the
competitiveness of the company In contrast, weighting and rating each factor as well as assessing its importance are still subjective
1.2.5.2 The Matrix of Internal Factor Evaluation - IFEM
e It is as same as the steps weighting and rating of the external factor evaluation matrix The internal factor evaluation matrix is a tool to evaluate the weakness, strength and importance of the importance of each functional denartment in the company,
e For good points it makes a general picture of the internal situation of the
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company with particular weakness and strength which may impact on the competitiveness of the company And for its limit, it is— still subjective
1.2.5.3.The matrix of SWOT
e The SWOT matrix accesses the strength, weakness, opportunity and
threat The purpose of the environment research is to access the threats, opportunities, strength and weakness that the company Is going to face during the time when it is running business so that they can be the base of building the corporate strategy The skili of the SWOT analysis is a tool to generate the results of the environment research and strategy establishment
e The key opportunities are the chances in which the products of their
influences on the company when they are utilized and become great
advantages for the company
e The key threats are the risks in which the products of the influences when the risks happen to the company and the probability of facing such
risks reach to the greatest values
e The assessment of key weakness and strength is the process of the internal environment evaluation and analysis of the company with many factors The most importance is to get key factors which may influence on the competitive position and implantation of the corporate strategy Hereby, we need to consider the factors based on the activities of the system and compared to the same standards of the industry and the main competitors
se The combination of the internal factors and external conditions: After assessing the basic factors of the internal and external conditions, we need to apply a process including the following steps to analyze and
establish the strategies:
° Step I: List the key factors of the internal and external conditions on the blank squares of the SWOT matrix SWOT is abbreviated to
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Strength, Weakness, Opportunities and Threats
° Step 2 Make a combination of couples logically Establish the combined strategies such as S/O, S/T, W/O and W/T
o S/O: Which strengths are used to utilize the external opportunities best? o S/T: Which strengths are used to deal with the threats from the outside
best?
o W/O: Which weaknesses are used to make good conditions for utilizing the opportunities from the outside? Which opportunities are utilized to
replace these weaknesses”
o W/T: Which weaknesses need to be improved to reduce the current risks?
° Step 3: Make the combination of the four factors S+W+O+T This will make a resonance of the four factors to establish a strategy which
helps the company use the strengths to utilize the opportunities well and replace the weaknesses as well as to reduce the threats step by step
° Step 4: Collect and reconsider the strategies Classify the strategy
groups and combine these strategies to become a system in which they can help one and another
EIGURE_ LS: SWOT MATRIX OPPORTUINITIES STRATEGIES OF | STRATEGIES OF | nies ing CHANING REINFORCING
For WO stratcay, to For SƠ strategy, to : DIRECTION š trprove the internal use the internal
weaknesses through strengths for utilizing the creating the advantages of the advantages from the
external ater |
opportunities opportunities
WEAKNESSES STRENGTHS
For WTdefensive : For ST strategies, to
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Jame H Donnelly, Jr.)
* In general, this analytic tool can clearly show the strengths,
weaknesses of the company as well as the threats and opportunities from the outside It can show the particular strategies which the company will implement are established from the strengths
weaknesses, opportunities and threats SWOT matrix will help the company build workable strategies which can be selected and implemented But which strategies are selected to develop hereby?
1.2.5.4 QSPM Matrix:
This analytical tool will subjectively show what strategy 1s the best QSPM matrix will use the results of the EFE and IFE matrix Then, the necessary information from the SWOT and SPACE matrix is used to establish the QSPM matrix
Hence, for the tools of strategy planning mentioned above, each of them also has the advantage as well as disadvantage Therefore, when they are practically applied, we must be flexible to choose the strategies that are suitable for each particular situation and conditions
1.3 THE OPINIONS OF DISTRIBUTION CHANNELS:
1.3.1 The concept of distribution channels in marketing: 1.3.2 Definition :
- Most of the manufacturers are distributing their products through marketing intermediaries The marketing intermediaries combine into a channel
that is named as a distribution channel
- The distribution mentioned hereby is not the one of the general social
products or GDP but it is an important strategy of marketing mix as a business concept The distribution in marketing will change the possession of products
trom the manufacturers to the end users To change the possession of the products, the companies have to establish their suitable distribution channels and
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use the intermediaries properly so that the products will come to the end users
the most reasonably
- FIGURE 1.6: The model of Marketing Mix :
PEOPLE
(Sourcing: the Marketing Management (Knowledge & Skill) by J Pau Peter &
Jame H Donnelly, Jr.)
The combination of the main elements such as, products, prices, distribution, physical environment (customer services) which will be used for the marketing planning of the company is also called as marketing mix The four following elements of the marketing mix will support, decide and impact on the
activities of the rest elements
The four “P” of maketing mix:
Product: the management of the product elements includes planning and developing the right items of products services that the company markets
Pricing: deierniing tne right pricing dase for che pioducts
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" Placement: selecting and managing the trading channels in order
that the products occupy the target markets on right time and developing the systems of logistics and transportation
Promotion: introducing and convincing the market to use the company’s products
Hereafter, we consider the concepts relating to the policies of distribution 1.3.2.1 The policy of products:
The policy of products is the foundation of the marketing mix policy based on planning the large scale business of new products and the general marketing strategy of all current products of the company When considering the policy of the products, the company should care about some key points such as, the general quality management, brand and package development of products,
selections of product packages 1.3.2.2 The policy of pricing:
Nowadays, pricing is not the most important competitive element to attract the customers, especially in markets in which the income of the end users is still low For the development of new products, the company should have an appropriate pricing policy to build a stable position for its products in the market
However, the company cannot rely on its subjective wish to do pricings
There are some pricing policies such as, Skimming, penetration and market- skimming pricing and so on
For Discounts and Commission
Discount: there are discounting on quantity: the big orders can reduce the
costs of production and transportation, trading discount and payment discount
Commissions: It is the reduction of prices to compensate the sales
promotion, services that the agents have done 1.3.2.3 The methods of sales promotion
Direct Sales:
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Strength: Largely flexible going straight to the target customers, getting
real sales volumes
Difficulty: High costs Advertising
Strength:
- Supporting the direct sales activities and attracting the customers who the sales teams have not been able to approach
- Improving the relationships with the traders; penetrating the products into a new market, dealers or attracting a segment of new markets
- Introducing new products
- Enlarging the usage possibility of a new product - Increasing the industrial sales volumes
- Being agaist the alternative products
- Building the good minds of the people to the company
- Supporting Sales
Condiser the two following policies:
- The policy of “Pulling”: this policy is used when the targets of the company are concentrated on quantity in sales and penetrating into a new market To stimulate the customer to use new products and to convince them not to use other products The company can use the methods such as, coupon, payment discount, product trial and bonus
- The policy “Pushing”: this policy contributes to supporting the retail sales activities and the goodwill of the dealers The supportive activities of this policy can be as training the sales teams of the retail dealers, representing the characteristics of sales and affording some advertising
Advertising Documents and Tools Strength:
Its costs will be lower than the advertising and direct sales
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- It brings the customers the content of advertising that is more reliable
than other telecommunication means attracts the attention of a lot of people - The clients may get more information than as usual
- It is right time Public Affair
These activities are held in order to build and develop a picture or a good relationship between the company and the public customers, staffs, local authorities and government The media means can be used in the advertising campaigns - The press - Television - Direct emails /mails - Radio - Magazines - Outdoor advertisements
1.3.2.4 The importance of the distribution system:
- The decision of marketing channels is the most important decision that the
management board has to make The management board has to decide these channels according to the opinions that are considered for sales environment
-Corey comments “The distribution channels are the core external resources that take us many years to build are not easy to change them They place an important role not less than the core internal resources such as, people, production means, research, design and consumption They are the company’s great agreement with many distribution-specialized companies and with the particular market in which it serves It is also a series of policies and regulars that make the base of building many long term relationships
1.3.3 The essence and functions of marketing channels
1.3.3.1 The essence of marketing channels:
1.3.3.2 The reason of using the marketing intermediaries
t2
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The marketing intermediaries, through the approach, experience,
specialization activitiy scales, give the manufacturers more benefits than they distribute the goods by themselves Using the distributing intermediary can make some great savings
FIGURE 1.7: Matrix of Distribution Channels
Manu- Manu- End
facturer users facturer users
Manu- End Manu- \ End
tacturer users facturer US€TS
Intermediary distributors
Manu- End Manu- End
facturer users facturer users
Manu- End Manu- End
facturer users facturer users
1.3.3.3 The intermediaries can give the manufacturer some savings
As per FIGURE above, it shows that four manufacturers are doing
marketing by themselves to distribute their products to four customers who
require them 16 times of approach But if using the intermediary distributors, their total times of approach will be 8 times only
1.3.3.4 The types of marketing channels
t2) t2)
Trang 35©2 Global Advanced ivi -' : My Capstone Project Fifure 1.8: The popular channels of marketing are as follows: Manu- Manu-tacturer Manu-tacturer Manu-facturer facturer y Wholesales agent Wholesalers { Wholesalers Retailers | ở r Retailers Retailers \ End users End users Ỳ , Ỳ End users End users
Direct sales 1° level channels 2"‘ level channels 3" level channels The
direct sales channels have no intermediary The manufacturer sells the goods directly to the end users There are 3 ways of direct sales: selling goods to home, selling goods at showrooms/galleries, selling goods via emails /mails /telephone or shopping phone calls The 1° level channels have only one sales intermediary in the consuming goods market that will be as a retailer in the industrial goods
market may be as a sales dealer or agent The 2" level channels have 2
intermediaries of marketing In consuming goods market, those are wholesalers and retailers In technology market, those are the distribution departments of the company and traders The 3™ level channels have 3 intermediaries of
distribution, for example: in beer, wine and beverage industry that there are general agents or wholesales agents, wholesalers and retailers
1.3.3.5 The functions of the marketing channels:
The members of the marketing channels will implement the following functions:
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/nformation: Collecting and spreading out the information of the
marketing research of potential customers and of current competitors, the company’s members as well as other forces in the marketing environment
Shareholders: Implementing and popularizing the highly convincing information of the goods in sales and new products
Approach: Seeking and communicating with the future customers Devision: Packing and classifying the goods
Negotiation: Trying to come to the agreement of price and other issues related to the goods that the customers plan to buy and resell
Sponsors: Mobilizing and dividing money to do payment for the costs of channels and issuing the credits to the customers
Facing risks: Accept the risks related to the operation of the activities of
the channels
The functions above may be changed among the members of its channels
If the manufacturers can implement these functions, their costs and prices will be
higher than as usual When some of functions are exchanged to the
intermediaries, the costs and prices of the manufacturers will be lower but they have to bear the costs of the intermediaries more The deal is that who has to implement each of the functions of the channels above They are because the
productivity and effectiveness decide
1.3.4 THE ORGANIZATION AND ACTIVITIES OF THE CHANNEL:
1.3.4.1 The activities of the distribution channels:
A distribution channel is a combination of firms together because of their same benefits Each of members of the channel relies on others Each of them
places a private role and is specialized in implementing one or more functions
The channel will be the most effective when the missions that each of the
members of the channel can do well are assigned to each of them
Because of the success of each member and of the channels, all of the firms of the channel must understand and accept their missions by coordinating the
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G Global Advanced '!: ': Busi NỈ Capstone Project one’s targets and activities with others to achieve the targets of the channel For their cooperation, they can catch and supply the satisfaction of the target market better
To operate the whole channel well, the roles of each member needs to be specialized If there are conflicts, they should be solved effectively The cooperation, specialization and conflicts, in the channels, are only solved by a strong management board The channel will be operated well if an organization has a power and knows how to devide the manpower appropriately int the channel as well as knows how to delegate duties to them and solve the conflicts scientifically
1.3.4.2 The organization of the distribution channels:
As a time ago, the distribution channels were consolidated accidentally Each member was independent with its sovereignty At the same time, each
member cared about the channel activities very little
The development of the Vertical Marketing System
A vertical marketing system is operated as a united form that includes manufacturer, wholesalers and retailers It may be that this member is the owner of other members or gives them a monopoly on consumption or give them such a strong power that other members have to cooperate with it A vertical marketing system may be occupied by a manufacturer or a retailer or wholesaler The vertical marketing system appears to control the activities of the channel and to solve the conflicts because a member Is just following up his own benefits
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ca Globai Advanced * ': i ‘i it Capstone Project FIGURE 1.9: Comparing the normal marketing system to the vertical marketing system is as follows: Normal marketing system Vertical Retailers marketing system Whole- salers Manufacturers
The development of the horizontal marketing system:
Another development of marketing system is a phenomynon of two or
many unrelated companies in which they are willing to engage their resources or
programmes in order to exploit a marketing opportunity just appearing If each company does it, there is not enough capital, manufacturing methods, production capacity or marketing forces to do business independently Because of being
atraid of risks andunderstanding the great effectiveness, it cooperates with other
companies in their marketing system All of companies can work together temporarily or permanently or they can establish their own companies Adler named it as marketing symbiosis
The development of multi-channel marketing system:
The companies apply the multi-channel marketing system to reach to the same or different markets In Vietnam, a company can both distribute its
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products to the independent agents and to the objectives HOREKA (Hotel,
Restaurant, Karaoke)
By adding more channels, the company can obtain three important benefits such as, increasing the area of the market, reducing the costs of their channels and increasing the consumption according to the client’s needs
The company can build one channel more to approach a group of clients that it cannot do The company can also build new channels more in order to reduce its sales expenses for a group of current clients or the company can also
one channel more that is capable of more suitable sales for the requirements of
the clients
1.3.5 THE MANAGEMENT OF DISTRIBUTION CHANNELS:
1.3.5.1 The establishment of targets and duties:
Establishing an effective distribution channel starts from identifying what market is needed to reach and what targets The targets may be that how the client 1s served and how to operate the intermediaries The duties of the channel include the characteristics of the end users, products, intermediaries (approach,
negotiation, advertising, inventories and so on) and the characteristics of
environment as well as the company (business scale, financial capability and
marketing strategy)
Determining the key options may be the marketing intermediary styles, the intermediary quantity (large distribution, general consumption and selective
distribution) and the rights as well as duties of each member of the channel
The evaluation of the options of the channel should be under the FIGUREs of economy, adaptation and easy control if the manufacturer wants to establish a channel that match the satisfaction of the company’s long term targets
The decisions of the distribution channels require choosing and stimulating the intermediaries and evaluating the actitivies of the members of the channel
1.3.5.2 The sclection of the channe! nembers:
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The company should know how to attract the qualified intermediaries for its planned channel What characteristics does a good intermediary have? The anwers are the ability of awareness, good relationship with the customers, business life and experience, cooperation, effectiveness and trust in business
Sometimes, it 1s also evaluated through the features of business opinions, future
growth
The following chart is for some features of the selection of the distributor
[tis kept for the comparision among the potential distributors to choose a suitable distributor for the company
FIGURE 1.10: Some features of the selection of a distributor: The features of evaluating the partners 1 It is doing the same business field and market that the company is focusing on
2 It has enough conditions to be ready to do business in the